FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v W.K.O. Pty Ltd [2012] FCA 1129

THE COURT DECLARES THAT:

1.    The first respondent contravened:

1.1    section 44(1) of the Fair Work Act 2009 (Cth) (FW Act) by denying Ms Joyce Nederpel’s entitlement to unpaid parental leave pursuant to s 70 of the FW Act;

1.2    section 45 of the FW Act by:

1.2.1    contravening cl 10.4(d) of the Children’s Services Award 2010 (Award); and

1.2.2    contravening cl 10.4(c) of the Award;

1.3    section 345(1) of the FW Act by recklessly making a false or misleading representation or representations about:

1.3.1    Ms Nederpel’s workplace rights, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the National Employment Standards (NES) in the FW Act; and

1.3.2    the exercise, or the effect of the exercise, of a workplace right of Ms Nederpel, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act.

1.4    Section 340(1) of the FW Act by taking adverse action against Ms Nederpel because Ms Nederpel had proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES in the FW Act.

1.5    Section 351(1) of the FW Act by taking adverse action against Ms Nederpel because she was pregnant.

2.    The second respondent was involved in the first respondent’s contraventions of the FW Act and, thereby, by reason of s 550(1) of the FW Act, contravened:

2.1    section 44(1) of the FW Act by denying Ms Nederpel’s entitlement to unpaid parental leave pursuant to s 70 of the FW Act;

2.2    section 45 of the FW Act by:

2.2.1    contravening cl 10.4(d) of the Award; and

2.2.2    contravening cl 10.4(c) of the Award.

2.3    section 345(1) of the FW Act by recklessly making a false or misleading representation or representations about:

2.3.1    Ms Nederpel’s workplace rights, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act; and

2.3.2    the exercise, or the effect of the exercise, of a workplace right of Ms Nederpel, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act.

2.4    Section 340(1) of the FW Act by taking adverse action against Ms Nederpel because Ms Nederpel had proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES in the FW Act.

2.5    Section 351(1) of the FW Act by taking adverse action against Ms Nederpel because she was pregnant.

The Court orders that:

1.    Pursuant to s 546(1) of the FW Act, the first respondent pay a penalty of $13,200 in respect of the contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act.

2.    Pursuant to s 545(2)(b) of the FW Act, the first respondent pay compensation to Ms Nederpel for economic and non-economic loss of $5,000 gross.

3.    The penalties and compensation be paid as follows:

(a)    the compensation of $5,000 be paid to Ms Nederpel within 30 days of the decision of the Court;

(b)    the penalty of $13,200 be paid to the Consolidated Revenue Fund, in accordance with s 546(3) of the FW Act, over the subsequent five month period from the date of the decision of the Court in equal instalments of $2,640.

4.    Pursuant to s 546(1) of the FW Act, the second respondent pay a penalty of $13,200 in respect of the contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act.

5.    Pursuant to s 545(2)(b) of the FW Act, the second respondent pay compensation to Ms Nederpel for economic and non-economic loss of $5,000 gross.

6.    Orders 4 and 5 be suspended unless the first respondent fails to pay the penalty and compensation the subject of orders 1 and 2 within the time specified in order 3, in which case the second respondent pay the penalty and compensation the subject of orders 4 and 5 within 30 days of the default of the first respondent.

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

REASONS FOR JUDGMENT

Contravention of fair work act 2009 (cth)

1    This proceeding was commenced by an originating application filed in the Court on 22 March 2012. On 23 August 2012 the parties filed a statement of agreed facts, admissions of contraventions and recommendations as to penalty. The first respondent (W.K.O. Pty Ltd, WKO or the company) and the second respondent (Ms O’Leary) one of the two directors of WKO, the operators of a child care centre, admitted to contravening various provisions of the Fair Work Act 2009 (Cth) (FW Act) and the Children’s Services Award 2010 (Award) relating to the unilateral reduction in a pregnant employee’s hours and associated rights in relation to parental leave.

background

2    The applicant, the Fair Work Ombudsman (FWO), is a statutory appointee of the Commonwealth under s 687, a Fair Work Inspector under s 701, and a person with standing and authority to bring these proceedings pursuant to s 539 to apply for orders, including penalties and compensation, in relation to contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act.

3    WKO is a company incorporated under the Corporations Act 2001 (Cth) and, from about 12 July 2010, carried on the business of a child care centre known as the Dinky Di Child Care Centre at 12 Barnes Street, Innaloo, Western Australia. From about 12 July 2010, WKO was the “employer” for the purpose of the FW Act, until about 5 November 2010, of Ms Joyce Nederpel.

4    Ms O’Leary is one of two directors of WKO and at material times was involved in the day to day operation of the Dinky Di Child Care Centre, responsible for the employment, management and control of employees of the business, and responsible for the overall direction, management and supervision of the company’s operations. Ms O’Leary at all times acted as an officer of WKO, so that under s 793(1) of the FW Act conduct engaged in by her is also taken to have been engaged in by the company.

5    In summary, it is admitted that, after Ms Nederpel applied for unpaid parental leave, Ms O’Leary, on behalf of WKO reduced Ms Nederpel’s hours of work and refused her entitlement to unpaid parental leave for reasons that included the fact that Ms Nederpel had proposed to exercise her workplace right to parental leave and because she was pregnant. It is also accepted that Ms O’Leary, on behalf of WKO, recklessly misrepresented to Ms Nederpel that she was not entitled to unpaid parental leave because she had not worked for WKO for 12 months, notwithstanding that there had been a transfer of business to WKO and, under the FW Act, Ms Nederpel was a “transferring employee”. The Award was also contravened.

6    WKO and Ms O’Leary admit the following contraventions of the FW Act, namely of:

(a)    section 44(1), by denying Ms Nederpel’s entitlement to unpaid parental leave pursuant to s 70;

(b)    section 45, by contravening cl 10.4(d) and cl 10.4(c) of the Award;

(c)    section 345(1), by recklessly making a false or misleading representation about:

(i)    Ms Nederpel’s workplace rights, namely, her entitlement to the benefit of a workplace law, being the FW Act, in particular, the National Employment Standards (NES), and her entitlement to take unpaid parental leave under the FW Act;

(ii)    the exercise, or the effective exercise, of a workplace right of Ms Nederpel, namely, her entitlement to the benefit of a workplace law, being the FW Act, in particular, the NES, and her entitlement to take unpaid parental leave under the FW Act;

(d)    section 340(1), by taking adverse action against Ms Nederpel because she proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES; and

(e)    section 351(1), by taking adverse action against Ms Nederpel because she was pregnant.

agreed facts as to Circumstances of employment

7    The parties have agreed the relevant circumstances of employment. Ms Nederpel commenced employment with WKO as a qualified child care worker on about 12 July 2010 and ceased employment around 5 November 2010. Ms Nederpel’s written employment agreement contained terms including, but not limited to, terms of the following effect:

(a)    Ms Nederpel would be employed on a permanent part time basis as a qualified child care worker;

(b)    Ms Nederpel would work Monday to Friday (inclusive);

(c)    Ms Nederpel would work 7.5 hours per day Monday to Friday (inclusive);

(d)    WKO would pay Ms Nederpel $20.57 per hour for each ordinary hour worked;

(e)    Ms Nederpel would perform the following duties, among other things:

(i)    formulate, facilitate the implementation of, and evaluate programmes that would enhance children’s development;

(ii)    liaise with families;

(iii)    identify and document developmental needs for individual children;

(iv)    participate in the documentation of observing children’s development;

(v)    supervise children at all times and assist other staff members when required;

(vi)    respond to ill health of children and use hygienic practices to prevent the spread of infectious disease;

(vii)    maintain a safe environment for the children in her care;

(viii)    ensure records were maintained for each child in her care;

(ix)    be responsible for the development and implementation of daily care routines for the children in her care; and

(x)    implement policies and procedures.

8    At all material times, WKO was bound by the FW Act as well as the Award, and Ms Nederpel performed duties consistent with the classification of a “Children’s Services Employee level 4” under the Award, and was entitled to the benefit of the minimum terms and conditions of employment contained in the Award including, but not limited to, that:

(a)    upon initial engagement, Ms Nederpel and WKO were required to agree in writing on a regular pattern of work, which specified the hours to be worked each day, the days of the week to be worked and the actual starting and finishing times each day (part time employment – cl 10.4(c)); and

(b)    Ms Nederpel’s hours of work could not be changed by the WKO without Ms Nederpel’s agreement in writing (part time employment – cl 10.4(d)).

9    At all material times, Ms Nederpel was entitled to the benefit of the minimum terms and conditions of employment contained in the NES, contained in Ch 2 Pt 2-2 of the FW Act, including but not limited to:

(a)    a right to 12 months’ unpaid parental leave after 12 months’ continuous service with her employer (s 67, s 70, s 71 and s 74 of the FW Act);

(b)    a right to reduce the period of unpaid parental leave taken with the agreement of her employer (s 77 of the FW Act); and

(c)    a right to request flexible working arrangements after the birth of her child (s 65 of the FW Act).

10    By virtue of its inclusion in the FW Act, the provisions of the NES constitute a “workplace law” as defined by s 12 of the FW Act to which Ms Nederpel was entitled to the benefit of. Therefore, Ms Nederpel had a “workplace right” as defined by s 341(1)(a) and s 12 of the FW Act.

11    An unrelated company, Blakiston Chong Pty Ltd (ACN 123 269 910) (Blakiston), was a corporation that operated the Dinky Di Child Care Centre from on or about 6 July 2007 until 9 July 2010 when the business was sold to WKO, and was also an “employer” as defined in the FW Act. Blakiston employed Ms Nederpel from on or about 15 September 2008 until 9 July 2010, including in the capacity of a qualified child care worker.

12    On or about 9 July 2010 a transfer of the business from Blakiston to WKO was completed within the meaning of s 311(1) of the FW Act. Ms Nederpel was a “transferring employee” for the purposes of s 311(2), her employment was transferred from Blakiston to WKO within the meaning of s 22(7), and her service with Blakiston counted as service with WKO. As a result, Ms Nederpel had in excess of 12 months’ deemed continuous service with the company at material times. Thus, at the time of her expected birth of her child Ms Nederpel would have had in excess of two years continuous service with the predecessor employer that owned the business and WKO, and so she was entitled to parental leave under the FW Act.

agreed facts as to Workplace conduct

13    The parties have agreed relevant facts as to workplace conduct. From around June 2010, Ms Nederpel told Ms O’Leary that she was pregnant. By reason of Ms O’Leary being informed of her pregnancy, WKO knew that Ms Nederpel was pregnant.

14    On or about 6 August 2010, Ms Nederpel gave WKO notice, in writing on an application for annual leave form, of her intention to take unpaid parental leave, with such leave to commence on 4 January 2011. Ms O’Leary approved Ms Nederpel’s application for annual leave and unpaid parental leave.

15    As at 6 August 2010, Ms Nederpel had an entitlement to 12 months’ unpaid parental leave pursuant to the NES.

16    On or about 31 August 2010, WKO unilaterally reduced Ms Nederpel’s hours of work from 7.5 hours on Tuesdays and Wednesdays to zero and increased the hours of another qualified child care worker, from zero hours on Tuesdays and Wednesdays to 7.5 hours.

17    From the week commencing 6 September 2010 until the week ending 5 November 2010, WKO unilaterally varied Ms Nederpel’s hours of work by rostering her to work at the Dinky Di Child Care Centre, Mondays, Thursdays and Fridays, 7.5 hours each day commencing and finishing at various times in accordance with a roster. So effectively WKO reduced her hours from working five days per week to three days per week which equated to a reduction by 15 hours.

18    On or about 14 October 2010, Ms O’Leary on behalf of WKO denied Ms Nederpel’s entitlement to unpaid parental leave and said to Ms Nederpel in words to the effect: “you are not entitled to maternity leave because you haven’t got 12 months’ service with us and you need to resign” which the parties agree was a statement which constituted a misrepresentation pursuant to s 345(1) of the FW Act, with respect to Ms Nederpel’s workplace right to unpaid parental leave.

19    On 22 October 2010, Ms Nederpel gave two weeks’ notice to WKO that her employment with WKO would cease. But for the unilateral change in Ms Nederpel’s hours and the denial of her entitlement to unpaid parental leave, and that Ms Nederpel would have not given notice of the cessation of her employment with WKO.

20    On or about 2 November 2010, Ms O’Leary contacted the Fair Work Infoline and inquired whether an employee is entitled to parental leave in circumstances where the employee had been employed for two years by the previous owner of the business and she received advice to the effect that the service with the old employer may or may not count for the purpose of parental leave, and that Ms O’Leary should seek legal advice regarding the period of service that should be taken into account, and was referred to a law firm in Western Australia.

21    Despite the advice received from the Fair Work Infoline, Ms O’Leary, on behalf of WKO “failed, refused or neglected” to seek advice on Ms Nederpel’s entitlement to unpaid parental leave in that she failed to seek advice specific to WKO’s obligations in relation to Ms Nederpel’s entitlement to unpaid parental leave, in circumstances where Ms Nederpel had more than 12 months’ continuous service with Blakiston and WKO at the Dinky Di Child Care Centre. She did not seek advice from an employer association, an industry association, a workplace relations’, employment or industrial expert, or an Australian legal practitioner.

22    The parties agree that the refusal, failure or neglect of Ms O’Leary to seek advice, on behalf of WKO was reckless in circumstances, especially as Ms O’Leary knew that Ms Nederpel was employed at the centre when the centre was operated by Blakiston and had more than 12 months’ continuous service at the centre, Ms O’Leary failed to seek advice, and Ms O’Leary ought to have known that an employee who had at least 12 months’ continuous service at the centre would be entitled to unpaid parental leave.

23    At the penalty hearing, counsel for the FWO said that had the respondents not acted unlawfully towards Ms Nederpel by reducing her hours, effectively disentitling her to parental leave and telling her that she had to resign, Ms Nederpel would not have submitted her notice of resignation. The parties agree that Ms O’Leary, on behalf of WKO constructively dismissed Ms Nederpel.

Agreed contraventions and admissions

24    Admissions: As a result of the agreed facts, the parties agree the following contraventions of the FW Act involve the failure to specify start and finish times, unilateral change to the hours of work, denial of unpaid parental leave entitlement, workplace rights, misrepresentations and pregnancy discrimination.

25    Ms O’Leary admits that she was, by way of her acts or omissions as set out above, involved in, within the meaning of s 550(2), each of the contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act, and is, therefore, taken to have contravened each of these provisions pursuant to s 550(1) of the FW Act.

26    Failure to specify start and finish times: WKO admits that it contravened cl 10.4(c) of the Award by failing to specify Ms Nederpel’s starting and finishing times in the employment and as such, the company admits that it contravened s 45 of the FW Act. It is admitted by Ms O’Leary that she had actual knowledge that Ms Nederpel’s starting and finishing times were not specified in the agreement.

27    Unilateral change to hours of work: WKO admits that it contravened cl 10.4(d) of the Award by unilaterally changing Ms Nederpel’s hours of work on Tuesdays and Wednesdays from 7.5 hours each day to zero from on or about 6 September 2010 until 5 November 2010 and therefore admits that it contravened s 45 of the FW Act. It is admitted by Ms O’Leary that she had actual knowledge and admits that she was knowingly concerned in WKO’s contraventions of s 45 of the FW Act. Counsel for the FWO stated that it contravened the Award as the respondents required Ms Nederpel’s written agreement in advance before reducing her hours, and such written agreement was not obtained.

28    Denial of unpaid parental leave entitlement: WKO admits that it breached s 44(1) because it contravened a provision of Div 5 titled “parental leave and related entitlements” contained in the NES, and in particular, by denying Ms Nederpel’s unpaid parental leave entitlement under s 70 of the FW Act.

29    Ms O’Leary admits that she was knowingly concerned in WKO’s contravention of s 44 of the FW Act in that she had actual knowledge that Ms Nederpel was pregnant, unpaid parental leave was requested, she had been employed at the Centre for more than 12 months and the entitlement to unpaid parental leave was denied.

30    Workplace rights: The parties agree that pursuant to the operation of s 793 of the FW Act, WKO injured Ms Nederpel in her employment by:

(a)    reducing her hours of work between 6 September 2010 and 5 November 2010;

(b)    reducing her hours of work between 6 September 2010 and 5 November 2010 and consequently increasing the hours of work of another employee, Ms Janet Johnson;

(c)    denying Ms Nederpel’s unpaid parental leave entitlement on or about 14 October 2010; and

(d)    forcing Ms Nederpel to cease her employment with the company and therefore constructively dismissing Ms Nederpel.

31    By reason of the facts referred to in (a) to (d) of the previous paragraph, under the operation of s 793 of the FW Act, WKO altered the position of Ms Nederpel to her prejudice, and discriminated between Ms Nederpel and other employees of the company.

32    By reason of the operation of s 793 of the FW Act WKO dismissed Ms Nederpel by forcing her to cease her employment with the company and therefore constructively dismissing her.

33    The parties agree that the conduct referred to above at paras 30 to 32 constitutes adverse action within the meaning of s 342(1)(b), s 342(1)(c), s 342(1)(d) and s 342(1)(a) of the FW Act. WKO engaged in the conduct set out at paras 30 to 32, for reasons including because Ms Nederpel had proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES pursuant to s 341(1)(a) of the FW Act.

34    WKO admits that by reason of the facts and matters set out above that it contravened s 40(1)(a)(iii) of the FW Act, which is the section which prohibits adverse action on the basis of proposing to exercise a workplace right. Further, Ms O’Leary has actual knowledge of the matters discussed above and admits that she was knowingly concerned in the company’s contravention of s 340(1)(a)(iii) of the FW Act.

35    Misrepresentations: FWO admits that it contravened s 345(1)(a) and s 345(1)(b) of the FW Act when it recklessly made a false or misleading representations and about:

(a)    Ms Nederpel’s workplace rights, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, and in particular, the NES, and her entitlement to take unpaid parental leave under the FW Act; and

(b)    the exercise, or the effect of the exercise, of a workplace right of Ms Nederpel, namely, her entitlement to the benefit of a workplace law, being the FW Act, in particular, the NES, and her entitlement to take unpaid parental leave under the FW Act.

36    Pregnancy discrimination: WKO admits that it took adverse action against Ms Nederpel as set out in s 342(1)(a)-(d) of the FW Act in that the company:

    injured Ms Nederpel in her employment;

    prejudicially altered her position;

    discriminated between Ms Nederpel and other employees of WKO; and

    constructively dismissed Ms Nederpel,

for reasons including because Ms Nederpel was pregnant in contravention of s 351(1) of the FW Act. Ms O’Leary admits that she was knowingly concerned in WKO’s contravention of s 351(1).

37    The admitted adverse action of injuring Ms Nederpel, prejudicially altering her employment, discriminating between Ms Nederpel and other employees of WKO and constructively dismissing Ms Nederpel was due to the company:

(a)    reducing her hours of work between 6 September 2010 and 5 November 2010;

(b)    reducing her hours of work between 6 September 2010 and 5 November 2010 and consequently increasing the hours of work of another employee, Ms Johnson; and

(c)    forcing Ms Nederpel to cease her employment with WKO and therefore constructively dismissing Ms Nederpel.

PENALTY – GENERAL PRINCIPLES AND RECOMMENDED PENALTY

38    The parties’ joint penalty submissions submit the following general principles govern penalty. Subject to my later consideration and qualification concerning the function “intuitive synthesis” plays in the pecuniary penalty setting process, I generally accept the statement of the principles is correct.

39    Section 545(1) of the FW Act provides that the court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene a civil remedy provision. The power is not limited by the examples provided under s 545(2) of the FW Act. More specifically, s 546(1) provides that the court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision. There is a note to the section which provides a limitation that pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination.

40    Subsection 546(2) of the FW Act provides that the maximum penalty that may be imposed by the Court to be, in the case of an individual, 60 penalty units and in the case of a body corporate 300 penalty units. “Penalty unit” is defined in s 12 of the FW Act as having the same meaning as in the Crimes Act 1914 (Cth) (Crimes Act). Section 4AA of the Crimes Act defines “penalty unit” to be $110. Therefore, the maximum penalty that may be imposed by the Court on WKO is $33,000 for each contravention of the FW Act and the maximum penalty that may be imposed by the Court on Ms O’Leary for each contravention of the FW Act is $6,600.

41    By their joint submissions, the applicant and the respondents recommend to the Court that in relation to the admitted contraventions the total penalty to be imposed by the Court should be $13,200 (gross) in the case of WKO, and nil in the case of Ms O’Leary.

42    The parties suggest the following approach for the Court to follow in determining the appropriate penalty to impose:

(a)    The first step is for the Court is to identify the separate contraventions involved.

(b)    Each contravention of each separate obligation found in the FW Act, in relation to Ms Nederpel, is a separate contravention of a term of an applicable provision for the purposes of s 557.

(c)    Secondly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The parties’ joint position is that WKO and Ms O’Leary should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what WKO and Ms O’Leary did: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 (Australian Ophthalmic Supplies) at [46]. This task is distinct from and in addition to the final application of the “totality principle”: Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383 (Mornington Inn) at [41]-[46].

(d)    Thirdly, the Court may then consider an appropriate penalty to impose in respect of each course of conduct, having regard to all of the circumstances of the case.

(e)    Fourth and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions: See Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 (Kelly) at [30]; Australian Ophthalmic Supplies at [23], [71] and [102]. The Court should apply an “instinctive synthesis” in making this assessment: Australian Ophthalmic Supplies at [27], [55] and [78]. This is what is known as an application of the “totality principle”.

(f)    Further, an appropriate penalty should not be fixed by comparing penalties in other cases. That would be to risk adopting a fundamentally wrong approach. The choice of penalty must be dictated by the individual circumstances of the case. See: Australian Ophthalmic Supplies at [12]; Draffin v Construction, Forestry, Mining and Energy Union [2009] FCAFC 120; (2009) 189 IR 145 at [73].

43    In relation to the maximum penalty possible, the parties say in their joint submissions that WKO and Ms O’Leary have contravened seven provisions of the FW Act in total, and therefore the maximum penalty that the Court may impose on WKO is $230,000 and on Ms O’Leary is $46,200. The parties say that it is not inappropriate to consider the maximum penalties that could be imposed on WKO and Ms O’Leary, as part of the comparative exercise of assessing where the current contraventions sit: Mornington Inn at [88].

44    The parties jointly submit that the respondents conduct can be grouped into two types – the denial of unpaid parental leave and the reduction in hours. The parties say that s 557(1) of the FW Act provides for treating multiple contraventions of s 44 and s 45 involved in a course of conduct as a single contravention of each provision. They say that in this matter, the two contraventions of s 45(1) are separate and distinct as they arise from the contravention of two separate provisions of the Award. For the purposes of s 557, the statutory course of conduct provisions do not apply to contraventions of s 340(1), s 345 or s 351(1). The parties say, however, there is authority that criminal sentencing principles in regard to course of conduct apply to civil penalty provisions: see Mornington Inn at [41]-[42], [58] per Stone and Buchanan JJ.

45    It is open to the Court, the parties submit, to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential punishment of WKO and Ms O’Leary for the same or substantially similar conduct: see Pearce v The Queen [1998] HCA 57; (1998) 194 CLR 610 at [40], Johnson v R [2004] HCA 15; (2004) 205 ALR 346 (Johnson) at [27]–[34]; Australian Ophthalmic Supplies at [46] and [93]. The Full Court of the Federal Court in Australian Ophthalmic Supplies accepted that this approach is open to the Court in determining appropriate penalties at [46] and [72].

46    The parties’ joint position is that the factual background to the admitted contraventions of s 44(1), s 45, s 340(1), s 345 and s 351(1) of the FW Act is set out at paras 15 to 40 of the statement of agreed facts and summarised by the submissions in Pt 3. The FWO accepts that some of the seven contraventions set out at paras 6 to 37 above have common elements and this should be taken into account in considering an appropriate penalty to ensure WKO and Ms O’Leary are not punished more than once for the same or substantially similar conduct. Whilst the Court is not required to group contraventions, the FWO and the respondents consider that grouping is appropriate in this case and jointly suggest that the contraventions of the FW Act by WKO and Ms O’Leary could be grouped as falling into the following categories:

(a)    denial of Ms Nederpel’s entitlement to unpaid parental leave in contravention of:

(i)    the requirement in s 70 of the FW Act and hence in contravention of s  44 of the FW Act;

(ii)    the prohibition on recklessly making false or misleading representations about the workplace rights of an employee or the exercise, or effect of the exercise, of a workplace right, being Ms Nederpel’s entitlement to take unpaid parental leave under the FW Act, in contravention of s 345(1)(a) and s 345(1)(b) of the FW Act; and

(iii)    the prohibition on taking adverse action against Ms Nederpel for reasons including:

a.    because Ms Nederpel had proposed to exercise her workplace right, to unpaid parental leave pursuant to s 341(1)(a), in contravention of s 340(1)(a)(iii) of the FW Act; and

b.    because of her pregnancy in contravention of s 351(1) of the FW Act.

(denial of unpaid parental leave) (maximum penalty $33,000 for WKO and $6,600 for Ms O’Leary)

(b)    unilateral reduction of Ms Nederpel’s hours from 6 September 2010 to 5 November 2010 in contravention of:

(i)    clause 10.4(d) of the Award and hence in contravention of s 45 of the FW Act;

(ii)    the prohibition on taking adverse action against a Ms Nederpel for reasons including because Ms Nederpel had proposed to exercise her workplace right, to unpaid parental leave pursuant to s 341(1)(a), in contravention of s 340(1)(a)(iii) of the FW Act.

(unilateral reduction in hours) (maximum penalty $33,000 for WKO and $6,600 for Ms O’Leary)

47    FWO, WKO and Ms O’Leary recommend to the Court that the contravention of cl 10.4(c) of the Award, regarding the failure to specify Ms Nederpel’s starting and finishing times, is a technical contravention only, and that it is inappropriate in all the circumstances to impose a penalty in relation to this contravention.

48    The parties state that if the Court were to adopt the grouping approach outlined above, which, in essence, groups the contraventions into two groups, the maximum penalty for WKO would be $66,000 (2 x $33,000) and for Ms O’Leary would be $13,200 (2 x $6,600).

FACTORS RELEVANT TO PENALTY

49    In their joint submissions the parties submit there are at least three purposes for imposing civil penalties: punishment, deterrence and rehabilitation: Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 (Ponzio) at [93]. Generally speaking, and subject to my consideration below, I accept these submissions as accurate.

50    A non-exhaustive list of factors potentially relevant to the imposition of a penalty have been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (Mason), [26]-[59], and adopted in Kelly at [14], as follows:

(a)    the nature and extent of the conduct which led to the contraventions;

(b)    the circumstances in which the conduct took place;

(c)    the nature and extent of any loss or damage sustained as a result of the contravening conduct;

(d)    whether there had been similar previous conduct by the respondents;

(e)    whether the contraventions were properly distinct or arose out of the one course of conduct;

(f)    the size of the business enterprise involved;

(g)    whether or not the contravening conduct was deliberate;

(h)    whether senior management was involved in the contravening conduct;

(i)    whether the party committing the contravening conduct had exhibited contrition;

(j)    whether the party committing the contravening conduct had taken corrective action;

(k)    whether the party committing the contravening conduct had cooperated with the enforcement authorities;

(l)    the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and

(m)    the need for specific and general deterrence.    

51    The parties note that while the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Australian Ophthalmic Supplies at [91]; Rojas v Esselte Australia Pty Limited (No 2) [2008] FCA 1585; (2008) 177 IR 306 at [65].

52    In Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357 (Plancor) at [58] Lander and Branson JJ observed:

It is important not to overlook that the list of considerations identified in the passage from Kelly v Fitzpatrick cited above is a non-exhaustive list of considerations that may, but may not, be relevant and applicable in any particular case. As Buchanan J, sitting as a member of the Full Court, observed in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91] after referring to the list of factors identified in Kelly v Fitzpatrick:

Check lists of this kind can be useful providing they do not become transformed into 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.

(Emphasis in original.)

53    FWO and the respondents submit that in the circumstances of this matter it is useful to consider the factors identified above. FWO and the respondents consider that some of the factors speak for themselves and therefore not all of these factors are addressed in these submissions. There are, however, some that, in the view of the FWO and respondents, warrant particular examination in the circumstances of this case.

Nature and extent of the conduct which led to the contraventions

54    The parties say that the contravening conduct in this matter represents a failure to provide basic and important conditions and entitlements under the FW Act to an employee seeking to benefit from her entitlement to unpaid parental leave provided for under the NES. The conduct also represents a failure by an employer to ensure that the employee’s basic right to not have her hours unilaterally reduced was maintained. In relation to the unpaid parental leave, the fundamental nature of the contravening conduct displays WKO and Ms O’Leary’s lack of understanding of statutory obligations in circumstances where the respondents ought to have known that an employee who had at least 12 months’ continuous service would be entitled to unpaid parental leave.

55    The parties submit that the contravening conduct in this case can be traced to a single source, namely, Ms O’Leary, as the decisions and conduct of Ms O’Leary resulted in the contraventions occurring. Ms O’Leary was responsible for the day to day management, direction and control of WKO’s operations, which included appointing another employee, Ms Johnson, to work Ms Nederpel’s hours, when Ms Nederpel’s hours were unilaterally reduced and denying her entitlement to unpaid parental leave.

Circumstances in which the conduct took place

56    The parties submit that the contravening conduct took place when Ms Nederpel sought to exercise her right to unpaid parental leave. At the time the contravening conduct occurred, Ms Nederpel had a number of months left to work before the anticipated start of her unpaid parental leave. The denial of Ms Nederpel’s entitlement to unpaid leave and the unilateral reduction in her hours resulted in Ms Nederpel being constructively dismissed and left to mitigate the immediate financial losses she suffered firstly through the reduction in her hours and secondly as a result of her constructive dismissal.

Nature and extent of loss or damage

57    In relation to the unilateral reduction in hours, the parties say that the consequence was that Ms Nederpel suffered lost earnings amounting to approximately $1,542.75 (gross) prior to being able to mitigate her loss by obtaining casual employment. Further, Ms Nederpel suffered lost annual leave and an annual leave loading entitlement in the same period of approximately $154.08 (gross).

58    The parties say that had the unilateral change to hours of work not occurred, Ms Nederpel would have continued to work 7.5 hours per day on each of a Tuesday and Wednesday at the Centre between 6 September 2010 and 5 November 2010.

59    The consequences of denying Ms Nederpel’s entitlement to unpaid parental leave and unilaterally reducing her hours was that Ms Nederpel was constructively dismissed. It is agreed that had Ms Nederpel not been constructively dismissed on 5 November 2010, she would have reasonably expected to continue to work for WKO until 24 December 2010 before taking unpaid parental leave.

60    It is also agreed that Ms Nederpel suffered unmitigated economic loss of non-payment of payment in lieu of notice amounting to approximately $1,542.75.

61    Furthermore, by reason of the denial of Ms Nederpel’s entitlement to unpaid parental leave, Ms Nederpel suffered the following non-economic loss and damage:

(a)    being denied the opportunity to remain in WKO’s employ;

(b)    being denied the opportunity to return to work with WKO after her period of unpaid parental leave in January 2012;

(c)    being denied the opportunity to reach an agreement with WKO that she return to work with WKO prior to the expiration of her entitlement to 12 months’ unpaid leave in January 2012;

(d)    being denied the opportunity to request flexible working arrangements after she returned to work with WKO;

(e)    being denied the opportunity to have her child cared for at the premises of WKO when she returned to work; and

(f)    other forms of non-economic loss, including hurt, humiliation and inconvenience.

Similar previous conduct

62    The parties agree there is no evidence of any previous findings of contravention of Commonwealth workplace laws by WKO or Ms O’Leary.

Size of the business

63    The parties submit that at all material times, WKO carried on the business of Dinky Di Child Care Centre which operated out of one location and the FWO accepts that WKO was a small business operating in the childcare industry, which is not an industry in which high earnings or large profits are generally generated by small childcare operators such as WKO. Further, at at all material times, Ms O’Leary was one of the two directors of WKO.

64    The parties agree that the size of the business of WKO and Ms O’Leary is relevant to determining penalties and note that the statement in Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392 at [63] and [75] is apposite:

The size and financial resources of a contravener are factors to be taken into consideration in determining penalty, that penalty to be determined having regard to all of the relevant circumstances of the case. Macpherson and Kelly are not authorities to the contrary. In Kelly the Federal Court expressly adopted as a relevant and applicable consideration the size of the business enterprise involved, following this Court’s judgment in Harrington Corporation [footnote 83 omitted].

…

As with cases under the trade practices legislation where the financial resources of a contravener are considered to ensure that the penalty does not have an anti-competitive affect by removing potential competitors from the market, so in industrial law proceedings the financial resources of a contravener must also be considered. There would be a none too subtle irony in the imposition of a penalty which caused an employer to close a business, resulting in:

a)    unemployment, a circumstance potentially contrary to two of the principal objects of the WR Act, namely:

i)    “encouraging the pursuit of high employment; [footnote 104 omitted]; and

ii)    “protecting the competitive position of young people” and “promoting youth employment”; [footnote 105 omitted] or

b)    non-payment of entitlements.

Deliberateness of the contraventions

65    The parties say that there is no evidence that WKO or Ms O’Leary deliberately set out to contravene the FW Act. At most, Ms O’Leary was reckless in the contravening conduct. In relation to the denial of parental leave contravention it is admitted that Ms O’Leary ought to have known that an employee who had more than 12 months’ service at Dinky Di Child Care Centre was entitled to unpaid parental leave, however, as to whether Ms Nederpel had more than 12 months’ service with WKO, and so the question of whether Ms Nederpel was entitled to unpaid parental leave, was complicated by the transfer of business from Blakiston to WKO.

Involvement of senior management

66    The parties agree that Ms O’Leary was the “directing mind and will” of WKO. The nature and extent of the contravening conduct of Ms O’Leary are outlined above, and the parties say there is no evidence before the Court that the contraventions were attributable to any other person or agent.

Contrition, cooperation with enforcement authority and corrective action

67    It is agreed by the parties that there has been acceptance of wrongdoing by WKO and Ms O’Leary shown by various admissions made in respect of the contraventions of the FW Act as outlined in the statement of agreed facts and joint submissions. It is the parties’ joint position that the admission of liability and the statement of agreed facts that it is appropriate for Ms Nederpel to receive a payment of compensation in the circumstances are evidence of contrition for the contravening conduct.

68    The parties submit that as Ms O’Leary is the “directing mind and will” of WKO, and the proper legal position has been brought to her attention through these proceedings, it is unlikely that either she or WKO will be involved in similar contraventions in the future or that any other corrective action is required. WKO and Ms O’Leary did cooperate during the applicant’s investigation relating to this matter.

69    In the statement of agreed facts WKO and Ms O’Leary admit to seven contraventions of the FW Act (this is instead of the nine alleged contraventions in the applicant’s statement of claim, however, there was also factual overlap between the seven admitted contraventions and the remaining two non admitted contraventions of the FW Act). The statement of agreed facts eliminates the need for the parties to prepare for a contested liability hearing.

70    Counsel for the FWO said since the respondents entered an early plea and avoided a contested hearing, they ought to have a benefit of a 20 per cent discount in the maximum penalty that is generally applied in such circumstances. The parties say that where respondents have cooperated with the FWO and the Court and also make admissions early in the course of an investigation or soon after the commencement of proceedings it is appropriate to allow a discount on penalty (in the vicinity of 10% to 25%). However, consistent with the decision in Mornington Inn at [76] per Stone and Buchanan JJ:

the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.

71    WKO and Ms O’Leary have made admissions and spared the need for a contested liability hearing as well as showing some contrition. The parties submit accordingly, that a discount of 20%, should be applied to the penalty on the basis of their demonstrated cooperation, which shows some contrition, in these proceedings: Mornington Inn at [73]–[80]. The parties have factored this in to the recommended penalty, which I will soon turn, that includes a discount for these factors.

Ensuring compliance with minimum standards

72    In imposing a penalty, the parties state that it is imperative for the Court to set the penalty range that reinforces the fundamental importance of compliance with the NES and the general protections provision of the FW Act, which came into effect from 1 January 2010 and 1 July 2009 respectively.

73    They say that it is important that employers and senior management comply with minimum standards in respect of employees seeking to benefit from their entitlement to unpaid parental leave and to not have their hours of work unilaterally reduced.

General and specific deterrence

74    In their joint submissions, the parties state that both general and specific deterrence are important in the present case, and it is well-established that “the need for specific and general deterrence” is a factor that is relevant to the imposition of a penalty: see Mason [26]-[59]. Subject to my observation below, I accept this is generally so.

75    The role of general deterrence in determining the appropriate penalty is illustrated by the comments of Lander J in Ponzio at [93]:

In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.

76    Similarly in CPSU, The Community and Public Sector Union v Telstra Corporation Limited [2001] FCA 1364; (2001) 108 IR 228 where Finkelstein J said at [9]:

even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and act as a warning to others not to engage in similar conduct.

77    The contraventions in this case, the parties say, concern the minimum entitlements of an employee in the child care industry seeking to exercise her entitlement to unpaid parental leave and to not have her hours unilaterally reduced. The penalties in this case should be imposed at a meaningful level so as to deter other employers from committing similar contraventions.

78    In relation to specific deterrence, Gray J in Plancor observed at [37]:

Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.

79    The parties say that here, there is some evidence before the Court, in the form of the statement of agreed facts, of contrition on the part of WKO and Ms O’Leary for the contravening conduct. Neither WKO nor Ms O’Leary should be left in any doubt, however, that failing to comply with minimum obligations will not be tolerated.

80    The parties note that WKO continues to be operated by Ms O’Leary, and it is possible that other employees of WKO will seek to exercise their NES entitlement to unpaid parental leave. Further it is important that no other employees of WKO have their hours unilaterally reduced in breach of the Award.

Instinctive Synthesis Test

81    The parties submit that having fixed an appropriate penalty for each contravention or group of contraventions, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions, and is not oppressive or crushing: Kelly at [30]; Australian Ophthalmic Supplies at [23], [71] and [102]. The parties submit that a penalty imposed on the respondents beyond that which the parties recommend, potentially would be oppressive or crushing. Subject to what I say below about not conflating the process of “intuitive synthesis” and the “totality” principle, I generally agree with these subjections.

82    In this context, the parties submit that, in the circumstances of this matter, in particular where Ms O’Leary is one of two shareholders of WKO, if the Court were to impose a penalty on Ms O’Leary in addition to imposing the recommended penalty on WKO, that this would effectively result in Ms O’Leary paying two penalties, being the penalty ordered against the company and the penalty ordered against herself: Lawlor v Personal Hire Pty Limited [2009] FMCA 228 at [33].

Declarations

83    The parties also highlight that Court may make declarations based on admissions, particularly in a case such as the present that involves issues of public interest: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427 (ACCC v Dataline) at [54]-[59]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352 (ACCC v Yellow Page Marketing) at [66]-[69].

84    The parties say that the declarations sought have been framed to convey the gist of the contravening conduct, setting out how and why the conduct of Ms O’Leary and WKO contravened the FW Act, and attempting to do so both accurately and concisely: see ACCC v Dataline at [63]; ACCC v Yellow Page Marketing at [68].

85    The parties submit that there will be utility in making the declarations sought because they clearly identify the contravening conduct and there is a public interest to be served in making the declarations, in that they will help to educate employers about their obligations to employees seeking to exercise their right to unpaid parental leave in circumstances where there has been a recent transfer of business and also the obligations of employers not to unilaterally reduce their employees’ hours of work in breach of awards, and to warn them of the consequences of failing to meet those obligations. Making the declarations sought would also mark the Court’s disapproval of the contravening conduct. See ACCC v Yellow Page Marketing at [69].

Joint Recommendations

86    FWO and the respondents jointly recommend that declarations and other orders be made as outlined in the proposed minute of declarations and orders handed up during the hearing.

87    Taking in account all the factors outlined in the joint submissions, the parties say that penalty range ought to be at the lower end of the scale. FWO and the respondents jointly recommend that a penalty of $13,200 (gross) be imposed against WKO and that no penalty be should be imposed against Ms O’Leary. This is because the parties have agreed that a low-range penalty is called for in all of the circumstances being 25% of the maximum of the penalty against WKO (on the basis of the grouping the penalties into two, as set out above) in this instance.

88    The parties say they are aware however that an agreed range does not bind the Court as the penalty is a matter for the exercise of discretion by the Court: Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72. Nonetheless, the parties identify Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064 where Logan J held at [58]:

That said, it is not irrelevant to take into account a jointly-agreed position where one of the parties to that agreement, namely the Fair Work Ombudsman, has particular responsibility for the administration of aspects of the Fair Work Act.

(See also: Australian Building and Construction Commissioner v Professional Gyprock Solution Pty Ltd [2011] FCA 1393 at [6]-[8], [13]-[15] and [41]-[48].)

89    Further the applicant and respondents jointly recommend that the respondents make a compensation payment to Ms Nederpel of $5,000 (gross) for economic and non-economic loss suffered as a result of the contraventions of the FW Act pursuant to s 545(2)(b) of the FW Act.

90    In relation to the payment of the penalty to the Consolidated Revenue Fund and compensation to Ms Nederpel, the FWO and the respondents jointly recommend that payment is in accordance with the payment plan annexed to their submissions.

Consideration

91    As accepted by the parties it remains the responsibility of the Court to determine the appropriate penalty in a case such as the present.

92    The parties in their joint submission have conveniently referred to a range of authority governing the imposition of a civil penalty under the FW Act. There is a wide and growing range of authority emanating from this Court concerning the imposition of civil penalties under a range of Commonwealth legislation. It is regularly, and appropriately, observed by the Court when imposing a civil penalty that the purpose of imposing the penalty is to ensure that the objects or objectives of the particular regulatory scheme embodied in the legislation in question is achieved. In the course of the Court stating this, it is usually accepted that the objects or objectives of the relevant legislation are likely to be upheld if an appropriate penalty is imposed on a particular contravener and that, in setting that penalty, it is also appropriate to have regard to the message that the penalty imposed sends to other persons affected by the scheme of regulation in question concerning the need to comply with the provisions of the Act in order to meet the objects or objectives of the legislation. These considerations are often referred to respectively as specific deterrent and general deterrent. Nonetheless it is to the realisation of the objects or objectives of the particular legislation that attention must primarily be given. In this regard, see generally my observations in Comcare v Transpacific Industries Pty Ltd [2012] FCA 90 at [38].

93    In setting a particular civil penalty, the Court necessarily has regard to the nature and seriousness of the contravention and the particular circumstances of each case of contravention. While there is no “checklist” of factors to be considered set out in the FW Act (and usually not set out in other similar types of regulatory legislation), the Court will also regard the particular circumstances in which the Contravention occurred, whether it was a deliberate or more incidental contravention, the extent to which the contravening party has accepted, sooner or later, the fact of the contravention, as well as such factors as the nature and size and general appreciation that a particular contravener should have of the responsibilities that the FW Act imposes on he, she or it.

94    The range of factors that might possibly be considered relevant in a case such as the present have been identified in the joint submissions of the parties and the parties have addressed each of those factors. In the circumstances of this case I consider that each of the factors addressed is relevant and that the observations that are made in the joint submissions by the parties are also generally apposite.

95    In cases where there are a number of contraventions, it is sometimes appropriate to enquire whether there were distinct courses of conduct to which particular contraventions relate. The purpose of doing this is to ensure that the final penalty or penalties imposed do not simply comprise a mathematical total of individual, technical contraventions. In some cases it is the same conduct that has led to the contravention of different statutory provisions, as indeed is the case here, and the contraventions can tend to overlap. Where a number of contraventions are involved in a single course of conduct the penalty should properly reflect the gravity of the relevant course of conduct.

96    In this case I accept that it is reasonable to identify the contraventions as falling within the two broad courses of conduct suggested by the parties, being firstly the denial of the employee’s entitlement to unpaid parental leave in contravention of a number of provisions of the FW Act, and secondly the unilateral reduction of the employee’s hours of work in contravention of other particular provisions of the award and the FW Act.

97    I also agree that the admitted contravention of cl 10.4(c) of the award is a technical contravention in respect of which no separate penalty need be considered.

98    The parties therefore reasonably submit that the maximum penalty that the Court should consider imposing in respect of each of the two separate courses of conduct identified is $33,000 for WKO, and $6,600 for Ms O’Leary.

99    The process of “instinctive synthesis” referred to by the parties comes to bear on determining what the appropriate penalty for each course of conduct should be. I should add that the process of “instinctive synthesis” is not, as suggested in the joint submissions, a process to be equated with the totality principle, but rather a process that involves taking into account all the relevant circumstances of the case and determining in the exercise of judicial judgment what the appropriate fine or penalty should be: see Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [37]. While often appealed to as reasonably describing how the Court goes about exercising a sentencing function in the administration of the criminal law or when imposing a civil penalty under legislation such as the FW Act, the intuitive synthesis approach is not free from controversy: see, for example, Johnson at [40]–[44] (Kirby J).

100    The principle of totality is different. In Johnson in the joint judgment of Gummow, Callinan and Heydon JJ, their Honours, in the context of sentencing under the criminal law of Western Australia, discussed what had been said by the High Court about sentencing in Mill v The Queen (1988) 166 CLR 59 (Mill) and Pearce. In Johnson, their Honours at [12], page 352 referred to Pearce and observed that in the recent judgment of McHugh, Hayne and Callinan JJ their Honours said that the approach which ought to have been adopted by the sentencing judge in that case was to fix appropriate penalties for both offences, then consider the application of the totality principle and, in particular, whether any adjustments were needed to be made to either of the sentences imposed to achieve the total effective sentence which was consistent with the application of the principle. In Johnson at [18], page 354, their Honours also made reference to what was said in Mill by the Court (Wilson, Deane, Dawson, Toohey and Gaudron JJ) to the effect that the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is proposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is “just and appropriate”. In Johnson at [26], their Honours affirmed the principle of totality, observing that the joint judgment in Mill had expressed a preference for what should be regarded as the orthodox, but not necessarily immutable, practice of fixing a sentence for each offence and aggregating them before taking the next step of determining concurrency. Their Honours in Pearce did not decree that a sentencing judge may never lower each sentence and then aggregate them for determining the time to be served. Their Honours noted that the preferable course would usually be the one which both cases commend but neither absolutely fully commands.

101    Their Honours in the joint judgement in Johnson also added at [26] that:

Judges of first instance should be allowed as much flexibility in sentencing as is consonant with consistency of approach and as accords with the statutory regime under which the sentencing is effected.

102    In the end, the point of identifying separate courses of conduct, where they truly exist, or in making some sentences or penalties concurrent, or in deciding not to impose a sentence or penalty in respect of some offences or contraventions, or in considering the principle of totality where there are a number of contraventions (or courses of conduct), is to ensure that the ultimate sentence or penalty reflects the nature and seriousness of the offending or contravening conduct in question and is proportionate to the overall offending or contravening conduct.

103    The principles drawn from the criminal law and such cases as Mill, Pearce and Johnson need to be applied with some caution in the imposition of civil penalties under legislation such as the FW Act, but they do serve to remind the Court that its task in imposing a penalty is to achieve what is appropriate, having regard to the nature and seriousness of an offence, to ensure that the objects or objectives of the civil regulatory legislation in question are achieved. To that end, the principles just discussed may assist in ensuring that excessive penalties going beyond what is necessary to achieve the objects or objectives of such legislation are not imposed.

104    As to the appropriate levels of penalty here, I consider the joint submission made to be correct, and that the penalty for each of the courses of conduct should be towards the lower end of the range after taking all relevant factors into account. The reasons for coming to this conclusion are that there is no suggestion that either respondent has previously contravened the legislation. At the same time, the contraventions are serious ones. The fact is that the respondents unilaterally and unlawfully decided to reduce the hours of employment of a pregnant employee. This led to the employee being constructively dismissed from her employment when she felt she had no option but to terminate her employment in light of her significantly reduced hours. An appropriate message needs to be sent not only to the contraveners in this case, but also to employers at large, that it is unlawful to terminate a woman’s employment because she is pregnant.

105    While taking into account what I consider to be the nature and relative seriousness and deliberateness of the contravening conduct in this case, in the end the respondents did not contest their liability at a trial and relatively early in the process admitted their contraventions. This is to their credit.

106    The parties, however, suggest that it is only necessary to impose a civil penalty on the company and not on the moving mind of the company, its director Ms O’Leary. In my view, this is an inappropriate penalty outcome. The fact of the matter is that there would have been no contravention by the company if Ms O’Leary had not acted as she did. Indeed, the evidence shows that Ms O’Leary at one point sought guidance from the Fair Work Ombudsman hotline, which advised her to obtain legal advice, but she failed or neglected to do so. It seems to me in all the circumstances that it would be quite inappropriate not to impose a penalty on the individual.

107    The Fair Work Ombudsman suggests that there is authority to support the view that where the individual, by being a shareholder in the offending corporation, will in effect be financially “punished” by the civil penalty imposed on the corporation, then there is a case for not additionally imposing a civil penalty on the individual. I agree that principle can be relevant and should be regarded here as Ms O’Leary has a stake in the company as a shareholder. Nonetheless, I am also concerned that should, for some reason, the company not pay or be unable to pay the civil penalty imposed on it, the penalty should not go unpaid and Ms O’Leary escape the sanction of the Court for her part in the contraventions.

108    In these circumstances I consider that it is appropriate to also impose a civil penalty on Ms O’Leary of the same kind that the parties have agreed should be imposed on the company, but that the penalty should be suspended and not payable unless the company fails to pay the penalty imposed on it.

109    Similarly, I consider Ms O’Leary should also be personally obliged to pay the recommended compensation of $5,000, which I consider reasonable, in the event the company fails to do so.

110    So far as the power of the Court to make such a suspended penalty or compensation order is concerned, I note that in United Group Resources Pty Ltd v Calabro (No 7) [2012] FCA 432 McKerracher J, at [19], considered there was nothing that militated against a construction of s 545 of the FW Act that would exclude a power to suspend a pecuniary penalty. I consider the power to impose a penalty or award compensation includes the power to impose a penalty or an award on terms, as I propose. Counsel for the parties did not dispute the Court’s power in this regard.

111    In conclusion, I am satisfied that the penalties proposed by the parties jointly are within the range of acceptable penalties and orders should be made in the terms proposed, provided however that there should also be an order imposing a similar penalty on the second respondent, as well as a compensation obligation, to be suspended in each case unless the first respondent fails to pay the similar penalty and compensation within the specific time.

Declarations

112    Having regard to the conclusions reached the Court therefore makes the following declaration and orders:

The Court declares that:

1.    The first respondent contravened:

(a)    Section 44(1) of the Fair Work Act 2009 (Cth) (FW Act) by denying Ms Joyce Nederpel’s entitlement to unpaid parental leave pursuant to s 70 of the FW Act;

(b)    Section 45 of the FW Act by:

(i)    contravening cl 10.4(d) of the Children’s Services Award 2010 (Award); and

(ii)    contravening cl 10.4(c) of the Award;

(c)    Section 345(1) of the FW Act by recklessly making a false or misleading representation or representations about:

(i)    Ms Nederpel’s workplace rights, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the National Employment Standards (NES) in the FW Act; and

(ii)    the exercise, or the effect of the exercise, of a workplace right of Ms Nederpel, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act.

(d)    Section 340(1) of the FW Act by taking adverse action against Ms Nederpel because Ms Nederpel had proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES in the FW Act.

(e)    Section 351(1) of the FW Act by taking adverse action against Ms Nederpel because she was pregnant.

2.    The second respondent was involved in the first respondent’s contraventions of the FW Act and, thereby, by reason of s 550(1) of the FW Act, contravened:

(a)    Section 44(1) of the FW Act by denying Ms Nederpel’s entitlement to unpaid parental leave pursuant to s 70 of the FW Act;

(b)    Section 45 of the FW Act by:

(i)     contravening cl 10.4(d) of the Award; and

(ii)    contravening cl 10.4(c) of the Award.

(c)    Section 345(1) of the FW Act by recklessly making a false or misleading representation or representations about:

(i)    Ms Nederpel’s workplace rights, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act; and

(ii)    the exercise, or the effect of the exercise, of a workplace right of Ms Nederpel, namely, Ms Nederpel’s entitlement to the benefit of a workplace law, being the FW Act, in particular, her entitlement to take unpaid parental leave under the NES in the FW Act.

(d)    Section 340(1) of the FW Act by taking adverse action against Ms Nederpel because Ms Nederpel had proposed to exercise a workplace right, which was that Ms Nederpel was entitled to the benefit of a workplace law, namely unpaid parental leave under the NES in the FW Act.

(e)    Section 351(1) of the FW Act by taking adverse action against Ms Nederpel because she was pregnant.

113    The Court makes the following orders:

1.    Pursuant to s 546(1) of the FW Act, the first respondent pay a penalty of $13,200 in respect of the contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act.

2.    Pursuant to s 545(2)(b) of the FW Act, the first respondent pay compensation to Ms Nederpel for economic and non-economic loss of $5,000 gross.

3.    The penalties and compensation be paid as follows:

4.    the compensation of $5,000 be paid to Ms Nederpel within 30 days of the decision of the Court;

5.    the penalty of $13,200 be paid to the Consolidated Revenue Fund, in accordance with s 546(3) of the FW Act, over the subsequent five month period from the date of the decision of the Court in equal instalments of $2,640.

6.    Pursuant to s 546(1) of the FW Act, the second respondent pay a penalty of $13,200 in respect of the contraventions of s 44(1), s 45, s 340(1), s 345(1) and s 351(1) of the FW Act.

7.    Pursuant to s 545(2)(b) of the FW Act, the second respondent pay compensation to Ms Nederpel for economic and non-economic loss of $5,000 gross.

8.    Orders 4 and 5 be suspended unless the first respondent fails to pay the penalty and compensation the subject of orders 1 and 2 within the time specified in order 3, in which case the second respondent pay the penalty and compensation the subject of orders 4 and 5 within 30 days of the default of the first respondent.

Associate:

Dated:    17 October 2012