FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Hu [2019] FCAFC 133

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FLICK AND REEVES JJ:

1    Marland Mushrooms Qld Pty Ltd (“Marland Mushrooms”) operates a mushroom farm at Stapylton in Queensland. Mr Troy Marland is the sole director and shareholder of Marland Mushrooms. Mr David McKeon was the manager of Marland Mushrooms. Marland Mushrooms and Mr Marland will be collectively referred to as the Marland parties.

2    In November 2013, Marland Mushrooms entered into an agreement with HRS Country Pty Ltd (“HRS Country”). HRS Country was to provide labour to pick mushrooms and to undertake other tasks at the farm. Ms Tao Hu was the sole director of HRS Country.

3    Of present relevance are the persons employed by HRS Country who picked mushrooms during the period from 7 February to 31 August 2014 (the “relevant period”). One hundred and fourteen employees were engaged pursuant to an oral contract; 215 employees signed written agreements. Pursuant to cl 15 of the Horticulture Award 2010 (the “Award”) a “casual employee” who entered into a piecework agreement was to be paid at a “piecework rate … [tha]t enable[d] the average competent employee to earn at least 15% more per hour than the minimum hourly rate prescribed in this award…”.

4    In 2016, the Fair Work Ombudsman commenced a proceeding in this Court. In very summary form, the case was (inter alia) that the workers employed by HRS Country were “casual employees” who had entered into a piecework agreement and who were not paid in accordance with cl 15.2 of the Award.

5    The Fair Work Ombudsman claimed that there had been contraventions of s 45 of the Fair Work Act 2009 (Cth) (the “Fair Work Act”) by HRS Country and that Ms Hu, Marland Mushrooms and Mr Marland were knowingly involved in those contraventions. It should be noted that in July 2017, the National Farmers’ Federation was granted leave to intervene in the proceeding before the primary Judge.

6    In July 2018, the primary Judge dismissed the proceeding against the Second and Third Respondents, namely the Marland parties: Fair Work Ombudsman v Hu (No 2) [2018] FCA 1034. The primary Judge concluded (at paras [133] to [135]) that HRS Country had contravened cl 15.2 by entering into 329 piecework agreements which fixed an inadequate piecework rate. However, the primary Judge further concluded that Mr Marland and Marland Mushrooms were not “knowingly involved” in the contraventions of HRS Country (at para [272]). Ms Hu admitted the contraventions alleged against her. Ms Hu therefore requested, and was granted, leave not to attend the hearing of this appeal.

7    It is that conclusion of the primary Judge, with respect to the Marland parties, which is the subject matter of central relevance to the present appeal. The conclusion that the Marland parties were not “knowingly involved” is said by the Fair Work Ombudsman to involve appellable error. That contention involves a submission that the primary Judge erred when making findings of fact.

8    The arguments on appeal, it should be noted at the outset, sought to trespass well beyond the case as pleaded and as advanced before the primary Judge.

9    The Notice of Appeal, moreover, was a somewhat discursive document which set forth 14 Grounds of Appeal. The issues to be resolved, however, were more helpfully summarised in the Outline of Submissions filed by the Fair Work Ombudsman in the present proceeding, the four issues sought to be canvassed on appeal (albeit not in the order set out in those submissions) centre upon:

    whether an employer who enters into an agreement providing for the payment of an inadequate piecework rate contravenes cl 15 only at that point of time when an agreement is entered into or whether there are continuing contraventions of cl 15;

    whether an employee is entitled to the payment of the applicable minimum award rate of pay (payable under cl 14 (adults) and cl 16 (juniors) of the Award) in circumstances where the agreement entered into pursuant to cl 15 fails to make provision for an adequate piecework rate;

    whether the primary Judge erred in concluding that Mr Marland and Marland Mushrooms were not “knowingly involved” in the contraventions by HRS Country; and

    whether the primary Judge failed to “apply the principles established in Blatch v Archer”.

The Second and Third Respondents filed a Notice of Contention. Leave was also granted to file in Court an Amended Notice of Contention at the outset of the hearing. In addition to the submissions which had been filed on behalf of the Fair Work Ombudsman and the Second and Third Respondents, the National Farmers’ Federation also filed submissions. In January 2019, leave was granted for the National Farmers’ Federation to also appear as intervener in this proceeding, with such leave limited to addressing specified Grounds.

10    It is concluded that each of these four issues are to be resolved adversely to the Fair Work Ombudsman and that the appeal should be dismissed.

11    The relevant provisions of the Fair Work Act and the Award should be set forth and each of the findings and conclusions reached should be briefly addressed.

The Fair Work Act & the Award

12    Section 45 of the Fair Work Act provides as follows:

A person must not contravene a term of a modern award.

13    As at 7 February 2014, cl 14 of the Award provided, in part, as follows:

14.    Minimum wages

14.1    Adult employee minimum wages

(a)    The classification and minimum wages for an adult employee are set out in the following table:

(b)    For the purposes of clause 14.1(a), any entitlement to a minimum wage expressed to be by the week means any entitlement which an employee would receive for performing 38 hours of work.

Clause 14 was varied during the relevant period, increasing the minimum wage set out in cl 14.1(a). As from 7 July 2014, the minimum wage for HRS employees was as follows:

Clause 15 has not been varied in the time between the relevant period and the current proceeding and provides as follows:

Pieceworkers

15.1    An employer and a full‐time, part‐time or casual employee may enter into an agreement for the employee to be paid a piecework rate. An employee on a piecework rate is a pieceworker.

15.2    The piecework rate fixed by agreement between the employer and the employee must enable the average competent employee to earn at least 15% more per hour than the minimum hourly rate prescribed in this award for the type of employment and the classification level of the employee. The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement.

15.3    The calculation of piecework rates in clause 15.2 for casual employees will include the casual loading prescribed in clause 10.4(b).

15.4    An agreed piecework rate is paid instead of the minimum wages specified in clause 14–Minimum wages.

15.5    The following clauses of this award do not apply to an employee on a piecework rate:

(a)    Clause 22–Ordinary hours of work and rostering;

(b)    Clause 24–Overtime; and

(c)    Clause 24.3–Meal allowance.

15.6    The employer and the individual employee must have genuinely made the piecework agreement without coercion or duress.

15.7    The piecework agreement between the employer and the individual employee must be in writing and signed by the employer and the employee.

15.8    The employer must give the individual employee a copy of the piecework agreement and keep it as a time and wages record.

15.9    Nothing in this award guarantees an employee on a piecework rate will earn at least the minimum ordinary time weekly or hourly wage in this award for the type of employment and the classification level of the employee, as the employee’s earnings are contingent on their productivity.

15.10    For the purposes of the NES:

(a)    The base rate of pay for a pieceworker is the base rate of pay as defined in the NES.

(b)    The full rate of pay for a pieceworker is the full rate of pay as defined in the NES.

Clause 10.4(b) of the Award prescribes that, for casual workers, a loading of 25% is to be added to the hourly rates prescribed by cl 14 (adults) and cl 16 (juniors).

14    Section 550 of the Fair Work Act provides in relevant part as follows:

550    Involvement in contravention treated in same way as actual contravention

(1)    A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

(2)    A person is involved in a contravention of a civil remedy provision if, and only if, the person:

   (a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced the contravention, whether by threats or promises or otherwise; or

(c)    has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

   (d)    has conspired with others to effect the contravention.

15    Although the terms of s 550 have given rise to some potential divergence in the authorities (cf. Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134 at [14] to [15], (2018) 282 IR 86 at 90 to 91 per Flick, Bromberg and O’Callaghan JJ), that which is established has been summarised, in part, as follows by White J in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365:

Relevant principles

[176]    Although the general principles relating to accessorial liability are settled, their application in a case such as the present is not without difficulty. In order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention: Yorke v Lucas (1984) 158 CLR 661 at 667. In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person knows that those matters amount to a crime: Yorke v Lucas at 667. Although it is necessary for the person to be an intentional participant and to have knowledge of the matters or things constituting the contravention, it is not necessary for the person to know those matters or things do constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 at [159]-[160]. That is to say, it is not necessary that the accessory should appreciate that the conduct in question is unlawful. …

[177]    Actual, rather than imputed, knowledge is required. So much was made clear in Giorgianni v The Queen (1985) 156 CLR 473 at 506–7 by Wilson, Deane and Dawson JJ …

[178]    The notion of being “knowingly concerned” in a contravention has a different emphasis from that of aiding, abetting, counselling or procuring” a contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention: Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87; (2007) 164 IR 299 at [26]; Qantas Airways Ltd v Transport Workers’ Union of Australia [2011] FCA 470; (2011) 280 ALR 503; at [324]–[325].

[179]    As indicated, these principles are not in doubt. The more difficult question arises from their application to the circumstances of this case and, in the identification of the essential facts about which an accessory must have actual knowledge.

(extracts omitted)

Clause 15 – May enter into an agreement & continuing contraventions

16    The first of the four issues raised in the Appellant’s written Outline of Submissions is resolved in favour of the Respondents. Clause 15 of the Award, it is concluded, gives rise to a contravention at the time a pieceworker agreement is entered into and does not thereafter give rise to continuing contraventions and/or separate contraventions on each and every day thereafter that an employee continues to be paid piecework rates that do not comply with cl 15.2.

17    So much follows from the terms of cl 15 itself.

18    Clause 15.1 of the Award provides that an employer and an employee “may enter into an agreement for the employee to be paid a piecework rate”. On its terms, a contravention of cl 15 arises if an employer and an employee “enter into an agreement” which does not provide for the payment of a piecework rate. Any such contravention thus occurs at the time the agreement is entered into.

19    The primary Judge concluded that HRS Country contravened cl 15 of the Award in respect to each pieceworker agreement and thereby contravened s 45 of the Fair Work Act (at para [135]). The primary Judge further concluded that the “contraventions in this case lie in HRS Country entering into the non-compliant employment agreements” and that cl 15 “was contravened at the time of entry into each agreement, but there was no ‘ongoing’ breach after that” (at para [137]) with respect to each agreement entered into. In this respect it is important to note that, before the primary Judge, the Fair Work Ombudsman did not claim that HRS Country had contravened cl 15 by paying an inadequate piecework rate: at para [141].

20    There is little difficulty, with respect, in accepting these conclusions of the primary Judge.

21    Section 45 is expressed in wide terms and cl 15 of the Award is a “term of a modern award” for the purposes of that section. Even though cl 15.1 confers a discretionary power upon an employer and employee to enter into an agreement providing for a different rate of pay than that set forth in cl 14 – and there is an absence of any imperative upon an employer and employee to avail themselves of that ability – if an agreement is entered into, cl 15 thereafter operates according to its terms. One of those terms is cl 15.2. If the “piecework rate” fixed by the agreement does not comply with cl 15.2, there is a contravention of that term with respect to each agreement entered into.

22    The first of the issues raised by the Fair Work Ombudsman is thus resolved in favour of the Respondents.

An entitlement of award payments – cl 14 as the default provision?

23    The second of the two issues pursued on appeal focussed on whether an employee who had entered into an agreement as a pieceworker pursuant to cl 15.1 of the Award was entitled to be paid the relevant minimum rate of pay guaranteed by the Award in circumstances where the “piecework rate” failed to comply with cl 15.2.

24    On the approach pursued by the Fair Work Ombudsman before the primary Judge, an employee who had entered into an agreement which failed to provide for the payment of a properly determined “piecework rate” was “entitled to be paid in accordance with the non-piecework provisions of the Award”: at para [142]. As already mentioned above, the Fair Work Ombudsman did not claim before the primary Judge that, in the event of a contravention of cl 15, an employee was entitled to be paid the minimum piecework rate that ought to have been fixed under cl 15.2. In this respect, his Honour’s conclusions are worth quoting as follows:

[138]    …Clause 15.2 stipulates that, “The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement”. The word “agreed” is apparently intended to have the same meaning as “fixed”, but, leaving that aside, the phrase is ambiguous. It could require that the piecework rate that has been agreed, regardless of whether it is inadequate, must be paid for all work performed in accordance with the agreement. Alternatively, it could mean the piecework rate that has been agreed and is at least at the minimum level must be paid for all work performed in accordance with the agreement.

[139]    In my opinion, the latter construction is to be preferred. The former construction, which could require an employer to pay a piecework rate fixed at a level which does not comply with cl 15, is improbable. Further, that construction would mean that where a piecework rate was initially fixed at an adequate level, but where the piecework rate later becomes inadequate, there is no obligation on the employer to adjust the rate. That would mean, for example, that if the minimum hourly rate prescribed under cl 14.1 of the Award increased during the term of an employment agreement, there would be no corresponding obligation on the employer to increase the piecework rate. Such an outcome cannot have been intended.

[140]    I recognise the force of the intervener’s submission that this construction produces an inconvenient outcome for employers. The piecework provisions of the Award, seen as a whole, attempt to balance the interests of employers with the risk that employees will be left vulnerable to exploitation. However, the requirements to fix and pay at least minimum piecework rates are protective of employees, and cl 15.2 should be construed in light of that protective purpose. Where the piecework rate was adequate when the agreement was entered, but becomes inadequate during the term of the agreement, it is a contravention of cl 15.2 of the Award for an employer to continue to pay only the agreed, inadequate piecework rate. Contrary to the intervener’s submission, that does not guarantee any employee a minimum wage, but it does guarantee an adequate piecework rate. Such contraventions are capable of fitting the FWO’s description of “ongoing” throughout the period during which the employee is paid an inadequate piecework rate.

25    The primary Judge rejected the contention the Fair Work Ombudsman made (at para [142]) and preferred the construction of the Award advanced on behalf of the Marland parties and the intervener: at paras [145] to [149].

26    It is concluded that the primary Judge was correct and for the reasons his Honour gave.

27    Irrespective of any consideration that may be given to the industrial history out of which cll 14, 15 and 16 emerged, those clauses cannot be construed as conferring an entitlement to payment under cl 14 or cl 16 in the event of underpayment of cl 15 entitlements.

28    By their terms, cl 14 and cl 16 provide for minimum wage rates for adult and junior employees respectively. In addition, an employee is entitled to the other applicable allowances provided for under the Award including public holiday rates (cl 28.3) and paid rest breaks (cl 23.2). Clause 15, by way of contrast, provides an option open to be availed of by employers and employees to “enter into an agreement for the employee to be paid a piecework rate”. The rate is “agreed” or “fixed” by cl 15.2 as “at least…the minimum level [that] must be paid for all worked performed in accordance with the agreement” (at para [138]). For all employees it takes account of the minimum wage rates specified in cl 14 and cl 16; for causal employees it includes the loading prescribed by cl 10.4 (as required by cl 15.3); and for the “average competent employee” it includes the requirement in cl 15.2 that it be “at least 15% more per hour than the minimum hourly rate prescribed” by the Award. Evidently, the clauses provide for different rates of pay calculated on different bases. And, as pointed out by Bromberg J, cll 14 and 16 form part of what his Honour has characterised as “a time-based system of remuneration”; cl 15 provides for a “task-based remuneration system”. It is open to an employer and employee to either take advantage of the “minimum wages” guaranteed under cl 14 (or cl 16) and other applicable provisions of the Award or enter into an agreement for the employee to be paid a “piecework rate” as fixed and calculated under cl 15. Depending on factors such as their age, classification levels, hourly work patterns and competency, some employees will be attracted to the former regime and others to the latter.

29    If cl 15 is the option availed of, there is nothing in the terms of cl 15 which would warrant a construction that an employee who does not receive a properly determined “piecework rate” has the benefit of cl 14 (or cl 16). To the contrary, as the primary Judge found, in the event of a contravention concerning the minimum piecework rate payable to an employee, the remedy lies in cl 15 itself. There is nothing to be found in the language employed in either cl 14 or cl 15 that would make cl 14 (or cl 16) the default provision in the event of a contravention of cl 15.

30    Contrary to the conclusion of Bromberg J, and with the greatest of respect to his Honour, recourse to the industrial context out of which cl 15 emerged cannot be relied upon as a means of construing cl 15 contrary to the clear terms employed. As was the conclusion of the primary Judge, the opening words of cl 15 confer an election – an employee can either be employed and have the benefit of the minimum wage provided for in cl 14 (or cl 16); or an employer and employee may enter into an agreement for the payment of a piecework rate under cl 15. The industrial context out of which a term may emerge may unquestionably be relied upon as a basis for construing an ambiguous term (or a term susceptible of alternative meanings) in a way which best promotes an objective of fairly balancing competing employer and employee interests. As recognised by the primary Judge, a scenario which may arise is where an agreement for the payment of a piecework rate is fixed under cl 15 where the piecework rate is above the minimum rate of pay provided for in cl 14 at the time of the agreement but then falls below that minimum rate during the course of the agreement due to changes in the minimum rate of pay prescribed under cl 14. But such a scenario is addressed, again as concluded by the primary Judge, by the continuation of payment at the agreed piecework rate being a contravention of cl 15.2. In that manner, cl 15 is susceptible of a construction which effects a fair balancing of competing employer and employee interests: cf. paras [139] to [140].

31    The National Farmers’ Federation in its submissions, it may be noted, opposed any construction of the Award which resulted in the minimum hourly rates of pay being “the primary and default mode of remuneration…”.

32    The second of the issues raised for resolution by the Fair Work Ombudsman is thus, again, resolved in favour of the Respondents.

Knowingly involved – s 550 of the Fair Work Act

33    The primary Judge concluded that neither Mr Marland nor Marland Mushrooms assumed any liability for their involvement in the contraventions of s 45 by HRS Country: paras [256], [266] and [272].

34    At least on appeal there was no uncertainty that the Fair Work Ombudsman sought to establish the liability of Marland Mushrooms by reference to both the knowledge of:

    Mr Marland; and

    Mr McKeon.

Whether the knowledge of Mr McKeon formed part of the case as advanced before the primary Judge was contentious. But that source of discontent may presently be left to one side.

35    Of importance to the knowledge of Mr Marland was a meeting on 7 February 2014. As noted by the primary Judge, it was “central to the FWO’s case that Mr Marland was present at the meeting”: at para [172]. If present, Mr Marland would have knowledge of the matters discussed at that meeting.

36    In summary form, it is concluded for the purposes of s 550(2)(c) of the Fair Work Act that neither Mr Marland nor Marland Mushrooms had knowledge of an essential element of the contravention of s 45, namely that the employees were “casual employees”. The findings of the primary Judge, it is respectfully concluded, should not be disturbed on appeal.

37    The reasons for decision of the primary Judge relevantly made findings that:

    the employees were “casual employees” (at para [56]);

    the amount paid to employees during the period from 7 February to 31 August 2014 was either $0.75 per kg or $ 0.80 per kg (at para [61]);

    HRS Country’s expectation was that a competent mushroom picker should be able to pick 30kg/hr after an initial probationary period of training (at para [131]); and

    the pick rate attributable to the average competent employee was in fact approximately 20kg/hr (at para [133]).

Of particular relevance to the knowledge of Mr Marland (and Marland Mushrooms), the primary Judge also made a finding:

    that Ms Hu “did not know whether the employees were full-time, part-time or casual” (at para [222]).

38    When addressing the knowledge of Mr Marland, the primary Judge found as follows:

What Mr Marland knew

[206]    As a result of his attendance at the meeting on 7 February 2014, Mr Marland knew that HRS Country’s general practice was to engage its employees as pieceworkers under written contracts. He knew that at that time, HRS Country was paying its employees $0.80 per kg. He knew that HRS Country claimed that $0.80 per kg was the piecework rate it was “able to pay” based upon the rate of $1.05 per kg paid by Marland Mushrooms.

[207]    Mr Marland also knew that the Award applied to the mushroom pickers. He knew that the Award required an employer to set the piecework rate based on the pick rate of the average competent employee. He knew that the average competent casual adult employee had to pick at a sufficient rate to be able to earn $22.85 per hour. He knew that if the average competent employee picked 25 kg per hour, the piecework rate had to be at least $0.91 per kg in order to comply with that requirement. Therefore, he knew that at that pick rate, $0.80 per kg was inadequate for a casual employee.

[208]    Mr Marland also knew that the hours of work of HRS Country’s employees could vary between three to six days per week, depending upon the amount of work that Marland Mushrooms made available. He knew that the employees did not receive annual leave or paid sick leave. He knew that Ms Hu did not know whether the employees were casual employees.

It is the last sentence which assumed relevance. Although Mr Marland may have known that Ms Hu “did not know whether the employees were casual employees”, left open was the prospect that he may nevertheless have known the status of the employment being offered.

39    His Honour then shifted his attention to the question as to whether the “Marland parties knew that HRS Country’s employees were engaged on a casual basis”. His Honour correctly observed that “the FWO must prove that the Marland parties knew that the employees were casual employees” (at para [215]).

40    In addition to the findings at paras [206] to [207], his Honour concluded that:

    he was “unable to draw the inference that [Mr Marland] knew that the employees were casual employees” (at para [227]); and

    he could not “conclude that Mr Marland deliberately refrained from enquiring as to the status of employees, rather than merely neglecting to do so” (at para [231]).

His Honour was thus “not satisfied that Mr Marland knew that HRS Country’s employees were engaged as casual employees” and concluded that the case against “Mr Marland must fail at this point” (at para [232]).

41    With respect to Mr McKeon, the primary Judge also found that:

    “the evidence did not demonstrate that Mr McKeon knew that HRS Country’s employees were employed as casual employees” (at para [266]).

42    Notwithstanding the fact that an appeal is in the nature of a re-hearing and not an appeal stricto sensu (Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 at [20], (2001) 117 FCR 424 at 434 to435 per Allsop J (Drummond and Mansfield JJ agreeing); Commissioner of Taxation v Amway of Australia Ltd [2004] FCAFC 273 at [34], (2004) 141 FCR 40 at 50 to 51 per Hill, Sundberg and Kenny JJ) and that it remains open to this Court on appeal to reach different findings of fact to those of the primary Judge, it is respectfully considered that no findings should be made different to those reached by the primary Judge.

43    Of central importance is the primary Judge’s conclusion that he could not infer that Mr Marland knew that the employees were casual employees. There were certainly any one of a number of bases upon which such an inference could have potentially be drawn, including:

    Mr Marland’s attendance at the 7 February 2014 meeting at which Ms Hu said to those in attendance that she did not know if the employees were casual employees but where Inspector De Iacovo explained the application of the Award which provided for the payment of a piecework rate agreement (at paras [174] to [179] and [193]);

    the knowledge which the primary Judge found that was possessed by Mr Marland – including the finding that Mr Marland knew “that the hours of work of HRS Country’s employees could vary between three to six days per week” and his knowledge that “the employees did not receive annual leave or paid sick leave”: (cf. paras [207] to [208]); and

    the letter sent signed by Mr Marland to HRS Country on 10 November 2014, albeit at a point of time outside the period of time the subject of the present proceeding, discussing the need to increase the piecework rate (at para [201]).

In addition to these facts, concurrence is also expressed with his Honour’s assessment that a “suspicion” may have arisen in Mr Marland’s mind that the employees were casual employees by reason of:

    the PayCheck Plus document sent by Inspector De Iacovo to Mr Marland in February 2014 where the “calculation of pay rates were done by adding a casual loading” (at para [225]).

44    But given the fact that:

    Ms Hu did not know whether the employees were casual (at paras [175] and [218]);

    there was no evidence that Mr Marland actually knew that HRS Country was entering into any of the employment agreements before they were entered into (at para [211]); and

    there was no evidence that Mr Marland had seen any of the written employment agreements (at para [226])

it is concluded that:

    the unwillingness of the primary Judge to draw an inference as to the knowledge of Mr Marland that the employees were casual employees discloses no appellable error; and

    approaching the matter afresh, and by reference to the factual basis from which the Fair Work Ombudsman contended on appeal that a different inference should be now drawn, it is separately considered that no inference should be drawn.

45    The meeting on 7 February 2014 was obviously of central importance to the case sought to be advanced against the Marland parties. The Fair Work Ombudsman was successful in securing a finding of fact that Mr Marland was in attendance at that meeting. But a significant weakness in the Fair Work Ombudsman’s case emerged when Ms Hu said at that meeting that she did not know whether the employees were full-time, part-time or casual employees. Had she said so, that knowledge could then be attributed to Mr Marland. But Ms Hu did not know. Nor did Inspector De Iacovo, for example, assert an understanding or even a question during the course of that meeting as to whether the employees were casual. Presumably at that stage of the investigation the Inspector was still gathering facts. A focus of attention was the piecework rate, the hourly rate of pay and the amount an employee could pick per hour. Although Mr Marland knew that the workers were paid a piecework rate, it was no part of the Fair Work Ombudsman’s case that pieceworkers could only be casual employees (at para [225]).

46    Any case as to Mr Marland being “knowingly involved” in the contraventions of HRS Country thus depended upon inferences being drawn from other facts. Like the primary Judge, it is concluded that no such inference should be drawn.

47    Concurrence is also expressed with the findings of the primary Judge as to the knowledge of Mr McKeon, including (in particular) his Honour’s finding that “the evidence does not demonstrate that Mr McKeon knew that HRS Country’s employees were employed as casual employees” (at para [266]). Given the absence of appellable error in this finding, it is unnecessary to resolve a submission by the Respondents that Mr Keon’s knowledge could not be relied upon as being the knowledge of Marland Mushrooms by reason of his knowledge not forming part of the pleaded case and only raised by Counsel for the Fair Work Ombudsman very late in the proceeding at first instance.

48    The third of the issues raised by the Fair Work Ombudsman is thus, again, resolved in favour of the Respondents.

The rule in Blatch v Archer

49    The final issue raised for resolution in the Appellant’s written Outline of Submissions is whether the primary Judge erred in applying “the principles in Jones v Dunkel too narrowly” and erred in not applying “the correct approach”, namely the approach set forth in Blatch v Archer (1774) 1 Cowp 63, (1774) 98 ER 969 (“Blatch v Archer”).

50    The oft-repeated principle set forth in Jones v Dunkel (1959) 101 CLR 298 at 308 (“Jones v Dunkel”) was expressed by Kitto J as follow:

... any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put a true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.

51    The “rule” in Blatch v Archer (1774) 1 Cowp 63 at 65, (1774) 98 ER 969 at 970 sought to be invoked by the Fair Work Ombudsman was there expressed by Lord Mansfield as follows:

… ‘[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted’.

These observations have been applied in other areas of the law, including industrial law: e.g., United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408 at [74], (2011) 198 FCR 514 at 542 per McKerracher J. A similar expression of principle was expressed, albeit in a family law context, as follows by Brennan and McHugh JJ in G v H (1994) 181 CLR 387 at 391 to 392:

… when a court is deciding whether a party on whom rests the burden of proving an issue on the balance of probabilities has discharged that burden, regard must be had to that party’s ability to adduce evidence relevant to the issue and any failure on the part of the other party to adduce available evidence in response.

52    In commenting upon both the decision in Jones v Dunkel and that in Blatch v Archer, French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ in Australian Securities and Investments Commission v Hellicar [2012] HCA 17, (2012) 247 CLR 345 (“Hellicar”), in reversing a decision of the New South Wales Court of Appeal, observed at 405 to 406:

[145]    What may perhaps be seen as constituting a third strand in the Court of Appeal’s reasoning was its treatment of the well-known decision of this court in Jones v Dunkel. The Court of Appeal… treated what it described as “the principle in Jones v Dunkel” as being “a ‘particular application of [the] principle’ in Blatch”. The Court of Appeal considered, however, that what it found to be ASIC’s breach of a duty to call Mr Robb took matters beyond what was decided in Jones v Dunkel. The court said that:

[t]he failure to call Mr Robb means more than disinclination to draw inferences favourable to ASIC’s case. Failure of a party with the onus of proof to call an available and important witness, the more so if the failure is in breach of the obligation of fairness, counts against satisfaction on the balance of probabilities.

(footnotes omitted)

Their Honours went on to conclude at 412 to 413:

The cogency of proof

[164]    The Court of Appeal concluded that ASIC’s failure to call Mr Robb had “consequences for the cogency of ASIC’s case”. By this the Court of Appeal meant that the cogency of ASIC’s proof was diminished.

[165]    Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles which do not permit the course taken by the Court of Appeal of discounting the cogency of the evidence tendered by ASIC.

[166]    Lord Mansfield’s dictum in Blatch v Archer that “[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted” is not to be understood as countenancing any departure from any of these rules. Indeed, in Blatch v Archer itself, Lord Mansfield concluded that the maxim was not engaged for “it would have been very improper to have called” the person whose account of events was not available to the court.

[167]    This court’s decision in Jones v Dunkel is a particular and vivid example of the principles that govern how the demonstration that other evidence could have been called, but was not, may be used. …

[168]    The Court of Appeal concluded that ASIC’s not calling Mr Robb founded an inference that his evidence “would not have assisted the ASIC case”. There was no basis for drawing any inference that Mr Robb would have given evidence adverse to ASIC’s case. More particularly, there was no basis for concluding that it was more likely than not that he would say that the minutes whose preparation he had supervised were false. The most that could be inferred from Mr Robb not being called by ASIC was that he could not give evidence, from his own independent recollection, of what had happened at the February board meeting. He was not “a person presumably able to put the true complexion on the facts relied on [by ASIC] as the ground” for any inference that ASIC sought to have drawn from the evidence. And contrary to the conclusions reached by the Court of Appeal, what Lord Mansfield said in Blatch v Archer permitted no larger conclusion.

(footnotes omitted)

In issue in that proceeding was whether the directors of a company had approved the release of an announcement to the Australian Stock Exchange which was misleading. Questions arose as to whether minutes of a meeting at which the announcement had been said to have been tabled and approved were false. Mr Robb was a solicitor retained by the company.

53    The result sought to be achieved by the Fair Work Ombudsman, in the reliance placed upon Blatch v Archer, was to impugn the conclusion of the primary Judge that an inference should not be drawn that the Marland parties knew that the employees were employed on a casual basis. Mr Marland was not called as a witness. Nor was Mr McKeon. The failure to call Mr Marland or Mr McKeon, the Fair Work Ombudsman contended, supported an inference – contrary to that drawn by the primary Judge – that the Marland parties did, in fact, know that the employees were employed on a casual basis.

54    If recourse is had to Jones v Dunkel, it is accepted that the statements in that case “give no support to the proposition that the failure to call a witness may itself provide the basis of an adverse inference. An inference must be founded in evidence”: Lek v Minister for Immigration, Local Government and Ethnic Affairs (1993) 43 FCR 100 at 124 per Wilcox J. Similarly, in Marku v Minister for Justice [2015] FCA 831 at [68], (2015) 237 FCR 580 at 601 Kenny J observed, in part, that “[w]hile the principle may operate to make evidence or inferences that may be drawn from admissible evidence more probable, the principle does not permit a failure to call a witness … to fill gaps in the evidence or transform conjecture into inference”. A failure to call a witness, it is thus accepted, cannot “fill gaps in the evidence, or convert conjecture and suspicion into inference”: The Legal Practitioner v Council of the Law Society of the ACT [2015] ACTCA 20 at [56] per Murrell CJ, Burns and Perry JJ (“Council of the Law Society of the ACT”).

55    On the facts of the present case, it leads to no different result whether recourse is had to the observations of Kitto J in Jones v Dunkel or those of Lord Mansfield in Blatch v Archer.

56    Although on the facts of the present case considerable reservation may be expressed as to whether an adverse inference was available to be drawn against Mr Marland, by reason of him being in possession of sufficient information to arouse a not inconsiderable suspicion as to the employees being casual employees, and thus a “basis for concluding” (cf. Hellicar [2012] HCA 17 at [168], (2012) 247 CLR at 413) that he in fact knew that the employees were casual employees, neither Blatch v Archer nor Jones v Dunkel can be relied upon to “convert conjecture and suspicion into inference”: cf. Council of the Law Society of the ACT [2015] ACTCA 20 at [56]. The more so is this the case in the present appeal in circumstances where there was no comparable basis for imposing upon the Respondents the same expectation as to “fairness” in the conduct of the litigation as was assumed (but not decided) to be imposed upon the Australian Securities and Investments Commission in Hellicar: [2012] HCA 17 at [147] and [152], (2012) 247 CLR at 406 to 407.

57    Unlike the position in Hellicar, however, was the fact that Mr Marland – unlike Mr Robb in the Hellicar case – was potentially in a position “to put a true complexion on the facts relied on as the ground for the inference” (cf. Jones v Dunkel). But, other than by way of inference, there was no basis in the available evidence upon which a finding could be made that Mr Marland knew that the employees were casual employees. In the absence of a basis upon which such an inference was available, no question arose as to an ability to more easily drawn that inference because Mr Marland was not called as a witness. Whatever inferences were available remained inferences founded upon conjecture as to what Mr Marland may or may not have said as to his state of knowledge. It is mere conjecture as to whether Mr Marland may have been able to put a different complexion on what was said at the 7 February 2014 meeting. On his account, albeit an account that was not accepted by the primary Judge, he was not even present at that meeting. On one view of the evidence, the only available inference to be drawn from the exchange that occurred at that meeting was that Mr Marland either could not recall what was said or was not in a position to put in question the account given by Inspector De Iacovo. On either approach, the Fair Work Ombudsman’s account of the evidence prevailed. A more broadly felt suspicion drawn from evidence, other than what was said at the 7 February 2014 meeting, cannot take the place of admissible evidence. Certainly, after the meeting, the exchange between Inspector De Iacovo and Mr Marland when the Inspector was having “a look around the farm” only evidenced a lack of knowledge on the part of Mr Marland: at para [181]. The PayCheck Plus document sent by Inspector De Iacovo to Mr Marland in February 2014 where the “calculation of pay rates were done by adding a casual loading” (at para [225]) went some distance further in perhaps putting Mr Marland on notice. But that, on its own and in the context of the other findings made by the primary Judge, provides an inadequate basis upon which any inference should be drawn that Mr Marland knew the employees were casual employees.

58    This Court was not taken by Counsel for the Fair Work Ombudsman to the decision in Hellicar in any meaningful way and thus did not have the benefit of such assistance as may have been provided by Counsel for the Appellant with respect to the potential application of their Honours’ observations in that case to the facts of the present case.

59    The same conclusions are expressed with respect to the submissions of the Fair Work Ombudsman regarding the failure to call Mr McKeon.

60    The failure to call Mr Marland and/or Mr McKeon cannot be relied upon as a basis to attribute to Marland Mushrooms knowledge that the employees were employed on a casual basis. The observations of Lord Mansfield, with respect, are not to be construed as permitting an adverse inference to be drawn merely because it was “in the power” of the Respondents to call either of these two witnesses.

61    The final issue raised by the Fair Work Ombudsman is thus, again, resolved in favour of the Respondents.

62    It is unnecessary to resolve the Amended Notice of Contention.

CONCLUSIONS

63    It follows that the appeal should be dismissed.

Associate:    

Dated:    16 August 2019

REASONS FOR JUDGMENT

BROMBERG J:

64    The background facts are sufficiently set out in the reasons of Flick and Reeves JJ to permit me to address, without further introduction, the question of the proper construction of cl 15 of the Horticultural Award 2010 (“Award”). On that question I respectfully differ from the approach taken by Flick and Reeves JJ and the primary Judge.

The proper construction of cl 15

65    The terms of cl 15 of the Award are set out in the joint judgment above at [13].

66    The primary Judge accepted (at [48]) the appellant’s (“FWO”) construction that an employer contravenes cl 15 by entering into an agreement which fixes a piecework rate that does not enable the average competent employee to earn at least the piecework rate that meets the requirements in cl 15.2 and cl 15.3 of the Award (“the prescribed piecework rate”). His Honour rejected the FWO’s contention that a failure to make an agreement which provided for the prescribed piecework rate constituted an ongoing contravention of cl 15 ([136]-[137]).

67    However, the primary Judge construed cl 15 as not merely prohibiting an employer from entering an agreement with a non-compliant piecework rate, but also as requiring “the employer to pay at least the minimum piecework rate that ought to have been fixed” (at [138]). For that conclusion, his Honour relied on the terms of cl 15.2 that, “The piecework rate agreed is to be paid for all work performed in accordance with the piecework agreement”, in respect of which his Honour said:

[138]    … The word “agreed” is apparently intended to have the same meaning as “fixed”, but, leaving that aside, the phrase is ambiguous. It could require that the piecework rate that has been agreed, regardless of whether it is inadequate, must be paid for all work performed in accordance with the agreement. Alternatively, it could mean the piecework rate that has been agreed and is at least at the minimum level must be paid for all work performed in accordance with the agreement (emphasis added).

[139]    In my opinion, the latter construction is to be preferred. The former construction, which could require an employer to pay a piecework rate fixed at a level which does not comply with cl 15, is improbable. Further, that construction would mean that where a piecework rate was initially fixed at an adequate level, but where the piecework rate later becomes inadequate, there is no obligation on the employer to adjust the rate. That would mean, for example, that if the minimum hourly rate prescribed under cl 14.1 of the Award increased during the term of an employment agreement, there would be no corresponding obligation on the employer to increase the piecework rate. Such an outcome cannot have been intended.

[140]    I recognise the force of the intervener’s submission that this construction produces an inconvenient outcome for employers. The piecework provisions of the Award, seen as a whole, attempt to balance the interests of employers with the risk that employees will be left vulnerable to exploitation. However, the requirements to fix and pay at least minimum piecework rates are protective of employees, and cl 15.2 should be construed in light of that protective purpose. Where the piecework rate was adequate when the agreement was entered, but becomes inadequate during the term of the agreement, it is a contravention of cl 15.2 of the Award for an employer to continue to pay only the agreed, inadequate piecework rate. Contrary to the intervener’s submission, that does not guarantee any employee a minimum wage, but it does guarantee an adequate piecework rate. Such contraventions are capable of fitting the FWO’s description of “ongoing” throughout the period during which the employee is paid an inadequate piecework rate.

68    Although holding that cl 15 could be contravened by the employer for failing to pay the “piecework rate that is at least at the minimum level”, the primary Judge did not consider whether contraventions of that kind had been committed by the employer HRS Country Pty Ltd (“HRS Country”) because, as he stated at [141], the FWO had only alleged that HRS Country had contravened cl 15 “by entering into employment agreements that fixed inadequate piecework rates …” (emphasis in original).

69    The primary Judge then turned to the FWO’s submission as to the consequence of an employer entering into an agreement which failed to fix what I have called the “prescribed piecework rate”. His Honour recounted that in that circumstance:

[142]    … The FWO alleges that the employees were therefore entitled to be paid in accordance with the non-pieceworker provisions of the Award. The FWO alleges that HRS Country contravened the Award by: failing to pay the hourly rates prescribed under cl 14.1 and cl 16.1; failing to pay the public holiday rates required by cl 28.3; failing to pay the casual loading required under cl 10.4; and failing to provide the employees with the paid rest breaks required by cl 23.2.

…

[144]    The FWO submits that a person is not a “pieceworker” merely because he or she is paid a “piecework rate”. The FWO points to the protective purpose of the minimum piecework rate and the mandatory language of cl 15.2 of the Award. The FWO submits that in light of that purpose and mandatory language, if an inadequate piecework rate is fixed, employees are entitled to be treated as if they had not entered into the purported piecework agreement at all. The submission continues that in order to be a pieceworker, the employee must be entitled under an agreement to a piecework rate that complies with cl 15. If the employee is not a pieceworker, the employee must be paid the hourly rates and other entitlements prescribed under the Award.

70    The primary Judge rejected that submission and preferred the construction of the Marland parties that “… while an employee on an inadequate piecework rate is entitled to be paid at least the minimum piecework rate, the employee is not entitled to be paid the hourly rates and other entitlements of non-pieceworkers under the Award” (at [145]).

71    The primary Judge’s reasons for preferring that construction were given at [145]-[148]:

[145]    The Marland parties and the intervener submit that any employee on any piecework rate, adequate or inadequate, is a pieceworker. They submit that while an employee on an inadequate piecework rate is entitled to be paid at least the minimum piecework rate, the employee is not entitled to be paid the hourly rates and other entitlements of non-pieceworkers under the Award.

[146]    I prefer this construction. It is supported by the language and context of cl 15. Clause 15.1 provides that an employer and an employee may enter into an agreement for the employee to be paid a piecework rate. It continues, “An employee on a piecework rate is a pieceworker”. The FWO would read that phrase as, “An employee on a piecework rate that complies with cl 15.2 is a pieceworker”, but that reading is not supported by the clear language. Further, nothing in the language or context of cl 15 indicates that provisions such as cl 15.4 and 15.5 will cease to apply where the piecework rate is inadequate.

[147]    The FWO’s submission is that if an inadequate piecework rate is fixed, employees should be treated as if they have not entered into the piecework agreement at all. Where legislation provides for a penalty in the event of non-compliance with a statutory command (as is the case with s 45 of the FWA) it is presumed that the statutory penalty is intended to cover the field in terms of consequences, and not render acts in contravention of the statute illegal or invalid: Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215 at 219–220, 226–227 and 244; Gnych v Polish Club Ltd (2015) 255 CLR 414 at 427. The FWO’s submission that the piecework agreement is to be treated as having no effect conflicts with this principle.

[148]    The protective purpose of cl 15 does not assist the FWO’s argument. That protective purpose can be served without the rather artificial construction contended for. If the piecework rate fixed under an agreement is inadequate, employees can be protected by an award of compensation calculated as the difference between the piecework rate that was paid and the piecework rate that ought to have been paid.

72    As I understand [148] in the context of the primary Judge’s conclusion at [139], the primary Judge reasoned that the protective purpose of cl 15 was accommodated by cl 15 providing employees with an entitlement to be paid the prescribed piecework rate “at least at the minimum level” and that, as any underpayments could be recovered, there was no need to construe the Award as requiring that the employee be paid entitlements conferred by cll 14.1, 16.1, 28.3, 10.4 and 23.2 which the primary Judge referred to as “the non-pieceworker provisions of the Award”.

73    The Award is a modern award. It was first made by the predecessor to the Fair Work Commission, the Australian Industrial Relations Commission (“AIRC”), pursuant to the award modernisation process provided in Part 10A of the former Workplace Relations Act 1996 (Cth) (“WR Act”). Modern awards made under the award modernisation process are deemed to be modern awards under the FW Act. For present purposes, it is not necessary to refer to the award modernisation process in any detail. It is sufficient to observe that the AIRC was, in the award modernisation process, required to comply with s 576A(2) of the WR Act which required, inter alia, that “together with any legislated employment standards, [modern awards] must provide a fair minimum safety net of enforceable terms and conditions of employment for employees”. That requirement is reflected in s 134(1) of the FW Act which requires that the FWC “must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions…” and also s 138 of the FW Act. Although the award modernisation process largely pre-dated the enactment of the FW Act, the commencement of the operation of modern awards was timed to coordinate with the commencement of the scheme for award regulation enabled by the FW Act (see further the discussion in National Retail Association v Fair Work Commission and Another (2014) 225 FCR 154 at [2] and [9], Collier, Bromberg and Katzmann JJ).

74    In that context, the Award must be construed as prescribing the minimum entitlement to remuneration of all employees within its coverage, including those working as pieceworkers. A contrary construction should not be adopted because to do so would entail an acceptance that the AIRC ignored or failed to perform the statutory tasks required of it.

75    The primary Judge was cognisant of the requirement that modern awards must provide a fair minimum safety net of terms and conditions (see at [24]). As I perceive it, it was in the context of that recognition (at [140]) that his Honour considered that cl 15.2 was protective of employees and is to be construed as imposing an obligation on an employer to pay the prescribed piecework rate “at least at the minimum level”.

76    The primary Judge’s rejection of the construction contended for by the FWO is the subject of ground 1(a) of the FWO’s Notice of Appeal. On the construction contended for by the FWO, an employee who is not a party to an agreement which requires the payment of the prescribed piecework rate is entitled to be paid the minimum hourly rates provided by cl 14 or cl 16 (junior employees) as well as, where applicable, other entitlements to remuneration including for work on public holidays and a casual loading.

77    The position adopted by the primary Judge and the construction contended for by the FWO give rise to constructional choices.

78    The available constructional choices should be resolved by reference to the text of cl 15, construed in light of its context and purpose. Additionally, the historical predecessor provision to cl 15 and the reason or reasons of the AIRC for the amendment of cl 15 into the form presently under consideration, are relevant.

79    Dealing with context, and in particular, the structure of the Award, it is convenient to commence with those arrangements made by the Award which put in place what I would call a “time-based system of remuneration”.

80    Clause 14 of the Award is headed “Minimum Wages”. The clause specifies the minimum weekly or hourly wage for “an adult employee” and, in conjunction with Schedule C and D, the minimum rates of pay for employees on a “supported wage” or a “training wage”. Clause 16 deals with the minimum rate of pay for junior employees. Clause 22.1 specifies the ordinary hours of work. Clause 22.2 provides for shift work and a penalty payment for the working of an afternoon or night shift. Clause 23 provides for meal breaks including for the payment of penalty rates if work is required to be performed during a meal break. Clause 24.2 provides for overtime to be worked at penalty rates. Clause 28.3 provides for work performed on public holidays to be paid at penalty rates. Clause 10.4 deals with the payment of a casual loading.

81    These clauses are part of a time-based system of remuneration under which an employee is remunerated by reference to the number of hours worked and the time when work is performed. Time-based remuneration is standard in awards and industrial agreements. However, some awards, including the Award, provide for employers and employees to elect to be remunerated by reference to the work tasks performed by the employee rather than the time spent working. Employees remunerated under that system are commonly referred to as pieceworkers. Clause 15 of the Award provides for work to be remunerated under such an alternative remuneration system.

82    Access to time-based entitlements under the Award require no election to be made that the work of the employee be remunerated by reference to the time-based system of remuneration in the Award. In contrast, access to the task-based system of remuneration under the Award requires the agreement of the employer and the employee. That is addressed in cl 15. It may be expected, therefore, that given that a time-based system of remuneration is the default position under the Award, that the Award would provide for that system to become inoperative should a piecework-based remuneration system be engaged and operative in respect of the work performed by a particular employee. That cl 15 adopts that position, is reflected in the terms of cl 15.4 and cl 15.5 (although not as comprehensively as it might have been).

83    Having set out the basic structure, it is convenient then to examine the history of cl 15.

84    The Award was first made by the AIRC on 3 April 2009 pursuant to a decision of that date ([2009] AIRCFB 345). The Award was made on the basis that it would not commence its operation until 1 January 2010 (when ss 45-49 of the FW Act dealing with modern awards commenced). When first made, cl 15 of the Award relevantly provided (emphasis added):

15.1    A full-time, part-time or casual employee may enter into an agreement to be paid piecework rates instead of the rate of pay which would otherwise apply to the type of employment and to the work performed by the employee.

15.2    Work may only be paid for at piecework rates where the piecework rates fixed by agreement enable the average employee working the ordinary hours of work to earn at least 15% more than the minimum hourly rate prescribed by this award for the type of employment and the work to be performed.

15.3    The piecework rates fixed in accordance with the requirements of these provisions will be paid for all work performed in accordance with the piecework agreement.

15.4    Where the earnings of an employee paid at piecework rates fall below the ordinary time rates prescribed by this award for more than three consecutive ordinary working days, the piecework agreement may be terminated by either party.

15.5    Agreements for payment by piecework rates must be recorded in writing and signed by the employee and the employer. The agreement must record the type of employment of the employee, the work to be performed, the appropriate minimum hourly rate for the type of employment and work to be performed, the times when the work is to be performed, the piecework rate payable and the duration of the agreement.

15.6    In no case will a full-time, part-time or casual employee working under a piecework agreement be paid less than the prescribed ordinary rate payable to the employee for the hours of worked performed.

85    Before the Award commenced its operation, it was varied including by the wholesale replacement of cl 15 with a new clause in the form of that presently under consideration. That variation occurred pursuant to a decision of the AIRC made on 23 December 2009 ([2009] AIRCFB 966) upon the AIRC resolving two variation applications. What was in issue between the industrial parties to the Award is set out at [18] and [19] of the AIRC’s decision. Although the terms of the former cl 15 were wholly replaced, it would seem from the matters at issue between the parties and the reasons given by the AIRC that, by the variation, the AIRC intended to make one substantive change. That change is reflected in the removal of the terms of the former cl 15.6 and the insertion of the terms thereafter found in cl 15.9. The effect of that change was to remove the former guarantee given to an employee working under a piecework agreement that the employee would not be paid less than the prescribed ordinary rate payable to the employee (for example under cl 14) for the hours of work performed. For current purposes nothing of significance turns on that change. The other change that may be noted, but which was not the focus of the AIRC’s reasons, is that an additional requirement was added that the agreement must have been genuinely made without coercion or duress. That addition is reflected in cl 15.6. The addition of that safeguard is of some relevance for current purposes. What is also of significance for current purposes is that the former cl 15.1 to cl 15.3 addressed subject matters which are then addressed by cl 15.1 to cl 15.5 in the amended Award without any suggestion in the decision of the AIRC that the matters there addressed were intended to be materially altered.

86    There is a conceptual difference of some importance between the construction adopted by the primary Judge and that contended for by the FWO. On the primary Judge’s construction of cl 15.1 to cl 15.5, once an employer and an employee elect by an agreement that the employer be paid under a piecework arrangement (whether compliant or not with the requirement contained in cl 15.2 that the rate of pay be at least the prescribed piecework rate), cl 15 is engaged and the time-based system of remuneration in the Award is rendered inapplicable to that employment. On the FWO’s approach, cl 15 is only engaged and the time-based system of remuneration is only rendered inapplicable, where an agreement compliant with the requirements of cl 15 exists, including the requirement in cl 15.2 that the piecework rate fixed by the agreement is at least the prescribed piecework rate.

87    In my view, and with respect to the primary Judge, the view that he adopted is, by reference to the text, context and history of cl 15, not the preferable construction. I appreciate and should record that, in my view, the primary Judge was at least to some extent led into error by the way in which the FWO put its contentions. Additionally, it does not appear that the primary Judge had the benefit of being taken to the history of cl 15.

88    There are a number of reasons why I differ from the approach taken by the primary Judge. First, the structure of the Award shows that cl 15 makes available an exception to the standard remunerative scheme of the Award. On the approach taken by the primary Judge, the exception becomes operative on the mere election of the employer and the employee for the employee to be paid a piecework rate. However, the text of cl 15 does not merely refer to an election. It requires an agreement and makes specific provision for both the content of the agreement and the manner in which it is to be made. It requires an agreement that is signed and in writing, genuinely made without coercion or duress and which includes as a term, an obligation that the employer pay at least the rate specified in the first sentence of cl 15.2: see cll 15.2, 15.6 and 15.7 (and where applicable in relation to a casual employee, cl 15.3). The ordinary meaning of the text of cl 15 as well as the discernible purpose of the clause, on which I will say more of shortly, supports the view that those requirements are intended as safeguard conditions necessary to engage the operation of cl 15. They are not merely requirements the breach of which may be subject to penalty.

89    In my view, the first sentence of cl 15.2 is descriptive of the requisite content of an agreement necessary to engage the operation of cl 15. In contrast, the primary Judge (incorrectly and at the behest of the FWO) treated the first sentence as having different work to do. His Honour construed that first sentence as being merely proscriptive - as imposing an obligation upon the employer to make an agreement with the employee in which the rate fixed was at least the prescribed piecework rate. The primary Judge determined that the consequence of a breach of that obligation was a contravention of s 45 of the FW Act and exposure to a civil penalty.

90    Whilst I appreciate that the mandatory language in the first sentence of cl 15.2 (“must enable”) lends some support to the view that the sentence is proscriptive, that text is entirely consistent with a description of a necessary condition for the engagement of cl 15. It describes what the necessary condition “must enable”.

91    It is unlikely that the sentence was intended to be proscriptive because a breach thereof would be a breach by both the employer and the employee. It would be entirely surprising if a provision intended to be protective of employee entitlements, was also intended to make an employee liable to a civil penalty for having made an agreement which provided for the employee to be paid less than the prescribed piecework rate required by the Award. Furthermore, the primary Judge’s approach involves the employer being penalised once for failing to make an agreement by which it is required to pay the prescribed piecework rate (under the first sentence of cl 15.2) and then penalised again for not paying the prescribed piecework rate under the second sentence of cl 15.2. Again, that consequence is unlikely to have been intended.

92    The better view is that the first sentence of cl 15.2 imposes no obligation at all but is intended to be descriptive of what an agreement must contain to be capable of engaging cl 15 and displacing the standard remuneration obligations in the Award. Once that is realised, what seems to have been the primary Judge’s main reason for rejecting the construction which I prefer, falls away. On the construction I prefer, there would be no conflict with the principle identified at [147] of the primary Judge’s reasons, to the effect that where legislation provides for a penalty in the event of non-compliance with a statutory command, it is presumed that the statutory penalty is intended to cover the field in terms of consequences and not render acts in contravention of the statute illegal or invalid.

93    Second, the construction that I prefer, is consistent with the language of cl 15.1 to cl 15.3 of the historical predecessor of cl 15. In particular the text in the former cl 15.2 makes it clear that the clause is only engaged (ie “Work may only be paid for at piecework rates”) “where the piecework rates fixed by agreement enable [the employee to earn the prescribed piecework rate]”. That requirement is clearly a condition on the capacity of the employer to utilise the piecework payment arrangements provided by the clause. As I have said, there is no indication in the relevant decision of the AIRC that the operation and effect of those former sub-clauses was intended to be materially, let alone fundamentally, changed.

94    Third, the construction I prefer permits the second sentence of cl 15.1 to be given its plain meaning. Where a compliant agreement (an agreement with the content required by the first sentence of cl 15.2) is extant, the second sentence of cl 15.2 obliges the employer to pay the “piecework rate agreed” to be paid under the agreement. On the construction I prefer, “the piecework rate agreed” means precisely that.

95    In contrast, the primary Judge’s approach requires a non-grammatical construction which, in essence replaces the phrase “the piecework rate agreed” in the second sentence of cl 15.2 with the phrase described by the primary Judge (at [145]) as “the minimum piecework rate” being not the rate actually agreed but the rate that should have been agreed as a minimum to comply with the requirement of the first sentence of the clause.

96    The reasoning of the primary Judge for that view is set out at [138]-[140]. There are in my respectful view two difficulties. First, the primary Judge’s analysis at [138]-[139] entirely ignores the possibility that the actual rate agreed under the agreement made by the employer and the employee may be higher than the minimum prescribed piecework rate. The primary Judge’s preferred construction does not encompass that possibility and would result in there being no obligation for the agreed rate to be paid where the agreed rate is higher than the minimum prescribed piecework rate.

97    Second, I appreciate that the primary Judge would have been entitled to strain for his preferred construction in order to enable the intended purpose of the provision to be achieved. As I said in Teys Australia Beenleigh Pty Ltd v Australasian Meat Industry Employees Union (No 2) [2016] FCA 2 at [91] by reference to a survey of the authorities (dealing with statutory construction but nevertheless here applicable), recourse to context (including purpose) may disclose that the ordinary grammatical meaning of the words used was not intended. The primary Judge justified his adoption of an ungrammatical meaning of the word “agreed” by reference to what his Honour regarded was disclosed by the intended purpose of the Award. In that regard the primary Judge said this at [140]:

The piecework provisions of the Award, seen as a whole, attempt to balance the interests of employers with the risk that employees will be left vulnerable to exploitation. However, the requirements to fix and pay at least minimum piecework rates are protective of employees, and cl 15.2 should be construed in light of that protective purpose.

98    I respectfully agree with the primary Judge that the Award seeks to balance the interests of employers to have work performed efficiently with, as the primary Judge put it, “the risk that employees will be left vulnerable to exploitation”. That risk is manifest where remuneration is fixed by reference to the valuation of the work task rather than the certainty and clarity of a time-based payment, particularly where the information necessary to undertake the valuation is unlikely to be known or understood by the employee. The formula for fixing the piecework rate in cl 15.2 is a testament to the vulnerability of the employee and therefore the capacity for exploitation involved in the piecework-based system of remuneration provided for by the clause.

99    It is for that reason that, in my view, rigorous safeguards have been intentionally built in so that cl 15 is not engaged without the conditions required by cl 15.1 to cl 15.7 being satisfied. Rather than support the purpose the primary Judge correctly identified, his Honour’s construction serves to undermine the effectuation of that purpose.

100    A construction which better effectuates that purpose is the construction which I prefer. That construction is also to be preferred because, and importantly, it is faithful to both the text and intended operation of the clause as reflected by the history of the provision. It is helpful to recall the observations made by Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation (1981) 147 CLR 297 at 321:

If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.

101    Accordingly, ground 1(a) of the FWO’s Notice of Appeal should be upheld.

102    Ground 1(b) asserts error in the primary Judge’s determination that cl 15 is operative despite an agreement not being in writing as required by cl 15.7 of the Award. It follows from my reasoning in relation to ground 1(a) that if this ground is to be entertained the ground should also be upheld. A question arose on the appeal as to whether this ground has been raised inconsistently with the way the FWO ran its case below. I shall return to that issue later.

103    Grounds 2 to 12 and ground 14 deal with the extent of the contraventions of cl 15.2 found by the primary Judge and the asserted accessorial liability of the Second Respondent (“Marland Mushrooms”) and the Third Respondent (“Mr Marland”) for the primary contravention by the employer HRS Country of cl 15, as found by the primary Judge. Contrary to the conclusion that I have arrived at, each of those grounds is based on the proposition that a failure to make an agreement compliant with cl 15.2 involves a contravention of that clause. For that reason, each of those grounds should be dismissed. In those circumstances it also becomes unnecessary to deal with the Amended Notice of Contention of Marland Mushrooms and Mr Marland.

104    That leaves appeal ground 13 which relevantly asserts that the primary Judge erred in failing to find that HRS Country contravened the following provisions of the Award:

(1)    clause 14.1 of the Award dealing with the minimum rates of pay for adult employees;

(1)    clauses A.2 and A.3 of Schedule A and 16.1 of the Award dealing with minimum rates of pay for junior employees;

(2)    clauses 28.3 and A.7 of Schedule A of the Award dealing with rates of pay on public holidays;

(3)    clauses 10.4(b) and A.5 of Schedule A of the Award dealing with the casual loading; and

(4)    clause 23.2 of the Award dealing with rest breaks.

105    Appeal ground 13(b) alleges that the primary Judge erred in failing to find Marland Mushrooms and Mr Marland accessorily liable for the contraventions of HRS Country referred to in appeal ground 13(a).

106    Having come to the view that cl 15 was operative and that therefore the obligations imposed by the Award on HRS Country in relation to time-based workers were inapplicable, the primary Judge (at [149]) rejected the FWO’s case that the Award provisions the subject of appeal ground 13(a) were contravened by HRS Country. The primary Judge did not expressly address whether Marland Mushrooms and Mr Marland had contravened those provisions as accessories. However, the primary Judge’s implied rejection of that part of the FWO’s case must follow from his Honour’s rejection of the FWO’s case that the primary contraventions by HRS Country had occurred. Consequently, the primary Judge made no findings of contravention by HRS Country, Marland Mushrooms or Mr Marland of those provisions of the Award.

107    In so far as appeal grounds 13(a) and (b) contest the primary Judge’s rejection of the FWO’s case that HRS Country, Marland Mushrooms and Mr Marland contravened the award provisions specified in appeal ground 13(a), those grounds of appeal should be upheld in part. Although those grounds express the primary Judge’s error as being a failure to find contraventions of the Award, they must be understood as at least in part raising, as an error, the primary Judge’s rejection of the contraventions asserted by the FWO.

108    Having adopted the construction of cl 15 which he did, the primary Judge regarded the provisions which the FWO asserted had been contravened as inapplicable. For that reason, his Honour appears to have given no further consideration to whether the contraventions asserted were made out on the evidence. As I consider that his Honour was wrong to regard the award provisions relied upon by the FWO as inapplicable, I consider that his Honour was wrong to reject the primary and accessorial contraventions contended for by the FWO on that basis.

109    That conclusion does not, however, mean that findings of either primary or accessorial contraventions of the provisions listed in appeal ground 13(a) should have been made.

110    An issue arises as to whether it would be appropriate for those matters to be determined on appeal or alternatively be remitted to the primary Judge for determination. Ordinarily, considerations of the kind here in question are best left to be determined by the primary Judge. There is however a question in my mind as to whether, given the way that the FWO’s case was run below (including the manner in which it was pleaded) in relation to accessorial liability, there would be futility in remitting to the primary Judge the task of determining whether Marland Mushrooms and Mr Marland contravened the Award provisions listed in appeal ground 13(a).

111    In circumstances where the majority view of the Court is that the appeal should be dismissed, there is no utility in me resolving that question or the issue earlier raised as to whether the FWO requires the Court’s leave to agitate appeal ground 1(b).

112    For all of those reasons, I would uphold appeal ground 1(a) and, assuming that the question of leave was resolved in the FWO’s favour, uphold appeal ground 1(b). I would also uphold, in part appeal grounds 13(a) and (b). I would otherwise dismiss the appeal.

Associate:    

Dated:    16 August 2019