FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 623

ORDERS

THE COURT ORDERS THAT:

1.    Declarations that the first respondent contravened s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

2.    A declaration that the second respondent was involved in each of the contraventions of the first respondent as set out in order (1) above.

3.    Orders pursuant to s 545(1) and/or s 545(2)(a) of the Fair Work Act 2009 (Cth) that within a period of two months of the order, the first respondent:

(a)    register with the applicant's 'My Account' portal at http://www.fairwork.gov.au/my-account/registerpage.aspx and complete the profile, including the award options;

(b)    download and complete for all current employees of the first respondent the following templates at https://www.fairwork.gov.au/how-we-wil/-helpltemplates and-guides:

(i)    letter of engagement - full-time/part-time employee templates;

(ii)    part-time hours of work agreement or variation;

(iii)    full-time hours of work agreement or variation;

(iv)    roster template;

(v)    timesheet template; and

(vi)    record of employee details template; and

(c)    arrange for an officer of the first respondent to complete the 'Hiring employees' training module in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

4.    An order pursuant to s 545(1) of the Fair Work Act 2009 (Cth) that the first respondent provide written confirmation and evidence to the applicant of its compliance with the order in order (3) above, within seven days of the timeframe specified in order (3) above.

5.    As against the first respondent, there be imposed a pecuniary penalty of $15,000.

6.    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

7.    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), these pecuniary penalties be paid by the first and second respondents to the Commonwealth within six months.

8.    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

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

ORDERS

THE COURT ORDERS THAT:

1.    A declaration that the second respondent was involved, within the meaning of s 550 of the Fair Work Act 2009 (Cth), in each of the liquidated company's contraventions of s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

2.    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

3.    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), the pecuniary penalty be paid by the second respondent to the Commonwealth within six months.

4.    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

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

ORDERS

THE COURT ORDERS THAT:

1.    Declarations that the first respondent contravened s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

2.    A declaration that the second respondent was involved in each of the contraventions of the first respondent as set out in order (1) above.

3.    Orders pursuant to s 545(1) and/or s 545(2)(a) of the Fair Work Act 2009 (Cth) that within a period of two months of the order, the first respondent:

(a)    register with the applicant's 'My Account' portal at http://www.fairwork.gov.au/my-account/registerpage.aspx and complete the profile, including the award options;

(b)    download and complete for all current employees of the first respondent the following templates at https://www.fairwork.gov.au/how-we-wil/-helpltemplates and-guides:

(i)    letter of engagement - full-time/part-time employee templates;

(ii)    part-time hours of work agreement or variation;

(iii)    full-time hours of work agreement or variation;

(iv)    roster template;

(v)    timesheet template; and

(vi)    record of employee details template; and

(c)    arrange for an officer of the first respondent to complete the 'Hiring employees' training module in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

4.    An order pursuant to s 545(1) of the Fair Work Act 2009 (Cth) that the first respondent provide written confirmation and evidence to the applicant of its compliance with the order in order (1) above, within seven days of the timeframe specified in order (1) above.

5.    As against the first respondent, there be imposed a pecuniary penalty of $15,000.

6.    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

7.    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), these pecuniary penalties be paid by the first and second respondents to the Commonwealth within six months.

8.    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

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

REASONS FOR JUDGMENT

BARKER J:

1    These three proceedings were commenced by the Fair Work Ombudsman (FW Ombudsman) against each of the corporate respondents in June 2016, alleging contraventions of s 535(1) of the Fair Work Act 2009 (Cth) (FW Act) and regs 3.33(2), 3.33(3), 3.34 and 3.36(1) of the Fair Work Regulations 2009 (Cth), as a result of the respondents' alleged failures to keep the records required by those Regulations.

2    The FW Ombudsman also alleged that the second respondent in each proceeding, Mrs Tram Hoang Han, was liable as an accessory for the contraventions of each corporate respondent, pursuant to s 550 of the FW Act.

3    Each of the corporate respondents has admitted each contravention alleged against it. Mrs Han has admitted to being involved in those contraventions.

4    The admissions are recorded in a statement of agreed facts filed in the proceedings on 24 January 2017. The respondents have consented to the relief recorded in this statement. The only matter not agreed is the amount of penalties to be imposed. This is the issue for determination.

Statement of agreed facts

5    The statement states as follows:

1.    This Statement of Agreed Facts is made by the parties in these proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).

A.    THE APPLICATION

2.    On 10 June 2016, the Applicant filed an Application and Statement of Claim in this Court against the Respondents in respect of various contraventions of the Fair Work Act 2009 (Cth) (FW Act).

B.    ADMITTED CONTRAVENTIONS

3.    On the basis of the facts set out below, the First Respondent admits to contravening section 535(1) of the FW Act by failing to make and keep records prescribed by the following provisions of the Fair Work Regulations 2009 (Cth) (FW Regulations):

(a)    regulation 3.33(2), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3), specifying the details of any incentive-based payment, bonus, loading, penalty rate, other monetary allowance or separately identifiable entitlement;

(c)    regulation 3.34(a), specifying the number of overtime hours worked by any employee each day;

(d)    regulation 3.44(b), specifying when an employee started and ceased working overtime hours; and

(e)    regulation 3.36(1), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

(Admitted Contraventions)

4.    The Second Respondent admits that she was involved in each of the Admitted Contraventions pursuant to section 550(1) of the FW Act.

C.    ADMITTED FACTS

The Parties

5.    The Applicant is, and was at all material times:

(a)    a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687(1) of the FW Act;

(b)    a Fair Work Inspector pursuant to section 701 of the FW Act; and

(c)    a person with standing to bring these proceedings pursuant to section 539(2) of the FW Act.

6.    The First Respondent is, and was at all material times:

(a)    a company incorporated under the Corporations Act 2001 (Cth);

(b)    capable of being sued in its corporate name;

(c)    a constitutional corporation within the meaning of section 12 of the FW Act;

(d)    a national system employer within the meaning of section 14 of the FW Act; and

(e)    the operator, until in or around September 2015, of a licenced and BYO business offering sit down food service (Business) trading as Han's Cafe, located within the Midland Gate shopping centre at 274 Great Eastern Highway, Midland in Western Australia.

7.    The Second Respondent is, and has been since 28 August 2015, the sole director and secretary of the First Respondent, pursuant to a Family Court order.

8.    The Second Respondent was at all relevant times prior to 28 August 2015 one of two directors and secretaries of the First Respondent , having been appointed a director on 7 June 1996 and a secretary on 24 March 1997.

9.    The Second Respondent holds 50% of the 2,000 shares in the First Respondent.

The Employees

10.    During the period between 1 July 2013 and 3 August 2014 (Assessment Period) the First Respondent employed, at various times, the 27 employees listed in Schedule 1 to work in the Business (collectively, the Employees) .

11.    During the Assessment Period, the Employees performed duties for the Business including cooking, kitchenhand and/or serving food and drink to customers.

Legislation and Award

12.    At all relevant times, pursuant to section 535(1) of the FW Act, the First Respondent was required to make, and keep for 7 years, employee records in relation to each of its employees, which included the information prescribed by the FW Regulations.

13.    The Restaurant Industry Award 2010 (Award) covered and applied to the First Respondent in respect of the employment of the Employees during the Assessment Period because the Business was an employer in the 'restaurant industry' as defined in clause 4.1 of the Award, and the work performed by the Employees fell within the scope of the classifications in Schedule B of the Award.

D.    FAILURE TO KEEP RECORD OF HOURS WORKED

14.    The First Respondent was required by section 535(1) of the FW Act and regulation 3.33(2) of the FW Regulations to make and keep records that specified hours worked by irregular part-time employees who are paid according to hours worked.

15.    During the Assessment Period, employees Ambu, Booth, Chang, Chaudhary, Chen (Ying), Choi, Chu, Ramos, Sann (Khuochnimol), Sann (Sreykongkea) and Suralta were employed as irregular part-time employees.

16.    Save for time records for the period 21 July 2014 to 3 August 2014 produced to the Applicant in August 2014, which recorded the hours worked by Booth, Chen (Ying), Choi, Sann (Khuochnimol) and Sann (Sreykongkea), the First Respondent did not keep records that specified the hours worked by the eleven Employees referred to in paragraph 15 during the Assessment Period.

17.    By reason of the matters set out at paragraphs 14 to 16 above, the First Respondent:

(a)    failed to keep records in accordance with regulation 3.33(2); and

(b)    therefore contravened section 535(1) of the FW Act.

E.    FAILURE TO MAKE AND KEEP RECORDS OF PENALTY RATES AND LOADINGS

18.    The First Respondent was required by section 535(1) of the FW Act and regulation 3.33(3) of the FW Regulations to make and keep records that specified a relevant loading or penalty that the Employees were entitled to be paid.

19.    During the Assessment Period, the Employees had entitlements to:

(a)    payment of penalty rates for ordinary hours of work performed on a Saturday, Sunday, public holiday or after 10.00 pm pursuant to clause 34 of the Award; and

(b)    payment of overtime rates of pay for work that was overtime, pursuant to clauses 12.7 and 33.2 of the Award.

20.    During the Assessment Period the Business operated on weekends.

21.    During the Assessment Period the First Respondent paid the Employees at the same rate of pay for all hours of work , regardless of when the work was performed.

22.    The First Respondent admits that from time to time during the Assessment Period Employees performed work on Saturdays and Sundays, and some of the Employees worked in excess of 76 hours per fortnight, which was overtime under the Award.

23.    The First Respondent did not make and keep records that specified any of the Employees' entitlements to be paid:

(a)    weekend penalty rates; and

(b)    overtime rates.

24.    By reason of the matters set out at paragraphs 18 to 23 above, the First Respondent:

(a)    failed to make and keep records in accordance with regulation 3.33(3) of the FW Regulations; and

(b)    therefore contravened section 535(1) of the FW Act.

F.    FAILURE TO MAKE AND KEEP OVERTIME RECORDS

25.    The First Respondent was required by section 535(1) of the FW Act and regulations 3.34(a) and 3.34(b) of the FW Regulations to make and keep records that specified:

(a)    the number of overtime hours worked by any employee each day ; and

(b)    when the employee started and ceased working overtime hours.

26.    During the Assessment Period, full-time and part-time Employees were entitled to payment of overtime rates for work that was overtime, pursuant to clauses 12.7 and 33.2 of the Award .

27.    The First Respondent admits that during the Assessment Period Choi, Preet, Ramos and Weng performed work that would be overtime and were entitled to be paid overtime rates of pay under the Award for that work.

28.    During the Assessment Period, the First Respondent did not keep records that specified:

(a)    the overtime hours worked by all employees; and

(b)    when employees started and ceased working overtime hours.

29.    By reason of the matters set out at paragraphs 25 to 28 above, the First Respondent:

(a)    failed to make and keep records in accordance with regulations 3.34(a) and 3.34(b) of the FW Regulations; and

(b)    therefore contravened section 535(1) of the FW Act.

G.    FAILURE TO MAKE AND KEEP LEAVE RECORDS

30.    The First Respondent was required by section 535(1) of the FW Act and regulation 3.36( 1) of the FW Regulations to make and keep records of leave taken by the Employees and the balance of the Employees' entitlement to leave from time to time .

31.    During the Assessment Period, the Employees were entitled to accrue and take paid annual leave and paid personal/carer 's leave pursuant to the National Employment Standards in the FW Act.

32.    During the Assessment Period, the First Respondent did not make and/or keep records that specified:

(a)    any leave taken by the Employees; and

(b)    the balance of the Employees' entitlement to leave from time to time.

33.    By reason of the matters set out at paragraphs 30 to 32 above, the First Respondent:

(a)    failed to make and keep records in accordance with regulation 3.36(1) of the FW Regulations; and

(b)    therefore contravened section 535(1) of the FW Act.

H.    ACCESSORIAL LIABILITY

34.    The Second Respondent was at all relevant times a person responsible for the operation and financial management of the Business.

35.    The Second Respondent was at all relevant times a person with responsibility for, and involved in, the direction, management and supervision of the Business, including in respect of making and keeping employment records on behalf of the First Respondent.

36.    The Second Respondent was at all relevant times a person with responsibility for, and involved in, the engagement and payment of the Employees by the First Respondent.

37.    At all relevant times the Second Respondent:

(a)    knew the operating hours of the Business, including that the Employees were regularly rostered to work on weekends ;

(b)    knew the rostering practices of the Business, including that the Employees were rostered to work variable hours;

(c)    knew that the Employees were not paid any additional rates or loadings for work performed by them other than, on occasion, a public holiday;

(d)    knew that the Award applied to employees of the First Respondent employed to work in the Business;

(e)    knew that the First Respondent did not keep rosters or timesheets for longer than two weeks or a maximum of a month; and

(f)    knew that the First Respondent did not keep records containing the Employees' leave balances and leave taken.

38.    The Second Respondent was at all relevant times responsible for ensuring the First Respondent complied with its legal obligations under the FW Act.

39.    By reason of the matters set out in paragraphs 34 to 38 above, the Second Respondent, by way of her acts or omissions:

(a)    aided and abetted, counselled or procured; and

(b)    was directly or indirectly knowingly concerned in or party to,

each of the contraventions of section 535(1) of the FW Act admitted by the First Respondent in paragraphs 17, 24, 29 and 33 above.

40.    By reason of the matters set out in paragraph 39 above, and pursuant to section 550 of the FW Act, the Second Respondent admits that she was involved in, and is therefore to be treated as having herself contravened, each of the provisions admitted to have been contravened by the First Respondent.

I.    AGREED DECLARATIONS AND ORDERS

The parties agree to the following relief:

41.    Declarations that the First Respondent contravened section 535(1) of the FW Act by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the FW Regulations, specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the FW Regulations, specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the FW Regulations, specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36( 1) of the FW Regulations, specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

42.    A declaration that the Second Respondent was involved in each of the contraventions of the First Respondent as set out in paragraph 41 above.

43.    Orders pursuant to section 545(1) and/or 545(2)(a) of the FW Act that within a period of two months of the order, the First Respondent:

(a)    register with the Applicant's 'My Account' portal at http://www.fairwork.gov.au/my-account/registerpage.aspx and complete the profile, including the award options;

(b)    download and complete for all current employees of the First Respondent the following templates at https://www.fairwork.gov.au/how-we-wil/-helpltemplates­ and-guides:

(i)    letter of engagement - full-time/part-time employee templates;

(ii)    part-time hours of work agreement or variation;

(iii)    full-time hours of work agreement or variation;

(iv)    roster template;

(v)    timesheet template; and

(vi)    record of employee details template,

(c)    arrange for an officer of the First Respondent to complete the 'Hiring employees' training module in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

44.    An order pursuant to section 545(1) of the FW Act that the First Respondent provide written confirmation and evidence to the Applicant of its compliance with the order in paragraph 43 above, within seven days of the timeframe specified in paragraph 43.

45.    An order pursuant to section 545(1) and/or 545(2)(a) of the FW Act that the Second Respondent comply with the requirements in paragraphs 43 and 44 above in respect of any other business or enterprise owned and/or operated by a body corporate of which the Second Respondent is an officer that employs employees covered by a modern award.

46.    An order pursuant to section 545(1) and/or 545(2)(a) of the FW Act that the Second Respondent is restrained from:

(a)    aiding, abetting , counselling or procuring ; or

(b)    being in any way directly or indirectly knowingly concerned in;

conduct in relation to employer obligations in relation to employee records that contravenes Division 3 of Part 3-6 of the FW Act or Division 3 of Part 3-6 of the FW Regulations.

47.    Orders that the First and Second Respondents each pay penalties pursuant to section 546(1) of the FW Act for the contraventions set out in paragraphs 41 and 42 above .

48.    Orders pursuant to section 546(3)(a) of the FW Act that any pecuniary penalties ordered to be paid by the First and Second Respondents be paid to the Commonwealth within six months of the Court 's orders.

49.    An order that the Applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

50.    Such further or other orders as the Court thinks fit.

Schedule 1

1.    Ambu, Alymer Alfredo

2.    Booth, Jesse

3.    Chang, Wan-Ting

4.    Chaudhary , Akash

5.    Chen, Ying Chen

6.    Chen, Jin- Yao

7.    Cheung, Yuen Ling

8.    Choi, Dongryeol

9.    Chu, Hiu Tung

10.    Dema, Kanjur

11.    Htoo, Aung Kyaw

12.    Kaur, Manpreet

13.    Li, Zhuhui

14.    Perakis, Aliki

15.    Preet, Tarun

16.    Ramos, Marlee Cisneros

17.    Sam, Somaly

18.    Sann, Khuochnimol

19.    Sann, Soeun

20.    Sann, Sreykongkea

21.    Singh, Pardeep

22.    Suralta, Amelyn

23.    Tran, Tu Duy

24.    Wang, Hao-Fei

25.    Wanningayake, Madusha

26.    Wei,An Chi

27.    Weng, You Tong

Regulatory context

6    Each of the corporate respondents – which may together be referred to as the Han entities – at material times operated licensed cafes and restaurants in the Perth metropolitan area. As part of an audit conducted by the FW Ombudsman during 2014 and 2015, the FW Ombudsman uncovered what she considered to be a systematic failure of the Han entities to keep the records required by the FW Act and FW Regulations. As a result, the FW Ombudsman was unable accurately to quantify the extent of the underpayment to employees of wages and other emoluments by the Han entities.

7    At this point, it should be noted Han's Café Management Pty Ltd, the corporate respondent in WAD248/2016, has had an order made against it that it be wound up in insolvency pursuant to s 459A of the Corporations Act 2001 (Cth). As a result, this proceeding is stayed as against Han's Café Management Pty Ltd and no penalty or other relief is sought by the FW Ombudsman against it. However, in all proceedings, including that proceeding, relief is sought against Mrs Han.

8    As far as penalties are concerned, s 535 of FW Act is a civil remedy provision. The maximum penalty for its contravention is 150 penalty units for a body corporate and 30 penalty units for an individual. Between 28 December 2012 and 30 July 2015 the value of a penalty unit was $170. As a result, the maximum penalties that can be imposed for the admitted contraventions are:

(1)    For each of the Han entities – $25,500

(2)    For Mrs Han – $5,100

9    So far as penalty is concerned, the FW Ombudsman submits that the determination of the penalties to be imposed should be approached using these maximum amounts because the majority of the admitted contraventions occurred prior to 31 July 2015. This is not controversial and I will proceed on that basis.

10    The FW Ombudsman also submits that, having regard to the course of conduct requirements in s 557(2)(n) of the FW Act and the relevant grouping principles, it is appropriate for the Court to approach each of the proceedings upon the basis of there being one maximum penalty – rather than a penalty for each of the four different types of contraventions under the FW Regulations. I also agree with this submission.

11    Accordingly, the FW Ombudsman contends for a maximum penalty of $25,500 against each of the two relevant corporate entities, being Han Investments Pty Ltd in WAD247/2016 and Han's Café Pty Ltd in WAD 249/2016. As against Mrs Han, the FW Ombudsman submits that the penalty should be $5,100 in each proceeding.

The admitted contraventions

12    Section 535(1) of the FW Act provides that:

An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.

13    The FW Regulations prescribe the different types of employment records and their forms which must be made and kept. Relevantly, the corporate respondents were required to keep records which recorded:

    the hours worked by irregular part-time employees;

    the relevant loading or penalty its employees were entitled to be paid;

    when an employee started and ceased working and the number of overtime hours worked; and

    leave taken by employees, including the balance of leave entitlements from time to time.

14    All the respondents have admitted that the Han entities failed to make and keep the records just described for 150 employees identified in the claims and described in Sch 1 of the statement.

The parties' submissions on penalty

15    The FW Ombudsman submits that the failure to make and keep the records required by the FW Act and FW Regulations is a serious matter.

16    The FW Ombudsman submits the record keeping obligations are directed at ensuring the creation and retention of records that are a critical tool in assessing compliance with Commonwealth workplace laws.

17    In short, it is submitted, unless an employer complies with the law and makes and keeps the employment records required to maintain an effective safety net for its employees, it makes them more vulnerable to exploitation and deprives them and the regulator (the FW Ombudsman) of an effective means of detecting and protecting their legal entitlements as employees.

18    The FW Ombudsman also submits that that the failure to keep the required records should not be seen as a lower order contravention. It strikes at the very foundation of a regulatory scheme designed to ensure employees are paid their legal entitlements, by making it much more difficult to determine when something has been wrongly denied and what it is that has been denied.

19    The FW Ombudsman contends that, in this case, the failure is particularly egregious in the case of employees who, for a variety of reasons, are uninformed or poorly informed about, and are denied, their legal entitlements. In such cases, the records and the regulator's ability to review them, detect any wrongdoing and act on it is of vital importance.

20    In the case of vulnerable employees, the FW Ombudsman says, particularly temporary visa workers whose employment and residence in Australia is often transient and dependent on the ongoing support of their employer, the difficulties associated with detection and remedial action where the required records are not made and kept, or properly made and kept, is often further aggravated by an unwillingness by some such employees to take any action which might jeopardise their employment or continued residence. In such cases, the ability of the regulator to detect and act is essential. The safety net for all employees should not depend for its effectiveness on the visa status of those employees.

21    The parties accept that the general approach and principles governing the assessment of penalty are well understood. There are three purposes, at least, for imposing penalties for breaches of industrial law, being punishment, deterrence and rehabilitation.

22    It is understood that deterrence, both specific (or personal) and general, have the potential to assume great importance in pecuniary penalty cases like the present.

23    In that regard it is generally understood that the purpose of a civil penalty is to promote the public interest in seeing compliance with relevant regulations.

24    By a process of instinctive synthesis or intuitive synthesis, the Court is required to take into account all relevant factors and arrive at a single result that takes account of them all.

25    In that process, proportionality and consistency commonly operate as a final check on the penalty. The totality principle is considered in that context.

26    The overriding principle, however, is to ensure that a penalty is proportionate to the gravity of the conduct.

27    The parties have identified and addressed a range of applicable penalty assessment considerations. I now deal with each of them.

28    As to the nature and extent of the conduct, the FW Ombudsman is at pains to emphasise that in its estimation the contravening conduct was deliberate and not relevantly to be explained away by the personal circumstances relied on by Mrs Han, including domestic violence that she suffered at material times and her other personal circumstances.

29    Having regard to this contest between the parties as to what factors, personal to Mrs Han, might relevantly be considered in mitigation of the admitted contraventions, it is useful to set out the precise submissions made by the FW Ombudsman.

48.    The nature of the respondents' unlawful conduct must first and foremost be seen in the context of the interaction which the second respondent, Mrs Han, previously had with the applicant. From as early as April 2013, she had interactions with the applicant's office. In April 2013, following an underpayment complaint by an employee, the FWO facilitated a resolution of that complaint, during which the second respondent was referred to the existence of the applicable Restaurant Industry Award 2010 (Restaurant Award). At the very least from that time onwards, the second defendant could have been under no misapprehension as to the relevance of the Restaurant Award to her businesses, the rates payable under it and the assistance available to her through the applicant's office (should she need it). It is telling that there is no reference to this significant interaction and acquired knowledge in the second respondent's affidavit sworn 16 February 2017 (second respondent's affidavit).

49.    The respondents' contraventions the subject of these Proceedings were initially drawn to the attention of the applicant following an audit into the accommodation and food services industry.

50.    Following an initial audit into the Han Entities, it became apparent to the applicant that appropriate records were not being kept. Following the initial provision of a limited number of records by the second respondent, she told one of the applicant's inspectors that she would have to close her business if she had to pay weekend penalty rates. It is open (and reasonable) to infer from this assertion by her, that the second respondent knew of the Han Entities' obligations to pay penalty rates. This assertion, in the context of the interaction of April 2013 (described in paragraph 46 herein) and failures to keep records which would disclose the full extent of the failure to pay those rates, is a strong indication of the purpose behind the failures to make and keep the required employment records the subject of these Proceedings. In short, deliberate avoidance of those obligations.

51.     The applicant offered further assistance to the Han Entities in 2014. On 4 July 2014, the applicant's inspectors met with the second respondent and (again) explained the applicable pay rates to her, referred her to the relevant www.fairwork .gov.au website and told her the applicant was able to help her businesses adhere to the FW Act and FW Regulations. There is no evidence from the respondents that the second respondent, or any of the Han Entities, sought then to take up or have ever taken up this offer of assistance. On the contrary, the respondents appear to have continued on with their non­compliant practices in respect of record keeping, largely unabated. Again, it is open (and reasonable) to infer this was a deliberate course of conduct.

52.    The applicant sought the production of relevant records from the Han Entities on 6 August 2014, pursuant to s.712 of the FW Act (NTPs). In response to these notices to produce records, the Han Entities only provided time sheets for a 2 week period. The pay slips which were also provided disclosed flat rates of pay and were clearly devoid of the detail required by the FW Regulations.

53.    It was following the provision of these patently inadequate records in response to the NTPs, that the applicant's office questioned why only 2 weeks of timesheets were produced. In response, the second respondent advised the applicant that:

[W]e don't keep any rosters beyond a 2 week period, maximum a month, and there is no way [I] can get rosters for the last financial year ...I don't know why you want to squeeze our company. There is no way we can pay extra on weekends

54.    Again, the second respondent's deliberate linkage of the failure to make and keep the required records with the assertion that the Han Entities could not afford to pay their employees their legal entitlements is a strong indication of the reasons why the records were not made and kept. Again, the inference is that the failures were deliberate.

55.    Relying on the woefully inadequately records provided by the Han Entities, the applicant was nonetheless able to assess a not insignificant total underpayment of $30,440.06. Given the:

(a)    very short and limited number of periods for which the relevant records were made and kept, and then produced ;

(b)    significant periods of time for which no relevant records were kept or produced; and

(c)    absence in those records of time recorded for evening or weekend work,

it is entirely plausible that, if the required record had been made and kept by the respondents, the underpayments would have been considerably greater in both number and amount. This significant hole in the required records is a very significant factor, which should be given full weight in the exercise of assessing the appropriate penalties to impose.

Records of hours worked: Regulation 3.33(2)

56.    HI has admitted not keeping records which specified the hours worked for its employees (save for a document setting out the hours worked for 5 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).

57.    The second respondent has admitted that HCM did not keep records which specified the hours worked for its employees (save for a document setting out the hours worked for 13 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).

58.    HC has admitted not keeping records which specified the hours worked by its employees (save for a document which recorded the hours worked for 6 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).

59.    This remarkable dearth of records is a proper basis on which to conclude that significant damage has been caused to the ability to detect, and if necessary enforce compliance against, failures by the first respondents to meet their obligations to pay their employees their legal entitlements. In the applicant's respectful submission, it is difficult not to be driven to the conclusion that those failures were not a very deliberate course of conduct. Even if the respondents did not know of a specific requirement to keep particular kinds of pay records, which in the applicant's submission is unlikely, it beggars belief to suggest that having been informed of the relevant pay rates (to which these records relate) in April 2013 and subsequently, the need for these records would not have been obvious.

Records of penalty rates and loadings: Regulation 3.33(3)

60.    During the period I July 2013 to 3 August 2014, employees of HI had entitlements to weekend penalty rates and overtime rates. Despite HI's business operating at times when such rates would have been payable (and applicable to employees working during those times), HI paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and has admitted not keeping records of such penalty rates and loadings

61.    During the period 1 July 2013 to 30 September 2015, employees of HCM had entitlements to weekend penalty rates, overtime rates and payment of annual leave loading. Despite HCM's business operating at times when such rates would be payable (and applicable to employees working during those times), HCM paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and the second respondent has admitted that it did not keep records of such penalty rates and loadings.

62.    During the period I July 2013 to 3 August 2014, employees of HC had entitlements to weekend penalty rates, overtime rates and annual leave loading. Despite HC's business operating at times when such rates would be payable (and applicable to employees working during those times), HC paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and has admitted not keeping records of such penalty rates and loadings.

63.    Again, the need to keep those records would, in the applicant's submission, have been obvious.

Overtime records: Regulations 3.34(a) and Cb)

64.    During the period 1 July 2013 to 3 August 2014, employees of HI performed work that would be overtime and would have been entitled to overtime rates under the Restaurant Award. HI has admitted that it did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.

65.    During the period 1 July 2013 to 30 September 2015, employees of HCM performed work that would be overtime and would be entitled to overtime rates under the Restaurant Award. The second respondent has admitted that HCM did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.

66.    During the period 1 July 2013 to 3 August 2014, employees of HC performed work that would be overtime and would be entitled to overtime rates under the Restaurant Award. HC has admitted that it did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.

67.    The need to keep those records would, in the applicant's respectful submission, have been obvious.

Leave records: Regulations 3.36(1)

68.    During the period 1 July 2013 to 3 August 2014, employees of HI were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. HI has admitted that it did not keep records which specified any leave taken by its employees and the balance of the employee's leave entitlements from time to time.

69.    During the period 1 July 2013 to 30 September 2015, employees of HCM were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. The second respondent has admitted that, save for a limited number of such records, HCM did not keep records which specified any leave taken by its employees and the balance of the employee's leave entitlements from time to time.

70.    During the period 1 July 2013 to 3 August 2014, employees of HC were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. HC has admitted that, save for a limited number of such records, it did not keep records which specified any leave taken by its employee s and the balance of the employee's leave entitlements from time to time.

71.     The need to keep those records would, in the applicant's respectful submission, have been obvious. The respondents' own employment documents reinforce this conclusion.

30    In this case, the FW Ombudsman says there is a compelling need for general and specific deterrence and, to use the language of the authorities, a price needs to be put on the contraventions that is sufficiently high to deter repetition by both the contraveners in this case, and by others who might be tempted to contravene the FW Act in a like manner.

31    Reflecting the submissions made above, that I have accepted, the FW Ombudsman says the making and keeping of employment records should not be assumed to be a trivial or technical obligation. In this case, where the absence of the required records is so extensive and so markedly undermines the legislative purpose, it submits a significant penalty is required on account of both specific and general deterrence.

32    The FW Ombudsman submits that the sophistication of the business model of the respondents emphasises the need for a stern warning.

33    The FW Ombudsman observes that the industry in which these contraventions arose is notorious for non-compliance with workplace laws. She refers to and relies on a report into the cafes, restaurants and the takeaway industry, accompanying the affidavit of Mr Victor Josue Acevedo (a Fair Work inspector) dated 24 March 2017, from which it is clear that:

    the industry accounted for the highest number of dispute lodgements with the FW Ombudsman's office;

    the industry has the highest proportion of disputes from vulnerable visa workers;

    workers in the industry tend to be, on average, young, less educated and lower paid; and

    the number of employees in the industry are projected to increase by around 12% by 2020.

34    So far as contrition or remorse is concerned, and relating that consideration to the question of the need for specific deterrence in this case, the FW Ombudsman submits that no demonstrable remorse has been shown by any of the respondents. She notes, however, that the relevant corporate respondents have agreed, as part of the resolution of these proceedings, to take positive compliance steps by registering with the FW Ombudsman's online compliance portal and to complete training.

35    Notwithstanding that, the FW Ombudsman says neither Han Investments Pty Ltd nor Han Café Pty Ltd has yet taken any steps to do anything and nor has Mrs Han. The submission is made that they should have already taken steps by the time of this hearing and should not be awaiting formal orders by the Court in that regard.

36    In any event, the FW Ombudsman submits that there is a need for specific deterrence, particularly in relation to Mrs Han, for the following reasons.

37    Mrs Han remains a current director of a number of entities in the restaurant industry, including these corporate respondents. They are still trading and she is still involved in them, and given the prior history of non-compliance, there is a need for penalties to be set out which will deter or direct compliant behaviour in the future.

38    The FW Ombudsman submits there is a demonstrated pattern of failing to comply with the FW Act by the Han entities and Mrs Han, highlighted by her flagrant disregard for known obligations, demonstrated by the following events:

    She told Inspector Acevedo on 4 November 2015 that she does not keep timesheets for more than one week after payday.

    She told the FW Ombudsman's office on 29 August 2015 that she has always used another Award (which she must have known was wrong because she had been clearly advised about the application of the Restaurant Award in 2014) to pay her employees and would continue to do so in the future.

    She implicitly told an inspector of the FW Ombudsman's office on 17 June 2014 that she did not pay weekend penalty rates.

39    The FW Ombudsman says this is conduct by Mrs Han, as the directing mind and will of the corporate respondents, which demonstrates a persistent disregard for the need to comply with the relevant obligations under the FW Act, even after the need and manner of compliance was or should have been abundantly clear to her. The FW Ombudsman submits this is not conduct deserving of any significant discount but deserving of opprobrium. More so, when the conduct involved a highly vulnerable class of employees who were, in effect, entitled to expect compliant behaviour from their respective employers but who got otherwise.

40    As to the making of injunctions, which the parties acknowledge is a matter in the discretion of the Court, the FW Ombudsman submits that the Court has the power to make relevant injunctions and there is an appropriate need to do so by way of specific deterrence.

41    Noting that the proposed orders do no more than require Mrs Han to comply with the law, there is benefit, the FW Ombudsman submits, in deterring her from being involved in future contraventions. This is particularly important because she continues to act as a director of a number of companies which operate in the restaurant industry and is the directing mind of the franchisor of the Han's Café franchises.

42    The relevant respondents, including Mrs Han, submit that the Court should, in effect, take into account the extenuating circumstances that Mrs Han experienced which help to explain, in many respects, the contravening conduct.

43    Mrs Han put on a number of affidavits relating to these mitigating circumstances, being those dated 16 February 2017, 1 May 2017 and 4 May 2017.

44    On behalf of Mrs Han, the relevant Family Court materials and submissions were made concerning proceedings between Mrs Han and her husband, Mr Han, which resulted in her obtaining orders against him in relation to property and other matters on an undefended basis. Her submissions included noting evidence in those proceedings of family violence against her, as set out in affidavits in the Family Court of 25 June 2015 and 16 February 2016, which were provided to this Court in her affidavits.

45    Included amongst the materials provided to the Court were letters of relevant treatment that she received concerning her condition, which need not be dealt with, for privacy reasons, in any greater detail here.

46    On behalf of Mrs Han, it was also noted that in the Family Court an interim property settlement order was made in circumstances where the magistrate was satisfied in light of an earlier violence restraining order which had been made final and unopposed by the husband, that it was "not practicable for the parties to operate the various entities together".

47    On behalf of Mrs Han, a number of official publications were provided to the Court, including of the Australian Law Reform Commission concerning family violence and Commonwealth laws, which emphasise that family violence can have a significant effect on employees, co-workers and workplaces and, more broadly, workplace productivity and safety.

48    On behalf of Mrs Han, a number of passages in those materials were highlighted for the Court's attention.

49    Mrs Han then made the following submissions, by reference to this material:

24.    In the present matters, the second respondent, a director of the respondent companies, has experienced family violence from the Husband in their domestic and work settings. She has experienced 'internal violence' (i.e. violence in the employment setting), and violence at home. Her young children have also been affected by the violence.

25.    The second respondent has provided evidence of this violence on affidavit to the Family Court and to this Court. Evidentiary support for this violence has also been provided through the letters of her psychiatrist and through the grant of a violence restraining order.

26.    The above-described employment-related initiatives in relation to disclosure of family violence, flexible working arrangements and awards with family violence provisions have been of no assistance to the second respondent in her employment setting given her role as a company director rather than employee. The circumstance where the perpetrator of the violence against her and her children over many years has been her husband, the sole co-director of the respondent companies until the Family Court order of 28 August 2015, placed the second respondent in an intractable situation.

27.    With the Husband being the co-director of the three family companies, the approach to the family violence issue favoured by Watson VP where 'employees feel they can be open with their manager, and in a cooperative and collaborative manner, develop solutions to assist the employee deal with the issues while remaining in productive employment' was simply not available to the second respondent. Nor is it apparent that any government regulator, including the applicant, has been in a position to assist the second respondent in her predicament.

50    The respondents also point to what they call the context of interaction which Mrs Han previously had with the FW Ombudsman from April 2013 in relation to underpayment complaints, in the course of addressing the nature and extent of the conduct that led to the contraventions. After referring to the complaints which are annexed to the affidavit of Mr Acevedo at exhibits VJAA 29 to 31, the submission is made that on 10 January 2014 an inspector of the FW Ombudsman sent a letter to "Han's Café" requesting copies of records of rates of pay and numerous other records to be submitted by 11 February 2014. That letter was stated to have been sent under the "National hospitality campaign 2012-2015 take away food sector".

51    A further submission is made that Mrs Han sent an email to that inspector on 10 February 2014 stating that she had posted the requested documents on that date and they included the template "Australian work place agreement for permanent employees" used by Han's Café.

52    The respondents say that an officer of the FW Ombudsman, Ms Marcello, made follow-up telephone calls in June 2014 to Mrs Han concerning those records, in particular rates of payment. During the first of those calls on 11 June 2014, the officer made the following record of what Mrs Han said:

The reason for getting the AWA was because the business just could not afford to pay weekend penalty rates and she had 2 government ee's call in and help the business set up the AWA's. She still uses the AWA and gives them to every new ee to read and sign.

53    They note that during the second of those calls on 17 June 2014, the officer and Mrs Han further discussed the AWA and penalty rates, and the officer recorded that she said:

She was not up to date with all the Workplace laws and was trying to run a business.

54    The respondents note that the officer concluded her file note with the following comment (bold emphasis added):

ACTION: DISCUSS WITH MANAGER FOR INSTRUCTIONS TO PROCEED FURTHER MY SUGGESTION WOULD BE TO Refer back to WA as this Er would be a good candidate for apersonal education visit Educate Er about IFA's (going forward) Advise that Ee's could lodge claims in future Do not enforce back payment on Er at this point as Er has been doing what she thought was correct.

55    The respondents further note that in a third telephone call on 19 June 2014, the officer had a further discussion with Mrs Han concerning the AWA and wage rates, and recorded the following details of that call (emphasis added):

She explained again that she was told that as long as she paid the current award rates she could use the AWA's I advised that AWA's were no longer valid and that I really felt that she should either visit our WA office or have an inspector call out and she said either would be OK but she felt that she was being attacked and victimised, She kept on repeating that she was trying to do the right thing and did not think she was breaking any laws, She said she has been very stressed since my first phone call 2 weeks ago and I told her that she may need to start paying weekend penalty rates. I reassured her that she was not getting picked on and that we had visited may restaurants and fast food outlets in all the states and all of them had been asked to provide records, She said that she was adamant that a lot of Asian restaurants in WA were not keeping records like she was nor were they paying rates like she was and they were not getting picked on. Again I told her not to stress about the situation. I said that she would be brought up to date with the legislation and if need be the Association may me call upon also, I said that moving forward the FWO would work with her and advise as to what she could do in place of AWA's perhaps IFA's or even Collective Agreements, I said she had my number and if she felt she needed/wanted to discuss anything she was free to call me but in the meantime try not to stress over the situation as the FWO was not trying to close businesses down and just wanted her be advised of her rights and obligations as and employer, franchisor, small business etc.

56    The respondents note the officer concluded her record of the conversation with the following note (emphasis added):

several times during conversation er said she did not want to be seen that she was breaking the law and she was just doing what she thought was right and needed all the help that the government could give her, she was just trying to run a business Again she thanked and hoped that whoever met with her was as compassionate as I had been, and I said I was sure they would be and terminated the call.

57    The respondents say Mr Acevedo's affidavit shows that a field visit took place on 4 July 2014 at which Mr Acevedo discussed the issue of correct rates under the award with Mr and Mrs Han. Subsequent to that discussion, on 6 August 2014, he issued notices to produce various employment records. Those notices were addressed to Mrs Han. The respondents say it does not appear that any such notices were sent to Mr Han.

58    Mrs Han says she produced various documents and submits that she responded to the notices as best she could under the circumstances.

59    She further notes that on 14 October 2014, Mr Acevedo sent an email addressed to the second respondent personally requesting all employees' annual leave and sick leave records to be provided to him by 29 October 2014. This email was sent by Acevedo during the period in which the second respondent was admitted to the Marian Centre for treatment between 20 September 2014 until 27 October 2014, and she was therefore unable to respond to the request within the deadline given.

60    Mrs Han says that she eventually responded to that request by email dated 17 February 2015, after Mr Acevedo had issued three notices to produce records or documents dated 13 January 2015 and addressed to the proper officer of the Han entities.

61    The respondents note that subsequently, Mr Acevedo made findings of contravention against the three respondent companies and notified these findings to Mrs Han by letter dated 28 April 2015. These contraventions were failing to pay the minimum hourly rate and overtime under the relevant award.

62    Mrs Han says that on 4 May 2015, she sent the following email to Mr Acevedo (emphasis added):

Hello Victor

I am very disappointed upon receiving the notices from Fair Work WA.

I have always believed we've always done the right thing and kept our records up to date.

Nevertheless I do want to correct these as soon as possible but I do hope you understand there is no way I can make all the payments at once and ask that you give me until the end of June 2015.

As you already know, my husband has left the country for over 5 months now and I'm stuck with running all our businesses and the franchise and looking after 2 young kids as well.

I'm behind with my taxes and the March BAS is overdue. I have recently surrendered 2 leases; I request an extension of time.

Also; majority of the employees on the list are no longer working for me and may have already returned to their country. What do I do with those employees?

Regards Tram

63    Mrs Han submits that the highlighted sentence in the above email suggests that she had notified Mr Acevedo about some of the difficulties she was facing. However, there is no record of these issues having been notified in Mr Acevedo's affidavit. Further, Mr Acevedo's email to Mrs Han of 14 October 2014 refers to a telephone conversation on Friday 26 September (that is, during the period Mrs Han was admitted to the Marian Centre) there is also no record of that telephone conversation in his affidavit.

64    Following the findings of contravention, Mrs Han said that she liaised with Mr Acevedo over the question of locating previous employees and other issues, and the outstanding payments were made to current employees and former employees who could be located.

65    Mrs Han says that Mr Acevedo continued to contact her to ascertain the attempts made to contact the remaining employees who were still owed money - see email dated 6 August 2015. That email did not give a timeframe for responding to the request.

66    Mrs Han says that by letters dated 26 August 2015, Mr Alan Wells, Assistant Director, Campaigns Operations Group emailed Mrs Han letters notifying her of pending enforcement action in relation to contraventions of the award by the respondent companies.

67    Mrs Han says that she replied to Mr Wells' email and letters on 29 August 2015 referring to her personal difficulties including:

    stress, depression and anxiety;

    that she was under a lot of medication;

    that she was about to lose her house; and

    that her husband and business partner had fled Australia.

68    Mrs Han says that she concluded her email of 29 August 2015 with the following request:

I would be very grateful if you could help me find a solution as I cannot handle any more stress and is terrified of relapsing.

69    Mrs Han says that by letter dated 27 October 2015, Ms Michelle Carey, Acting Principal Lawyer of the FW Ombudsman responded to Mrs Han's email, in which Ms Carey requested proof of payments made, to be provided by 12 November 2015.

70    Mrs Han says she responded to Ms Carey's letter with a bundle of documents sent through the post, including timesheets and payroll records.

71    The respondents submit that the above history demonstrates that Mrs Han responded to the FW Ombudsman's inquiries as promptly, diligently and honestly as she could in all the circumstances, which include her personal health difficulties, the toxic relationship in the workplace and at home that she had with the husband, and the exigencies of running hospitality businesses in a strained economic environment.

72    The respondents note they have admitted that their record keeping fell short of the legislative requirements, but say it should not be inferred that Mrs Han or any of the Han entities failed to make and keep records as part of a deliberate course of conduct to avoid their obligations in relation to payment of award rates to employees.

73    The respondents submit that Mrs Han has been characterised by the FW Ombudsman as deliberately non-cooperative. However, she is more appropriately understood as someone struggling to come to terms with the extent of the problems within the Han entities and attempting, albeit slowly, to correct the companies' record-keeping deficiencies.

74     As to the circumstances in which the relevant conduct took place, the respondents say that the personal circumstances of Mrs Han should be taken into account and that at the time of the contraventions she was "doing her best" to conduct the restaurants as profitable businesses in the following circumstances:

    She had responsibility for caring for two young children without any assistance from Mr Han. In the cultures of herself and Mr Han, it is the woman's responsibility to take care of the children.

    Mr Han had abandoned the Han entities from January 2015 by leaving Australia.

    She had commenced litigation in the Family Court of Western Australia on or around 12 June 2015 in relation to financial matters.

    She was the victim of family violence from Mr Han at home.

    She was the victim of family violence from Mr Han in the workplace.

    She was suffering from anxiety and depression.

    She was heavily medicated during this time.

75    She again refers to her Family Court affidavit of 16 February 2016 and medical reports concerning her diagnosis of anxiety and depression on 17 September 2014. She says this was made during the relevant contravention period in WAD 248/2016, and it was shortly after the end of the contravention periods in WAD 247/2016 and WAD 249/2016.

76    She submits that it should not be inferred that she or any of the Han entities failed to make and keep records as part of a deliberate course of conduct to avoid their obligations in relation to payment of award rates to employees.

77    In relation to the question of any loss or damage sustained as a result of the contraventions, the respondents submit that Mrs Han, as the directing mind and will of the corporate respondents, has admitted that the required records were not kept, but, nonetheless, it should be borne in mind that the present matters are not ones where the employees were not paid, let alone not paid for months at a time. They are matters in which underpaid employees were identified and reimbursed.

78     The respondents also note that they have not been the subject of previous contravention findings. They note that previous complaints for underpayment have been successfully resolved by other means.

79    They also submit that the FW Ombudsman's submission that the respondents have taken no or no adequate steps to comply with workplace laws and have instead chosen to ignore those requirements should be rejected in light of the co-operation Mrs Han has shown, as acknowledged by officers of the FW Ombudsman outlined above.

80    As to the size of the business enterprises involved, the respondents say Mrs Han has explained the current trading circumstances, and has produced financial records. She notes that Han's Cafe Management Pty Ltd has gone into liquidation since the proceedings were commenced and the companies are otherwise not in a position to be able to pay large penalties.

81    Additionally, she says, she has filed further evidence that Han's Cafe Pty Ltd is no longer trading and as at 20 April 2017 has an outstanding tax bill, that is being paid in instalments by Han Investments Pty Ltd. She also notes that Han Investments Pty Ltd receives approximately $20,000 per month and currently has a payment plan in place to pay payroll tax, which currently stands at $12,000.

82    As to whether the contraventions were deliberate, the respondents note that Mrs Han has admitted that she knew of the various matters alleged in these proceedings, but nonetheless, the contraventions should be seen in the context of what is clearly "an industry-wide deficiency" in record-keeping, the misunderstanding on her part, and her husband, of their companies' industrial law obligations, and in light of the extensive pressures on Mrs Han occasioned by her "toxic home and work environments".

83    While Mrs Han admits accessorial liability for the contraventions, she submits that the FW Ombudsman liaised only with her in its investigation as to whether the respondents were contravening the FW Act, apart from the field visit that took place on 4 July 2014 when Mr Han was present.

84    As to the office holders of corporate companies at material times, Mrs Han sets out the period that she was a director and secretary, and when her husband was a director of each of the companies.

85    As a result, she says that she was company secretary for only one of the three companies, Han Investments Pty Ltd, prior to the Family Court order of 28 August 2015 and her estranged husband was the sole secretary of the other two companies prior to that order. He was, therefore, equally involved in the contraventions but left all the responsibility for dealing with the FW Ombudsman over the investigation of the contraventions with her.

86    As to contrition, corrective action or cooperation, she submits that she responded in the best way she could to the various complaints and investigations made and she was honest in reporting the stress she was under to the officers concerned. She submits there is nothing to suggest she deliberately attempted to frustrate their investigatory processes. She says her cooperation was noted by Mr Acevedo. She also notes that Ms Marcello considered she was a "good candidate for a personal education visit" and recommended that backpayment of wages not be enforced on the respondents at that stage as she had been doing what she thought was correct.

87    In relation to the backpayment of wages, the respondents say the records show that Mrs Han responded to all of the FW Ombudsman's requests for information, doing the best she could in the circumstances. At material times when Mr Acevedo was making requests between July 2014 to May 2015, she says she was subject to sustained physical and verbal abuse from Mr Han, was diagnosed with anxiety and depression, and receiving medication, as well as being separated finally from her husband on 24 September 2014 after a 20 year relationship and had commenced litigation in the Family Court. She was also hospitalised and obtained an interim Violence Restraining Order against her husband.

88    She emphasises the extent to which she and her children obtained counselling and medical assistance during these periods.

89    As to the need for general and specific deterrence, and the need to uphold the regulatory scheme of the FW Act, the respondents and Mrs Han submit that they have accepted their wrongdoing in failing to keep the specified records and consider it is difficult to see how there would be any utility in the respondents now offering an apology to the many past and present Han entity employees whose wages may have been affected by the record keeping deficiency. They say it would have been an impossible administrative task for Mrs Han to contact each of those employees and offer an apology to them. They say the best apology that they could have made was by paying the lawful entitlements, which was done to the extent possible.

90    Ultimately, the respondents make the submission that in setting penalties, the Court should take into consideration the respondents' compliance with what Mr Acevedo's findings required to be done – that is, make payments to affected employees. They submit that Mrs Han's proactive responses to those findings have substantially contributed to the aim in this litigation of ensuring that the respondents are specifically deterred from again committing the contraventions that they have made.

91    The respondents say they are committed to further educative activity and submit that a large monetary penalty is not needed in order to affect specific deterrence.

92    In relation to general deterrence, they say the Court should take into account that the gravity of the record keeping contraventions in these matters is vastly different from those in some of the authorities cited by the FW Ombudsman. The present matters, by contrast, involve admitted contraventions in respect of a failure to keep records of employment and are not matters when the employer was benefitting from free labour.

93    They also say the respondents were not bereft of the necessary administrative and accounting systems to make wage payments to employees each fortnight. They employed a bookkeeper who took instructions from the husband and an external accountant.

94    Finally, it is submitted on behalf of the respondents that the extenuating circumstances of Mrs Han, the actions of her husband and the findings of the Family Court raise the question whether any financial penalties should be imposed on the respondents at all, and Mrs Han in particular.

95    Further, if financial penalties are to be imposed, they should not involve an additional penalty on Mrs Han or that any penalty on Mrs Han should be suspended so that it is not payable unless the corporate respondents fail to pay the penalty imposed on them.

96    In her reply submissions, the FW Ombudsman does not accept that Mrs Han has proved that the domestic violence and other health circumstances that she has referred to affected the performance of her work and the discharge of her duties and responsibilities as an officer of the corporate respondents. The FW Ombudsman says that the evidence cannot be used to contradict the agreed facts on contravening conduct and accessorial liability.

97    In relation to the nature and extent of the conduct that led to the contraventions, the FW Ombudsman says that whether Mrs Han was as responsive, diligent, honest and cooperative in her dealings with the FW Ombudsman as she could have been and whether the failures to keep records were part of a deliberate course of action, are matters which should be assessed objectively in all the evidence and, when done so, there is evidence she may not have been as responsive, diligent, honest or cooperative as she could have been in the circumstances. In particular, paras [9] to [36] of Mr Acevedo's affidavit are relied on. That evidence included records of Mrs Han telling Inspector Marcello that if she had to pay weekend penalties she would just have to close the current business. It also included advice that Ms Han gave to Mr Acevedo that she did not keep any rosters beyond a two week period and only to a maximum of a month and there was no way she could get rosters for the last financial year. During this conversation, she added she did not know why the FW Ombudsman wanted to "squeeze our company" and added that "there is no way we can pay extra on weekends".

98    That evidence also included findings by the FW Ombudsman of underpayments for various entities totally $30,440.06.

99    It further included evidence that on 4 November 2015, Mrs Han indicated that the entities did not keep timesheets of more than one week after payday and they only provide timesheets for the latest payroll week.

100    In particular, the FW Ombudsman submits that when one takes account of Mr Acevedo's affidavit evidence at [9], [11] to [23], [32] and [35] to [36] and the exhibits referred to, as well as the Bhatia affidavit at [3] to [15] and the exhibits referred to, it is open to find that the failures to make and keep records were deliberate with the intended effect of avoiding some of the obligations owed by the Han entities to their employees.

101    In reply, as to the circumstances in which the relevant conduct took place, the FW Ombudsman says the Court should not accept the invitation of the respondents to accept Mrs Han's personal circumstances should be taken into account when assessing the culpability of the contravening conduct and coming to a finding about whether or not the failures were part of a deliberate course of action.

102    The FW Ombudsman says that the expert medical evidence on which the respondents seek to rely, when examined closely, does not clearly establish that Mrs Han's personal circumstances were a complete explanation for her role in the contravening conduct.

103    As to the respondents' submission that the present matters before the Court are not ones where the employees were not paid, let alone not paid for months at a time, and therefore are distinguishable, the FW Ombudsman says that they miss the point, as does a submission that they are matters in which underpaid employees were identified and reimbursed. The FW Ombudsman says the failures to keep records are spread across a number of different legal entities, covered significant periods of time and involved a number of significant and different types of pay records.

104    The FW Ombudsman submits the magnitude of the record keeping failures, when seen in the context of businesses which operated on weekends and at night, and the limited number of instances where underpayments of only minimum rates for hours actually recorded on payslips for employees were able to be calculated and reimbursed, is a strong indication that if required records were made and kept, the scale and periods of underpayment would more than likely be much larger.

105    The FW Ombudsman further submits that the evidence of who was underpaid, what they were underpaid, and how those calculations were made in the limited circumstances in which they were made and the evidence of how the lack of record keeping created underpayment exposures for at least one employee, Mr Bhatia, all go to show how unsustainable the respondents' submission is in this regard. The loss and damage was very likely real and much more significant than suggested, and the lack of records simply made it incalculable.

106    The FW Ombudsman submits that the history of previous contraventions by the respondents demonstrates that the respondents should have known, and most probably did know, about their legal obligations in respect of payments to employees of the Han entities, and so the need to make and keep records.

107    The FW Ombudsman repeats there is no evidence the respondents have altered their record keeping practices despite sufficient reminders of their need to do so.

108    As to the size of the business enterprise involved, the FW Ombudsman submits that the evidence which has been put on by the respondents show the respondents were part of a structurally, financially and legally sophisticated business which had the means at its ready disposal to ensure that proper records were made and kept.

109    The FW Ombudsman submits that the respondents' reference to notorious industry-wide deficiency in record keeping cannot excuse or be used in some way to lessen the respondents' culpability in this case. If anything, it reinforces the need for a penalty which will effect general deterrence.

110    In reply, the FW Ombudsman repeats its submissions, in effect, concerning the involvement of senior management in the breach and the lack of contrition, corrective action and cooperation with enforcement authorities.

111    The need for specific and general deterrence is again pressed in reply by the FW Ombudsman. Any reduction or suspension of the payment of penalties is opposed by the FW Ombudsman.

Consideration

112    In my view, for the reasons advanced by the FW Ombudsman, the contraventions are serious.

113    This is an area of employment regulation where, unless record keeping obligations are met, the ability of a regulator, and indeed individual employees, to identify an employer's breach of employment obligations is made difficult, if not on occasions impossible – as indeed this case emphasises.

114    The record keeping obligations are directed at ensuring the creation and retention of records as a critical tool in the assessment of compliance with workplace laws. Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation. The job of the FW Ombudsman, as regulator, in detecting and protecting employees' workplace entitlements is reduced in effectiveness.

115    I therefore accept the submission made on behalf of the FW Ombudsman that the contraventions in this case should not be seen as mere contraventions of some lower order. The failure to maintain records truly strikes at the very foundation of the regulatory scheme which is designed to ensure that employees are paid their legal entitlements.

116    As the FW Ombudsman submits, the failure will be considered particularly egregious where employees are in a class of uninformed or poorly informed people, or where they are transient workers dependent on the ongoing support of their employer for their work, as indeed the evidence shows is the case here.

117    It will rarely be open to a respondent to point to a notorious lack of compliance in a particular industry as an excuse for their contraventions and a reason why they should receive a lighter penalty than is otherwise appropriate. To the extent that the respondents suggest such an approach to the assessment of penalty in these proceedings, I reject that submission.

118    That question aside, the substance of the respondents' various submissions is that, at material times, Mrs Han did her best, on behalf of the corporate respondents, to comply with the requirements of the FW Act in question, and otherwise was personally under such a degree of stress, having regard to the breakdown of her marriage and domestic violence suffered at the hands of her husband, that the penalty should be lower than otherwise.

119    I consider that the various medical reports submitted on behalf of Mrs Han are relevant to the question of the assessment of penalty on behalf of all respondents, including Mrs Han. But, having read them, they do not fully explain the conduct their conduct. It is not said, for example, that Mrs Han was unable to meet the requirements of the FW Act and FW Regulations because of her distress. Nor that, by reason of her health condition, she did not understand or otherwise appreciate the obligations imposed upon her by those laws. Rather, the medical reports provide a more generalised reference to her health, the domestic violence she suffered at the hands of her husband, and the general difficulty surrounding the management of the businesses at material times.

120    I accept, therefore, the submission made on behalf of the FW Ombudsman that there is an insufficient basis to explain the contraventions by reference to a lack of appreciation that the FW Act and FW Regulations imposed serious recording obligations on the respondents as employers and/or by reference to Mrs Han's ignorance of them.

121    There is a solid evidentiary foundation to the submission made by the FW Ombudsman that when one considers the whole of the evidence, one finds that the contravening conduct engaged in was deliberate. There was an awareness by Mrs Han of what the record requirements were, and what the appropriate awards were, and yet, despite advice at material times, she and the respondents simply failed to do what was necessary to comply with the law.

122    As to whether senior management was involved in the breach, while Mrs Han's husband was plainly involved at material times in the operation of the businesses, there is also little doubt that Mrs Han was also involved in the record keeping part of them at material times. Generally, she accepts this. This is not a case where a person was a director or an officer of the company or an employee only in name. Mrs Han was actively engaged in the businesses of the companies and the contraventions complained of were very much part of her responsibilities.

123    As to contrition, corrective action and cooperation with enforcement authorities, it is difficult to conclude, on all the evidence, that the respondents, including Mrs Han, have shown any true endeavour to engage in corrective action. There is little evidence of contrition for what has been done. It is, in my view, insufficient for them simply to say that when formal complaints of underpayment were made, the situation was corrected. The need to implement processes within the businesses to ensure that records were properly kept had been lacking for some time, and were not changed even when questions were asked. The statements made by Mrs Han herself at material times suggest that the respondents, and she, were more focused on the financial burden of record keeping and paying penalties rates, than the need to comply with the Fair Work laws.

124    In the result, reference to the behaviour of Mrs Han's husband and the health problems she experienced as a result of her personal circumstances, are taken into account by me, but overall I consider they fail adequately to explain or significantly to mitigate the admitted contraventions in question.

125    I do, however, take into account that in the result, following mediation in the Court and the receipt of legal advice, the respondents and Mrs Han have admitted the contraventions in question. That degree of cooperation is noted.

126    The FW Ombudsman considers that an apology might have been given, but was not. Not every case of contravention will suggest a formal "apology" should be given. The fact that there has been no direct acknowledgment to particular employees or more generally is something I note but do not place any great weight on in the circumstances of this case when assessing penalty.

127    I also take into account that the respondents do not have a prior contravention history.

128    In my view, there is, however, a need for the imposition of a penalty which ensures there is both specific and general deterrence. The respondents, while continuing to experience business difficulties, need to fully appreciate that the workplace laws have to be complied with and are not to be bent or relaxed simply because a particular employer considers that its business will suffer financially if they comply.

129    In the circumstances of this particular case, I am not satisfied that the respondents have simply made an error which is unlikely ever to be repeated.

130    I consider that the gravity of the contraventions in the case of each of the respondents should be considered to fall within the mid to upper end of the scale of penalties.

131    In that regard, the fact that one of the respondents is now in liquidation; as of recent times, a second has ceased trading; and the franchise business activities of the third appears to be the main source of revenue, are all borne in mind. But the penalties to be imposed should not be crafted on the basis of what the respondents can or cannot afford to pay.

132    In that regard, not only is there a question of specific deterrence in this case, but there is also a clear need for general deterrence so that a message is sent clearly and loudly to businesses operating in the restaurant industry that the record keeping laws are of fundamental importance and must be complied with; and that if they are not complied with, those businesses, and those persons who are accessories to contraventions, will be visited with penalties that show that penalties are not merely a cost of doing business.

133    This is not a case where I consider, as the respondents suggest I might, that no penalties are required or that any penalty imposed on Mrs Han should be suspended. I consider, on the facts of these cases, that each of the respondents should be the subject of appropriate penalty which, as I have just said, should be in the mid to upper end of the penalty range, but as I have said bearing in mind that the respondents have no prior history of contraventions.

134    The maximum penalty that can be imposed on each of the corporate respondents against whom the FW Ombudsman still seeks penalties is $25,500. I would impose a penalty of $15,000 against each in respect of the course of conduct involved in the various contraventions.

135    In respect of Mrs Han, the maximum penalty that can be imposed in the case of each corporate respondent's contravening conduct is $5,100. Taking into account the need to consider the totality principle, I would impose a penalty of $2,500 in each proceeding, with the result Mrs Han should pay a total penalty of $7,500.

136    I have also considered the terms of the agreed declarations and orders set out in section I of the statement above.

137    I am satisfied, for the reasons advanced by the FW Ombudsman, that this is an appropriate case in which the Court should make the declarations. The declarations make it quite clear just what the contravening conduct was and may also be considered a timely reminder to the respondents, including Mrs Han, of their relevant record keeping obligations in the future.

138    However, I do not consider that it is appropriate to make the injunction against Mrs Han that is proposed in para [46] of the statement. It is sufficient in the circumstances that the declaration concerning her be made and that the penalty be imposed upon her. It will be abundantly clear to Mrs Han that, should she be an accessory to any breaches by any entity in the future, she will likely be exposed to higher penalties than those which have been imposed on this occasion, by reason of her prior contravening conduct.

139    Nor do I think it is appropriate for the same reasons to make an order such as that proposed in para [45] of the statement, requiring Mrs Han to comply with the relevant FW Act and FW Regulations requirements. Compliance is a matter of law and it is inappropriate, in my view, and indeed otiose for this Court to make an order in such terms.

140    I would therefore, otherwise make the orders agreed by the parties at paras [41], [42], [43], [44], [47], [48] and [49], save for the making of orders and declarations against the first respondent in WAD248/2016.

Orders

141    The Court would, therefore, make the following declarations and orders in WAD 247/2016:

(1)    Declarations that the first respondent contravened s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

(2)    A declaration that the second respondent was involved in each of the contraventions of the first respondent as set out in order (1) above.

(3)    Orders pursuant to s 545(1) and/or s 545(2)(a) of the Fair Work Act 2009 (Cth) that within a period of two months of the order, the first respondent:

(a)    register with the applicant's 'My Account' portal at http://www.fairwork.gov.au/my-account/registerpage.aspx and complete the profile, including the award options;

(b)    download and complete for all current employees of the first respondent the following templates at https://www.fairwork.gov.au/how-we-wil/-helpltemplates­ and-guides:

(i)    letter of engagement - full-time/part-time employee templates;

(ii)    part-time hours of work agreement or variation;

(iii)    full-time hours of work agreement or variation;

(iv)    roster template;

(v)    timesheet template; and

(vi)    record of employee details template; and

(c)    arrange for an officer of the first respondent to complete the 'Hiring employees' training module in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

(4)    An order pursuant to s 545(1) of the Fair Work Act 2009 (Cth) that the first respondent provide written confirmation and evidence to the applicant of its compliance with the order in order (3) above, within seven days of the timeframe specified in order (3) above.

(5)    As against the first respondent, there be imposed a pecuniary penalty of $15,000.

(6)    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

(7)    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), these pecuniary penalties be paid by the first and second respondents to the Commonwealth within six months.

(8)    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

142    The Court would, therefore, make the following declarations and orders in WAD 248/2016:

(1)    A declaration that the second respondent was involved, within the meaning of s 550 of the Fair Work Act 2009 (Cth), in each of the liquidated company's contraventions of s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

(2)    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

(3)    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), the pecuniary penalty be paid by the second respondent to the Commonwealth within six months.

(4)    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

143    The Court would, therefore, make the following declarations and orders in WAD 249/2016:

(1)    Declarations that the first respondent contravened s 535(1) of the Fair Work Act 2009 (Cth) by failing to make and keep records prescribed by:

(a)    regulation 3.33(2) of the Fair Work Regulations 2009 (Cth), specifying the hours worked by irregular part-time employees;

(b)    regulation 3.33(3) of the Fair Work Regulations 2009 (Cth), specifying the details of loadings and penalty rates in the Award;

(c)    regulations 3.34(a) and 3.44(b) of the Fair Work Regulations 2009 (Cth), specifying the number of overtime hours worked by any employee each day and when an employee started and ceased working overtime hours; and

(d)    regulation 3.36(1) of the Fair Work Regulations 2009 (Cth), specifying any leave that the employee takes and the balance of the employee's entitlement to that leave from time to time.

(2)    A declaration that the second respondent was involved in each of the contraventions of the first respondent as set out in order (1) above.

(3)    Orders pursuant to s 545(1) and/or s 545(2)(a) of the Fair Work Act 2009 (Cth) that within a period of two months of the order, the first respondent:

(a)    register with the applicant's 'My Account' portal at http://www.fairwork.gov.au/my-account/registerpage.aspx and complete the profile, including the award options;

(b)    download and complete for all current employees of the first respondent the following templates at https://www.fairwork.gov.au/how-we-wil/-helpltemplates­ and-guides:

(i)    letter of engagement - full-time/part-time employee templates;

(ii)    part-time hours of work agreement or variation;

(iii)    full-time hours of work agreement or variation;

(iv)    roster template;

(v)    timesheet template; and

(vi)    record of employee details template; and

(c)    arrange for an officer of the first respondent to complete the 'Hiring employees' training module in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

(4)    An order pursuant to s 545(1) of the Fair Work Act 2009 (Cth) that the first respondent provide written confirmation and evidence to the applicant of its compliance with the order in order (1) above, within seven days of the timeframe specified in order (1) above.

(5)    As against the first respondent, there be imposed a pecuniary penalty of $15,000.

(6)    As against the second respondent, there be imposed a pecuniary penalty of $2,500.

(7)    An order that, pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), these pecuniary penalties be paid by the first and second respondents to the Commonwealth within six months.

(8)    An order that the applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

Associate:

Dated:    31 May 2017