Federal Court of Australia

Fair Work Ombudsman v Lam [2021] FCA 205

ORDERS

THE COURT ORDERS THAT:

1.    The parties bring in short minutes of order to give effect to these reasons within 7 days.

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

REASONS FOR JUDGMENT

PERRAM J:

1    The Applicant, the Fair Work Ombudsman (‘FWO’), seeks declarations against, and the imposition of pecuniary penalties upon, the Respondents, Mr Lam and Ms Tong. Mr Lam and Ms Tong were at the times relevant to this case married with two young children. They lived as a family near Haymarket in Sydney. On 3 May 2016 Mr Lam employed Ms Romero as the family’s domestic worker and nanny. Ms Romero ceased working for Mr Lam (and the family) on 2 May 2017 and so worked for him for exactly a year. During that year, Mr Lam paid into Ms Romero’s bank account in the Philippines as wages an amount in Philippine pesos equivalent to $12,574.39.

2    It is now accepted by Mr Lam and Ms Tong that Ms Romero’s employment was, in fact, governed by the Miscellaneous Award 2010 (Cth) (‘the Award’). When regard is had to all of the hours worked by Ms Romero and the terms of the Award the parties agree that Mr Lam ought to have paid her an amount equivalent to $105,809.72. There was therefore an underpayment by Mr Lam of some $93,235.33.

3    On 19 June 2019 the FWO commenced proceedings in this Court under the provisions of the Fair Work Act 2009 (Cth) (‘the Act’) seeking orders that Mr Lam pay Ms Romero the sum of the underpayment. The FWO also sought the imposition of pecuniary penalties upon both Mr Lam and Ms Tong together with a number of prayers for declaratory relief.

4    The liability of Mr Lam was said to arise directly but in the case of Ms Tong her liability was said to be accessorial. It has not been necessary for the Court to determine whether Mr Lam ought to pay Ms Romero the shortfall. Following a successful mediation, the Court on 1 May 2020 ordered by consent that Mr Lam pay the shortfall amount which, on 29 May 2020, he did.

5    There remains, however, for resolution the determination of the appropriate penalties to be imposed upon Mr Lam and Ms Tong and the scope of the declaratory relief which the Court ought to grant.

6    Insofar as the penalties are concerned, the FWO seeks penalties which lie in a range between $32,130 and $38,556 for Mr Lam and in a range between $4,590 and $5,508 for Ms Tong. Mr Lam and Ms Tong do not dispute the range suggested by the FWO but they do urge that the penalties should be set at the lower end of that range.

7    Insofar as the declarations are concerned, both sides are content for there to be declarations that Mr Lam and Ms Tong have infringed various provisions of the Act relied upon by the FWO. However, whilst the parties accept for the purposes of the present hearing that the Award did indeed apply to Ms Romero during the relevant period, the Respondents submit that the Court should forebear from declaring that to be so. The Respondents argue that the question is in fact a reasonably difficult one and the evidence before the Court is not sufficient to justify a formal declaration by the Court that the Award did apply to Ms Romero’s employment as a domestic worker and nanny.

8    For the reasons which follow I will impose civil penalties totalling $32,500 on Mr Lam and $5,000 on Ms Tong. I will grant some of the declaratory relief sought together with some consent injunctions requiring Mr Lam to undergo online education. As is usual in proceedings under the Act there will be no order as to costs.

9    The FWO read affidavits by Ms Romero dated 2 June 2020 and 31 July 2020 and an affidavit by Ms Blee, a solicitor with the FWO. There were no objections. The Respondents read an affidavit by Mr Lam dated 27 July 2020, not reading §10, and an affidavit by Ms Tong dated 6 July 2020. In addition the parties agreed a statement of facts which was placed before the Court (‘SOAF’).

10    Ms Romero is a citizen of the Philippines. She was recruited in the Philippines and then employed in Australia by Mr Lam as a domestic worker and nanny for the period 3 May 2016 to 2 May 2017. She had not previously worked in Australia. During this time Ms Tong was married to Mr Lam and they lived together with their two young children. Whilst Ms Romero worked for Mr Lam she lived at the couple’s home. She shared a bedroom with one or possibly both of the children. Her duties were various. She did the cleaning, the cooking, the laundry, the ironing and the grocery shopping. She also attended to household maintenance. In addition, she looked after the two children and, when required, ran personal errands for Mr Lam and Ms Tong.

11    Although Ms Romero was legally employed by Mr Lam she in fact reported to Ms Tong as well. It seems that Mr Lam was responsible for her overall direction, management and supervision. In conjunction with Ms Tong he decided her hours of work and directed her as to her duties.

12    It is not in dispute that Ms Romero worked very long hours. Frequently she started work at 6 am on weekdays and 7 am on the weekends. Most days she would not finish her work until 10 pm at night. During the day she usually had around 4 hours of breaks. The FWO contended that this meant that she worked up to 82 hours per week which would appear to be the case.

13    The parties agreed that in the 365 days that she was employed by Mr Lam she had only 12 days off work. Turning then to the issue of her wages, it would seem that Mr Lam paid Ms Romero a monthly wage of 40,000 Philippine pesos which he transferred to a bank account in her name maintained by her in the Philippines. Despite fluctuations in the exchange rates, the parties proceeded on the basis that this amounted to a payment of $12,574.39 for the period involved and I will proceed on the same basis.

The Application of the Award

14    The parties agree at SOAF §27 that Ms Romero was covered, in various ways, by the Award. This is an agreement on a question of law. The Award is a modern award which means an award made under Part 2-3 of the Act. By s 48, an award covers an employee if it is expressed to cover an employee. Clauses 4.1 and 4.2 of the Award deal with coverage. They provide:

4.1     Subject to clauses 4.2, 4.3, 4.4, 4.5 and 4.6 this award covers employers throughout Australia and their employees in the classifications listed in clause 14—Minimum wages who are not covered by any other modern award.

4.2     The award does not cover those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.

15    There was no suggestion that Ms Romero did not fall within cl 4.1. The issue is whether she is caught by the exclusion in cl 4.2. There is no evidence before the Court as to whether domestic workers and nannies have ‘traditionally been covered by awards’ within the meaning of this clause. The evidence which would be necessary to make good such a contention would be reasonably complex and would involve a survey of the position of domestic workers and nannies under Australian industrial awards over the vague period of time implied by the word ‘traditionally’. Armies of law clerks could be consumed by such a task. The SOAF does not include agreed facts of that kind and there is no other evidence before the Court about such matters either. The question of whether domestic workers have traditionally been covered by awards is not a matter which the Court can take judicial notice of under s 144 of the Evidence Act 1995 (Cth) since the preconditions to the operation of that provision are not engaged.

16    For completeness, I do not accept the FWO’s submission that the comments of the Full Bench of the Fair Work Commission in 4 yearly review of modern awards – Miscellaneous Award 2010 [2020] FWCFB 754 at [38] should be seen as suggesting that employees performing lower-skilled, semi-skilled or trades-qualified work do not fall within the exception in cl 4.2. It may well be that that observation is correct, however, that does not solve the evidentiary problem which I have outlined. In order to be satisfied that Ms Romero’s employment was covered by the Award the Court would need to be satisfied that the employment of domestic workers and nannies had not traditionally been covered by any award and was not a class of employment to which cl 4.2 otherwise applied. The comments of the Full Bench are not evidence of that proposition.

17    Consequently, the evidence led in this proceeding does not justify the Court making a formal declaration that Ms Romero’s employment was covered by the Award. This does not entail a conclusion that the Award does not apply to domestic workers and nannies but is just a consequence of the evidence not being sufficient to draw any conclusion.

18    Mr Lam and Ms Tong, of course, agree that the Award applied to Ms Romero’s employment. Given the potential complexities of the question and its uncertain outcome, it was sensible for them to agree that the Award did apply. However, their agreement does not provide a basis for the Court declaring to be correct a particular legal proposition when the evidence before the Court does not justify that conclusion and where the proposition may be legally contestable.

Declarations of Contravention And Penalties

19    Having concluded that the Court ought not to declare that the Award applied to Ms Romero’s employment, I am unable to see how it can sensibly declare Mr Lam to have contravened the Act where the contravention alleged is founded on the application of the Award either, for example, a declaration that Ms Romero was not paid the correct wage. A declaration of such a contravention would carry with it a necessary implication of the anterior application of the Award. On the other hand, I see no reason why the Court ought not to grant declaratory relief in relation to those contraventions of the Act which do not depend on the application of the Award.

20    Mr Lam admits eight sets of contraventions of the Act as follows:

(i)    Contraventions of s 45 of the Act in failing to comply with a term of an award (being a failure to pay Ms Romero the minimum wage specified in cl 14.1 of the Award);

(ii)    Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero penalty rates for work performed outside the hours of 7 am to 7 pm specified in cl 22.3(a) of the Award);

(iii)    Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero the overtime specified in cl 22.1 of the Award);

(iv)    Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero penalty rates for work performed on public holidays as required by cl 22.3(e) of the Award);

(v)    Contraventions of s 44(1) in failing to comply with the National Employment Standards (being a failure to pay accrued annual leave on termination contrary to s 90(2));

(vi)    Contraventions of s 44(1) in failing to comply with the National Employment Standards (by unreasonably requiring Ms Romero to work more than 38 hours per week contrary to s 62(1));

(vii)    Contraventions of s 535(1) in failing to make and keep prescribed records; and

(viii)    Contraventions of s 536(1) in failing to provide Ms Romero with pay slips.

21    I am satisfied that Mr Lam did contravene each of the provisions just set out on many occasions. For example, each time Mr Lam underpaid Ms Romero he committed a fresh contravention of s 45. Each of the eight sets of contraventions represents therefore a single course of conduct under s 557 (ie there are 8 courses of conduct). Section 557 requires each course of conduct to be treated as a single contravention. Further, in terms of assessing any penalty, I am also satisfied that the wrongdoing implied by each of the courses of conduct will be adequately addressed if each course of conduct were treated as if it were a single contravention. I do not think the penalty needs to be set with a view to deterring Mr Lam from future contraventions because I am quite satisfied that he will not contravene again. However, cases such as this do require the penalty to be set with a view to deterring others who might otherwise be tempted to contravene the Act.

22    The appropriate maximum penalty for each of the contraventions in (i) to (vi) is $10,800 whilst the maximum penalty for the contraventions in (vii) and (viii) is $5,400. The maximum theoretical penalty which could be imposed on Mr Lam is therefore $75,600.

23    Mr Lam’s conduct was deliberate in the sense he decided to hire a domestic worker and nanny from overseas and to pay her outside the Australian regulatory framework. I accept that it is unlikely he was aware of the Award or even the Act. In my view the underpayment contraventions (i)-(iv) and the contraventions relating to working excessive hours (vi) are quite serious. I view the failure to pay accrued annual leave (v) as less serious and the record keeping contraventions (vii) and (viii) as less serious still. I accept that Mr Lam is to a degree largely contrite and that contrition is evidenced to some extent by the fact that he paid Ms Romero her entitlements, although only after more than 3 years.

24    Mr Lam has some factors in his favour. First, although the proceeding was initially contested, Mr Lam has since co-operated including in the preparation of a statement of agreed facts. Secondly, I take into account the fact that the media coverage of the litigation resulted in Mr Lam and Ms Tong being wrongly branded as having engaged in the practice of modern slavery. The FWO was in no way responsible for this suggestion and it was the result of irresponsible journalism. Despite the innocence of the FWO in all of this, the chain of events resulting from the FWO’s proceeding has resulted in Mr Lam being widely and unfairly pilloried as a person who has engaged in the practice of modern slavery. This suggestion was false and unjustified. I do not accept the FWO’s submission that this unjustified harm to Mr Lam’s reputation ought not to be brought to account. This is not a case where the harm to the reputation of the person being subjected to the penalty is harm of a kind naturally flowing from the misconduct committed such as in Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) [2014] FCA 1308; 322 ALR 45, see at [357] per Murphy J.

25    In principle the following penalties should be imposed:

26    I consider the total penalty of $32,500 adequately reflects the total wrongdoing by Mr Lam and is an appropriate penalty.

27    Turning then to Ms Tong, she has admitted that she was knowingly involved in Mr Lam’s conduct in requiring unreasonably Ms Romero to work more than 38 hours per week, that is to say, one of his contraventions of s 44(1). By s 550 a person who is knowingly involved in another’s contravention is taken to have contravened the provision. Consequently, Ms Lam is taken to have contravened s 44(1). The maximum penalty for this is $10,800. The circumstances of Ms Tong are the same as those of Mr Lam. It seems to me that I should impose the same penalty on Ms Tong as I have on Mr Lam, ie, $5,000.

Conclusion

28    The First Respondent consented to an order under s 545 requiring him to undergo some online training and I am content to make that order. I will grant the declaratory relief which relates to those contraventions of the Act which do not depend on the application of the Award, that is to say, contraventions (v) to (viii), but will not grant the balance of the declaratory relief sought. I will make orders requiring Mr Lam to pay the Commonwealth a pecuniary penalty of $32,500 within 28 days and for Ms Tong to pay $5,000 on the same basis. The parties should bring in short minutes of order giving effect to these reasons.

Associate:

Dated:    11 March 2021