FEDERAL COURT OF AUSTRALIA

Ahmed v Al-Hussain Pty Ltd t/as The Cheesecake Shop (No 2) [2019] FCA 670

ORDERS

THE COURT ORDERS THAT:

1.    The parties provide agreed orders to give effect to the reasons delivered orally today and, in default of agreement, each party file and serve the draft orders it proposes be made on or before 17 May 2019.

2.    The applicant file and serve written submissions as to penalty (limited to 5 pages) on or before 10 May 2019.

3.    The respondents file and serve written submissions as to penalty (limited to 5 pages) on or before 17 May 2019.

4.    The proceeding be listed for case management hearing at 9.30am on 23 May 2019.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J:

1    Jameel Ahmed is a Pakistani man in his middle age who came to Australia in 2012. He had a Master of Business Administration qualification in his home country, but here he was reduced to working in more menial pursuits. In early 2014, he began working for the Cheesecake Shop at Tuggerah, having previously worked for 7-Eleven from February 2013. The Cheesecake Shop is the business name used by the franchise business that the first respondent, Al-Hussain Pty Limited (the employer), conducted. In early 2014, the sole director and shareholder of the employer was Sughra Zahid, who was married to the second respondent, Zahid Hussain. It is common ground that Mr Zahid was the person who controlled the operations of the employer at all times up until June 2017, when he entered into an equal partnership with the third respondent, Saqib Khayyam Azam Bhatti. On around 8 June 2017, Mr Zahid sold, or caused his wife to transfer, a 50% interest in the employer to Mr Bhatti. Mr Zahid then left, with his family, for Pakistan. Mr Zahid has not appeared in the proceeding and did not appear when called outside the Court today.

2    Mr Ahmed claims that, first, he was underpaid substantial amounts during the period of his employment by the employer from when he first started working at the Cheesecake Shop in February 2014 until the termination of his employment on 26 November 2017. However, he has not sued in this proceeding in respect of any claim for underpayment of what his entitlements would have been in the period prior to his entering into a written contract of employment on 20 December 2014 (the 2014 contract), and I am not concerned with the underpayments in that earlier period, save to the extent that they corroborated Mr Ahmed’s account of his treatment subsequently.

3    Secondly, Mr Ahmed claims that from 15 September 2015 Mr Zahid and, after 8 June 2017, Mr Bhatti required him to pay each of them substantial amounts of cash out of his wages, in the order of $700 per fortnight, under threat of losing his employment and the employer’s continuing sponsorship of his application for a temporary class 457 visa under the Migration Regulations 1994 (Cth) (the cashback payments). Mr Ahmed also claims that the employer underpaid his superannuation in the total sum of $12,991.98.

4    In essence, Mr Ahmed claims that the respondents contravened ss 323 and 325(1) of the Fair Work Act 2009 (Cth) by reason of the underpayments and cashback payments. He seeks to recover those sums and pecuniary penalties under s 546(1) in respect of those contraventions. It is not necessary to deal with the alternative claim under s 45 of the Fair Work Act as it relates to a breach of a modern award which provided lesser rates of pay than Mr Ahmed was entitled to receive under his contracts of employment.

The legislative provisions

5    Relevantly, the Fair Work Act provided:

323    Method and frequency of payment

(1)    An employer must pay an employee amounts payable to the employee in relation to the performance of work:

(a)    in full…

Note 1:    This subsection is a civil remedy provision (see Part 4-1).

325    Unreasonable requirements to spend or pay amount

(1)    An employer must not directly or indirectly require an employee to spend, or pay to the employer or another person, an amount of the employee’s money or the whole or any part of an amount payable to the employee in relation to the performance of work, if:

   (a)    the requirement is unreasonable in the circumstances; and

(b)    for a payment—the payment is directly or indirectly for the benefit of the employer or a party related to the employer.

Note:    This subsection is a civil remedy provision (see Part 4-1).

546    Pecuniary penalty orders

(1)    The Federal Court…may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

550    Involvement in contravention treated in same way as actual contravention

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

Note:    If a person (the involved person) is taken under this subsection to have contravened a civil remedy provision, the involved person’s contravention may be a serious contravention (see subsection 557A(5A)). Serious contraventions attract higher maximum penalties (see subsection 539(2)).

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

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

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

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

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

(emphasis added)

Service on Mr Zahid

6    On 10 August 2018, I gave leave to Mr Ahmed to serve Mr Zahid outside the jurisdiction in Pakistan: Ahmed v Al-Hussain Pty Limited t/as The Cheesecake Shop [2018] FCA 1741. I am satisfied by the affidavits that Alexander Ariti and the then solicitor for Mr Ahmed affirmed on 29 October 2018, that Mr Ariti caused Mr Zahid to be served in accordance with the orders made on 10 August 2018 with the amended originating application, further amended statement of claim and those orders. The entries on the Australia Post tracking website established that those documents were posted and delivered to the two addresses in Rawalpindi in accordance with those orders. Although Mr Zahid has not entered an appearance, I am satisfied that he has been served and is aware of the proceeding. That is reinforced by the fact that, although Mr Zahid appears now to be a de facto director of the employer on the evidence before me, Mr Bhatti has an equal 50% interest in the employer with him and the employer is defending the proceeding.

Background

7    Mr Ahmed originally was represented by counsel and solicitors who acted for him pro bono, but they have recently ceased to act. He appeared and represented himself at the hearing today. Mr Ahmed annexed to his principal affidavit of 11 July 2018 a large number of documents, including bank statements on which he drew to support his contentions that, first, he had been underpaid what his contractual entitlements were and, secondly, he had withdrawn, usually round figure, lump sums of cash from his bank accounts that he claimed had been paid as cashback payments to Mr Zahid and or, after Mr Zahid left for Pakistan, Mr Bhatti.

8    Mr Ahmed worked for the employer on a part-time basis through 2014, learning, effectively, how to cook and work as a pastry cook. He obtained sufficient qualifications to satisfy the requirements for him to be granted the visa, on 15 September 2015, sponsored by the employer through Mr Zahid.

9    Before this, however, Mr Zahid had offered to sponsor Mr Ahmed to stay in Australia and work in the employer’s business. Mr Zahid suggested a migration agent/lawyer to assist in the sponsorship application, and Mr Ahmed paid $3,000 to the lawyer to begin the process. Sometime between March and June 2014, Mr Ahmed had a discussion with Mr Zahid. Mr Ahmed told him that he had been advised by the lawyer that the sponsor had to pay the fees for the visa. When Mr Zahid refused to do so, the lawyer refunded $2,500 of the fee to Mr Ahmed.

10    Between September and December 2014, the two men had a further conversation in which Mr Zahid told Mr Ahmed that Mr Zahid and his wife wanted him to accept a fulltime contract but that they were not able to pay the sponsorship expenses at the moment. Mr Zahid said that they would repay those expenses later when the business was going better. Mr Ahmed said that he could not pay all the money at once. Mr Zahid agreed that he would reimburse the $5,000 fee for the visa fee later once the business had more money if Mr Ahmed paid it to the lawyer. When Mr Ahmed asked Mr Zahid to put in writing his promise to reimburse the balance of the moneys due in respect of the visa application, Mr Zahid said that he did not want to do so but would not run away with the money. Mr Ahmed claimed that, following 20 December 2014, he incurred expenses relating to the sponsorship of the visa application of over $18,000.

11    On 20 December 2014, the employer and Mr Ahmed entered into the 2014 contract, being an individual flexibility employment agreement. Under the 2014 contract, Mr Ahmed was entitled to a four year long-term appointment from the date of the visa grant. He agreed to work 38 hours a week, as prescribed by the National Employment Standard, and was entitled to four weeks of annual leave under that Standard. He was to be paid a total package of $59,130, including a yearly salary of $54,000 and superannuation of $5,130. The 2014 contract entitled Mr Ahmed to receive four weeks’ written notice of termination by the employer without cause or an equivalent payment in lieu of notice, but he could be summarily dismissed on other bases. There is no claim in this proceeding for entitlements arising from the termination of Mr Ahmed’s employment.

The underpayment of wages between 20 December 2014 and 15 September 2015

12    Between 20 December 2014 and 15 September 2015, Mr Ahmed was paid a total of $16,106 despite his entitlement under the 2014 contract to a total of $32,015 (or $842.50 after tax per week). Thus, he was underpaid a total of $15,909 in wages after tax.

13    The underpaid wages that I have found above appear from the payments credited to Mr Ahmed’s bank account with Westpac Banking Corporation (the Westpac account) which were irregular both in time and amounts. On occasions, he was not paid at all for some weeks and then on others, he was paid some amounts to partially catch-up. On other occasions, he was not paid catch-up money.

14    On average, Mr Ahmed was paid $420 in wages a week throughout the period between signing the 2014 contract on 20 December 2014 and 15 September 2015, when his visa was granted. Thereafter the employer appears to have decided to pay relatively, but not always, regularly into Mr Ahmed’s bank accounts approximately $842 per week or $1,685 per fortnight, being the equivalent, after tax, of his annual salary of $54,000.

The underpayment of wages and cashback payments between 15 September 2015 and 7 June 2017

15    From the time of the grant of the visa, Mr Ahmed claims that he had to make payments to Mr Zahid in cashback from his salary. Mr Ahmed had a conversation with Mr Zahid at about the time of the grant of the visa, in which Mr Zahid told him that he was on a three month probation period, now that the visa had been granted and the employer was sponsoring him. Mr Ahmed protested that he had already been working for over a year for Mr Zahid, to which the latter replied that:

You are giving me stress all the time, asking me to pay you the right money. This makes me uncomfortable working with you. If you don’t stop demanding the money, I will cancel your sponsorship and re-employ [sic] someone else.

16    Also, after the grant of the visa, Mr Zahid requested Mr Ahmed to open a bank account with the Australia and New Zealand Banking Group Limited (the ANZ account). Up to that time, Mr Ahmed had been using the Westpac account, being the account into which the underpaid salary had been deposited. Mr Zahid asked for the ANZ account to be opened because, he told Mr Ahmed, it was easier to transfer money between his own ANZ account and what would be the new account.

17    Mr Ahmed opened the ANZ account on 2 October 2015. On about 5 October 2015, Mr Zahid demanded that Mr Ahmed provide him with the debit card for the new ANZ account. Mr Ahmed agreed and provided Mr Zahid with the internet banking login and password, to enable Mr Zahid to operate on the ANZ account. Around this time, Mr Zahid also told Mr Ahmed that in order to maintain the employer’s sponsorship, Mr Ahmed had to pay him the cashbacks in the following conversation:

Mr Zahid:    Jameel, I now gave you the 457 visa and I am helping you and your family, so you know you have to pay me cashback money. I do not trust you to make the cash back payments yourself. So now that I have the debit card and login and I will deposit your wages into the ANZ account. After I take out the cash back, I will transfer the remainder to your Westpac account.

Mr Ahmed:     OK, I have no other choice.

Mr Zahid:     The tax and superannuation figures are also your responsibility now. You are to pay me in cash, $10,000 for tax and $5000 for superannuation. If you don’t pay these, I will cancel your job and visa.

Mr Ahmed:     OK.

18    In January 2016, Mr Ahmed joined an ANZ smart choice superannuation fund after inquiring with Mr Zahid about his superannuation. Mr Zahid assisted in opening the account, but little of Mr Ahmed’s superannuation entitlements found their way into that account.

19    In around March 2016, Mr Zahid told Mr Ahmed that he had to pay $700 per week in cash from his wages to Mr Zahid or he would terminate his employment and cancel his visa.

20    In about May or early June 2016, Mr Zahid left Mr Ahmed a handwritten note, on which Mr Ahmed relied as corroborating that he was making, in fact, the $700 cashback payments. The note read:

I do not wanna ask but I am in tight position and I have to submit tax GST installement on 24th June Friday, If you can arrange for amount of $7500, it would be great help for me thanks,

If you have $700 with you, you plz [scil: please] leave them in the tray next to computer I will pick them up tonight, Thanks. (emphasis added, errors in original)

21    On about 19 November 2016, Mr Ahmed had a conversation with Mr Zahid, in which he demanded that he be paid his full wages and did not want to continue making the cashback payments. The conversation continued:

Mr Zahid:    I will end your job and cancel your visa, if you don’t make the payments to me.

Mr Ahmed:     I have your messages with me and you cannot terminate. I will also go to Fair Work.

22    On 19 November 2016, the employer issued a notice of termination to Mr Ahmed (the 2016 notice). The 2016 notice alleged that over the course of the preceding year, Mr Ahmed had engaged in numerous inappropriate acts and conduct and that, since he had received his visa:

…you never came to shop full time…Since last 5 weeks, I am not putting [sic] your wages fully because you just come for few hours into shop and whatever hours you worked I did transfer to you.

23    As appears in the passage emphasised above, the 2016 notice also admitted that the employer and Mr Zahid had not paid Mr Ahmed in full. However, the employer and Mr Zahid withdrew the 2016 notice because Mr Zahid made Mr Ahmed promise not to complain about the cashback payments and to continue making them.

24    Between 15 September 2015 and 7 June 2017, Mr Ahmed was underpaid a total of $9,512.92 in wages after tax, as appears from comparing the sums that the employer deposited into the Westpac and ANZ accounts with his contractual entitlements to payment under the 2014 contract. The employer initially, from 15 September 2015, paid $420, and on occasion more, a week into the respective bank accounts, increasing those payments to about $842 a week for a period and then, after about mid-April 2016, it paid Mr Ahmed fortnightly at the rate of $1,685 on most, but not all, fortnights giving rise to the shortfall that I have described.

25    During the period between 15 September 2015 and 7 June 2017, Mr Ahmed said that he had made cash withdrawals totalling $54,750 from either his own bank accounts or, with the assistance of his wife, from her bank account. He said that he applied all of those withdrawals to cashback payments to Mr Zahid.

The underpayment of wages and cashback payments between 8 June 2017 and 27 November 2017

26    Mr Bhatti said that he had not reviewed any of the employer’s records before the time when he became a director. He said that Mr Zahid was his cousin and that he had arrived in Australia on 19 May 2017 on a partner visa. He said that Mr Zahid offered him a 50% partnership in the employer’s business, if he could improve its sales and then sell the business. Mr Bhatti said that Mr Zahid had transferred (or I infer cause to be transferred) the shares in the employer to his name on 8 June 2017. While Mr Zahid was in Pakistan, Mr Bhatti asked him to look after the bills and payments while Mr Bhatti concentrated on improving the quality of production, stock and customer service.

27    Mr Bhatti gave evidence that when he became a director of the employer, he checked the employer’s records and found no documents relating to cash that Mr Ahmed asserted he had given to either of Mr Zahid or Mr Bhatti. Mr Bhatti said that there was no document in which the employer had directed Mr Ahmed to enter into any cashback arrangements.

28    Thus, on 8 June 2017, when the ostensible ownership of the employer changed and Mr Bhatti became the sole holder of issued shares and its director, as he said in his evidence (and I accept), he was a 50:50 partner with Mr Zahid thereafter.

29    Shortly after Mr Bhatti became involved in the employer, he told Mr Ahmed that thenceforth Mr Ahmed should continue the existing arrangements but that Mr Ahmed would now have to pay to Mr Bhatti all the amounts that he was paying to Mr Zahid.

30    In June 2017, Mr Ahmed had a conversation with Mr Bhatti, in which he told Mr Bhatti that he could not continue paying cashback out of his wages. Mr Bhatti gave Mr Ahmed Mr Zahid’s telephone number in Pakistan. On 27 June 2017, Mr Ahmed and Mr Zahid exchanged WhatsApp messages. In that exchange, Mr Ahmed told Mr Zahid that he had handed over $2,500 to Mr Bhatti and asked Mr Zahid to ensure that Mr Bhatti and or the company accountant, Kamran Imam, issue Mr Ahmed with a group certificate for him. He added:

…and one more thing I haven’t received my wages for the last 4 or 5 weeks. whenever I asked from [Mr Bhatti] he told a story and latest he told me to talk to u [scil: you]. (emphasis added, errors in original)

31    Mr Zahid appears to have tried to telephone Mr Ahmed, because there is a missed voice call notation in the exchange above a WhatsApp message in which Mr Zahid said that he had been very busy, but:

just gonna tell [Mr Bhatti] that he will put that $2500 in a company account and will transfer wages to you for 4 weeks…sorry but I am really busy. OK I will call him today[.] (emphasis added, errors in original)

32    After some follow-up attempts by Mr Ahmed, Mr Zahid messaged back on 5 July 2017 stating that he had transferred wages from Pakistan to Mr Ahmed’s ANZ account that would be credited in three days.

33    On 17 July 2017, Mr Bhatti signed a glowing reference in support of Mr Ahmed’s permanent residency visa application.

34    On 25 July 2017, Mr Ahmed signed a new employment contract with the employer under which his salary would again be $54,000 plus 9.5% superannuation based on a minimum of 38 hours per week (the 2017 contract).

35    As the WhatsApp exchanges set out in [30]-[32] above confirmed, by the end of June 2017, the employer had not paid Mr Ahmed for some weeks. In order to satisfy the requirement of his visa that he continue in the employment of his sponsor, Mr Ahmed needed to produce evidence to the Department of Immigration of his continuing employment and his status. He asked Mr Bhatti for documentary evidence.

36    On 31 July 2017, in an email, Mr Bhatti asked the franchisor’s accounting services provider, BPO Connect, to process additional wages for Mr Ahmed of $2,572.50 for the last three weeks in the preceding financial year so as to make his wages total $54,000 per annum. Mr Bhatti wrote that he had paid that sum to Mr Ahmed. BPO Connect responded that even so, because the payment for the last week was split between two financial years, he needed to pay a further $370 to top up Mr Ahmed’s total salary to equate to $54,000 per annum for the financial year ended 30 June 2017.

37    On 2 August 2017, Mr Bhatti responded that he had paid Mr Ahmed another $400, attaching a receipt. Mr Bhatti asked BPO Connect to issue a group certificate to Mr Ahmed which he could take to his lawyer that afternoon. Shortly afterwards, BPO Connect responded by sending a PAYG summary report for 2017, and a payroll employee summary for 2017. These emails and the attached payroll employee summary showed that Mr Ahmed had been paid $54,000, and tax of $9,987 and superannuation of $5,129.92 had been deducted, leaving him with a net pay of $44,013. As I find below (at [49]-[51]), no superannuation payments occurred in the financial year ended 30 June 2017.

38    On 14 September 2017, Mr Zahid sent a WhatsApp message from his Australian mobile phone number, seeking to borrow from Mr Ahmed about 5 lac in Pakistani rupees (or approximately $5,700) for an urgent matter. It is not clear what, if anything, happened about that request.

39    On 27 September 2017, Mr Ahmed applied for a permanent residency visa.

40    Mr Ahmed claimed that, based on cash withdrawals from his ANZ account and from his wife’s account, he had made cashback payments totalling $6,977 to Mr Bhatti in the period after Mr Bhatti became involved with the employer and before Mr Ahmed’s summary dismissal on 26 November 2017. He also claimed that he had not been paid $1,685 in wages after tax for his final fortnight.

The termination of Mr Ahmed’s employment

41    On 20 November 2017, Mr Ahmed received a WhatsApp message from Mr Zahid, asking him to contact the latter. The two men finally spoke on 24 November 2017. They had a conversation as follows:

Mr Zahid:    Why have you stopped paying Saqib  [Mr Bhatti] cash backs? What do you think, If you have applied for PR, you are safe now? If you want us to continue with sponsorship, we need you to make the cashback payments and $11,000.00 from you.

Mr Ahmed:     My wife is not well, and I need money to look after her medical treatment. It is not possible to pay $11,000.00.

Mr Zahid:    If you not able to continue, you are still under my thumb, we can cancel your visa and report you to immigration.

Mr Ahmed:     I cannot pay this much amount as I told you about my shortcomings.

 Mr Zahid:       I will discuss this with Mr Saqib and get back to you.

(emphasis added)

42    Mr Ahmed made no further payments by way of cashback or otherwise to any of the respondents following that conversation.

43    On 26 November 2017, Mr Ahmed had a telephone conversation with Mr Zahid. Mr Zahid told him that Mr Bhatti did not agree with Mr Ahmed’s request to cease making cashback payments and that they were terminating his employment. Mr Ahmed complained, but to no avail. Mr Zahid told him not to go to the shop again.

44    Subsequently, on 26 November 2017, Mr Ahmed received an email from Mr Zahid attaching a notice of termination (the 2017 notice) that appears to have been largely drafted from the 2016 notice (see [22] above), but with some additions, including assertions that the employer had paid Mr Ahmed four weeks wages for which he had not worked and that he was not entitled to any payment in lieu of notice. In particular, the 2017 notice bears both Mr Zahid’s and Mr Bhatti’s typed names under that of the employer and stated:

Since last 5 weeks, I am not putting [scil: paying] your wages fully because you just come for few hours into shop and whatever hours you worked I did transfer to you…

We have already paid you 4-week wages without you worked at shop.

(emphasis added, errors in original)

45    On 27 November 2017, Mr Ahmed and Mr Zahid spoke again on the telephone. They had a conversation as follows:

Mr Zahid:    Why you are in the shop when you are terminated and I asked you to stay away from shop?

Mr Ahmed:     You know I worked 4 years in the shop. I did not commit any crime and big mistake. I was hoping that you had sorted out that already with Mr. Saqib [Mr Bhatti]. I am workaholic and can not sit home free.

Mr Zahid:    Pay the $11,000.00, plus the cash backs you that have stopped paying. Pay this by tomorrow otherwise we will cancel your job and notify the Immigration Department. We will ruin your life.

Mr Ahmed:     I can not pay this much amount by tomorrow.

Mr Zahid:    You will get nothing by sharing my messages and handwritten note and reporting against me. I will cancel your sponsorship and you will be ruined. I am in Pakistan already and Australian Government cannot do anything against me. I will gift business to somebody. When after your visa will be cancelled and you will be rolled back to Pakistan I will show you what I can do. I will teach you lesson you will remember lifetime. I will fix you and I know where the rest of your family is living in Islamabad- Pakistan, and started abusing me and humiliated/ insulted me.

Mr Ahmed:     I did not answer.

(emphasis added, errors in original)

46    In a subsequent WhatsApp message, Mr Zahid told Mr Ahmed not to come back near the shop and that they would call the police if he did.

47    On 28 November 2017, Mr Bhatti said to Mr Ahmed (who did not respond):

If you pay $11,000 by tomorrow plus $11,000 within the next three months, we will continue with your sponsorship.

48    On 20 April 2018, Mr Ahmed received a letter from the Department of Home Affairs in which it gave notice of intention to consider cancellation of his visa, based on a notification on 7 December 2017 by the sponsor, namely, the employer, that Mr Ahmed had ceased to be employed effective from 26 November 2017.

The unpaid superannuation

49    The employer made few payments of any substance for superannuation throughout Mr Ahmed’s employment, as is evidenced by a letter from the Deputy Commissioner of Taxation dated 13 February 2019. The Commissioner found that Mr Ahmed was owed outstanding superannuation amounts totalling $12,991.98 for the period comprising the quarters ended 31 March 2015 to 31 December 2017, as follows:

50    The underpaid totals of superannuation of $1,018.65 for the two quarters ended 31 March 2015 and 30 June 2015 represent about 40% of what Mr Ahmed should have been paid for 6 months, namely $2,565. The underpaid amount of $4,045.30 for the financial year ended 30 June 2016 is 9.5% of a salary of about $42,582 (which is nearly 80% of $54,000). Thus, the employer appears to have paid only about 60% and 20% respectively of the amounts of $2,565 and $5,130 it had to pay under the 2014 contract in each of the financial years ended 30 June 2015 and 30 June 2016. And, the unpaid amount of $5,130 for the financial year ended 30 June 2017 was the whole of the amount due by the employer for that year for a salary of $54,000 before tax.

51    Thus, the employer made no superannuation payments for Mr Ahmed in the period from 20 December 2014 to the time of his termination on 26 November 2017 other than, perhaps, about $1,500 and $1,000 in respect of the financial years ended 30 June 2015 and 30 June 2016.

The employer’s and Mr Bhatti’s submissions

52    The employer and Mr Bhatti (the respondents) argued that I should not accept Mr Ahmed’s evidence because he did not answer questions directly when giving evidence and was not clear about his own evidence, including what the $2,500 in the 27 June 2017 WhatsApp message (referred to in [30] above) was for. They contended that nowhere in his written evidence-in-chief had Mr Ahmed ever suggested that he had complained about an underpayment before bringing this proceeding. The respondents also contended that Mr Ahmed should have spoken or complained to someone in a position to do something about the alleged underpayments and cashback demands and that Mr Ahmed’s complaints to the psychologist (that I discuss below at [57]-[61]) were of little to no weight in establishing the fact of such underpayments or demands. Rather, the respondents suggested that Mr Ahmed should have complained to the Department of Immigration, the Fair Work Ombudsman or other persons in authority, if he were truly in a position where he was not being paid his true entitlements and was being required to pay money back in cash to his employer. They argued that the seriousness of the allegations that Mr Ahmed had made, coupled with the vagueness of his evidence and lack of corroboration, should lead me to finding that those claims could not be made out, having regard to s 140 of the Evidence Act 1995 (Cth).

The credibility of Mr Ahmed and Mr Bhatti

53    Mr Ahmed said that he signed his timesheets in blank, after Mr Bhatti became involved with the employer, and that they were filled in later by Mr Bhatti. Mr Bhatti said in evidence that all of the writing on the timesheets, other than Mr Ahmed’s signature, was in Mr Bhatti’s handwriting. The timesheets in evidence did not include any records after the week ended 13 October 2017. They indicated that on every week Mr Ahmed attended work on every single day, Monday to Friday, starting at exactly 9am and finishing at exactly 5pm, with exactly the same time off for lunch between noon and 12.30pm, working 7.5 hours per day and 38 hours per week – even though 7.5 hours per day does not add up to 38 hours per week.

54    Mr Bhatti said that towards the end of Mr Ahmed’s employment, he stopped approving Mr Ahmed’s timesheets because they were not accurate since he was not working at the shop as he said he was. However, in cross-examination, Mr Bhatti acknowledged (as noted above) that all of the timesheets had been filled out by him, other than for Mr Ahmed’s signature on them. He denied having had any conversations or transactions involving cashback payments with Mr Ahmed or otherwise. Mr Bhatti acknowledged that he had been late in paying Mr Ahmed his wages, but had offered to do so in cash. He denied receiving any cash sums from Mr Ahmed. I do not accept Mr Bhatti’s evidence and prefer Mr Ahmed’s more when they conflict.

55    Mr Ahmed was challenged in cross-examination on the basis that he had not provided any evidence of corroboration of his claims of being required to make, or making, cashback payments. It was put to him that the bank account withdrawals that he had identified as being the source of the cash to make those payments could have been for any purpose at all, since they were simply entries on the bank statements indicating the withdrawal of the particular sum. Mr Ahmed said that the withdrawals were for the purpose of making, and were used to make, the cashback payments, as he had identified in his affidavits.

56    When challenged that he had never complained about the underpayments or being required to make cashback payments, Mr Ahmed said that he had documents in the courtroom to show that he had made complaints about his treatment at the hands of Mr Zahid and Mr Bhatti involving the cashback payments. However, counsel did not require Mr Ahmed to produce those documents while being cross-examined. I asked Mr Ahmed, by way of assisting in his re-examination, whether he wished to produce any of those documents to which he had referred. He produced two psychological counselling reports, one dated 19 July 2017 and the second dated 28 February 2018.

57    The first report referred to a session that Mr Ahmed and his wife had had with the psychologist on 10 June 2017. The psychologist said that Mr Ahmed reported that he was extremely stressed and depressed about his situation and was at a complete loss as to how to deal with it. The report noted that Mr Ahmed could not afford any more sessions because of his financial situation, and that his sponsor had not paid him for six weeks. Among other matters that the psychologist noted was that Mr Ahmed reported working in the shop 38 hours a week, as his contract stated, but that his employer had paid into his bank account $1,685 per fortnight, instead of the $2,076 as required in his contract. The psychologist noted (as I find) that the likely reason for that discrepancy was that the balance was deducted in respect of PAYG tax on the salary payments. The psychologist then stated:

However, he reports that the sponsor then demands he pay him back $700 cash every fortnight. He says he actually has a copy of a note that the sponsor left for him one time – telling him to make sure he remembered to pay the $700. He also says that he is expected to give the sponsor $2500 per quarter to pay for his own tax ($10000 pa) and also has to pay the owner for his own super ($5 000 pa). (emphasis added)

58    I note that the sums referred to in the report (being $700 cashback per fortnight, $10,000 for tax and $5,000 for superannuation) totalled over $33,000 per annum. The psychologist noted that Mr Ahmed was devastated to discover all of those arrangements when he came to this country.

59    In my opinion, the evidence of Mr Ahmed’s statements to his psychologist, as recorded in the first report, provide powerful corroboration of the purpose of Mr Zahid’s note that I have set out above concerning the $700 and of Mr Ahmed’s account of the oppression worked on him by his employer in requiring him to make cashback payments under threats of terminating his employment and causing the cancellation of his visa. (I consider and make findings about the frequency and quantities of the cashback payments at [65] below).

60    The second report repeated some of the detail from the first report but added that Mr Ahmed said that:

the owner kept demanding he pay back extra money (to pay for his tax and super) – and was demanding $11000 from him – he says he refused to pay the owner – and then the new partner also demanded $11000 – and he refused to pay this as well. (emphasis added, I infer that the “owner” was Mr Zahid and “new partner” was Mr Bhatti)

61    Mr Ahmed also told the psychologist, as recorded in the second report, that his employment was subsequently terminated in November 2017. Again, in my opinion, that evidence corroborated Mr Ahmed’s evidence of the demands for cashback payments and the payments themselves.

62    It appears that the franchisor subsequently terminated the franchise agreement that the employer held, when Mr Ahmed was working for it, and a new franchisee is in place at the Tuggerah shop for which Mr Ahmed is now working in his old role as the pastry chef.

Consideration

63    I had the benefit of seeing both Mr Ahmed and Mr Bhatti in the witness box.

64    Mr Ahmed gave his evidence honestly. I found his evidence to be generally compelling, reliable and corroborated by the objective circumstances. First, the Westpac account statements showed that he was substantially underpaid his entitlements under the 2014 contract for the period between 20 December 2014 and 15 September 2015. There was no explanation for that underpayment. Secondly, Mr Zahid’s handwritten note requiring, or asking for, the $700 to be left in a drawer, coupled with the request for a further $7,500, also suggested that there was a highly unusual arrangement (as compared to an ordinary employment situation), namely that the employer asked Mr Ahmed, as its employee, to pay the employer significant sums in cash.

65    Thirdly, the evidence of in the reports of Mr Ahmed’s psychologist was independent, corroborative material, from a source that would not have been expected to be used or provided in evidence in this proceeding (or a proceeding such as this), that Mr Ahmed contemporaneously had complained about those same matters (concerning his being underpaid and required to pay cashback amounts of $700 per fortnight (as suggested in the psychologist’s first report) or, as I find below, closer to $700 per week. Mr Ahmed was not cross-examined about the statement in the psychologist’s report that $700 was paid as cashback fortnightly. Mr Ahmed was distressed, as the first report noted, during his consultation and had not been paid wages for six weeks. Because of the irregularity of the employer’s payment of his wages, it is likely that Mr Ahmed paid money as cashback at times correspondingly irregularly (depending on his most recent payments). But overall, I accept his evidence that he paid what worked to be about $700 or so weekly. Moreover, the objective evidence, including the WhatsApp message on 27 June 2017 (see [30] above), also supported that Mr Ahmed had not been paid at all in June 2017.

66    Fourthly, the Commissioner’s letter of 13 February 2019 demonstrated that Mr Ahmed’s superannuation was also substantially unpaid throughout his employment. Mr Bhatti said that he did not know that Mr Ahmed’s superannuation entitlements had not been paid. He asserted that he may have paid one or two instalments of superannuation and that Mr Ahmed was not working full-time in his employment. I found Mr Bhatti’s evidence to be unpersuasive. It was unsupported by any documentary evidence and, indeed, contradicted by the Commissioner’s letter of 13 February 2019. Mr Bhatti’s evidence about the times that Mr Ahmed worked (or rather did not work) was falsified by his (Mr Bhatti’s) own creation of the timesheets, in which Mr Ahmed was noted as having worked his full 38 hour week up to 13 October 2017. There were no timesheets for any later periods tendered by the respondents. Mr Ahmed said that he worked longer hours on his shifts but only received into his ANZ account (when he was paid) the equivalent of his salary based on his working a 38 hour week (before taking account of the cashback payments). Mr Bhatti provided no documentary evidence of payroll payments made to Mr Ahmed. He gave no explanation as to why he did not produce such documents.

67    A person in Mr Ahmed’s position has only a limited ability to produce documentary or objective proof of an oral and undocumented agreement or arrangement to make payments to his employer or of the making of cashback payments of the kind he alleged. Such a claim requires either substantive corroborative material to support it or an inherent likelihood that the transactions occurred for a Court to be satisfied, in accordance with s 140 of the Evidence Act, that large sums of money, over the course of a lengthy period, were paid in this way.

68    I have had regard to the fact that both Mr Zahid and Mr Bhatti knew that Mr Ahmed (and any person in Mr Ahmed’s position) was vulnerable to exploitation, by reason of his immigration status as a sponsored worker whose livelihood they could terminate and thereby bring into peril the continuation of his visa to remain in Australia. Mr Ahmed was the more vulnerable, as Mr Zahid and Mr Bhatti were aware, because he had brought his family out to Australia. There is clear documentary evidence in the Westpac account statements that Mr Ahmed was underpaid by nearly 50% for the first nine months of the 2014 contract (i.e. between 22 December 2014 and 15 September 2015) and that, thereafter, he was, at least, irregularly paid and, again, not paid in full what he was due, such as at June 2017.

69    I have had some hesitation in accepting that all of the moneys which Mr Ahmed identified (in what I find to be his honest but not necessarily reliably precise belief) in his bank statements were, in fact, used to make cashback payments to his employer. I am mindful, as he explained, that he had paid some of those moneys back as a reimbursement of the $5,000 payment that the employer or Mr Zahid made for the visa sponsorship, but I think that it is likely that some other amounts that Mr Ahmed identified may have been used for other purposes, including domestic purposes of Mr Ahmed and his wife. Without notations as to the purpose of each of the amounts of cash that Mr Ahmed withdrew, it is not possible for me to be satisfied that all of the identified withdrawals were used for cashback payments.

70    In addition, there was an obvious mistake in the preparation of Mr Ahmed’s affidavit by his then solicitors, that was also replicated in the further amended statement of claim. The mistake appeared in the two tables for the respective periods 15 September 2015 to 7 June 2017 and 8 June 2017 to 26 November 2017 that identified cashback drawings from the bank accounts. The second table in both the affidavit and further amended statement of claim (that applied to the period when Mr Bhatti was involved commencing on 8 June 2017) incorrectly recorded the first four entries as withdrawals made on 4, 11 and 19 May 2017 and 1 June 2017 that totalled $4,220. Mr Ahmed was cross-examined to suggest that he had sworn his affidavit with that error in it, so as to suggest that his evidence in general was unreliable. However, I accept his evidence that he signed the affidavit believing the tables to have been correctly prepared by his solicitors to summarise his evidence. The obvious errors were not noticed by the solicitors, both in the preparation of the affidavit and, likewise, in the further amended statement of claim (for the drafting of which they were responsible). Each of the tables reflected that the four items to which I have referred, erroneously appeared in the second table, even though they necessarily fell within what was going to be claimed as cashback payments in the first period between 15 September 2015 and 7 June 2017. I am not persuaded that this obvious error in his affidavit adversely affects my assessment that Mr Ahmed was an honest, credible and generally reliable witness.

The contraventions

71    In my opinion, Mr Ahmed has succeeded in establishing that the employer contravened s 323(1) of the Fair Work Act on multiple occasions by not paying him amounts (in wages) in full, before tax and superannuation amounts, payable to him in relation to the performance of work, totalling $15,909 in the period between 20 December 2014 and 15 September 2015, $9,512.92 in the period between 16 September 2015 and 7 June 2017, and $1,685 in the final two weeks to 26 November 2017 that Mr Ahmed worked.

72    I am also satisfied that the employer contravened s 325(1) of the Fair Work Act in that it unreasonably required Mr Ahmed to pay, as cashback payments, to the employer or another person related to it (being Mr Zahid and Mr Bhatti) an amount that was payable to Mr Ahmed, as an employee, in relation to the performance of his work. The payments were made directly to, and for the benefit of, a party related to the employer, namely Mr Zahid and Mr Bhatti. The requirement was unreasonable and unjustified because it forced Mr Ahmed to pay money back to his employer out of his wages for no proper reason. The employer exploited the fact that it could hold him in employment conditions to which he could not properly be subjected by threatening to terminate his employment and inform the Department of Immigration so as to jeopardise the continuation of Mr Ahmed’s visa.

73    I am also satisfied that Mr Zahid and, after 8 June 2017, Mr Bhatti were each involved, within the meaning of ss 550(1) and (2) of the Fair Work Act, in the employer’s contraventions of ss 323(1) and 325(1) that I have found. That is because at the times of the underpayment of wages and superannuation and cashback payments, each of Mr Zahid and, after 8 June 2017, Mr Bhatti was managing the employer.

74    Mr Zahid and Mr Bhatti each knew of the terms of the 2014 and 2017 contracts that entitled Mr Ahmed to be paid a salary of $54,000 per annum and $5,130 in superannuation. Each of Mr Zahid and Mr Bhatti knew how much the employer was obliged to pay to, or for the benefit of, Mr Ahmed and what it actually paid directly to Mr Ahmed (into the Westpac and, later, ANZ accounts), to the Australian Taxation Office, and in PAYG deductions from his wages and in superannuation.

75    Mr Zahid was knowingly concerned in the contraventions of s 323(1) within the meaning of s 550(2)(c) because he caused the irregular payments of Mr Ahmed’s wages at a rate far lower than the contractual amount in the period between 20 December 2014 and 15 September 2015 that must have occurred with Mr Zahid’s knowledge. Additional underpayment of wages totalling $9,512.92 continued in the period between 15 September 2015 and 7 June 2017, and $1,685 in the period between 8 June 2017 and 27 November 2017. Again, these must have occurred with Mr Zahid’s knowledge because of his position of control of the employer as appeared from the 2016 and 2017 notices.

76    Likewise, Mr Bhatti (as well as Mr Zahid) was in a positon of control of the employer between 8 June 2017 and 27 November 2017 and each admitted in the 2017 notice that the employer had not paid Mr Ahmed’s wages in full. Accordingly, each of Mr Zahid and Mr Bhatti knew the employer had not paid Mr Ahmed the $1,685 (after tax) due for his last fortnight’s wages and each caused, or was knowingly concerned in bringing about, that occurrence: Yorke v Lucas (1985) 158 CLR 661 at 670-671 per Mason ACJ, Wilson, Deane and Dawson JJ.

77    Each of Mr Zahid and, after 8 June 2017, Mr Bhatti was involved in the employer’s contraventions of s 325(1) in respect of the cashback payments because each induced the contraventions by his threats that Mr Ahmed’s employment would be terminated and the Department of Immigration informed, unless he paid, or continued to pay, cashback moneys. Moreover, each of Mr Zahid and, after 8 June 2017, Mr Bhatti was knowingly concerned in making his own demand that Mr Ahmed pay the cashback sums to him, while he was in the position of control of the employer in the circumstances that I have described and the threats that each continued to make to enforce payment of the cashback. Because each of Mr Zahid and Mr Bhatti personally made the demands to Mr Ahmed to pay the cashback sums, each of Mr Zahid and, after 8 June 2017, Mr Bhatti induced the employer’s contraventions of s 325(1).

78    Each individual respondent had knowledge of the essential matters that constituted each contravention of s 325(1). That is because he was the person who made the demand for the cashback payment and the accompanying threat in order to enforce it: cf. Yorke 158 CLR at 670.

79    I do not believe Mr Bhatti’s evidence that, after 8 June 2017, the employer made any superannuation payments in respect of Mr Ahmed. Mr Bhatti provided no corroboration that he or the employer made any such payments and the Commissioner’s 13 February 2019 letter confirmed that none were made after Mr Bhatti became involved in the employer on 8 June 2017. Moreover, Mr Bhatti was not a reliable witness on whose uncorroborated, contested evidence I am not prepared to place weight.

80    In my opinion, it is not possible to make a precise allocation of the purpose of the multiple cash withdrawals that Mr Ahmed and his wife made over a two year period. I think that Mr Ahmed is likely to have included, inadvertently, some sums that appear in the Westpac and ANZ accounts, or in his wife’s account, in his tables of cashback payments that, in fact, he used for other expenses or erroneously allocated the withdrawal to that purpose. This is despite my overall assessment that Mr Ahmed was an honest and reliable witness.

81    Accordingly, doing the best I can and making allowance that there may have been some inadvertent errors in Mr Ahmed’s allocations, I find that a total of $45,000 was paid by him as cashbacks to Mr Zahid during the period between 15 September 2015 and 7 June 2017 and that a total of $5,000 was paid as cashbacks to one or both Mr Zahid or Mr Bhatti in the period between 8 June 2017 and 27 November 2017.

Conclusion

82    Accordingly, first, there should be judgment against the employer and Mr Zahid jointly and severally for the full amounts of the underpayment of wages plus tax, the cashback payments of $45,000 and $5,000 that I have found, and the total amount of unpaid superannuation of $12,991.98. That is because Mr Zahid was an active partner in the business even after Mr Bhatti began managing it in Australia. Secondly, there should be judgment against the employer and Mr Bhatti jointly and severally for $5,000 paid by way of cashback and the $1,685 (plus tax) underpayment of wages, together with the unpaid superannuation instalments for the quarters ended 30 June 2017 of $1,278.99, 30 September 2017 of $2,075.96, and 31 December 2017 of $722.07.

83    The parties will need to bring in calculations of the sums due together with interest so that I can make final orders to give effect to these reasons. They may also need to lead any further evidence and make submissions on Mr Ahmed’s claims for pecuniary penalties.

Associate:

Dated:    14 May 2019