FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456

THE COURT ORDERS THAT:

1.    The Applicant is to file and serve minutes of the declarations and other orders to give effect to the Court’s findings.

2.    The matter is adjourned to Wednesday, 10 February 2016 for submissions as to the appropriate orders and submissions as to penalty.

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

REASONS FOR JUDGMENT

Introduction

1    The first respondent (South Jin) was the employer of trolley collectors. These are the persons who retrieve shopping trollies at and around supermarkets and major stores and relocate them for the use of future customers.

2    The Fair Work Ombudsman (the FWO) alleges that, in the period between 16 February 2009 and 21 November 2010 (the Relevant Period), South Jin failed to comply with several of the obligations imposed on it by, and under, the Workplace Relations Act 1996 (Cth) (the WR Act) and by, and under, the Fair Work Act 2009 (Cth) (FW Act) in respect of 49 trolley collectors. The FWO alleges that the second respondent (Mr Jin) is liable as an accessory in respect of the same contraventions and that the third and fourth respondents, Coastal Trolley Services Pty Ltd (CTS) and Mr Stroop (together the CTS Respondents), are liable as accessories in respect of nine of the contraventions of South Jin.

3    The FWO seeks declarations with respect to each of the contraventions alleged and the imposition of penalties.

4    The proceedings were commenced in the Federal Circuit Court (the FCC) (then the Federal Magistrates Court). South Jin did not file a defence and judgment by default was entered against it on 17 July 2012. On the following day, an order for the winding up of South Jin was made. The pursuit of the proceedings against it was then stayed, as the FWO has not sought leave to proceed against it: Corporations Act 2001 (Cth) s 471B. The proceedings against the remaining respondents were transferred to this Court in June 2014.

5    The Court ordered that the trial proceed in two stages, with the first stage to comprise a trial of all issues other than the issue of penalty and the second stage, should it become necessary, the claims with respect to penalty.

6    Although Mr Jin denied the FWO allegations relating to his liability as an accessory, his lawyer informed the Court that he did not wish to take any part in the liability aspects of the trial. He does however wish to be heard on the matter of penalty should the Court find the contraventions alleged against him to be established. In those circumstances, Mr Jin was excused from attending at the liability trial.

The hierarchy of contracts – overview

7    In and before 2009 and 2010, Integrated Trolley Management Pty Ltd (ITM) had contracts with Coles Group Ltd, formerly Coles Myer Ltd (Coles) and Woolworths Ltd (Woolworths) for the provision of trolley collection services at a number of stores in shopping centres in South Australia. These proceedings concern trolley collectors employed at four of those locations as well as those employed at the Fairview Park Foodland Store. The four locations of Coles and Woolworths are the Kurralta Park Coles and Kmart stores, the Woolworths and Big W stores at Elizabeth, the West Lakes Woolworths store and, at the Marion Shopping Centre, the Woolworths, Big W and Dan Murphy’s stores and, until 15 March 2009, the Marion Coles, Kmart and Target stores.

8    The directors of ITM are Mr Hills and Mr Vickery. Both gave evidence in the trial.

9    ITM entered into sub-contracts with CTS for the provision of its services under the contracts with Coles and Woolworths. At relevant times Mr Stroop was the director and majority shareholder of CTS. He managed the trolley collection operations of CTS, including its sub-contracts, and had the day to day responsibility for its trolley collection business. Mr Stroop gave evidence in the trial.

10    CTS in turn sub-contracted the work to South Jin, and it was South Jin which employed the trolley collectors. It seems that many of the 49 trolley collectors were young men from South Korea who entered Australia on student or working holiday visas.

11    At relevant times, Mr Jin was the sole director of South Jin and he held all shares in it. By reason of the form of his defence, Mr Jin is taken to have admitted that he was the manager of South Jin’s operations. There is, however, some evidence that a Mr Paul Hyun may also have been involved in the management. I will refer to that evidence shortly.

12    CTS negotiated a trolley collection contract directly with Fairview Park Foodland store. That contract came into operation on 1 April 2009. CTS sub-contracted the provision of the trolley collection services at the Fairview Park Foodland store to South Jin. ITM provided management services to CTS in respect of that contract.

The requirements of the WR Act and the FW Act

13    As already noted, the FWO claims relate to the period between 16 February 2009 and 21 November 2010. The WR Act was in force during part of this period, until the FW Act came into operation on 1 July 2009. The repeal of the WR Act and the commencement of the FW Act were governed by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act).

14    In the period between 16 February 2009 and 31 December 2009, the trolley collectors employed by South Jin were award free. South Jin was however subject to the obligations imposed by the WR Act. It continued to be so bound during the “bridging period” for which the Transitional Act provided, namely, from 1 July 2009 to 31 December 2009.

15    From 1 January 2010, the employment of the trolley collectors was governed by the FW Act and by the Cleaning Services Award (CS Award), a modern award made by the Australian Industrial Relations Commission (AIRC) on 3 April 2009. The CS Award commenced on 1 January 2010. An Exposure Draft of that Award had been circulated in early 2009.

16    In February and March 2009, contractors such as ITM and CTS had sought to have trolley collectors removed from the coverage of the then proposed CS Award. That attempt failed, as did a later attempt after the CS Award had been made: see the decision of the AIRC in General Retail Industry Award 2010 [2009] AIRCFB 983 delivered on 22 December 2009. This meant that the CS Award applied to the employment of trolley collectors immediately upon its commencement on 1 January 2010. This was inconvenient for ITM and its sub-contractors as, amongst other things, the CS Award did not contain, in relation to trolley collectors, the standard transitional provisions adopted by the AIRC to facilitate the introduction of modern awards such as it.

17    ITM then applied to Fair Work Australia (FWA) to have the employment of trolley collectors employed by contractors governed by the General Retail Industry Award (the GRI Award) or, in the alternative, for a variation of the CS Award so as to have transitional provisions included. Only the application for variation succeeded: Integrated Trolley Management Pty Ltd [2010] FWA 3317. FWA made the order of variation on 23 April 2010 and ordered that it come into effect that same day. There was no order for retrospectivity.

18    The effect of this course of events with respect to the trolley collectors employed by South Jin in the Relevant Period was as follows.

19    In the period from 16 February 2009 to 31 December 2009, ss 182, 185, 186 and 195 of the WR Act applied to the trolley collectors. Section 182(3) required that they be paid the “basic periodic rate of pay”:

(3)    If:

(a)    the employment of an employee is not covered by an APCS; and

(b)    the employee is not a junior employee, an employee with a disability, or an employee to whom a training arrangement applies;

the employee must be paid a basic periodic rate of pay for each of the employee’s guaranteed hours (pro-rated for part hours) that is at least equal to the standard FMW (the guaranteed basic periodic rate of pay).

20    The “standard FMW” to which s 182(3) referred was the standard Federal Minimum Wage (FMW) fixed in s 195. It was common ground that the FMW in 2009 was $14.31 per hour.

21    In respect of casuals, s 185 provided (relevantly):

185 The guarantee

(1)    This section applies to a casual employee for whom, under section 182, there is a guaranteed basic periodic rate of pay, other than a casual employee in relation to whom the following paragraphs are satisfied:

(a)    subsection 182(1) applies to the employee;

(b)    the APCS that covers the employment of the employee does not contain casual loading provisions under which a casual loading is payable to the employee;

(c)    the employee’s employment is not covered by a workplace agreement.

(2)    The casual employee must be paid, in addition to his or her actual basic periodic rate of pay, a casual loading that is at least equal to the guaranteed casual loading percentage of that actual basic periodic rate of pay.

22    Section 185(3) fixed the “guaranteed casual loading percentage” referred to in s 185(2) as the “default casual loading percentage”. That was 20% (WR Act s 186).

23    Accordingly, this meant that, in the period from 16 February 2009 to 31 December 2009, South Jin was obliged:

(a)    by ss 182(3) and 195 of the WR Act, to pay at least the FMW of $14.31 per hour;

(b)    by ss 185(2) item 3 and 186 of the WR Act, to pay “the default casual loading” of 20% to those employees who were casuals. This produced an hourly rate of $17.17.

24    These provisions continued to apply after 1 July 2009 by virtue of Sch 9, item 5 of the Transitional Act.

25    Section 45 of the FW Act applied with effect from 1 January 2010. It provides:

45 Contravening a modern award

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

26    Accordingly, in the period from 1 January 2010 to 22 April 2010, South Jin was obliged:

(a)    by s 45(1) of the FW Act and cl 16 of the CS Award, to pay at least $15.34 per hour, this being the rate for Level 1 employees, the classification level which appears most appropriate to trolley collectors and, in any event, the lowest classification level;

(b)    by s 45(1) of the FW Act and cl 12.5 of the CS Award, to pay a loading of 25% to those employees who were casuals. This was an hourly rate of $19.18;

(c)    by s 45(1) of the FW Act and cl 27.1(a) of the CS Award, to pay a loading of 15% of the ordinary hourly rate for work after 6 pm. This was an hourly rate of $17.64 and, with the casual loading, $21.48;

(d)    by s 45(1) of the FW Act and cl 27.2 of the CS Award, to pay time and one-half of the ordinary hourly rate for time worked on Saturdays. This was $23.01 per hour and, with the casual loading, $26.85 per hour;

(e)    by s 45(1) of the FW Act and cl 27.2 of the CS Award, to pay double the ordinary hourly rate for all work performed on Sundays. This was $30.68 per hour and, with the casual loading, $34.52 per hour;

(f)    by s 45(1) of the FW Act and cl 28 of the CS Award, to pay overtime rates to those employees who worked in excess of 7.6 hours in one day or in excess of five days in the seven day period from Monday to Sunday. Overtime worked from midnight Sunday to midnight Saturday was to be paid at the rate of time and a half for the first two hours, and double time thereafter, and overtime worked on Sundays was to be paid at the rate of double time. This meant that overtime at the rate of time and a half was $23.01 per hour and at the double time rate (other than on Sundays) $30.68 per hour. Overtime on Sundays was at the rate of $30.68 per hour. If the employees were casual, these rates were $26.85, $34.52 and $34.52 per hour respectively.

27    When the variation to the CS Award inserting transitional provisions became operative on 23 April 2010, the obligations of South Jin changed and were in some respects reduced. In the period from 23 April 2010 to 30 June 2010, South Jin was obliged:

(a)    by s 45(1) of the FW Act, cl C.2.3 of Sch C of the CS Award and Sch 9 cl 5(3) of the Transitional Act, to pay at least the transitional standard FMW of $14.31 per hour;

(b)    by s 45(1) of the FW Act, cl C.7.2 of Sch C of the CS Award and Sch 9 cl 5(3) of the Transitional Act, to pay the “transitional default casual loading” of 20% in addition to the transitional standard FMW – an aggregate casual rate of $17.17 per hour;

(c)    to pay overtime at the same penalty rates as applied in the period from 1 January 2010 to 22 April 2010, although by reason of the application of the transitional provisions, the time and a half rate for overtime worked on Monday to Saturday was $21.47 per hour, the double time rate for overtime worked on Monday to Saturday was $28.62 per hour, and the overtime rate for Sunday was $28.62 per hour.

28    South Jin was not obliged to pay any penalty rates in respect of Saturday and Sunday work in the period from 23 April 2010 to 30 June 2010.

29    In the period from 1 July 2010 to the end of the Relevant Period on 21 November 2010, South Jin was obliged:

(a)    by s 45(1) of the FW Act and cl C.2.5 of Sch C of the CS Award, to pay at least $15.21 per hour;

(b)    by s 45(1) of the FW Act and cl C.7.3 of Sch C of the CS Award, to pay a transitional casual loading of 21% in addition to the rate of $15.21 per hour – an aggregate casual rate of $18.40 per hour;

(c)    by s 45(1) of the FW Act and cl 27.2 of the CS Award, to pay penalty rates for Saturday and Sunday work. By reason of the application of the transitional provisions, the Saturday penalty rate was $19.92 per hour and the Sunday penalty rate was $21.45 per hour;

(d)    by s 45(1) of the FW Act and cl 28 of the CS Award, overtime at the same rates as had applied in respect of the period 1 January 2010 to 22 April 2010 although, by reason of the application of the transitional provisions, the time and a half rate for overtime worked on Monday to Saturday was $22.82 per hour, the double time rate for overtime worked on Monday to Saturday was $30.42 per hour, and the overtime rate for Sunday worked was $30.42 per hour.

30    Upon the commencement of the CS Award on 1 January 2010, South Jin became bound by cl 23.2 to make a superannuation contribution to a superannuation fund for the benefit of each employee, being 9% of each employee’s earnings prescribed by the Superannuation Guarantee (Administration) Act 1992 (Cth) (the SGA Act). In the period from 16 February 2009 until 31 December 2009, South Jin had, in effect, been subject to the same obligation if it wished to avoid the additional taxation liability imposed by the SGA Act, but the FWO makes no claim in respect of that period.

31    Throughout the Relevant Period, South Jin was obliged to provide payslips to each of the trolley collectors within one working day of the making of a payment of wages. From 16 February 2009 to 30 June 2009, reg 19.20(1) of the Workplace Relations Regulations 1996 (Cth) (WR Regulations) required South Jin to issue to each trolley collector a written payslip relating to each payment. Regulation 19.20(2) required each payslip to be issued in electronic form or hard copy within one day of the payment to which the payslip related.

32    From 1 July 2009 to 21 November 2010, s 536(1) of the FW Act imposed a like obligation on South Jin. Section 536(2) required that the payslip be in the form, and include any information, prescribed by regulation. Regulation 3.46 of the Fair Work Regulations 2009 (Cth) (the FW Regulations) contains the relevant prescription.

33    Finally, South Jin was required at all times during the Relevant Period to maintain a record for each of its employees containing the content prescribed by the regulations in force from time to time. From 16 February 2009 to 30 June 2009, reg 19.4(1) of the WR Regulations required South Jin to make, or to cause to be made, a record relating to each of its employees, in accordance with Divs 3 and 4 of the WR Regulations.

34    Section 535 of the FW Act imposed a similar obligation on South Jin in respect of the period from 1 July 2009 to 21 November 2010. Regulation 3.32 of the FW Regulations specified the content of the records to be kept. That content was similar to that pertaining under the WR Act but, in addition, required the records to include South Jin’s own Australian Business Number (ABN) and, under reg 3.34 of the FW Regulations, the number of overtime hours worked by the employee during each day, or when the employee started and ceased working overtime hours.

The application of the Cleaning Services Award to trolley collectors

35    Counsel for the CTS Respondents submitted that the CS Award did not apply to trolley collectors at all until 1 July 2010 with the effect that the summary of South Jin’s obligations given above is not accurate. Counsel relied for this submission on statements made by Mr Stroop and Mr Vickery in their respective affidavits. However, the date on which the CS Award commenced to apply to trolley collectors is to be determined by reference to the orders made by the AIRC and by FWA. Those orders do not bear out the submissions of the CTS Respondents.

36    As noted earlier, the AIRC made the CS Award on 3 April 2009 ([2009] AIRCFB 345). By cl 2, the CS Award was stated to commence on 1 January 2010.

37    On 14 December 2009, the AIRC amended cl 2 and inserted some transitional provisions. However, the Award commencement date of 1 January 2010 remained. Clause B.1.15 required employers, from 1 January 2010, to pay at least the minimum wage stipulated in the tables in cl B.2.

38    When FWA varied the CS Award on 23 April 2010 so as to introduce transitional provisions relating to trolley collectors, it did not alter the Award’s commencement date. Section 165(2) of the FW Act provides expressly that a determination varying a modern award may not be specified to come into operation earlier than the day on which the determination was made unless one or other of two conditions were satisfied. Neither of these conditions was satisfied in the case of the variation made on 23 April 2010.

39    Accordingly, this submission of the CTS Respondents is rejected.

40    I set out earlier the effect of the FWA decision on 23 April 2010 on the rates applicable to trolley collectors. The challenge by the CTS Respondents to the accuracy of those rates did not rise above bare assertion.

41    In his opening submissions, counsel for the CTS Respondents made a different submission ([46]-[47]), namely, that it should be inferred that the variations to the CS Award made on 23 April 2010 were intended to operate retrospectively. As I understood it, counsel contended by this submission that, although the variation made by the FWA on 23 April 2010 was expressly stated to come into effect on 23 April 2010, it should nevertheless be regarded as having come into effect on 1 January 2010. This was of course inconsistent with counsel’s later submission to the effect that the Award had not applied at all to trolley collectors until 1 July 2010.

42    The submission cannot be accepted because FWA did not even purport to invoke the power under s 165(2) to give retrospective operation to the variation.

43    I will proceed on the basis that the rates of pay and obligations set out earlier were the applicable rates and obligations.

The contraventions alleged against South Jin

44    The FWO alleges a number of contraventions by South Jin of the obligations summarised above.

45    First, the FWO alleges that, in the period from 1 January 2010 to 22 April 2010, South Jin failed to pay a rate which was at least equal to the applicable rate of $15.34 per hour.

46    Secondly, the FWO alleges that the 49 trolley collectors were at all times casual employees and that South Jin failed to pay them, throughout the Relevant Period, the casual loadings which were applicable from time to time.

47    Thirdly, the FWO alleges that South Jin failed to pay the 49 trolley collectors the applicable penalty rates for Saturday and Sunday work between 1 January and 22 April 2010 and between 1 July and 21 November 2010.

48    Fourthly, the FWO alleges that South Jin failed in the period from 1 January to 21 November 2010 to pay the required overtime payments to its employees.

49    Fifthly, the FWO alleges that from 1 January to 21 November 2010, South Jin did not pay any of the minimum superannuation contributions required by cl 23.2 of the CS Award.

50    Next, the FWO alleges that, until on or about 12 September 2010, South Jin did not issue employees any payslips at all, let alone in timely way and with the content required by the WR Regulations and later the FW Regulations. The FWO alleges that, while South Jin did issue payslips to its employees from on or about 12 September 2010, those payslips did not include all the information prescribed by reg 3.46 of the FW Regulations, because they did not include the number of the superannuation fund to which contributions would be made.

51    Finally, the FWO alleges that South Jin did not comply with its record keeping obligations. In particular, the FWO alleges that South Jin did not record in relation to each employee whether the employee’s employment was full-time, part-time, permanent, temporary or casual. The FWO also alleges that, after 1 July 2009, South Jin failed to make records of the overtime worked by each employee, as required.

52    As noted earlier, judgment in default of a defence was entered against South Jin by the FCC on 17 July 2012. The FCC made declarations that South Jin had committed each of the contraventions alleged by the FWO and, in addition, made orders that South Jin pay to each of 48 of the 49 employees the amounts underpaid to those employees. In total this was $165,323.77 before interest.

53    The FWO acknowledged that the default judgment and the orders with respect to payment, did not bind Mr Jin or the CTS Respondents. She accepted that the claims of accessorial liability against them required her to prove the primary contraventions by South Jin.

54    The FWO alleges that Mr Jin was knowingly concerned in all of South Jin’s alleged contraventions. She alleges that the CTS Respondents were knowingly concerned in South Jin’s underpayment contraventions, namely, its failures to pay casual loading in 2009; its failures to pay the minimum hourly rate required by cl 16 of the CS Award in the period from 1 January 2010 to 22 April 2010; its failures to pay the casual loadings required by cl 12.5(a) of the CS Award; and its failures to pay penalty rates for Saturday, Sunday and overtime work during 2010, but not that they were knowingly concerned in the contraventions of South Jin relating to the superannuation contributions, the provision of payslips and the record keeping.

55    There was no issue in the trial about the FWO’s standing to bring these proceedings: see ss 687(1) and 701 of the FW Act and s 718(1) of the WR Act as it continues to apply by virtue of the Transitional Act.

Were the trolley collectors casual employees?

56    The claim of the FWO that the trolley collectors were underpaid was principally, but not only, made on the basis that each trolley collector was a casual employee, with the consequence that South Jin was obliged to pay each the casual loading prescribed at different times by the WR Act, the Transitional Act and the CS Award.

57    It is convenient to address at this stage the question of whether the employees were casual employees. That determination has to be made in respect of two distinct periods within the Relevant Period: 16 February to 31 December 2009 when the employment of the employees was award free but subject to the provisions in the WR Act; and from 1 January to 21 November 2010 when the CS Award was applicable.

An admission by Mr Jin?

58    The FWO relied first on an admission in the first Defence filed by Mr Jin that the 49 employees were casuals. This admission was not repeated in a later Defence. The FWO, relying on the interaction between the Federal Circuit Court Rules 2001 (Cth) (FCCR 2001), on the one hand, and the Federal Court Rules 2011 (Cth) (FCR 2011), on the other, submitted that Mr Jin was nevertheless bound by the earlier admission.

59    In the Statement of Claim filed in the then Federal Magistrates Court on 27 June 2011, the FWO pleaded in [21(d)] that each of the 49 trolley collectors was employed by South Jin during the Relevant Period “on a casual basis”. In the Third Amended Statement of Claim (TASC) filed on 26 April 2012, the same allegation was made in [52(c)].

60    In his Defence filed on 21 October 2011, Mr Jin admitted the allegation in [21(d)]. However, in the defence to the TASC, Mr Jin said that he did not plead to number of the allegations, including those in [52], because he took the view that those pleas related to other respondents. He then pleaded in the alternative a denial to those paragraphs.

61    The FWO submitted that it had not been open to Mr Jin, without leave, to withdraw in the later Defence his admission that the employees had been employed on a casual basis. She relied in this respect on r 26.11(2) of the FCR 2011 which provides:

(2)    However, a party must not withdraw an admission or any other plea that benefits another party, in a defence or subsequent pleading unless:

(a)    the other party consents; or

(b)    the Court gives leave.

62    The FWO submitted that FCR 26.11(2) applied to the pleadings in the Circuit Court by virtue of s 43(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (the FCC Act). Section 43 provides (relevantly):

43 Practice and procedure

(1)    The practice and procedure of the Federal Circuit Court of Australia is to be in accordance with Rules of Court made under this Act. However, this subsection is subject to any provision made by or under this or any other Act with respect to practice and procedure.

(2)    In so far as the provisions applicable in accordance with subsection (1) are insufficient:

...

(b)    the Rules of Court made under the Federal Court of Australia Act 1976 apply, with necessary modifications, so far as they are capable of application and subject to any directions of the Federal Circuit Court of Australia or a Judge, to the practice and procedure of the Federal Circuit Court of Australia in relation to the jurisdiction of the Federal Circuit Court of Australia under laws of the Commonwealth other than:

(i)    the Family Law Act 1975; or

(ii)    the Child Support (Assessment) Act 1989; or

(iii)    the Child Support (Registration and Collection) Act 1988.

(3)    In this section:

practice and procedure includes all matters in relation to which Rules of Court may be made under this Act.

FCCR 2001 r 4.05, which requires a defence to be filed to a statement of claim, contains a cross-reference to s 43.

63    Thus, although the FCCR 2001 did not preclude the withdrawal without leave of an admission in an earlier pleading, the FWO submitted that s 43, in combination with r 26.11(2) of the FCR 2011, had that effect.

64    I uphold that admission. Mr Jin had not obtained the requisite leave and so his earlier admission stands. However, that admission does not bind the CTS Respondents. In their case, the question of whether the 49 employees were casuals is to be determined by reference to the evidence.

The concept of casual employment

65    In relation to that part of the Relevant Period which falls between 16 February and 31 December 2009, the question of whether the employees were casual arises in particular from s 185 of the WR Act. That section required that “a casual employee”, in defined circumstances, be paid a “casual loading” which was at least equal to the “guaranteed casual loading percentage”. The WR Act did not contain any definition of the term “casual employee” or its cognates. It is reasonable to infer that, subject to some qualifications to be mentioned shortly, the term was used with its meaning in the general law.

66    Although casual employment is common, its precise definition has proved elusive. In its original conception, casual employees were those whose work was intermittent or irregular (Doyle v Sydney Steel Co Ltd (1936) 56 CLR 545 at 555) so that the employees did not know when completing one period of work if, or when, they would be employed again. Casual employees were generally thought to be engaged under a series of separate and distinct contracts with each contract terminating on the completion of the task or period for which they were engaged. Being generally paid by the hour, their employment could be terminated on an hour’s notice.

67    In Doyle v Sydney Steel at 565, McTiernan J said of the term “casual worker” in the context of worker’s compensation legislation:

[T]he term “casual worker” is not capable of exact definition. Hamilton LJ said in Knight v Bucknill: “I think that ‘casual’ is here used not as a term of precision, but as colloquial term.” Each case is to be determined on its own facts, consideration being given not only to “the nature of the work but also the way in which the wages are paid, or the amount of the wages, the period of time over which the employment extends, indeed all the facts and circumstances of the case.” ...

(Citations omitted)

68    In more recent times, it has been recognised that employees may be casuals even though engaged continuously over an extended period: Australasian Meat Industry Employees’ Union v Sunland Enterprises Pty Ltd (1988) 24 IR 467 at 473; Ryde-Eastwood Leagues Club Ltd v Taylor (1994) 56 IR 385 at 389.

69    In Reed v Blue Line Cruises Ltd (1996) 73 IR 420 at 425-6, Moore J considered the term “casual employee” in the context of a regulation which excluded casual employees from the termination provisions in Pt VIA of the Industrial Relations Act 1988 (Cth):

A characteristic of engagement on a casual basis is, in my opinion, that the employer can elect to offer employment on a particular day or days and when offered, the employee can elect to work. Another characteristic is that there is no certainty about the period over which employment of this type will be offered. It is the informality, uncertainty and irregularity of the engagement that gives it the characteristic of being casual.

... In my opinion, a casual employee for the purposes of reg 30B is an employee who is, from time to time, offered employment for a limited period on the basis that the offer of employment might be accepted or rejected but in circumstances where it could be expected that further employment of the same type would or might be offered and accepted but there was no certainty about the period over which it would continue to be offered.

70    To similar effect, the Full Court in Hamzy v Tricon International Restaurants [2001] FCA 1589; (2001) 115 FCR 78 at [38] said:

The essence of casualness is the absence of a firm advance commitment as to the duration of the employee's employment or the days (or hours) the employee will work. But that is not inconsistent with the possibility of the employee's work pattern turning out to be regular and systematic.

(Emphasis added)

71    In addition to these features of casual employment, the authorities indicate that the characterisation of a worker’s employment as casual, or otherwise, is essentially a question of fact in which no single criterion is likely to be decisive. Instead, regard must be had to a number of matters, including the way in which the parties themselves regarded their relationship, any commitment by the employer or the worker to ongoing employment, the regularity or otherwise of the worker’s hours or days of work, how the worker was notified of each period of work, the payment of an hourly rate for the hours actually worked, any indication that the hourly rate was intended to encompass leave entitlements, the absence of payment of the benefits associated with employment of an indefinite nature such as paid annual leave, sick leave and public holidays, and whether the employer and worker were able to refuse to offer or accept, as the case may be, further work: Bernardino v Abbott [2004] NSWSC 430 at [21]-[23]; Melrose Farm Pty Ltd t/as Milesaway Tours v Milward [2008] WASCA 175; (2008) 175 IR 455 at [106].

Implications from the Workplace Relations Act

72    In the present case, in relation to the period from 16 February to 31 December 2009, account must be taken of provisions in the WR Act itself which indicated that employment may be casual even if it was regular and systematic. Two provisions are pertinent in this respect. Division 6 of Pt 7 of the WR Act entitled employees, including “eligible casual employees” to paid parental leave. By s 264, an “eligible casual employee” was defined to be a casual employee who had (relevantly) been engaged by a particular employer “on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months”.

73    Section 638(1)(d) excluded “a casual employee engaged for a short period” from the termination of employment provisions. By s 638(4) a casual employee was taken to be engaged for a short period unless (relevantly) the employee was engaged by a particular employer on “a regular and systematic basis” for a sequence of periods of employment during a period of at least 12 months.

74    Each of these provisions was accordingly an express contemplation by the WR Act that the fact that a person may have been engaged on a regular and systematic basis was not by itself inconsistent with the person being a casual employee.

Implications from the Cleaning Services Award

75    In relation to the period from 1 January to 21 November 2010, regard must be had to the provisions of the CS Award. Like the WR Act, it did not contain a definition of “casual employment”. However, some implications can be drawn from the specification of the employment categories contained in cl 12. That clause provides:

12.    Employment categories

12.1    Employees under this award will be employed in one of the following categories:

(a)    full-time employment;

(b)    part-time employment; or

(c)    casual employment.

12.2    At the time of engagement, an employer will inform each employee of the terms of their engagement and in particular whether or not they are to be full-time, part-time or casual, their usual location of work and the employee’s classification. This will then be recorded in the time and wages record of the employee.

12.3    Full-time employment

A full-time employee is an ongoing employee engaged to work an average of 38 ordinary hours per week. Such hours are to be arranged in accordance with clause 24 – Ordinary hours of work.

12.4    Part-time employment

(a)    An employer may employ a part-time employee in any classification in this award. At the time of engagement the employer and the part-time employee will agree in writing on a regular pattern of work, specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day.

(b)    A part-time employee is an employee who:

(i)    is engaged to work less than the full-time hours of 38 per week;

(ii)    has reasonably predictable hours of work; and

(iii)    receives, in addition to the hourly rate for a full-time employee, an allowance of 15% of the hourly rate. This allowance allows the employer to roster a part-time employee to work up to 7.6 hours per day, five days per week or 38 ordinary hours per week without the payment of overtime.

(c)    An employer is required to roster a part-time employee in accordance with the provisions of clause 25 – Rostering, and for a minimum number of hours in accordance with clause 24.2.

(d)    Where clause 25 – Rostering does not apply, any requirement by an employer that a part-time employee works hours in addition to those specified in accordance with clause 12.4(a) will be subject to the provisions of clause 28 – Overtime.

(e)    Subject to clause 12.4(b)(iii), a part-time employee receives, on a pro rata basis, equivalent pay and conditions to those on full-time employees who do the same kind of work.

12.5    Casual employment

Casual employees may only be engaged to perform work on an intermittent or irregular basis or to work uncertain hours or to replace a weekly employee who is rostered off or absent.

(a)    Casual loading

Casual employees will be paid, in addition to the ordinary hourly rates and rates payable for shift and weekend work that apply to full-time employees, an addition loading of 25% of the ordinary hourly rate for the classification under which they are employed.

76    As can be seen, cl 12 contemplates three categories of employment: full-time employment, part-time employment and casual employment and, implicitly, that each employee will be in one or other of these categories. Clause 12.2 requires an employer, at the time of engagement, to inform each employee of the terms of their engagement and, in particular, whether they are to be full-time, part-time or casual employees.

77    A full-time employee is one whose employment is of an indefinite kind and who works an average of 38 ordinary hours each week. A part-time employee is engaged to work less than the full-time 38 hours, has “reasonably predictable” hours of work, and is entitled to a loading of 15% on the hourly rate. The CS Award contemplates that the employer and the part-time employee will agree in writing, at the time of the engagement, on a regular pattern of work specifying at least the hours to be worked each day and the days of the week on which the employee will work (with actual starting and finishing times).

78    The CS Award contains prescriptions as to the manner in which full-time employees may perform their hours of work. Clause 24 provides that the ordinary hours of a full-time employee are not to exceed 38 in each week, are not to exceed 7.6 hours each day and are to be worked in five day periods. Clause 24 also permits the 38 hours to be worked on flexible rosters which average the hours over a four week cycle with the effect that an employee may have a rostered day off.

79    Clause 12.5 contemplates that casual employees may be engaged only to perform work on “an intermittent or irregular basis or to work uncertain hours”, unless they are replacing a weekly employee who is rostered off or absent.

80    The structure of cl 12 suggests that, at least in general, employees who are neither full-time nor part-time will be casuals. That is to say, unless the agreements which the employees make with the employer, or the working arrangements themselves, indicate that they are full-time or part-time, the employees will be regarded as casual.

81    The FWO submitted that cl 12.5 was not definitional in nature but merely prohibitory. That meant, it was said, that cl 12.5 operated in relation to those employees engaged as casuals so as to limit the kind of work arrangements which could be made in their case. I doubt that that is a correct understanding of the clause. Subclause 12.5 appears in a clause which describes the different kinds of employment under the Award. It appears to be the counterpart of cll 12.3 and 12.4 which are descriptive of full-time and part-time employment. That suggests that cl 12.5 is intended to be descriptive of the category of casual employees. Further, the use of the word “engaged” suggests that the Award is speaking to the time at which employees are taken on, that is, of the kind of contractual arrangement which an employer may have with casual employees.

82    On their face, the expressions “work on an intermittent or irregular basis” and work of “uncertain hours” in cl 12.5 stand in contradistinction to the concept of “reasonably predictable hours of work” to which cl 12.4(b)(ii) refers. Intermittent or irregular work, or work of uncertain hours, is work which is not “reasonably predictable”.

83    However, these distinctions are blurred to an extent by cll 24.2 and 25. Clause 24.2(a) requires employers to roster “part-time and casual employees” for specified minimum engagement periods. Clause 25 requires employers to prepare a roster for all employees showing normal starting and finishing times (cl 25.1). Such a roster is alterable on seven days’ notice (cl 25.2). The reference to all employees suggests that it includes casuals.

84    The rostering contemplated by cl 24.2 and cl 25 is seemingly inconsistent with work which is intermittent, irregular or of uncertain hours. It suggests that, despite the description of casual employment in cl 12.5, such employment may nevertheless have some regularity about it.

The evidence of Mr Sarkar

85    The FWO lead evidence at the trial from only one trolley collector, Mr Sarkar. He worked for South Jin between 22 April and 5 June 2010, collecting trolleys at the Woolworths and Big W stores at West Lakes, Elizabeth and Fairview Park. The CS Award was in force in this period.

86    Mr Sarkar said that he was not given any roster telling him where and when he was to work. Instead, he received each night a telephone call or a text message from Mr Jin telling him where, and the hours, he should work on the following day. Generally he started at 10 am. The number of hours he worked each day varied from between seven and 11.

87    Mr Sarkar said that there had not been any discussion between Mr Jin and him as to whether he would be full-time or casual.

88    Mr Sarkar’s work was interrupted by periods of sickness. He did not receive any sick pay.

89    On 4 June 2010, Mr Sarkar was quoted in an article published in The Advertiser regarding trolley collectors not being paid Award rates. He was given work on only one day after that date, but did not receive any notice of termination of his employment.

90    Mr Sarkar’s evidence about these matters was not challenged. I thought that he was an honest witness and accept his evidence.

91    The FWO tendered a wage record for Mr Sarkar provided to her by South Jin pursuant to a Requirement to Produce Records or Documents under s 709(d) of the FW Act. This showed that, in the week ending 25 April 2010, Mr Sarkar worked three days (two days of nine hours and one of 11); in the week ending 2 May, six days (three of eight hours, one of six, one of seven and one of nine hours); in the week ending 9 May, 5 days (two of eight hours, one of six, one of seven and one of nine hours); in the week ending 16 May, 5 days (two of seven hours, one of eight, one of nine and one of 12 hours); in the week ending 23 May, 5 days (three of nine hours, one of six and one of 12 hours); and nine hours on 5 June.

92    For reasons to be given later, I some doubts about the reliability of South Jin’s wage records in every respect. However, the wage record for Mr Sarkar confirms his evidence about the irregularity and lack of predictability of his hours.

93    In my opinion, Mr Sarkar’s evidence and the wage records bespeak casual employment of the kind discussed in the authorities and as contemplated by cl 12.5 of the CS Award. He did not receive the 15% part-time employment loading. I have no difficulty in concluding that Mr Sarkar was a casual employee for the purposes of the CS Award.

The evidence of Jongsu Jeong

94    One of the 49 trolley collectors who is the subject of the action is Jongsu Jeong. South Jin’s wage records show that Mr Jeong regularly worked 39 hours each week with some work on each of the seven days in the week.

95    Mr Jeong identified himself to Ms Peters, a Fair Work Inspector, when she visited the Elizabeth Shopping Centre on 18 May 2010 as part of the FWO’s investigation.

96    On 7 October 2010, Ms Peters interviewed Mr Jeong with the assistance of an interpreter. Mr Jeong told Ms Peters that he was leaving the following day to return to Korea. Ms Peters subsequent attempts to contact Mr Jeong in Korea have not been successful. It seems that he remains in Korea.

97    In those circumstances, I was satisfied that ss 62 and 63 of the Evidence Act 1995 (Cth) permitted the reception into evidence of the record of Ms Peters’ interview of Mr Jeong and of the documents which he produced during that interview.

98    Mr Jeong said in the interview that he had worked for Mr Jin at the Elizabeth Shopping Centre; that he had commenced on 26 February 2010; that he had regarded himself as a permanent full-time employee; that he had worked seven days a week; that the only days which he had off were public holidays and that he was not paid for those days; and that generally he worked 12 hours on Mondays, Tuesdays and Wednesdays, 14 hours on Thursdays, 13 hours on Fridays, 11 hours on Saturdays, and 7 hours on Sundays.

99    Mr Jeong said that he knew his starting time each day as, by reason of his being a full-time employee, he had a “certain” starting time.

100    Mr Jeong produced a diary in which he had recorded his hours. That diary did not confirm fully Mr Jeong’s oral account of his hours of work but does indicate that he worked considerably more hours than those recorded in South Jin’s wage records.

101    Mr Jeong said that he was paid $8.00 per hour.

102    Mr Jeong also said that when he first arrived in Australia on 25 November 2009, he had been met at the airport by Mr and Mrs Jin and, while living in Australia, had lived in the Jin’s house.

103    This evidence concerning Mr Jeong was not contradicted, and I consider it appropriate to rely on it.

The reliability of the wage records

104    The FWO or her investigators had, at different times, required the production of wage and other records pursuant to s 709(d) and s 712 of the FW Act.

105    The submissions of both parties assumed the reliability of the wage records, albeit for different purposes. However, the position of the FWO was that the wage records should be taken as evidence only that the employees worked at least the hours shown and that it is likely that they worked more.

106    These wage records appear to be printouts of electronic records, although there is no indication that they were made progressively and not (as a whole) in retrospect. There is a separate page for each employee and, for some employees, more than one page. Each page commences with the name of South Jin and the name and personal details of the employee to whom the record relates. It also contains some details particular to the employee such as the employee’s commencement date, tax file number and superannuation fund.

107    The earliest of the records commences on 16 February 2009. All the records relating to the period 16 February to 31 December 2009 show that a flat hourly rate of $14.31 was paid for ordinary time, weekends and public holidays. The records for some employees in respect of the period from 1 January 2010 to 30 June 2010 show a flat hourly rate of $14.31 for ordinary time, weekend and public holiday work, and for others a flat hourly rate of $14.76 for work at those times.

108    In respect of the period after 1 July 2010, the wage records show different rates for ordinary time, Saturday, Sunday and public holiday work ($15.55, $17.11, $18.66 and $20.22 respectively). The derivation of these figures is not known. I observe, however, that the difference between each succeeding figure is uniformly $1.56. This uniform differential, which does not seems to have any basis in the rates of pay applicable to trolley collectors, raises by itself a doubt about the reliability of the records.

109    The wage records then record on a weekly basis the hours said to have been worked by the employee on each day in each week, together with the employee’s gross pay, tax deducted, net pay, superannuation contribution and the date of payment to the employee.

110    The wage records have several features which raise issues about their reliability. All employees appear to be in two categories. Thirty seven of the 39 employees are shown regularly to have worked 39 hours in each week, with work being performed on each of the seven days. Eleven are shown regularly to have worked 19.5 hours in each week, usually over four days. The 49th employee is Mr Sarkar, whose hours were irregular, apparently because of his illness. It seems remarkable that there was not more individual variation between the hours each employee worked, and the number of days in each week on which each employee worked. That is especially so having regard to the evidence of Mr Hills and Mr Vickery, the directors of TMS, that the demand for trolley collectors varies according to the season, day of the week and time of day. For example, the demand in the busy Christmas period is greater than at other times; the demand in the weeks in which pensions are paid is usually greater than in the non-pension payment weeks, and factors such as the daily weather, sales, special events and school holidays mean that trading patterns (and the consequential demand for trolley collection services) vary from time to time.

111    In addition, although there is variance in the number of hours worked by each employee on the different days in each week, there is remarkable consistency in the hours shown to have been worked on the same day in each succeeding week.

112    The records show that employees did not work on those days which were public holidays. Yet the employees who were shown as working 39 hours in each week are still shown as having worked those hours in the weeks which included the public holiday, by virtue of having worked increased hours on the remaining days. It seems improbable that the employees in an industry of this kind would have needed to work additional hours in a public holiday week which matched exactly the hours they worked in a non-public holiday week. This feature suggests an element of contrivance in the wage records.

113    I refer again to the different rates for ordinary time, Saturday, Sunday and public holiday work for those workers shown as having worked after 1 July 2010. They appear to be contrived rates without any relationship to the rates required by the applicable law.

114    I referred earlier to the inconsistency between the hours for Mr Jeong recorded in South Jin’s wage records and those which Mr Jeong recorded in his diary. Mr Jeong’s diary shows that there were many occasions on which he worked 10 or more hours a day whereas the South Jin records indicate that he did not work more than eight hours in any one day.

115    It is pertinent in this respect that, when interviewed by Ms Peters on 4 November 2011, Mr Jin said that Mr Jeong had worked more hours than those shown in the South Jin wage record “because he said that he wanted to earn more money, he asked me to give more work”.

116    I also observe that there are inconsistencies between South Jin’s wage records relating to Mr Sarkar and the hours of work which Mr Sarkar recorded for himself.

117    It is apparent that South Jin commenced new records for each trolley collector at 1 January 2010. Because that was part way through a working week, the hours for some days in that week appear in both the former and the new records. I observe that, in respect of at least three trolley collectors, there are inconsistencies between the records for some days in this week.

118    Finally, the hours of work recorded in South Jin’s wages records could not have been sufficient for the performance of all the work required of South Jin at the five shopping centres. I accept as reliable a calculation carried out by Ms Peters in this respect, using the week of 6 April to 12 April 2009 as an example. South Jin’s records show that a total of 156 hours were worked by trolley collectors in that week, an average of 31.2 hours at each of the five shopping centres. That is equivalent to one worker per shopping centre per week working less than 4.5 hours per day. I will refer later to the evidence which indicates that the Coles and Woolworths stores, especially those at the bigger shopping centres, could not have been serviced with this level of trolley collectors.

The involvement of Paul Hyun

119    My misgivings about the reliability of the wage records were increased by evidence indicating the involvement of a Mr Paul Hyun in South Jin’s business. Mr Hyun was the sole director of Honest and Frank Pty Ltd (H&F). H&F had previously been an employer of trolley collectors. CTS had subcontracted to H&F work which it had obtained by subcontract from ITM. It had commenced the sub-contracts to South Jin shortly after terminating its contact with H&F.

120    During 2009, the FWO took proceedings in the South Australian Industrial Court (the SAIRC) against H&F and Mr Hyun. The FWO alleged a number of contraventions of the FW Act, including breaches of the obligations to make, keep and provide employee and payment records and, on two occasions, the making and providing to the FWO of false and misleading employee records. H&F admitted the contraventions and Mr Hyun admitted to having been personally involved in its contraventions. By a judgment delivered on 29 April 2010, the SAIRC imposed penalties on each of H&F and Mr Hyun: Fair Work Ombudsman v Honest and Frank Pty Ltd [2010] SAIRC 23.

121    In 2009, while those proceedings were on foot, Mr Hills and Mr Vickery took the view that, in the light of the matters disclosed in the SAIRC proceedings, they should ensure that H&F and, in particular Mr Hyun, did not have any involvement in the businesses of the companies to which CTS had contracted work it obtained from ITM.

122    On 16 October 2009, Mr Hills discussed the H&F litigation with Mr Stroop and told him of his concerns of a possible connection between Mr Jin and Mr Hyun. Mr Hills confirmed his concerns in a letter to Mr Stroop of 19 October 2009, saying (relevantly):

It would appear from the prosecutor’s brief that H&F are being charged with numerous counts of failure to keep proper payroll records etc in the period October 2007 to May 2008. Unfortunately, it also appears that yet again Paul Hyun has pleaded guilty to presenting falsified documents to an inspector.

This leads us with no choice but to request that CTS end all business association with Mr Hyun. We note that H&F ceased to be a sub-contractor of CTS on 10 November 2008, however, we must be sure that the three corporate entities which replaced H&F are not “fronts” for Mr Hyun.

To achieve this, we require:

•    Proof as to officers and shareholders of the three companies. This may be an annual return or incorporation documents.

•    A letter from the directors of South Jin Pty Ltd and Joon Ocean Pty Ltd detailing all payments made by the companies to Paul Hyun or any associated entity of Paul Hyun since 10 November 2008 and the basis of such payments (consultant, employee??) and confirming that no future payments beyond 16 October 2009 will be made from the companies’ funds to Mr Hyun for any reason.

...

123    Mr Stroop drafted the reply by Mr Jin to that letter dated 28 October 2009. The reply confirmed that South Jin had not paid Mr Hyun or any entities associated with him any money, that no payments of any kind would be made to him and that Mr Hyun would not be employed by South Jin without the express written approval of ITM.

124    Mr Stroop acknowledged in his cross-examination that he had explained to Mr Jin at the time why ITM had requested the letter; that ITM had made it clear that it did not want Mr Hyun to have any association with its contracts; and that ITM had not subsequently given any approval for Mr Hyun to be involved in its contacts.

125    Despite this, the evidence discloses that Mr Stroop continued after 28 October 2009 to involve, and to recognise the involvement of, Mr Hyun in South Jin’s business. Mr Stroop sent several emails to Mr Hyun concerning the day to day performance of contracts which it had subcontracted to South Jin and the management of those contracts. On 27 November 2009, Mr Stroop sent an email to Mr Hyun (copied to Mr Jin) attaching an Incident Report concerning an injury suffered by a trolley collector at the Elizabeth Shopping Centre on the previous day. On 1 December 2009, Mr Stroop sent an email to Mr Hyun (copied to Mr Jin) conveying a request by Woolworths Regional Manager concerning the placement of trolleys at the Marion Shopping Centre. On 14 December 2009, Mr Stroop sent an email to Mr Hyun and Mr Jin attaching a spreadsheet of the Christmas trading hours at the Kurralta Park store. On 17 December 2009, Mr Stroop sent an email to Mr Hyun and Mr Jin forwarding on a request by the Manager of the Elizabeth Shopping Centre concerning an aspect of the conduct of trolley collectors at that Centre. On 27 January 2010, Mr Stroop sent the new roster for the Fairview Park Foodland to Mr Hyun (copied to Mr Jin). Earlier, December 2009, Mr Stroop had sent to Mr Hyun and Mr Jin information regarding the roster at the Norwood Foodland. On 5 March and 17 May 2010, Mr Stroop sent emails to Mr Hyun (copied to Mr Jin) passing on a report by the Manager of the Elizabeth Shopping Centre of unsafe practices adopted by trolley collectors.

126    Some of these emails were sent to Mr Hyun within minutes of Mr Stroop having received the report from the shopping centre manager.

127    There were other emails in early 2010 from the office of CTS to Mr Hyun, although the evidence did not indicate that these had been sent by Mr Stroop personally. One of these contained the results of an audit of the trolley collection at the Kurralta Park store carried out on behalf of ITM.

128    On their face, these emails seemed to reflect an understanding by Mr Stroop and CTS of a continued close involvement by Mr Hyun in the day to day affairs of South Jin.

129    Mr Stroop said that he had sent the emails to Mr Hyun because he had fluent English and Mr Jin did not. He said that he had been “using” Mr Hyun as a “tool” so that he could convey information to Mr Jin and in turn obtain information from Mr Jin.

130    I considered Mr Stroop’s evidence on this topic to be unimpressive. He appeared to be discomforted when the various emails were put to him in cross-examination. His evidence had the hallmarks of a retrospective justification. I observe that none of the emails included any request for assistance by Mr Hyun in translation or for any report from Mr Jin. As I have said, the emails rather suggest a close involvement by Mr Hyun in the business of South Jin. It also seems implausible that Mr Stroop, having been told by Mr Hills on 19 October 2009 that there were, in effect, doubts about Mr Hyun’s honesty, would have thought that he could trust him in the way that his answers in cross-examination supposed.

131    It is not to Mr Stroop’s credit that immediately before being confronted with the emails in cross-examination, he had given the following evidence:

Q:    You did not, after this letter went to ITM in October 2009, alert either Mr Vickery or Mr Hills to the fact that Mr Hyun did have an ongoing [association] with South Jin?

A:    I’m not aware of any ongoing association with South Jin. I know he was a friend of his.

...

Q:    Is it your evidence that there was no association between South Jin and Mr Hyun?

A:    Business sense, correct. Yes.

132    These answers also contrasted starkly with Mr Stroop’s later evidence, after being confronted with the emails, that he had “routinely” passed on emails from ITM or a centre manager to Mr Hyun and Mr Jin.

133    In the circumstances, I am satisfied that Mr Hyun did, in 2009 and 2010, have a reasonably close involvement in the affairs of South Jin. That involvement and Mr Hyun’s conduct as disclosed in the proceedings in the SAIRC, added to my misgivings about the reliability of the South Jin wage records.

Conclusion on the South Jin wage records

134    For these reasons, I doubt that the South Jin wage records can be regarded as reliable. This limits the inferences which can be usefully drawn from them.

135    Like the FWO, I consider it appropriate to proceed on the basis that the hours of work disclosed in the wages records are at least those actually worked but that, beyond that, the wage records should be treated with circumspection.

Consideration of the employees other than Mr Sarkar

136    In relation to the remaining employees, the FWO relied on the following for the contention that they should be categorised as casual employees:

(a)    The wages of all employees were calculated by the hour, and not by the week;

(b)    The employees were paid only for time worked;

(c)    Although annual leave and sick leave entitlements accrued progressively (WR Act ss 323(2), 235(2), 465(2); FW Act ss 87(2), 96(2)) South Jin’s records did not indicate any accrual, let alone payment, of annual or sick leave. Pro-forma documents entitled “Employee Leave Records” on which the names of workers had been entered were completely blank with no record of accrual or payment of sick leave or annual leave. This was evidence, it was submitted, that the employees did not have any such entitlement, a circumstance consistent with them being casuals. Mr Jin admitted that South Jin had not paid annual leave, holiday pay or sick leave;

(d)    The wage records showed that employees who did not work on public holidays were not paid;

(e)    None of South Jin’s records showing payments of any kind to employees on termination of their employment;

(f)    The South Jin wage records show variance in the number of hours worked by each employee each day in any given week;

(g)    Admissions made by Mr Jin when interviewed with the assistance of an interpreter by Ms Peters on 17 August 2010:

Q:    How do they know when to work? How do employees know when to work?

A:    I call them then tomorrow only. I call them to come to work at certain time. So just communicating through the phone call.

Q:    Do you call the night before, the week before? How much do you know in advance when someone will be working?

A:    OK. So, night before. Yeah. If there is a reliable person goes on (sic), then no problem, but people just in the morning saying (sic) that, “I’m not well, I had a heavy drink last night and I can’t work”, that kind of information comes then he just phone directly to somebody who is available. But otherwise night before most of them are contacted.

(h)    The varying demand for the services of trolley collectors from time to time such that the flexibility which casual employment allows must have been attractive to South Jin.

137    In relation to the period after 1 January 2010 when the CS Award was in force, the FWO relied on these additional matters:

(i)    Even when employees were working a regular pattern of hours each week, that pattern did not conform with the requirements of cl 24 of the CS Award. For example, the wage records show employees regularly working seven days a week after week, whereas cl 24.1 contemplates the hours being worked in not more than five days in any one week;

(j)    The wage records do not indicate any payment of the 15% loading in respect of part-time employment.

138    Counsel for the CTS Respondents submitted that the diverse range of factors to be considered in determining whether employment was casual or otherwise meant that the character of the employment of each of the trolley collectors had to be determined on an employee-by-employee basis. This meant, so the submission ran, that the Court could not, on the evidence presented by the FWO, make the necessary determination. I do not accept that submission as an a priori proposition. Of course, the determinations must be made by reference to the circumstances of each case, but it does not follow that the Court need hear evidence from, or about, each trolley collector individually in order to make the determinations. If it is evident that there are no material distinctions between those in a group, the determination may be made by reference to the evidence concerning the group. The omission of the FWO to call evidence from more of the trolley collectors may make the Court’s task more difficult but does not mean necessarily that the assessment sought by the FWO cannot be made.

139    Counsel for the CTS Respondents emphasised the seeming regular and systematic engagement of employees and submitted that this was consistent with the employees having had a reasonable expectation of continued employment. Having regard in particular to ss 264 and 638 of the WR Act to which reference was made earlier, that submission does not have the force in respect of the period between 16 February and 31 December 2009 which it may otherwise have had. Further, even under the CS Award in which casual work is contrasted with work with “reasonably predictable hours”, a number of other indicia may indicate that, despite the regular and systematic nature of the work, the employment is nevertheless properly characterised as casual.

140    Counsel submitted that the circumstance that South Jin’s records did not contain any indication that paid leave had been provided was of little significance. This was so, he said, because there was no evidence that any employee had requested paid leave; because those who had had unpaid time off may have chosen simply to take leave without pay; and because it may simply be that South Jin was in breach of its obligations in not paying the employees monies to which they were entitled.

141    One cannot gainsay the first two of these matters as theoretic possibilities, but to my mind they are not persuasive. It is improbable that employees would have taken leave without pay if they, or South Jin, had thought that they had an entitlement to paid leave. The third alternative is however more plausible.

142    I agree with counsel for the CTS Respondents that the circumstance that the Court has heard evidence from only one trolley collector is a cause for pause. So also are the statements of Mr Jeong to Ms Peters that he regarded himself as a full-time permanent employee and that he had certain starting times. His employment, and in particular, its regularity seem more in keeping with that of a full-time employee for the purposes of the CS Award. It is pertinent that Mr Jeong did not receive payments of leave or payment for public holidays, but that is just as consistent with South Jin not having complied with its obligations in that respect as it is with him being a casual employee.

143    In the circumstances, I am not persuaded on the evidence that Mr Jeong was a casual employee.

144    I am not able to identify a basis by which Mr Jeong’s employment may be distinguished from the other employees shown in the wage records as having worked 39 hours over seven days in each week. Mr Jin did say that he let the employees know each night when they would be working on the following day, but it seems improbable that he could have done that to 37 employees. The fact that they were working (at least) 39 or more hours each week does suggest some regularity and certainty about their work. It is of course unusual for employees to be expected to work seven days in a week, and week on week, but that is so whether their employment is permanent or casual.

145    I am not satisfied that these employees have been shown to be casual. I will accordingly refer to these employees as “the Full-time Employees”.

146    The position with respect to those shown as having worked regularly 19.5 hours over four days in each week is more difficult. Plainly they were not full-time employees. The flexibility seen with casual work is more common for employees who are less than full-time. I consider it probable that South Jin would have wished, in relation to these employees, to have the same flexibility which it sought in the case of Mr Sarkar, with the effect that there was an unpredictability about the place and hours of their work. That is consistent with them being casuals. The circumstance that these employees did not receive paid leave, or payment on public holidays, is also consistent with them being casual employees. It is this class of whom Mr Jin was probably speaking when he said that he would let them know each night of the work for the following day. I agree that the difference between these employees and the Full-time Employees is a matter of degree only but nevertheless I regard it as significant.

147    It is true that the work of those shown as working 19.5 hours was in some respects regular and systematic but, as the authorities and the CS Award itself show, the regular nature of the work is not inconsistent with the employees being casual.

148    Although the position is not straightforward, I consider that the FWO has shown these employees to be casual. That conclusion can be reached with more confidence in respect of those employed after 1 January 2010, as the employees do not satisfy the description of full-time or part-time employees in the CS Award.

149    The finding that South Jin’s trolley collectors were full-time and casual in these proportions derives support from statutory declarations made by Mr Stroop on 17 February 2009 and 20 October 2009. The declarations were part of the evidence put to the AIRC in support of the attempts to have trolley collection removed from the CS Award. In the first, Mr Stroop estimated that 85% of the employees of “our contractors/subcontractors” were full-time employees and 15% casual employees. In the second, he said:

A recent survey with our subcontractors has shown that 85% of employees engaged by our subcontractors are full-time employees. We directly employ a similar proportion of permanent to casual employees.

150    The employees I consider to be casual are:

    Ashin Maharjan

    Avi Narayan Baskota

    Biswajit Sarkar

    Dongog Kim

    Kumar Shrestha

    Kyewoon Lee

    Prabin Rajbhandari

    Rabin Bk

    Raj Kumar Aryal

    Sanju Shrestha

    Sehwan Kim

    Wenjin Liao

151    I will refer to these as the “Casual Employees”. Of these, seven (Wenjin Liao, Sehwan Kim, Rabin Bk, Prabin Rajbhandari, Kyewoon Lee, Dongog Kim and Avi Narayan Baskota) carried out at least some of their work in 2009, before the CS Award came into operation.

152    In summary, I proceed on the basis that those shown as working 19.5 hours in each week and Mr Sarkar were casuals and that those shown in the wage records as working 39 hours each week were permanent full-time employees.

Were the trolley collectors underpaid?

153    For the evidence of what the trolley collectors were in fact paid, the FWO relied upon South Jin’s wage records. It may be that, just as the hours recorded in the wage records are of doubtful reliability, so also are the amounts of the payments. However, these are the records which South Jin produced to the FWO pursuant to ss 709(d) and 712 of the FW Act. Given the nature of the FWO’s investigation, and the obvious purpose of the request for production, it is reasonable to suppose that South Jin did not attempt to understate the wages it had paid. Further, with the exception of statements of Mr Jin when interviewed by Ms Peters to the effect that from time to time he gave cash payments to trolley collectors, there was no other evidence indicating that he paid more than the amounts shown in the wage records.

154    I proceed therefore on the basis that the wage records record the amounts said to have been paid by South Jin to, or on behalf of, the trolley collectors.

155    On this basis, it can be concluded that the Casual Employees were underpaid in both 2009 and 2010 because the hourly rates paid by South Jin to those employees did not include the applicable casual loading. In addition, those working on weekends were not paid the penalty rates which became applicable from 1 January 2010, and nor were they paid the overtime rates.

156    In respect of the Full-time Employees, there was no underpayment in 2009 because South Jin did pay at the applicable rate of $14.31 per hour and the WR Act did not contain any provision for payment of overtime or weekend penalties.

157    The position is different, however, once the CS Award came into operation. In respect of the period from 1 January 2010 to 22 April 2010, the Full-time Employees were underpaid because the payment by South Jin was at a flat hourly rate of $14.31 in respect of some employees and $14.76 in respect of others when it should, in each case, have been $15.34 per hour. In addition, there was no payment of penalty rates and there was no payment of overtime even though each of the Full-time Employees was entitled to these payments.

158    In respect of the period from 23 April to 30 June 2010, there was underpayment by reason of South Jin’s failure to pay overtime.

159    It is possible that South Jin’s liability in this respect may be reduced to an extent in respect of those whom it paid at the rate of $14.76 per hour. That will be a matter for calculation.

160    In respect of the period from 1 July to 21 November 2010, the Full-time Employees were underpaid because they were not paid at the correct hourly rate of $15.21 per hour, did not receive penalty payments for Saturday and Sunday work, and did not receive payments for overtime work.

161    In each case, the amount of the underpayment will be a matter for calculation. The FWO is directed to make the calculations and, subject to what follows, to provide minutes of the orders necessary to give effect to the Court’s conclusions.

Identifying the contraventions of s 45

162    Section 45 of the FW Act, which came into operation on 1 January 2010, provides that a person must not contravene “a term” of a modern award.

163    There is an issue as to the number of contraventions of a term of the CS Award indicated by the findings I have made above. In order to identify how that issue arises, it is appropriate to summarise the declarations sought by the FWO.

164    In relation to the employment in 2009 (to which s 45 is inapplicable), the FWO sought first a declaration that South Jin had contravened s 185(2) of the WR Act in the period to 30 June by not paying to the Casual Employees a loading which was at least equal to “the guaranteed casual loading percentage” (20%). A declaration to that effect is appropriate in respect of Avi Narayan Baskota, he being the only casual employee who, on my findings, worked during this period.

165    In respect of the period between 1 July and 31 December 2009, the FWO sought a declaration that South Jin had contravened item 5 of Sch 16 of the Transitional Act by not paying the same casual loading. A declaration to that effect is appropriate in respect of Avi Narayan Baskota, Dongog Kim, Kyewoon Lee, Prabin Rajbhandari, Rabin Bk, Sehwan Kim and Wenjin Liao as they performed casual work in this period.

166    In respect of the period between 1 January and 22 April 2010, the FWO sought separate declarations that South Jin had contravened each of cl 16 and cl 12.5(a) (and thereby in each case, s 45 of the FW Act) by failing to pay the prescribed rate and by failing to pay the casual loading of 25%. In respect of the Full-time Employees, the FWO also sought a declaration giving effect to my finding that South Jin had breached cl 28 of the Award by failing to pay overtime at the prescribed rates.

167    In relation to the period between 23 April and 30 June 2010, the FWO sought separate declarations that South Jin had, in relation to the Casual Employees, contravened each of cl 16 and cl 12.5(a) of the CS Award (and thereby in each case, s 45 of the FW Act) by failing to pay the prescribed minimum rate and by failing to pay the casual loading of 20%. In addition, the FWO sought a declaration that, in respect of the Full-time Employees, South Jin had breached cl 28 by failing to pay overtime at the prescribed rates. In relation to full-time employees in this period, the FWO sought declarations that South Jin had contravened both cl 16 and 28.

168    In respect of the period from 1 July 2010 to 21 November 2010, the FWO sought separate declarations that South Jin contravened cl C.2.5 of Sch C of the CS Award (the minimum hourly rate) and of cl C.7.3 of Sch C of the CS Award (the casual loading of 21%). In relation to the Full-time Employees, the FWO sought declarations that each of cl 16 (the minimum hourly rate), cl 27.2 (Saturday and Sunday penalty rates) and cl 28 (overtime) was breached.

169    The question is whether, in relation to both the Full-time and the Casual Employees, declarations of contraventions of all the Award provisions just identified are appropriate. The resolution of this question turns on the identification of the obligations imposed by the CS Award and therefore of what it is that South Jin has contravened.

170    The FWO contended, in the case of the Casual Employees, that the CS Award imposes separate and distinct obligations to pay the ordinary hourly rate and the casual rate so that a contravention of each attracts the operation of s 45 of the FW Act. Similarly, in relation to the Full-time Employees, the FWO contended that the CS Award imposes separate and distinct obligations to pay the ordinary hourly rate, the overtime rate and the respective weekend penalty rate so that a contravention of each also attracts the operation of s 45. An alternative position would be to regard the Award terms with respect to casual, weekend and overtime payments as subsuming the earlier obligations so that there is a single obligation with respect to payment for each hour worked, and accordingly, a single term of the CS Award which has been contravened.

171    In support of her submission, the FWO referred to Gibbs v The Mayor, Councillors and Citizens of the City of Altona [1992] FCA 374; (1992) 37 FCR 216. In that case, the respondent Council admitted that it had contravened the redundancy clause in the applicable award by failing, after it had made a definite decision that it no longer wished an employee’s job to be done by anyone, to hold discussions with the relevant union about the proposed termination of the employee’s employment and by failing to provide in writing to the union all the relevant information about the proposed termination. Gray J considered the application of s 178(2) of the Industrial Relations Act 1988 (Cth) in these circumstances. Section 178(2) provided:

Subject to subsection (3), where:

(a)    2 or more breaches of the term of an award or order are committed by the same organisation or person; and

(b)    the breaches arose out of a cause of conduct by the organisation or person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.

Section 178(2) has its counterpart in s 557(1) in the FW Act.

172    Gray J concluded that each obligation in the redundancy clause was a “term” of the award, so that each breach of obligation was a breach of a term for the purposes of s 178. His Honour’s reasoning, at 222-3 [21]-[24], was as follows:

It is possible to regard cl 23(a) as a term of the Award, imposing a number of different obligations. It is possible to regard each of pars (i), (ii) and (iii) of cl 23(a) as a “term”, each of which imposes several obligations. It is possible to regard each of the separate obligations within these paragraphs as a separate term.

…

The object of s 178(2) appears to be that a party bound by an award and pursuing a course of conduct involving repeated acts or omissions, which would ordinarily be regarded as giving rise to a series of separate breaches, should not be punished separately for each of those breaches. If such a party has pursued a course of conduct which gives rise to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another. This reasoning leads to the conclusion that each separate obligation found in an award is to be regarded as a “term”, for the purposes of s 178 of the Act. The ascertainment of what is a term should depend not on matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out. For these reasons, I incline to the view that each separate obligation imposed by an award is to be regarded as a “term”, for the purposes of s 178 of the Act. If the different terms imposed cumulative obligations or obligations that substantially overlap, it is possible to take into account the substance of the matter by imposing no penalty, or a nominal penalty, in respect of breaches of some terms, but a substantial penalty in respect of others.

173    The FWO referred next to McIver v Healey [2008] FCA 425. That was an underpayment of wages case and so, on its facts, more like the present. The relevant award required the employer to pay casual employees an hourly rate which was 1/38th of the prescribed weekly rate “plus the appropriate undermentioned addition to that rate”. These additions were loadings of varying amounts depending on the time of day at which the work was performed and whether it was performed on Saturdays, Sundays or public holidays.

174    Marshall J considered that each of these award obligations should be regarded as a term for the purposes of s 178(2) and its counterpart in s 719(2) of the WR Act so that each breach was a separate contravention of a term.

175    Tracey J applied a similar approach in Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14. Again, this was an underpayment of wages case and involved the application of s 178 of the WR Act. The employer had admitted breaches of award obligations with respect to payment for ordinary time, overtime and Saturday, Sunday and public holiday work. Those obligations were contained in different award provisions. Tracey J considered that the parties had been correct to regard City of Altona as requiring the non-compliance with each of the obligations to be treated as a contravention of a separate term.

176    The FWO submitted that this reasoning should be applied in the present case. The CTS Respondents did not contend to the contrary.

177    In addition to her reliance on the authorities, the FWO referred to two further considerations. First, the FWO submitted that the imposition of penalties would be a more difficult task if it was held that there had been a failure to pay the appropriate aggregate amount required by the CS Award for each hour of work, rather than to pay each element making up the aggregate amount. Secondly, the FWO submitted that as she herself had made findings that “the employees were entitled to receive the benefit of these specific award entitlements, it was appropriate for the Court to make separate declarations as to each”.

178    I do not regard either of these latter considerations as persuasive. The difficulties to which the FWO referred in relation to the imposition of penalties are not readily apparent. Nor is it readily apparent that such difficulties, if they exist, could bear upon the proper construction and application of the CS Award. I agree, however, that the framing of the declarations necessary to give effect to the Court’s findings may be more difficult.

179    The manner in which the FWO has chosen to express her “findings” cannot control the proper construction of the FW Act nor of the construction and application of the CS Award.

180    The more significant consideration is the authorities to which reference has already been made.

181    In my opinion, the reasoning in City of Altona, McIver and Kelly v Fitzpatrick is not conclusive in the present context. In this case, the issue arises at the stage of determining the contraventions of the award involved whereas, in those cases, the issue was whether two or more admitted contraventions were to be treated as a single contravention for the purposes of imposition of penalty. That is to say, the present issue arises at a stage which is antecedent to that considered in the authorities.

182    Further, to my mind, the question of whether the underpayments by South Jin give rise to two or more contraventions of a term of the CS Award is to be determined by reference to the terms of that Award. The manner of expression of an award may make it apparent that the failure to pay each element of a composite hourly rate is itself a contravention of the award. Alternatively, it may be apparent from an award that there is but a single obligation in respect of each hour of work with the amount to be paid derived from two or more provisions in the award. It is also possible that an award which provides for two or more entitlements may indicate that the obligation to pay the first is subsumed by the obligation to pay the second.

183    For these reasons, I consider that the present issue is to be resolved by regard to the terms of the CS Award, and not by reference to s 577, or to the terms of the awards considered in City of Altona, McIver or Kelly v Fitzpatrick.

184    Clause 16 of the CS Award is foundational. It stipulates the minimum hourly rate as follows:

An employer must pay full-time employees minimum weekly wages for ordinary hours (exclusive of penalties and allowances) as follows …

Clause 16 then goes on to specify both a minimum weekly and a minimum hourly rate.

185    Other provisions in the Award contain references to these minimum rates. It is important in my opinion to pay close attention to the manner in which they do so. Clauses 27.2 and 27.3 provide in respect of weekend penalties and public holiday work:

27.2    Weekend Penalties

(a)    Saturday work

For all hours worked between midnight Friday and midnight Saturday, an employee will be paid time and one half of the ordinary hourly rate for their classification.

(b)    Sunday work

For all hours worked between midnight Saturday and midnight Sunday, an employee will be paid double the ordinary hourly rate for their classification.

27.3    Public holiday work

For all hours worked on public holidays an employee will be paid double time and one half of the ordinary hourly rate for their classification.

186    In respect of overtime, cl 28 provides as follows:

28.2    Overtime, worked from midnight Sunday to midnight Saturday will be paid at the rate of time and a half for the first two hours and double time thereafter.

28.3    Overtime worked on Sundays will be made at the rate of double time.

28.4    Overtime worked on Public holidays will be paid at the rate of double time and one half.

187    As can be seen, these clauses require payment of a specified rate (time and half, double time and double time and a half, as the case may be). Their effect is to prescribe the award obligation in respect of each hour worked on a weekend, a public holiday and in overtime. The obligation imposed by cl 16 is, on its own terms, inapplicable to work in these hours, as it applies only to work in ordinary hours. Clause 16 is relevant only to the extent that it indicates the amount of one integer in the calculation of the obligations imposed by cll 27 and 28.

188    In these circumstances, I consider that the obligations imposed by cll 16, 27 and 28 of the CS Award should not be regarded as separate and distinct obligations, each of which can be contravened simultaneously, or in respect of the same hour of work.

189    The position with respect to the casual loading for which cl 12.5(a) provides, is different. For convenience I set that clause out again.

Casual employees will be paid, in addition to the ordinary hourly rates and rates payable for shift and weekend work that apply to full-time employees, an additional loading of 25% of the ordinary hourly rate for the classification under which they are employed.

190    The structure of cl 12.5(a) is to require an employer to make a payment which is additional to the amount which cl 16 requires. That is to say, cll 12.5(a) and 16 impose cumulative obligations. This is indicated by the specification that the casual loading is to be paid “in addition to” the hourly rate which is “payable”. This terminology is suggestive of separate and distinct obligations operating simultaneously.

191    Accordingly, in respect of casual employees, I conclude that an employer may contravene the term of the CS Award which imposes the obligation to pay the ordinary time rate, a weekend penalty rate, a public holiday penalty rate, and an overtime rate, as the case may be, on the one hand, and the applicable casual rate, on the other. However, in relation to full-time employees, an employer may contravene only that term which imposes the liability to pay the greatest amount to the employee for the hour of work in question.

192    In respect of the Casual Employees, I consider that there should be declarations that South Jin contravened cl 16 by failing to pay the applicable ordinary time hourly rate and separate declarations that it contravened cl 12.5(a) by failing to pay the applicable casual loading.

193    In respect of the Full-time Employees, there should be declarations that South Jin contravened the term imposing the highest hourly rate applicable from time to time to each employee’s work.

Failure to pay the superannuation contributions

194    The FWO alleges that in the period from 1 January to 21 November 2010, South Jin contravened s 45 of the FW Act by failing to pay the minimum superannuation contribution required by cl 23.2 of the CS Award. Clause 23.2 provides:

Employer contributions

An employer must make superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

195    I accept that the amount required to be paid to satisfy this obligation was 9% of each employees’ earnings – see s 19(2) of the SGA.

196    The effect of Mr Jin’s filed Defence was to deny this allegation. The CTS Respondents did not challenge it.

197    The FWO relied on a number of matters. She referred first to Mr Jin’s admitted lack of knowledge about the requirement to pay the superannuation contribution and lack of knowledge as to whether the payments had been made. When interviewed by Ms Peters on 17 August 2010, Mr Jin responded as follows in relation to payment of superannuation contributions:

Q:    Do you pay superannuation?

A:    The accountant I told – I thought the accountant does; I don’t know anything about it.

Q:    If you don’t know anything about it, then why is there a superannuation column on here?

A:    It’s automatic calculation done by the computer.

Q:    Who puts it into the computer to make this come out though because you said you didn’t know what superannuation was but you said you made this record? So if you don’t know what superannuation is, then why would you put it on there, unless someone else made it?

A:    I don’t remember but this formula is given to me and if I put the number of hours and the hourly rate in there, so it puts the hours down, then it’s calculated at the end.

(Emphasis added)

198    Ms Peters questioned Mr Jin again about the payment of superannuation in the second interview which occurred on 4 November 2010. Mr Jin gave a number of confused answers. At one stage he said that he thought he had paid superannuation contributions to “the tax office”, but shortly afterwards said the he had given the money to his accountant and that as far as he was aware the accountant had paid the money to “the government”. However, Mr Jin appeared in these passages to be confusing superannuation contributions with the tax which he had withheld from payments to the employees. Later, Mr Jin said that his accountant attended to these matters. Later still, Mr Jin gave the following responses:

Q:    Do you know if you paid that [superannuation] money anywhere?

A:    No, I haven’t paid anywhere.

Q:    So you’ve put it on a payslip and on a pay summary …

A:    Yeah.

Q:    … but it hasn’t gone anywhere.

A:    Because I don’t understand exact concept yet probably I have to ask about this.

    …

Q:`    … You have stated on these that the appropriate superannuation fund is AMP. A year on AMP. Have you made any superannuation payments to any employees to AMP?

A:    I don’t know well and I have to ask the accountant.

Q:    You have to complete a form every three months to make the payment to the superannuation fund. You would be required to sign a statement, like when you pay other company taxes and fill in other statements. This is three-monthly and would require your signature or would require knowledge by you of the amount that was being transferred to the fund.

A:    I don’t know well.

(Emphasis added)

199    Given the amounts involved are not insignificant, it is probable that Mr Jin would have well known if he had in fact been paying the superannuation contributions on behalf of his employees.

200    Next, the FWO relied upon the failure of South Jin and Mr Jin to provide, in answer to a Notice to Produce Records or Documents pursuant to s 712 of the FW Act, any documents by way of proof that superannuation contributions had been made.

201    I accept the submissions of the FWO concerning these matters. Mr Jin’s statements when interviewed by the FWO reveals an ignorance on his part about superannuation as a concept and ignorance of the obligations of South Jin as an employer with respect to the payment of superannuation contributions. In that circumstance, the inference can readily be drawn from the failure by South Jin and Mr Jin to produce documents in response to the FWO’s specific request that those documents do not exist, and that they do not exist because no payments were made.

202    I conclude that South Jin contravened s 45 of the FW Act by failing to comply with cl 23.2 of the CS Award in respect of each of its employees during the period from 1 January to 21 November 2010.

Failure to provide pay slips

203    As previously noted, South Jin was obliged throughout the Relevant Period to provide pay slips to each of the trolley collectors within one working day of the making of a payment of wages. In respect of the period from 16 February to 30 June 2009, that obligation was imposed by reg 19.20(1) of the WR Regulations. Regulation 19.20 provides relevantly:

19.20 Pay slips

(1)    An employer who employs an employee must issue to the employee a written pay slip relating to each payment by the employer of an amount to the employee as remuneration.

(2)    The pay slip:

(a)    must be issued within 1 day of the payment to which the pay slip relates being made to the employee; and

(b)    may be issued in electronic form or as hard copy.

(3)    The employer must include on a pay slip particulars specified in regulation 19.21.

…

204    The particulars specified in reg 19.21 (to which reg 19.20(3) refers) include the period to which the pay slip relates and, in respect of employees paid an hourly rate of pay, the ordinary hourly rate, the number of hours in the period for which the employee was employed at that rate, and the amount of the payment made at that rate.

205    In respect of the period from 1 July 2009 to 21 November 2010, the obligation to provide pay slips was imposed by s 536(1) of the FW Act. Section 536 provides relevantly:

536 Employer obligations in relation to pay slips

(1)    An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work.

…

(2)    The pay slip must:

(a)    if a form is prescribed by the regulations—be in that form; and

(b)    include any information prescribed by the regulations.

206    Regulation 3.46 of the FW Regulations contains the prescription (for the purposes of s 536(2)(b)) of the information to be specified in the pay slip. This information is similar to that required by reg 19.21 of the FW Regulations. For present purposes, it is sufficient to set out only reg 3.46(5):

(5)    If the employer is required to make superannuation contributions for the benefit of the employee, the pay slip must also include:

(a)    the amount of each contribution that the employer made during the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contribution was made; or

(b)    the amounts of contributions that the employer is liable to make in relation to the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contributions will be made.

207    The FWO’s allegation is that South Jin did not issue any pay slips at all until on or about 12 September 2010. In respect of the period from on or about 12 September until 21 November 2010, the FWO accepts that South Jin did issue pay slips but alleges that those pay slips did not include the information prescribed by reg 3.46(5) because they did not include the number of the superannuation fund to which the contributions had or would be made.

208    The FWO relied on the following evidence to establish these contraventions. First, admissions made by Mr Jin when interviewed by Ms Peters on 17 August 2010 and 4 November 2010 respectively. In the interview on 17 August 2010, Mr Jin gave the following responses:

Q:    Do you understand that as an employer you have an obligation to provide a pay slip within one day of payment?

A:    I didn’t know.

Q:    Have you been giving pay slips within one day of payment to your employees?

A:    No.

209    In the interview on 4 November 2010, Mr Jin gave the following responses:

Q:    When did you start [providing pay slips every week]?

A:    After the interview.

…

Q:    Will anybody … who was employed by you between January of 2009 and August of 2010 be able to confirm that you provided them with a pay slip?

A:    They haven’t received until August 2010.

210    Mr Sarkar’s evidence, which I accept, was that he had not been provided with any kind of pay slip during his employment. Mr Jeong also told Ms Peters when interviewed by her on 7 October 2010 that he had not received any pay slip.

211    Finally, I note Ms Peters’ evidence that neither South Jin nor Mr Jin produced any pay slips in respect of any period until 12 September 2010. It seems that Mr Jin and South Jin were prompted to issue the pay slips by reason of the questioning of Mr Jin in the interview on 17 August 2010.

212    I conclude that the contraventions with respect to the failure to issue pay slips in the period from 16 February 2009 to 12 September 2010 are established.

213    The contravention alleged by the FWO in respect of the period after 12 September 2010 is quite narrow, namely, a failure by South Jin to include on a pay slip the number of the superannuation fund into which superannuation contributions had been made or would be made. In my opinion, this contravention is not made out. As indicated in the previous section of these reasons, South Jin had not made superannuation contributions and was not intending to make superannuation contributions. In that circumstance, there was no number of a fund which could be included on the pay slip. Any number which South Jin did include on the pay slip would have been a falsity. It would not be appropriate for the Court to find that South Jin had contravened reg 3.46(5) by failing to include an entry which was false.

214    South Jin’s culpability is encompassed by the finding that it contravened cl 23.2 of the CS Award by failing to make the superannuation contributions required of it.

215    In summary, I am satisfied that the FWO has made good the alleged contraventions constituted by the failure to issue pay slips in respect of the period from 16 February 2009 until 12 September 2010, but not thereafter.

Failure to keep proper records

216    The final contraventions by South Jin alleged by the FWO concern its failure to keep proper records.

217    From 16 February 2009 until 30 June 2009, reg 19.4(1) of the WR Regulations required South Jin to make, or to cause to be made, a record relating to each employee in accordance with Divs 3 and 4 of the WR Regulations. Regulation 19.8(1) of the WR Regulations required that the records maintained by South Jin specify:

(i)    South Jin’s name;

(ii)    the employee’s name;

(iii)    whether the employee’s employment was full-time or part-time;

(iv)    whether the employee’s employment was permanent, temporary or casual; and

(v)    the date on which the employee’s employment commenced.

218    As previously noted, s 535 of the FW Act imposed a similar obligation on South Jin in respect of the period from 1 July 2009 until 21 November 2010. Part 3-6, Div 3, Subdiv 1 of the FW Act specifies the content of the records to be kept. In addition to the records required under the WR Act, the FW Act requires the records to include South Jin’s own ABN and, under reg 3.34 of the FW Regulations, the number of overtime hours worked by the employee each day, or when the employee started and ceased working overtime hours.

219    The FWO alleges that South Jin failed to comply with these obligations because its records did not include a statement of whether the employee’s employment was full-time, part-time, permanent, temporary or casual. In respect of the period after 1 July 2009, the FWO alleges that South Jin did not make, or cause to be made, an overtime record in relation to those employees who did work overtime.

220    For the evidence of these contraventions, the FWO relied upon the documents produced by South Jin and Mr Jin in response to Notices and Requirements to Produce served pursuant to ss 709(d) and 712 of the FW Act. I have already referred to the content of the South Jin wage records, being some of this documentation. Those records did not include information of the kind presently in question.

221    It is not necessary to refer in detail to the remaining documentation produced by South Jin and Mr Jin. It is sufficient to record my satisfaction that those documents do not record in relation to each employee whether the employee was full-time, part-time, permanent, temporary or casual and do not, in respect of the period after 1 July 2009, include the required overtime records.

222    These contraventions by South Jin are established.

Accessorial liability

223    The FWO alleges that Mr Jin and the CTS Respondents are liable as accessories in relation to the contraventions of South Jin. In the case of Mr Jin the allegation is that he is liable as an accessory in relation to each of South Jin’s contraventions. In relation to the CTS Respondents the FWO alleges accessorial liability only in respect of South Jin’s underpayment contraventions in 2010.

Statutory provisions

224    In relation to accessorial liability for contraventions of provisions in the WR Act, the FWO relied upon s 728 of the WR Act:

728 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 treated as having contravened that provision.

(2)    For this purpose, 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.

As can be seen, by subs (1), a person who is “involved in” a contravention of a civil remedy provision is treated as having contravened that provision. Subsection (2) identifies the means by which a person may be “involved in” a contravention. The FWO relies upon subs (2)(c) as she alleges that each of Mr Jin, CTS and Mr Stroop was “knowingly concerned in or party to” the contraventions of South Jin which she alleges.

225    As noted previously, it was not in dispute that each of ss 182 and 185 of the WR Act, regs 19.4 and 19.20 of the WR Regulations, and item 5 Sch 16 of the Transitional Act was a “civil remedy provision”.

226    Section 550 is the counterpart in the FW Act to s 728 of the WR Act. Again, the FWO alleges that each of Mr Jin, CTS and Mr Stroop was “involved in” South Jin’s contraventions by being “knowingly concerned in or party to” the identified contraventions. It was not in dispute that ss 45, 535 and 536 of the FW Act and regs 3.32, 3.34 and 3.46 of the FW Regulations are civil remedy provisions.

Accessory liability – principles

227    In order to be knowingly concerned in, or party to, a contravention, a person must have engaged in some conduct which “implicates or involves” him or her in the contravention, so that there is a “practical connection” between the person and the contravention: Qantas Airways Ltd v Transports Workers’ Union of Australia [2011] FCA 470; (2011) 280 ALR 503 at [324]-[325]. See also Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87; (2007) 164 IR 299 at [26]. In Trade Practice Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299, Wilcox J at 357 quoted with approval the following passage from the judgment of the Full Court of the Supreme Court of Western Australia in Ashbury v Reid (1961) WAR 49:

The question which a Court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of section 54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connection between him and the offence.

The statement in Ashbury v Reid was also approved in R v Nifadopoulos (1988) 36 A Crim R 137 at 140 with the Court (Kirby ACJ, Maxwell and Carruthers JJ agreeing) saying that “a person cannot become criminally involved in an act made unlawful by mere knowledge or inaction on his part – some act or conduct on his part is necessary”.

228    In Yorke v Lucas (1983) 49 ALR 672 at 681, the Full Court of this Court approved the following statement of Pennycuick V-C in Re Maidstone Buildings Provisions Ltd [1971] 1 WLR 1085 at 1092-3:

[T]he expression “party to” must on its natural meaning indicate no more than “participates in” or “concurs in”. And that, it seems to me, involves some positive steps of some nature.

See also Sent v Jet Corporation of Australia (1984) 2 FCR 201 at 208-9.

229    In order for a person to have been knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. However, it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention: Yorke v Lucas at 667; Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 at [48]. An accessory does not have to appreciate that the conduct involved is unlawful: Australian Competition and Consumer Commissioner v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302 at [186].

230    Actual knowledge of the essential elements constituting the contravention is required. Imputed or constructive knowledge is insufficient: Young Investments Group Pty Ltd v Mann [2012] FCAFC 107 at [11]; (2012) 293 ALR 537 at 541.

231    Proof that a person had actual knowledge of each of the essential elements making up a contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a respondent’s knowledge of suspicious circumstances and the decision by the respondent not to make enquiries to remove those suspicions. Nevertheless it is actual knowledge which is required. In this respect, Wilson, Deane and Dawson JJ in Giorgianni v The Queen (1985) 156 CLR 473 at 505 said:

[A]lthough it may be a proper inference from the fact that a person has deliberately abstained from making an inquiry about some matter that he knew of it and, perhaps, that he refrained from inquiry so that he could deny knowledge, it is nevertheless actual knowledge which must be proved and not knowledge which is imputed or presumed.

And later (at 507-8):

The fact of exposure to the obvious may warrant the inference of knowledge. The shutting of one’s eyes to the obvious is not, however, an alternative to the actual knowledge which is required as the basis of intent to aid, abet, counsel or procure.

232    The conclusion that a person has actual knowledge of the elements of a contravention by reason of that person’s knowledge of suspicious circumstances coupled with a deliberate failure to make enquiries which may have confirmed those suspicions requires consideration of the person’s knowledge of the matters giving rise to the suspicion, the circumstances in which the person did not make the obvious enquiry and the person’s reasons, to the extent that they are known, for not having made the enquiry. It is not every deliberate failure to make enquiry which will support the inference of actual knowledge. In several cases, including Official Trustee in Bankruptcy v Mitchell [1992] FCA 521, (1992) 38 FCR 364 at 371 and Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd [1994] FCA 1222, (1994) 123 ALR 681 at 693-4, this Court has referred with approval to a passage from the advice of Lord Sumner in Zamora (No 2) [1921] 1 AC 891 at 812-3 in which his Lordship noted two senses in which a person may be said not to know something because they do not wish to know it:

A thing may be troublesome to learn, and knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a person is said not to know because he does not want to know, where the substance of a thing is borne in upon his mind with a conviction the full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that whereas ignorance is safe, ‘tiz folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise.

233    In the former circumstance described by Lord Sumner, the person will not have actual knowledge of the matter. In the latter circumstance, the person does have that knowledge but deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance. That is not a circumstance of constructive or imputed knowledge, but of actual knowledge reduced to minimum by the person’s wilful conduct: Richardson & Wrench at 694 (Burchett J).

234    The requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient.

235    A company may be knowingly concerned in a statutory contravention. The knowledge of an officer of a corporation is imputed to the corporation: s 826 of the WR Act and s 793 of the FW Act.

236    Before expressing conclusions about the application of these principles in the present case, it is necessary to identify the elements of the contraventions of which Mr Jin and the CTS Respondents had to have actual knowledge if they are to be liable as accessories and also to make some further findings of fact.

Elements of the contraventions

237    The FWO alleges contraventions of ss 182 and 185 of the WR Act. The elements of the contravention of s 182(3) of the WR Act alleged by the FWO are:

(a)    The trolley collectors were employed by South Jin;

(b)    The employment of the trolley collectors was not covered by an Australian Pay and Classification Scale; and

(c)    The employees were not paid the FMW of $14.31 per hour.

238    I take the view that it is not necessary for the FWO to show that the trolley collectors were not junior employees, employees with a disability, or employees to whom a training arrangement applied because these are in the nature of exemptions to the obligation imposed by s 182(3). Having that character, they are matters on which an alleged contravenor has the onus. Accordingly, they are not elements of a contravention of which an accessory must have knowledge: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 170 FLR 1 at [413]. See also Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342 at [436]-[437].

239    The elements of the contravention of s 185(2) of the WR Act alleged by the FWO are:

(a)    Some of the trolley collectors employed by South Jin were casual employees;

(b)    Those employees were not paid the default casual loading of 20%.

240    The FWO must establish that Mr Jin and the CTS Respondents had actual knowledge of these matters.

241    The elements of the alleged contraventions of s 45 of the FW Act in 2010 are similar. The FWO must establish that Mr Jin and the CTS Respondent had actual knowledge of the following:

(a)    That the trolley collectors were employed by South Jin;

(b)    That some of these employees were casuals;

(c)    That those who were casual were not paid the casual loading prescribed by cl 12.5 of the CS Award;

(d)    That some employees worked at times attracting overtime, weekend and public holiday penalty rates; and

(e)    That these employees were not paid the penalty rates applicable at those times.

ITM background

242    Mr Hills and Mr Vickery, the principals of ITM, have been involved in the trolley collection business since about 1991. This has included the obtaining and performance of trolley collection contracts and the provision of managerial assistance to other trolley collecting contractors.

243    As previously noted, each of Mr Hills and Mr Vickery gave evidence in the trial. Each was an impressive witness, and I consider that their evidence provides a reliable basis for findings of fact.

244    Since 2005, ITM (a Sydney based company) has contracted directly with the major supermarkets and stores for the provision of trolley collection services. These have included the Woolworths Group (Woolworths supermarkets, Dan Murphy’s liquor stores, Big W stores), the Coles/Wesfarmers Group (Coles supermarkets, Target and, until May 2012, Kmart) and other supermarkets such as Franklins, Aldi and Foodland. ITM held contracts with these stores on the basis that it would subcontract the performance of the actual trolley collection work, with its role being limited to contract negotiation, management and administration services.

245    ITM’s principal subcontractor in South Australia from 2006 to October 2011 was CTS. As previously noted, Mr Stroop was at material times the principal of CTS.

246    Mr Hills described the trolley collection business as highly intensive. Between 80% and 90% of the costs involved are labour costs (wages and on costs such as superannuation, leave entitlements and workers’ compensation insurance premiums). The remaining costs comprise vehicle costs, public liability insurance premiums, safety apparel and business compliance and administration costs.

247    Trolley collecting has low profit margins. Most of ITM’s clients and subcontractors work many hours themselves on site and the wage they pay to themselves is a significant proportion of their income.

248    The trolley collection business is very competitive. Entry costs are fairly low, with the consequence that there is a steady supply of new entrants to the industry who seek to attract business by offering lower prices. Hence, a competitive tender price plays a significant role in the awarding of contracts.

ITM tendering for contracts

249    When ITM proposed tendering for a trolley collection contract, Mr Hills and Mr Vickery (and other staff of ITM) made a detailed assessment of the site in order to determine the number of labour hours required to provide the required level of service. This took account of a number of factors, including the size of the centre, the number and location of the centre’s car parks, access and delivery paths for trolleys into the store, the size of store trolley bays, and store turnover (customers served per week by the store).

250    The assessments were made in spreadsheets with estimates of the staffing levels necessary during the course of each day to meet the required trolley collection service levels. This was done by listing the number of trolley collectors required at the site on each day and the hours in that day for which each trolley collector would be required. Mr Vickery said that, given the variability in demand, he and Mr Hills applied a “generous average”.

251    The overall cost was calculated by multiplying these hours by an hourly rate. That hourly rate was calculated by reference to the labour costs, including on costs, equipment costs, and management and administration costs.

252    In relation to South Australian sites, ITM involved Mr Stroop in these assessments. On most occasions Mr Stroop went to ITM’s Sydney offices during the tender process to work through in detail the estimated labour hours for each site and the associated costings. Mr Stroop provided some of the necessary information, for example, workers compensation rates, minimum rates of pay (before the commencement of the CS Award), vehicle requirements and site costs. On some occasions, Mr Stroop prepared his own estimates which were then reviewed and discussed in the course of the meetings.

253    I am satisfied that, by this involvement, Mr Stroop acquired a detailed knowledge of the service requirements of each site.

The Coles 2005 Contract

254    In September 2005, ITM entered into a contract with Coles (the Coles 2005 Contract) for the provision of trolley collection services to the Coles, Kmart and Target stores at the Marion Shopping Centre. The Coles 2005 Contract commenced on 1 September 2005 and, as a result of an extension, expired on 15 March 2009. The Contract stated the required “coverage hours” (also referred to as the “service hours”) by specifying the starting and finishing times between which trolley collection services were required each day. The contract also stipulated the number of “street runs” required each week. A street run is a search of the local area, by vehicle, for the purpose of retrieving trolleys which have been taken off site.

255    In respect of the Coles store at Marion, the service hours were specified to be 8.30 am to 9 pm Mondays to Fridays, 8.30 am to 5 pm on Saturdays, and 11 am to 5 pm on Sundays. These hours were more extensive than the similar, but not identical, hours required for the Target and Kmart stores. In the case of the Target stores, the service hours were 9 am to 6 pm Monday to Friday (save for Thursday when coverage was required to 9 pm), 9 am to 5 pm on Saturdays, and 11 am to 5 pm on Sundays. The service hours for the Kmart store were 8.30 am to 6 pm Monday to Friday (save for Thursday when coverage was required to 9 pm), 8.30 am to 5 pm Saturdays, and 11 am to 5 pm on Sundays.

256    The Coles 2005 Contract did not stipulate the total number of labour hours required for the site (i.e., the total number of hours to be worked by all trolley collectors) but ITM did provide this information to Coles. ITM and CTS made their own assessment of these hours. I will refer to these as the “indicative rosters”.

257    During the currency of the Coles 2005 Contract, ITM negotiated increases in the rates paid by Coles from time to time. With effect from 17 March 2008 until the expiry of the contract on 15 March 2009, the prices paid by Coles to ITM in respect of the stores at the Marion Shopping Centre were as follows:

(a)    Coles – $2,482.78 per week (ex GST);

(b)    Kmart – $847.78 per week (ex GST);

(c)    Target – $904.44 per week (ex GST).

258    Although ITM tendered for the new Coles contract at the Marion Shopping Centre, it was unsuccessful, and it ceased providing the trolley collection services to the Coles Stores at Marion on 15 March 2009.

Coles and Kmart – Kurralta Park site

259    Coles did accept ITM’s tender for the provision of trolley collection services at the Kurralta Park Coles and Kmart stores commencing in March 2009. The Coles 2009 Contract covers the Kurralta Park site. ITM contracted with Coles to provide the following service hours: 9 am until 9 pm Mondays to Fridays, 9 am to 5 pm Saturdays and 11 am to 5 pm on Sundays. ITM estimated that a total of 86 roster hours per week would be required.

260    Mr Stroop provided ITM with price modelling on a spreadsheet for the purposes of its tender to Coles in respect of the Kurralta Park site. Mr Stroop’s labour cost modelling was also based on a total estimated roster hours of 86 per week.

261    At the commencement of the Coles 2009 Contract on 16 March 2009, the contract prices for the Kurralta Park stores were:

(a)    Coles – $1,274.65 per week (ex GST);

(b)    Kmart – $615.35 per week (ex GST).

262    With effect from 3 August 2009 (and because of an increase in the number of street runs), the Coles store price became $1,484.65 per week (ex GST).

263    ITM and CTS had indicative rosters for the Kurralta Park site, containing the estimates of the number of trolley collectors and their hours of employment.

Woolworths Group – Marion, Elizabeth and West Lakes sites

264    ITM’s contract with respect to trolley collection services at the Woolworths Marion, Elizabeth and West Lakes sites came into operation on 21 August 2006.

265    The service hours varied from store to store. At West Lakes, from November 2008, the service hours were 8 am to 9.30 pm Monday to Wednesday, 7 am to 9.30 pm on Thursdays, 7.30 am to 9.30 pm on Fridays, 7.30 am to 6 pm on Saturdays and 10.45 am to 5.30 pm on Sundays.

266    The services hours at Marion from June 2008 were 7.30 am to 9.30 pm Monday to Friday (except that the hours were extended to 10 pm on Thursdays), 7.30 am to 6 pm on Saturdays and 10.30 am to 6 pm on Sundays. The service hours for Big W at Marion from June 2008 were 8.30 am to 7 pm Monday to Saturday (save that on Thursdays this was extended to 9 pm and on Saturdays shortened to 5 pm) and 11 am to 5 pm on Sundays.

267    At Elizabeth, the service hours were 9 am to 7.30 pm Monday to Wednesday, 8 am to 9.30 pm on Thursdays, 8 am to 8 pm on Fridays, 8 am to 6 pm on Saturdays and 11.30 am to 5.30 pm on Sundays.

268    As part of the tender process, Woolworths provided ITM with service sheets for each site. These sheets required ITM to provide details of the number of trolley collectors who would be engaged each day, the hours for which they would be engaged, and the pricing. They were in the nature of rosters. Mr Hills and Mr Vickery used their own spreadsheets to determine the figures to be inserted into the Woolworths service sheets. I will refer to these too as “indicative rosters”. These indicative rosters did not acquire contractual force but were an indication to the Woolworths store managers of the level of the service which they could expect from ITM. The indicative rosters were updated from time to time during the currency of the Woolworths contract. In addition, the rates paid by Woolworths were increased from time to time.

269    The applicable rates for each site were as follows:

(a)    Woolworths West Lakes:

    2008/09 – $3,345.00 per week (ex GST);

    2009/10 – $3,445.35 per week (ex GST);

    2010/11 – $3,545.71 per week (ex GST);

(b)    Woolworths Marion:

    2008/09 – $4,143.60 per week (ex GST);

    2009/10 – $4,267.91 per week (ex GST);

    2010/11 – $4,395.95 per week (ex GST);

(c)    Big W Marion:

    2008/09 – $933.59 per week (ex GST);

    2009/10 – $961.60 per week (ex GST);

    2010/11 – $990.45 per week (ex GST);

(d)    Woolworths Elizabeth:

    2008/09 – $2,450.68 per week (ex GST);

    2009/10 – $2,524.20 per week (ex GST);

    2010/11 – $2,524.20 per week (ex GST);

(e)    Big W Elizabeth:

    2008/09 – $785.07 per week (ex GST);

    2009/10 – $808.62 per week (ex GST)

    2010/11 – $832.88 per week (ex GST).

Dan Murphy’s Marion

270    ITM also had a contract to provide a trolley collection service for the Dan Murphy’s store at Marion. The required service was one hour per day clean-up and a street run. This did not require any additional staff to be employed over and above those already engaged at the Marion site because most of Dan Murphy’s trolleys were collected from the Marion Westfield car parks.

ITM subcontracts with CTS

271    As noted, ITM does not provide any trolley collection services directly.

272    Mr Stroop has been involved in the trolley collection business since 2001. Initially he was employed as a manager of Yasmin Trolley Services which, at one stage, had more than 300 employees.

273    Mr Stroop incorporated CTS in 2002. CTS then contracted with a number of supermarkets to provide trolley collection services and engaged a company controlled by Mr Hills and Mr Vickery to perform management services in respect of those contracts, including invoicing and the provision of advice regarding occupational health and safety obligations and employee entitlements. CTS engaged its own employees to carry out the trolley collection work.

274    In about 2005, when the major retailers expressed a wish to contract with companies like ITM, CTS and ITM entered into a number of management services agreements. I will refer to one such agreement shortly.

275    In or around August 2005, ITM entered into a subcontract with CTS for the provision of trolley collection services at (amongst other places) the Marion Coles, Kmart and Target sites (the 2005 CTS Subcontract).

276    Under the 2005 CTS Subcontract, CTS agreed to perform the shopping trolley collection services for which ITM had contracted with Coles in accordance with all the terms, conditions and obligations specified in the Coles 2005 Contract and ITM undertook to oversee the compliance by CTS with the terms and conditions of that contract (cl 3.c). CTS undertook to:

(1)    Effect and maintain workers’ compensation insurance for all its employees (cl 5.c);

(2)    Ensure that all employees who were not Australian citizens had visas allowing them to work in Australia and that they complied with any visa conditions (cl 5.d);

(3)    Ensure that all staff employed by it to perform or assist in the performance of the work were paid in accordance with the applicable State or Federal industrial awards and received all entitlements as may be legally required, including, but not limited to, award penalty rates and allowances, annual leave, long service leave and superannuation levy payments (cl 5.f);

(4)    Maintain direct control over the work at all times and not to delegate the management of that work, or sub-contract or assign it to any other party without the prior and express permission of ITM (cl 5.k).

277    ITM invoiced Coles for the work, retained for itself 5% of the total invoice amount and paid the balance to CTS. As CTS was covered by ITM’s Public Liability Master Policy, ITM also deducted an amount for the premium.

278    The 2005 CTS Subcontract operated in respect of the Marion site until ITM lost the contract for those stores with effect from 15 March 2009.

279    In March 2009, ITM entered into a subcontract with CTS for the provision of trolley collection services at (amongst other places) the Coles and Kmart stores at Kurralta Park (the 2009 CTS Subcontract). That contract came into effect on 15 March 2009. This contract required CTS to perform all of ITM’s trolley collection obligations under the Coles 2009 Contract and for ITM to remit to CTS 95% of the total amount invoiced to Coles in respect of those services (less an amount for the insurance premium).

280    The 2009 CTS Subcontract contained terms which were similar to those contained in the 2005 CTS subcontract.

281    On or around 1 July 2005, ITM entered into a “Management Services Agreement” (the MSA) with CTS with respect to the provision of trolley collection services at the Woolworths and Big W stores at West Lakes, Marion and Elizabeth. Mr Hills and Mr Vickery took the view that it was really CTS which held the contract with Woolworths and that it was merely contracting to provide management services in relation to that contract. The correctness of that view does not arise for determination presently and I express no view about it. It appears however, that ITM provided services under the MSA which were similar to those it provided under its subcontracts with CTS with respect to the Coles sites and that it received 5% of the amount invoiced to Woolworths in consideration for that work.

282    Under the MSA, CTS undertook to:

(1)    Perform the work in a safe, business-like manner and in compliance with all terms and conditions of the relevant Store contracts and Centre Management requirements (cl 2.2);

(2)    Maintain workers compensation insurance for all employees or sub-contractors (without their own policy) engaged in the business (cl 2.3);

(3)    Abide by wage rates and conditions determined from time to time under the relevant State or Federal Awards (cl 2.8);

(4)    Ensure that all employees or sub-contractors of the business had visas allowing them to work in Australia and that they complied with their visa conditions (cl 2.9);

(5)    Ensure that all employees wore a reflective safety uniform or vest approved by ITM at all times while working in the business (cl 2.10);

(6)    Pay the superannuation guarantee levy for all relevant employees and to abide by any relevant statutes and awards relating to employment including, but not limited to, annual leave, long service leave and industrial relations acts (cl 2.11).

283    CTS appointed ITM to provide it, amongst other things, with up to date information about current Award and rostering requirements (cl 1.4).

284    Mr Vickery deposed (and I accept) that the MSA also applied with respect to the provision of trolley collection services at the Dan Murphy’s store at Marion and at the Fairview Park Foodland store.

Foodland Fairview Park

285    In March 2009, Mr Stroop negotiated directly with the Commercial Retail Group a contract for the provision of trolley collection services at the Foodland supermarket in Fairview Park. ITM provided contract management services in relation to this contract. Mr Stroop prepared CTS’s own costing analysis for the Fairview Park Foodland. This included a breakdown of the number of employees expected to be necessary to provide the appropriate level of service. That breakdown described the capacity of each employee, their expected start and finish times and the expected hourly rate. This too was in the form of an indicative roster. Before submitting the tender, Mr Stroop emailed the indicative roster to ITM and sought Mr Vickery’s opinion about it.

286    The initial contract price was $2,150.00 per week (ex GST) for a total of 109 service hours. With effect from 1 February 2010, the contract price for the Fairview Foodland contract was reduced to $1,500.00 per week (ex GST) for 74.5 service hours.

The CTS – South Jin subcontracts

287    ITM contemplated that CTS would subcontract the trolley collection services which were the subject of the Coles 2005 Contract, the Coles 2009 Contract and the MSA.

288    CTS subcontracted to South Jin the trolley collection services at Marion, Elizabeth, West Lakes and Kurralta Park. It also subcontracted to South Jin the trolley collection services at the Fairview Park Foodland and the Dan Murphy’s store at Marion. It did so pursuant to a standard form subcontract agreement. Each subcontract required South Jin to:

(a)    Collect and return supermarket trolleys and shopping baskets from, in and around, the shopping centre;

(b)    Undertake these services during the service hours set out in Sch 2 to each subcontract (although  Sch 2 to the Marion subcontract did not specify the service hours);

(c)    Take all reasonable care to ensure that all shopping trolleys were accounted for and not lost or damaged;

(d)    Ensure that all of its employees wore a uniform approved by CTS;

(e)    Ensure that its staff were paid in accordance with the appropriate industrial awards and received all applicable entitlements;

(f)    Ensure that it abided by all laws which may be applicable to the conduct of the work, including, but not limited to, occupational health and safety and workers’ compensation;

(g)    Effect workers compensation insurance for all its employees;

(h)    Pay superannuation levies for the employees.

289    In addition, the subcontracts required South Jin to adhere to conditions of the principal contracts requiring it to:

(a)    Keep a supply of trolleys available to the customers of the store at all times;

(b)    Ensure that all trolleys were accounted for and secured each night (it was stated that this had the effect that “there is no set finishing time”);

(c)    Ensure that all internal bays were full at the commencement of trade;

(d)    Maintain an adequate supply of trolleys for customers’ use by feeding trolleys to the internal bays from the stores’ external bays, collecting trolleys from the centres’ car park, loading docks and fire escapes and returning them to the external bays, removing and disposing of rubbish or debris from trolleys, and collecting trolleys from the immediate surrounding streets.

290    CTS was required to pay South Jin the weekly lump sum contract price set out in Schedule Three to the subcontract. Those payments (ex GST) were as follows:

291    These contract prices were stipulated by CTS when it offered each subcontract to South Jin. Save for two matters, the subcontracts did not provide for any adjustment of the contract price during the currency of the subcontract. CTS had the ability to adjust the price paid if the store altered its trolley service requirement or if the store made a deduction because of poor service by the subcontractor. Apart from the increase associated with the increased duties at Kurralta Park on 3 August 2009, CTS did not increase the weekly payments to South Jin during the Relevant Period. Mr Stroop deposed that CTS was not contractually bound to pay any more than the contract price but did in the latter part of 2010 make some additional lump sum payments. I will refer to these later

292    The subcontracts did not provide for any term, stipulating only that they were to be “week to week” and subject to South Jin performing adequately its obligations under the contract and CTS maintain its contract at the store. CTS was entitled to terminate the subcontracts immediately and without notice if South Jin failed to meet its obligations by failing to pay employee wages and superannuation payments (cl 10(b)(vi)).

Comparison of the payments

293    A comparison of the payments (exclusive of GST) made by ITM to CTS, on the one hand, and by CTS to South Jin, on the other, is contained in the following table.

294    The table shows that by 1 January 2010 CTS was retaining $2,672.72 per week and, by 4 July 2010, $2,914.12 per week; that the payments from ITM to CTS increased periodically (with the exception of the payments with respect to the Fairview Park store after the trolley collection services at that store were reduced in February 2010); and that the payments from CTS to South Jin remained constant. The only exceptions are the reduction in February 2010 in respect of the payment relating to the Fairview Park store and the increase in August 2009 following the increased service at the Kurralta Park store.

South Jin’s use of the indicative rosters

295    CTS provided the indicative rosters for each site to South Jin.

296    Mr Jin’s responses when interviewed by Ms Peters on 4 November 2010 show that he used the indicative rosters to determine the number of employees he required at each site and the hours they should work:

Q:    [I]f you hadn’t worked at Elizabeth before or Kurralta Park or Fairview, how do you know how many employees to have at each site and how many hours they should work?

A:    Coastal gave me information.

Q:    Okay. So Coastal would tell you how many employees?

A:    Yes.

Q:    Would they also tell you how many each week?

A:    Yes.

Q:    Okay. And is that how you based, how you put your employees at the site?

A:    Yes.

…

Q:    What would happen if you changed these hours?

A:    I don’t change.

The CTS Respondents and the CS Award

297    ITM became aware during the award modernisation process in 2009 that the AIRC intended that trolley collectors, other than those to whom the GRI Award would apply, would be covered by the CS Award: [2009] AIRCFB 345. Subsequently, the Australian Industry Group (AIG), on behalf of ITM and other contractors, applied to the AIRC to have the employment of all trolley collectors governed by the GRI Award. That application was dismissed: General Retail Industry Award 2010 [2009] AIRCFB 983 delivered on 22 December 2009. ITM then made its own application to FWA seeking a variation of the GRI Award so as to extend its coverage to trolley collectors employed by contractors. In the alternative, ITM sought a variation of the CS Award so as to include junior rates and transitional provisions similar to those contained in the GRI Award. By a decision delivered on 23 April 2010, Watson VP dismissed the first application but granted the second: Integrated Trolley Management Pty Ltd [2010] FWA 3317.

298    Mr Hills and Mr Vickery took the view that, even with the transitional provisions in the varied CS Award, the wage requirements under the CS Award could not be accommodated within the amounts paid by Woolworths and Coles under their respective contracts. Accordingly, Mr Hills and Mr Vickery commenced negotiations with Coles and Woolworths for increased payments. This process took some time, and agreement was not reached with Woolworths until December 2010 and with Coles until April 2011. Each company then agreed to make back payments in respect of the period from 1 July 2010.

299    Mr Vickery deposed, and I accept, that Mr Stroop “was kept fully informed of ITM’s progress with the FWA application and later of [its] negotiations with Woolworths and Coles in relation to price increases and back-pay”. Either Mr Hills or Mr Vickery spoke to Mr Stroop every few days and discussed with him the latest development in the progress of the application and the negotiations. Mr Stroop did not dispute this evidence.

300    CTS employed some trolley collectors directly. Accordingly, Mr Stroop had to keep abreast of the obligations of CTS and he did so, including making his own review of the CS Award.

301    Mr Hills deposed, and I accept, that ITM’s general advice to its subcontractors, including CTS and Mr Stroop, was that they should pay employees under the CS Award from 1 January 2010 until ITM’s application to FWA was resolved. Mr Hills also deposed that he had discussed with Mr Stroop the fact that the AIRC had put trolley collectors under the CS Award, that Mr Stroop had authorised ITM to represent CTS in the application to the FWA, and that he had generally kept Mr Stroop up to date as to the progress of the application.

302    Some indication of Mr Stroop’s knowledge of the likely effect of the CS Award is given by the statutory declaration which he made on 17 February 2009 in connection with the proceedings in the AIRC. In that declaration, Mr Stroop deposed to the impact which the proposed CS Award would have on his business, describing it as “devastating”. He referred in particular to the impact of penalty rates and the absence of junior rates of pay and estimated, that if the CS Award was made in its proposed form, the labour costs of contractors such as CTS would be higher than the labour costs of retailers employing their own employees to perform the same tasks.

303    Another indication of Mr Stroop’s knowledge of the effect of the CS Award is the statutory declaration which he made on 2 October 2009 in connection with the AIG application to the AIRC. In that declaration, Mr Stroop deposed to having “reviewed” the CS Award, to understanding that his business would be covered by the Award from 1 January 2010 and to particular impacts of the CS Award on his business, in particular, the absence of junior rates of pay, the loading for work performed after 6 pm and the Saturday penalty rate. Mr Stroop concluded the statutory declaration by saying:

[18]    My profit margin is currently 5.8%. In total, if the [CS Award] were to apply, I would be faced with increased costs of approximately $350,000, which is equivalent to a 6% increase. If I was faced with these increased costs, I would have to close down my operations as my business costs would exceed my business income.

304    The FWO relied upon this statement as an indication, not only of Mr Stroop’s knowledge of the terms of the CS Award, but that CTS, and by implication South Jin, would operate at a loss on the commencement of the CS Award.

305    Immediately after the FWA decision of 23 April 2010, Mr Hills and Mr Vickery worked on price modelling for all sites to assess the impact of the increase in wage rates over the next five years. On 7 May 2010, Mr Hills emailed to Mr Stroop a set of schedules outlining the wage rates under the CS Award as well as projected wage rates from 1 July 2010 when the expected annual modern award wage increase would take effect. As the increase to apply from 1 July 2010 was not known at that stage, Mr Hills used an estimate of 4% for that purpose. The schedule which Mr Hills provided in respect of the period before 1 July 2010 stated the ordinary time hourly rate to be $15.34 for permanent or part-time employees and $19.18 for casual employees. It also stipulated that all work on Saturdays was payable at 150% of the ordinary time rate ($23.01 for permanent and part-time employees and $28.76 for casuals) and that all work on Sundays was payable at 200% of the ordinary time rate ($30.68 for permanent and part-time employees and $38.35 for casual employees).

306    Mr Hills deposed, and I accept, that Mr Stroop identified an error in the manner in which he had applied the casual loading. Mr Hills then circulated revised schedules to all ITM subcontractors in May and June 2010. By this means, Mr Stroop had knowledge of the rates which were applicable.

307    Mr Stroop informed Mr Hills and Mr Vickery that, with effect from July 2010, he would increase payments to his subcontractors on account of the Award rate increases, that he would cover these increases out of CTS reserves, and that he expected to recover that money from the back-payments anticipated from Woolworths and Coles. Mr Stroop told Mr Vickery that he had increased the payments to his contractors by “about $5 an hour”.

308    However, the first additional payment made by CTS to South Jin was not until September 2010 ($56,381.00). Subsequently CTS made further payments with the effect that it paid South Jin in total $142,479.00 more than required by its contracts. Some $115,274.92 of this was reimbursed by the supermarkets.

309    At various times after 1 July 2010 until the receipt of the back-payments, Mr Stroop informed ITM that he was having cashflow difficulties. ITM advanced payments to him in order to assist in alleviating this problem.

310    ITM also sent updated CS Award rate schedules to its contractors, including CTS, in May 2010 and again in mid-June 2010.

Assessment of Mr Stroop’s credibility

311    Before proceeding to express my conclusions about the accessorial liability of the CTS Respondents, it is appropriate that I indicate my assessment of the evidence given by Mr Stroop, given my rejection of significant aspects of that evidence.

312    I have already referred to the unsatisfactory nature of Mr Stroop’s evidence concerning Mr Hyun. There were other aspects of Mr Stroop’s evidence which I considered to be implausible, unconvincing and self-serving. I had the firm impression that Mr Stroop well knew where his interests lay in the litigation and, on occasion, adapted his evidence accordingly. I also had the distinct impression that Mr Stroop had been aware in 2009 that South Jin was probably underpaying its employees and knew in 2010 that that was the fact, and sought, in his evidence, to indicate that that had not been so.

313    An example is Mr Stroop’s assertion that, when in 2009 South Jin started providing payroll records to CTS, he had simply passed them on to ITM without any review himself. He said that his job had been only to check that the records existed. In my opinion, that evidence was implausible and I think it highly probable that Mr Stroop had himself inspected the records to make at least some assessment. He knew at the time that South Jin was the subcontractor to CTS, and not to ITM, and that CTS had the principal interest in checking South Jin’s records.

314    Another example of Mr Stroop’s attempts to distance himself from knowledge about South Jin’s conduct is his evidence about ITM’s request that he carry out a three monthly audit of South Jin’s payroll records:

[49]    I was concerned about being asked to do a three monthly audit of payroll records. I felt that I was not properly qualified to undertake such an audit, and I was concerned about having too great a role in the financial affairs of a subcontractor. I spoke to Hills and raised my concerns. I asked whether if I were to receive a letter from South Jin’s accountant confirming that South Jin has complied with its obligations, would that be acceptable and sufficient for his requirements. Hills said yes. Accordingly, CTS did not perform the three monthly audits as set out in the letter [dated 19 October 2009], nor did ITM require us to.

315    Mr Stroop was questioned about this passage in cross-examination:

Q:    You were concerned about having too great a role in the financial affairs of South Jin because you knew that you could be held legally responsible for those financial affairs if you knew too much about them?

A:    That’s probably a fair statement to make, after the facts. Yes.

316    To my mind, this evidence confirmed that he knew, as a matter of inference, that South Jin was underpaying its employees at the time and wished to avoid having objective evidence that that was so, in order that he might avoid culpability in that state of affairs.

317    This was an obvious attempt to shift the responsibility for the auditing to someone else. I note that neither Mr Hills nor Mr Vickery had any recollection of Mr Stroop making the claimed request, and did not confirm that Mr Hills had said that a certificate from South Jin’s accountant would be adequate. To my mind it is improbable that they would have done so, especially as it is unlikely that the accountant would have been sufficiently familiar with South Jin’s obligations under the WR Act and the FW Act so as to be able to audit its compliance with them. I reject this aspect of Mr Stroop’s evidence.

318    In answer to the FWO’s contention that CTS had not paid South Jin a sufficient amount with which to meet its statutory and award obligations, Mr Stroop put forward an analysis which showed that the amounts CTS paid to South Jin averaged $41.31 per hour. This analysis was obviously wrong, as that rate exceeded the rate which ITM received from the stores and the rate which CTS itself received from ITM. Mr Stroop must have known that that was so. The fact that, despite that knowledge, he still deposed to the analysis in his affidavit did him no credit. Mr Stroop based his analysis on the hours of work shown in South Jin’s wage records. It must have been obvious to him that those hours were unreliable because they were well less, on any view, than the minimum number of hours necessary to provide the required trolley collection services. I say that it must have been obvious because Mr Stroop included in his own analysis the total number of hours recorded by South Jin as worked by trolley collectors in any one week. A simple comparison of those totals with the service hours required under its contract indicates that the hours recorded in the wage records could not be accurate. Mr Stroop well knew the hours necessary at each site as he acknowledged in cross-examination that he “knew what the hours were that were required to do the stores that [he] serviced”. Again, it did Mr Stroop no credit that, despite this circumstance, he still put forward, and attempted to rely upon, the misleading analysis.

319    Mr Stroop’s evidence was also contradicted by the evidence of others in the trial whose evidence I considered to be reliable. One of those was Mrs Sarkar, the wife of the trolley collector Mr Sarkar. Mrs Sarkar gave evidence of a conversation she had with Mr Stroop on or about 8 May 2010 which she said was to the following effect:

Mrs Sarkar:    I have read in the newspaper about award wages and I want to make sure that Biswajit gets paid properly.

Mr Stroop:    That’s nothing to do with me. We subcontract that work to South Jin. … You’re misinformed about pay rates. They can pay whatever they want.

320    Mrs Sarkar went on to tell Mr Stroop that she and her husband were unhappy about the wages and would make an official complaint.

321    Mr Stroop disputed this account and said that Mrs Sarkar had asked for her husband to be paid cash in hand, with no records kept. Mrs Sarkar denied that she had said this. I thought that she was an honest witness and accept that she did not ask Mr Stroop for some form of “black money”. I reject Mr Stroop’s account to the contrary. To my mind, it is implausible that Mrs Sarkar, having rung Mr Stroop to make a forceful complaint about her husband not being paid his lawful entitlements would, almost in the next breath, have asked for cash in hand in an apparent attempt to avoid taxation obligations.

322    Another unsatisfactory aspect of Mr Stroop’s evidence was that concerning the commencement date of the CS Award. Mr Stroop said that he knew in 2009 that the CS Award was to commence on 1 January 2010. He said however, that Mr Vickery’s advice to him “during the period 1 January 2010 to 25 April 2010” was that the CS Award would not apply because ITM’s application to FWA would be accepted. Mr Vickery denied this account. He said that he had told Mr Stroop in early-mid-January 2010 that trolley collection was now covered by the CS Award and that the Award applied from 1 January 2010. He had of course informed Mr Stroop of ITM’s application to FWA in early 2010, and was hopeful that ITM’s view that the CS Award should not apply until 1 July 2010 would prevail. However, Mr Vickery went on to say, and I accept, that he had told Mr Stroop in the period January-April 2010 that the CS Award did in fact apply.

323    I consider that Mr Stroop’s evidence on this topic was part of an attempt to deny knowledge that the CS Award applied in the period from 1 January 2010 to 23 April 2010. I reject his evidence to that effect.

324    I refer to Mr Stroop’s evidence concerning his countersigning of ITM questionnaires completed by Mr Jin as part of an ITM program to monitor the compliance of its contractors and subcontractors with the requirements of its contracts with the supermarkets. Mr Stroop said that he had signed the questionnaires only for the purpose of verifying that Mr Jin had completed the forms and not for the purpose of verifying that the information provided by Mr Jin in them was correct. This was not persuasive evidence. I do not accept that Mr Stroop’s understanding, at the time he countersigned each document, was that he was doing so only for the purpose of verifying to ITM that it was Mr Jin who had signed the document. It is apparent on the face of the questionnaires that he was verifying to ITM that the information provided by Mr Jin in the questionnaires was correct. This was another matter causing me to have doubts about the reliability of Mr Stroop’s evidence more generally.

325    For these reasons, I have concluded that considerable care is needed before acting on Mr Stroop’s evidence. There are aspects of his evidence which I do not accept at all.

The knowing involvement of the CTS Respondents

326    In the circumstances of this case, it is not necessary to distinguish between Mr Stroop and CTS. Mr Stroop’s knowledge can be imputed to CTS: s 826 of the WR Act and s 793 of the FW Act. Neither of the CTS Respondents made any submission to the contrary.

327    The FWO did not attempt to establish that Mr Stroop and CTS had knowledge of the hours being worked by each particular employee nor that each employee was being underpaid. Instead the FWO’s claim was that Mr Stroop and Mr Jin had the requisite knowledge because they must have known, and did actually know, that the amounts CTS was paying to South Jin were insufficient to allow it to comply with its statutory and award obligations with respect to wages and other entitlements. The FWO made this point with even greater force in respect of the period after 1 January 2010, when the CS Award came into operation.

328    In addition, the FWO also relied on what she contended was the detailed knowledge by the CTS Respondents of South Jin’s operations generally. It had that knowledge by a variety of means.

329    As already noted, the subcontracts of CTS with South Jin stipulated the contract price which CTS would pay, and stipulated the service levels to be met. CTS provided South Jin with the indicative rosters so that it knew, at least in a general way, of the number of hours for which South Jin would have to engage trolley collectors. The CTS Respondents knew the minimum rates of pay and other entitlements applicable from time to time which South Jin was obliged to pay under the WR Act, the FW Act and the CS Award. They were informed of these matters by ITM, which kept Mr Stroop and CTS up to date with the progress and outcome of the applications to the AIRC and to FWA, and the effect of the decisions of those entities on the rates payable. The CTS Respondents acknowledged that they knew that South Jin was legally obliged to pay minimum rates to its employees as well as other entitlements. Mr Stroop admitted that he knew the minimum rates of pay and the applicable entitlements for the employed trolley collectors because of the obligations of CTS under its contracts with ITM, because CTS employed and paid trolley collectors at other sites, and because CTS provided payroll services for subcontractors at other sites. Mr Stroop also admitted that he knew at relevant times that South Jin was obliged to effect workers compensation insurance in respect of its employees and to pay superannuation contributions for those employees. The CTS Respondents acknowledged that CTS provided South Jin with information and advice about the minimum entitlements of the employees under the WR Act, the Transitional Act and the CS Award both verbally and in the form rate sheets.

330    The CTS Respondents also acknowledged that they knew that the service hours under the contracts with Coles, Woolworths and Foodland and the indicative roster hours for each site required weekend work (other than in the period 23 April 2010 to 1 July 2010) for which South Jin had to pay penalty rates and other work for which South Jin had to pay overtime rates.

331    In addition to knowing the amount which it paid to South Jin pursuant to its subcontracts, the CTS Respondents knew that CTS had not made any additional payments to South Jin until 2 September 2010. They must have known that South Jin was reliant on the payments made under the subcontracts in order to meet its statutory and award obligations and I find that they were.

332    Apart from the matters already mentioned, the CTS Respondents had knowledge from other sources of the operations of South Jin. Mr Stroop made regular visits to the shopping centre sites in order to oversee the provision by South Jin of the trolley collecting services for which it had contracted. Mr Stroop said, however, that he made these visits for the purposes of ensuring that Coles, Woolworths and Foodland respectively were satisfied with the service being provided, and not for the purpose of checking the compliance by South Jin with its obligations concerning minimum pay and other entitlements.

333    ITM had a system in place by which it sought to monitor compliance by its contractors and their subcontractors with the requirements of its contracts with the supermarkets. I have already referred to the questionnaires ITM required CTS and its subcontractors to complete every six months. In addition, ITM required CTS to co-sign the declarations provided by its subcontractors certifying that the information provided by the subcontractor was true and correct. Mr Hills produced the compliance questionnaires provided by CTS and South Jin for the monthly periods ending 31 December 2008, 30 June 2010 and 31 December 2010. He was unable to locate the compliance questionnaires for 2009. Question 13 in the compliance questionnaire was as follows:

Are all your staff being paid the correct Award rates of pay including Superannuation?

334    In each case Mr Stroop answered this question in the affirmative and indicated that the award being used was the “CSA”. I am satisfied that this was an abbreviation for the Cleaning Services Award.

335    The questionnaire forms also enquired whether CTS was using a subcontractor at the site and required it to have the subcontractor to sign the questionnaire as well. In each case Mr Jin signed the questionnaire. Mr Stroop also signed each of South Jin’s 2010 questionnaire forms (with one exception) opposite the printed words “Signed, certifying the above is true and correct”. By this means, Mr Stroop certified to ITM that staff were being paid the correct Award rates, including the superannuation and, in the 2010 year, that they were being paid pursuant to the CS Award. I reject his account that he was signing only to indicate that it was Mr Jin who had signed the questionnaires on behalf of South Jin.

336    On 16 October 2009, Mr Hills visited Adelaide and checked a number of aspects of the performance by CTS of its contracts with ITM. In a letter dated 19 October 2009 following this visit, Mr Hills raised a number of concerns. The letter commenced with the following statement:

If CTS wishes to be allowed by ITM to sub-contract its trolley contracts, then CTS must be responsible for ensuring that its sub-contractors act in full compliance of all legal and contractual obligations.

337    It was in this letter that Mr Hills raised ITM’s concerns about H&F to which I referred earlier and insisted that CTS terminate all businesses associations with Mr Hyun.

338    Mr Hills went on in the letter to require from CTS a letter from the accountant of (amongst others) South Jin that the individual wages record produced to Mr Hills had been properly incorporated into the payroll general ledger of each company since 10 November 2008, together with confirmation that the companies had met their other statutory obligations, including GST and superannuation. Mr Hills then went on to say:

Given the past history, we also require that CTS on a quarterly basis do a random check on individual payroll records of these 3 companies [which included South Jin] and report to ITM. Presumably there must exist a spreadsheet for a weekly/quarterly/annual payroll summary and checking names against a few weekly summaries taken at random through the quarter should establish whether the records match. We will also be requesting an annual letter of compliance from the company accountants for the foreseeable future.

339    Mr Stroop responded to this letter on 27 January 2010 saying (relevantly) that CTS had put in place requirements for payroll records to be submitted to its office by South Jin (and other contractors) on a three monthly basis for the purpose of a random audit; that CTS was requiring contractors who did not have their records prepared by CTS to submit “annual letters from their accountants stating their compliance with all regulatory requirements”; and that it was requiring “six monthly letters to be signed off by the contractors, stating that they have adhered to all company policies: ie, a statutory declaration [stating] that the appropriate remuneration according to the FMW, WorkCover, PAYG, Superannuation and occupational health and safety policies have been adopted”.

340    However, Mr Stroop’s evidence was that he did not recall doing the three monthly audits required by Mr Hills and that he had not himself checked the payroll records provided by South Jin. Instead he had left this to the payroll clerk employed by CTS. I thought that Mr Stroop’s evidence about this was unconvincing and consider that he paid closer attention to South Jin’s wage records than he was prepared to acknowledge.

341    Having regard to these matters, I am satisfied that the CTS Respondents had the requisite knowledge of several of the elements of the contraventions of ss 182(2) and 185(2) of the WR Act and of s 45 of the FW Act, to which I referred earlier. I add that I am satisfied that the CTS Respondents knew that the employment of trolley collectors was not covered by an Australian Pay and Classification Scale. That inference can be drawn given CTS’s own employment of trolley collectors.

342    The critical issue bearing on the claimed accessorial liability is whether the CTS Respondents knew that South Jin was underpaying its employees.

343    In respect of the period 16 February to 31 December 2009, the question is whether the CTS Respondents knew that South Jin was not paying the loading of 20% to the Casual Employees and whether they knew, when the CS Award came into operation, that South Jin was underpaying its employees.

344    As I have already indicated, the FWO’s claim in this respect did not turn on alleged knowledge by the CTS Respondents of the amounts paid to any particular employee. Instead, the FWO claim was that the CTS Respondents must have known that South Jin was underpaying its employees because CTS was not paying South Jin sufficient to allow it to comply with the Award obligations.

345    For this purpose, the FWO placed considerable reliance on a calculation of the “effective hourly rate” which CTS paid to South Jin in respect of each site. The FWO calculated the effective hourly rate by dividing the contract price paid by CTS to South Jin for each site by the number of hours shown on the indicative roster applicable to each site. The following table contains the effective hourly rates calculated in this manner.

346    For ease of comparison, I summarise the hourly rates payable to trolley collectors as follows:

347    The effective hourly rates are slightly overstated as CTS did not pay South Jin in full the contract amounts upon which the FWO relied for the calculation. That is because CTS deducted amounts for uniforms and other items which it provided to South Jin’s employees.

348    As can be seen, two of these effective hourly rates (Marion and West Lakes) were less than the minimum hourly rate of $14.31 per hour payable from 16 February to 31 December 2009 and from 23 April to 30 June 2010 and nearly all were less than the rates applicable in the various categories after 1 January 2010.

349    On the basis of the submission that all of the trolley collectors were casuals, the FWO submitted that these payments were inadequate to allow South Jin to meet its statutory and award obligations to the trolley collectors, and that that was so obviously so that the CTS Respondents must have known it.

350    The force of that submission is weakened by my finding that 37 of the trolley collectors were full-time and not casual. However, in my opinion, the FWO submission remains persuasive. Even though South Jin did not have to pay the casual loading in respect of those employees, it still had to pay (and presumably make provision for) payments of annual leave, sick leave, and public holidays. Mr Hills’ evidence was to the effect that, while the payment of the casual loading to casual employees made them more expensive than permanent employees, the difference was only about 3-4%. In addition, South Jin had to pay the superannuation contributions and workcover levies. Mr Stroop acknowledged in cross-examination that the difference between the costing for permanent and casual employees did not vary a great deal. His practice when costing was to take the base hourly rate and add an average of 27% for annual leave, superannuation, workcover and the other on costs.

351    Thus, the submission of the FWO retains some force.

352    The CTS Respondents submitted, however, that the FWO analysis based on the calculated effective hourly rate was flawed. This was because the calculations assumed that it had been necessary for South Jin to employ trolley collectors for the whole of the hours stated in the indicative rosters, when this was not so in fact. The CTS Respondents submitted that it was possible for the requisite levels of service to supermarkets to be provided with less than the hours shown in the indicative rosters, especially having regard to the times of non-peak demand at the different sites. They also pointed out that, as the supermarkets tended to want a single hourly rate in the tender, ITM and CTS amortised all the costs in the hourly rate over the year. This meant that there were many hours for which ITM and CTS were receiving more than the actual costs incurred for that hour. Further, in order to provide a margin of error, ITM and CTS over estimated the hours shown in the indicative rosters. The combined effect of these factors was that the contracts could be performed, in fact, with less than the hours shown in the indicative rosters.

353    Mr Stroop claimed in his evidence that, even with a reduction of 20-35% in the number of trolley collectors, South Jin could still have met the required service levels. Both Mr Hills and Mr Vickery agreed that some reduction in the hours of trolley collectors from those shown in the indicative rosters was feasible. Both said that they had encouraged their contractors in early 2010 to reduce the numbers of trolley collectors because of the higher rates payable under the CS Award.

354    Each of Mr Hills and Mr Vickery gave evidence of the kinds of reductions which were possible. I prefer the evidence of Mr Vickery to Mr Hills on this topic as he had more involvement in the day to day operations at each site. Mr Vickery disagreed that the reductions of the order suggested by Mr Stroop were practicable. Having regard to my assessment of Mr Stroop generally and this evidence of Mr Vickery, I do not accept Mr Stroop’s evidence that reductions in the range 20-30% were possible. The reductions which Mr Vickery thought were reasonable tended to be of the order of about 15%.

355    I have, accordingly, recalculated the FWO’s effective hourly rate on the basis that it was possible for South Jin to perform its contracts with the hours shown on the indicative rosters reduced by 15%. The adjusted effective hourly rates are shown in the following table.

356    Again, it can be seen that the rates payable under the CS Award well exceeded most of the adjusted effective rates.

357    I find that the CTS Respondents knew that this was so. Mr Stroop said that he had been told on or about 3 January 2010 by Mr Vickery that the CS Award came into operation 1 January 2010. He said that he immediately spoke to all his contractors, including South Jin, and informed them that they had to comply with the terms of the Award in respect of the first full pay period after 1 January 2010. I find therefore that the CTS Respondents knew the amounts which South Jin had to pay. They also knew the hours, and the spread of hours, to be worked by South Jin’s employees to meet the required service levels.

358    Mr Stroop said that he had explained to Mr Jin when negotiating the subcontracts with South Jin that he did not have to comply with the indicative rosters. In particular, he had told Mr Jin words to the following effect:

[30.1]    You will not actually engage staff for the figures on the “rosters”. These are an indicative tool that we use when pricing the tender with the supermarkets only;

[30.2]    You will need to work out the minimum number of staff that can service the store during the service hours, and the more efficiently you do it (whilst ensuring that all your employees are paid correctly) the more money you make.

359    Mr Stroop also said:

[139]    I also note that I have had regular discussions with [Mr Jin], as to how he could increase profitability by reducing labour hours. This included at the time of negotiating/entering into the sub-contracts, as well as from time to time thereafter. I did not diarise or keep records of such conversations so I cannot specifically identify the date and time they occurred, however they occurred on a regular basis.

360    I am disinclined to accept this evidence. It is inconsistent with the understanding of Mr Jin, as disclosed in his statements to Ms Peters on 4 November 2010 (set our earlier), that he had based the number of the employees at each site on the indicative rosters and had not departed from them. It is also inconsistent, to an extent, with the statements made by Mr Stroop himself when interviewed by Ms Peters on 18 April 2011. In reference to South Jin’s acceptance of the contract at Marion, the following exchange occurred:

Q:    Having signed the Marion contract he may have been somewhat aware about what hours and employees. Did he seek advice from you or did you provide any advice about how many employees need to go to each other site from the other contracts?

A:    He was given a copy of the rosters and the contracts to consider four weeks prior to making up his mind.

Q:    So there was a roster. Did the roster specify how many employees?

A:    How many employees, start and finishing times, …

…

Q:    So what we’re referring to, just for the purposes of the recording, at the end of Exhibit ES2 is a store trolley collection roster and it has pusher 1 and pusher 2 and start and finish times for those employees, and a total.

A:    Yeah.

…

Q:    And so he was provided, are you saying, with something like this for each store?

A:    Every single store.

…

Q:    Are those – so that’s part of that contract?

A:    It’s part of the contract …

…

Q:    So is there a requirement to pass that onto each contractor who performs the actual service?

A:    Is there a requirement to pass on? No. But is really dumb not to … from my perspective.

…

Q:    … As one of the contracting parties for these five contracts … what’s your intention behind including the roster as part of the contract?

A:    So he has a full understanding of what his obligations are.

Q:    So it is an obligation under the contract?

A:    Yeah.

361    Other evidence indicated that the “rosters” to which Mr Stroop referred were the indicative rosters.

362    These responses of Mr Stroop tended to confirm that compliance with the indicative rosters was expected. In fairness to Mr Stroop, I observe that elsewhere in the same interview he had described the indicative rosters as “the maximum hours that they need to work” and said that contractors such as South Jin probably did not work the total hours shown on the indicative rosters 100% of the time. However, the tenor of these statements seems quite different from the tenor of Mr Stroop’s evidence in [30] and [139] of his affidavit set out earlier.

363    Whether or not the indicative rosters had contractual force, these statements by Mr Stroop suggested that South Jin was expected to adhere reasonably closely to the hours shown.

364    In any event, Mr Stroop knew that South Jin did not reduce the hours in the way he said that he had suggested. This is evident in the following passage of his evidence:

[141]    … I recall a number of occasions where I have said words to [Mr Jin] to the effect that he had too many staff on site, which creates inefficiencies. I also recall a number of occasions, particularly when the Award was being discussed, where I explained to [Mr Jin] as well as numerous other contractors, particularly in late 2009 and early 2010, that it was necessary to cut the number of hours worked by employees to ensure that they would be paid correctly. … The reality is, that when the cost of labour increased the supermarkets did not immediately agree to increase their rates. It was accordingly necessary to reduce labour hours to ensure that staff were properly paid.

365    I regard these passages as containing an implicit admission by Mr Stroop that he knew that the amounts which CTS was paying South Jin were insufficient to allow South Jin to meet its statutory and award obligations if he provided trolley collectors at each site in accordance with the indicative rosters. The same admission is implicit in another passage in Mr Stroop’s affidavit:

[70]    [O]nce the award came into effect, the hourly rates payable to employees increased, mostly because of entitlement to overtime and penalty rates for work after 6 pm, Saturday, Sunday and Public holidays. This meant that the contract rates paid to sub-contractors would not be adequate to enable the sub-contractors to pay their employees properly without a large cut in the amount of hours worked by employees.

(Emphasis added)

366    Despite my reservations about Mr Stroop’s evidence generally, I accept that, at least from February 2010, he was counselling South Jin to reduce the number of employees at each site. Mr Stroop knew by this time that the CS Award applied. He himself was being advised by Mr Vickery and Mr Hills that the only way to remain viable was to reduce the number of hours. It is probable that he would have given effect to that advice. It is not possible to tell whether or not South Jin did reduce the number trolley collectors, but if it did, it could not have reduced below the adjusted hours, and the CTS Respondents knew that that was so.

367    Later, CTS did make additional payments to South Jin with the first payment being made on or about 2 September 2010 ($56,381.00). In total, CTS paid South Jin an additional $142,479.00, of which it later recovered $115,274.92 in reimbursement from the supermarkets. The very fact that CTS made these payments is indicative of its recognition that, at least until 2 September, the amounts it had paid to South Jin were inadequate for it to comply with its award obligations.

Accessory liability – conclusions

368    I keep in mind two matters. It was open to South Jin to meet its wage obligations by aggregating the income it received from CTS. That is to say, it did not have to meet its obligations to employees at one site from only that income which it received in respect of that site. Secondly, the FWO alleges accessorial liability in respect of South Jin’s underpayment contraventions only, and not in respect of any failures by it to comply with other obligations, such as payment of annual leave, sick leave and the like. That is significant because it means that the focus should be on the cash flows available to South Jin.

369    I am not satisfied that the FWO has established that the CTS Respondents had knowledge that South Jin was underpaying its employees in the period between 16 February and 31 December 2009. I have reached this conclusion because South Jin’s records show that it was paying at the rate of $14.31 per hour. Its underpayments affected only those who were casuals. I am not satisfied that the FWO has shown that the CTS Respondents knew that South Jin was underpaying the casuals in this period. The number of casuals, on my findings, was relatively small. Even if CTS was paying South Jin less than the effective hourly rate at some sites, it was paying more than the effective hourly rate at other sites. South Jin thereby had the means of using monies received in respect of work at one site to make payments to trolley collectors at other sites. This has the consequence that CTS cannot be taken to have known, by the arrangements it had in place, that South Jin was underpaying the Casual Employees.

370    In these circumstances, I do not have the requisite degree of persuasion that the CTS Respondents knew of South Jin’s underpayments in the period from 16 February to 31 December 2009.

371    The position is different, however, in 2010. In the period from 1 January 2010 to 23 April 2010, South Jin was obliged to pay a minimum of $15.34 for ordinary time work, $19.18 to casuals, an hourly rate of $23.01 for Saturday work and $30.68 for Sunday work, and even higher rates for overtime. Even with reduced staff, the adjusted effective hourly rate was insufficient to allow South Jin to make these payments. The matters to which I referred above indicate that the CTS Respondents knew this. They proceeded in the hope that the major supermarkets would be persuaded to provide increased amounts, but this did not occur until well after this period. I conclude that the CTS Respondents knew that, by reason of its payment of insufficient amounts to allow South Jin to meet its award obligations in this period, that South Jin was underpaying its employees.

372    I am not satisfied that it has been shown that the CTS Respondents had the same knowledge in the period between 23 April and 30 June 2010. The differences between the adjusted effective hourly rates and the award obligations in this period are not so great that the CTS Respondents must have known that South Jin was underpaying the trolley collectors.

373    The conclusions with respect to the period from 1 January to 23 April 2010 apply in respect of the period from 1 July to 2 September 2010. I have applied the latter date because that is when CTS made the first additional lump sum payment to South Jin. There is no direct evidence of how South Jin applied that lump sum payment. It may well be that it was used to make additional payments in the period after 2 September 2010. Accordingly, it has not been established to my satisfaction that the CTS Respondents had knowledge that South Jin was continuing with underpayments after that date.

374    The CTS Respondents knew that South Jin employed some casuals. In the two statutory declarations made by Mr Stroop for use in the applications to the AIRC, he referred to surveys he had carried out of his own employees and of his contractors indicating that about 15% were casual. I find that he knew that this same proportion of South Jin’s employees was casual.

375    The CTS respondents participated with knowledge of the elements making up the contraventions. It is apparent that the CTS Respondents encouraged and expected South Jin to continue to provide trolley collection services, despite the inadequate payments to it. It was in the economic interest of CTS for South Jin to continue the trolley collection services, because in 2010 it was earning some $2,600-$2,900 per week from the contracts being performed by South Jin.

376    The CTS Respondents may have encouraged South Jin to reduce the hours, but there were limits to the extent to which South Jin could do so, while maintaining adequate service levels. The CTS Respondents knew that. Their encouragement, whether it be express or implicit, was inculpatory conduct in the contraventions.

377    I find that the FWO has established the accessorial liability of the CTS Respondents in respect of the underpayments in the period from 1 January to 23 April 2010 and from 1 July to 2 September 2010, but not otherwise. In these circumstances, it is not necessary to consider the FWO submissions concerning the circumstances in which an omission to act may constitute conduct giving rise to accessorial liability.

Accessorial liability of Mr Jin

378    Mr Jin was the principal and Director of South Jin. He was involved personally in the day to day management of its trolley collection operations. There is no difficulty in imputing to him knowledge of South Jin’s operations and the matters concerning its employment of trolley collectors.

379    Mr Jin knew the trolley collectors who were employed and the hours which they worked. He knew the amounts which they were paid as he was responsible for making that payment.

380    By his defence, Mr Jin denied knowledge of the Award, superannuation and statutory obligations. However, as noted, he did not attend to give evidence.

381    I find that Mr Jin did have knowledge of the statutory obligations applicable in the period from 16 February to 31 December 2009 and the Award obligations applicable from 1 January 2010.

382    As to the former, I note that the subcontracts between South Jin and CTS (which were signed by Mr Jin on behalf of South Jin) included a number of express obligations with respect to employee entitlements, including:

[5]    (l)    To ensure that any staff employed by the Sub-Contractor to perform, or assist in the performance of work shall be paid in accordance with the appropriate industrial awards and shall receive such entitlements as may be applicable;

…

(o)    To comply with all regulations under the Workers Compensation Act and the Occupational Health and Safety Act (SA);

(p)    To pay Superannuation Levies as may be due for employees pursuant to the Federal Act.

383    By these means, Mr Jin’s attention was drawn to the existence of general obligations of these kinds.

384    Mr Jin’s knowledge of the source of his obligations with respect to employees appears to have been imperfect but nevertheless he had knowledge that obligations were imposed.

385    When interviewed by Ms Peters on 17 August 2010, Mr Jin gave the following responses:

Q:    Who makes the decision to make payments to your employees?

A:    Okay. When government decide – okay. When government changed the rule by law, then it’s a change, then CTS was informed by the government and then CTS is going to tell me.

386    Later, Mr Jin gave the following response:

Q:    When the contract was offered to you, did you negotiate the rates of pay in it or how did the amount come about for the trolley collection services?

A:    Okay. Okay. Yeah Eddie told – Eddie [Mr Stroop] told him the hourly rate was there by law, so that was told him.

387    Mr Vickery gave evidence of an “updated induction and compliance program” that ITM provided in April 2009. This program was directed to “compliance issues” in the trolley collection industry. As part of this program, a session was held in Adelaide on 28 April 2009. Mr Jin attended that session. The overheads used at the session indicate that the topics covered included the Australian Fair Pay Condition Standard (AFPC Standard), wage rates, casual employees, the rates applicable to casual employees, leave entitlements, public holidays, meal and rest breaks, record keeping, the issue and retention of pay slips to employees, general record keeping, pay records, superannuation records and audit processes. Attendees were informed of the AFPC Standard and of what was needed to be done to comply with that Standard.

388    English is not Mr Jin’s first language and I accept that he may have difficulties in understanding some of the matters addressed in the session. Nevertheless, it is apparent that he was provided with information on a number of matters relevant to these proceedings. The evidence also indicates that Mr Jin was informed about matters bearing upon the introduction of the CS Award. He attended a meeting at the office of CTS in February 2010 at which Mr Vickery provided information about the CS Award and the obligations imposed by it. Mr Stroop’s evidence was that he had passed onto Mr Jin information which he received from ITM about the introduction of the CTS Award.

389    Finally, I note that in July 2010, Mr Peters (an employee of CTS) sent to South Jin pay rate sheets showing the rates under the CS Award. It is reasonable to infer (and I do so infer) that these came to Mr Jin’s attention.

390    Mr Jin must also have known of the concerns about his compliance with award and statutory obligations. At the very least, he knew that this was so because of the requests by CTS that he produce his wage records and other information and, further, that he obtain a letter from his accountant certifying as to South Jin’s compliance with statutory entitlements.

391    In these circumstances, I am satisfied that Mr Jin had knowledge of each elements of the underpayment contraventions.

392    I am also satisfied that Mr Jin had knowledge of the obligation to make superannuation contributions. At the very least, he acquired that knowledge in the compliance session which he attended in April 2009.

393    Finally, in relation to the pay slips, I am satisfied that Mr Jin acquired the same knowledge at the least at the compliance session in April 2009.

394    In short, I consider that the FWO has made good the allegations of Mr Jin’s knowing involvement in each of the contraventions of South Jin I have found to be established.

Conclusion

395    In summary I have found that:

(a)    Twelve of South Jin’s trolley collectors were casuals and the rest were full-time employees;

(b)    South Jin contravened s 182(3) and s 185(2) of the Workplace Relations Act in the period 16 February to 31 December 2009 by underpaying the Casual Employees;

(c)    South Jin contravened the Cleaning Services Award by underpaying all of its trolley collectors in the period 1 January to 21 November 2010;

(d)    South Jin contravened cl 23.2 of the Cleaning Services Award by failing to pay the minimum superannuation contributions in respect of all its trolley collectors in the period of 1 January to 21 November 2010;

(e)    South Jin contravened reg 19.20(1) of the Workplace Relations Regulations in the period 16 February to 30 June 2009 and s 536(1) of the Fair Work Act in the period 1 July 2009 to 12 September 2010 by failing to issue pay slips;

(f)    South Jin contravened reg 19.4(1) of the Workplace Relations Regulations in the period 16 February to 30 June 2009 and s 535 of the Fair Work Act in the period 1 July 2009 to 21 November 2010 by failing to keep proper employment records;

(g)    Mr Jin was involved as an accessory in respect of all of South Jin’s contraventions;

(h)    Coastal Trolley Services and Mr Stroop were knowingly involved in South Jin’s underpayment contraventions during the periods 1 January 2010 to 23 April 2010 and 1 July 2010 to 2 September 2010;

(i)    In all other respects, the claims of the Fair Work Ombudsman should be dismissed.

396    The FWO is to prepare minutes of the orders appropriate to give effect to the conclusions in these reasons. Account should be taken in the preparation of the minutes of the desirability of avoiding any inconsistency with the declarations previously made by the Federal Circuit Court in respect of South Jin. I will hear from the parties as to the form of orders, penalties and any other matters.

Associate:

Dated:    18 December 2015