Federal Court of Australia

Danaratna v Arunatilaka (Penalty) [2024] FCA 1431

ORDERS

THE COURT ORDERS THAT:

1.    The respondent, Ms Himalee Arunatilaka, pay a pecuniary penalty to the applicant, Ms Horathal Danaratna, of $117,028.80 within 60 days.

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

REASONS FOR JUDGMENT

RAPER J:

1    Ms Danaratna is a Sri Lankan national who came to Australia to work routinely seven days a week, from 6:00am until 10:00pm, as a domestic servant for Ms Arunatilaka, in her home, in Canberra. Ms Arunatilaka was the Sri Lankan Deputy High Commissioner in Australia. During the relevant employment period (over two years and five months) Ms Danaratna only received $11,212.70 for the work she performed.

2    In Danaratna v Arunatilaka [2024] FCA 918 (liability judgment or LJ), the Court found that Ms Arunatilaka had failed to properly pay and afford Ms Danaratna the working conditions she was entitled to enjoy under the Fair Work Act 2009 (Cth). Ms Danaratna was awarded compensation (in the sum of $374,151.90 for unpaid employee entitlements). The issue to be determined now is the appropriate pecuniary penalty to be awarded.

3    Where the Court is satisfied that a person has contravened one or more specified civil remedy provisions under the FW Act, the Court may, upon application, order the contravener to pay a pecuniary penalty the Court considers appropriate: ss 539 and 546(1) of the FW Act.

4    In the liability judgment, the Court declared Ms Arunatilaka to have contravened 10 civil remedy provisions (ss 323(1), 536(1), 44 and 45 (by way of contravening seven different terms of a modern award)). The declarations made were in the following terms:

The respondent contravened the following civil remedy provisions in the period between 12 March 2016 and 14 August 2018:

(a)    section 323(1) of the Fair Work Act 2009 (Cth) by failing to pay the applicant amounts payable to her in relation to the performance of work in full, at least monthly and by one of the methods specified in s 323(2) of the FW Act;

(b)    section 536(1) of the FW Act by failing to provide the applicant with a pay slip within one working day of paying her an amount in relation to her performance of work;

(c)    section 44 of the FW Act by contravening a provision of the National Employment Standards, being s 90(2) of the FW Act, by failing to pay the applicant when her employment ended the amount that would have been payable to her had she taken that annual leave;

(d)    section 45 of the FW Act by:

(i)    the applicant being required to perform more than an average of 38 ordinary hours of work per week as a full-time employee in breach of cl 10.2 of the Miscellaneous Award 2010 (Cth);

(ii)    the applicant being required to perform ordinary hours of work on more than 6 days a week and more than 20 days in a 28 day period in breach of cl 20.1 of the Award;

(iii)    the applicant being required to work in excess of 10 ordinary hours of work on any one day in breach of cl 20.2 of the Award;

(iv)    failing to provide the applicant with an unpaid break of at least 30 minutes where the applicant was required to work more than 5 hours in breach cl 21 of the Award;

(v)    failing to pay overtime rates in breach of cl 22.1 of the Award;

(vi)    failing to pay penalty rates for work performed on public holidays in breach of cl 22.2(e) (until 21 August 2016) and cl 22.3(e) (thereafter) of the Award; and

(vii)    failing to pay an annual leave loading of 17.5% in breach of cl 23.3 of the Award.

What is the appropriate penalty in the circumstances?

5    By operation of s 546 of the FW Act, the Court is empowered, on application, to 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.

6    The primary, if not sole purpose of imposing a civil penalty is deterrence: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 at [9], [15] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ. The Court must fix “appropriate” penalties. Penalties will be appropriate where they are not more than might be considered reasonably necessary to deter further contraventions of a “like kind” by the contravener and others, and where they strike “a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case”: Pattinson at [9]–[10], [46].

7    Relevant non-exhaustive factors, which may be taken into account, include those identified in in Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152–52,153 per French J:

1.     The nature and extent of the contravening conduct.

2.     The amount of loss or damage caused.

3.     The circumstances in which the conduct took place.

4.     The size of the contravening company.

5.     The degree of power it has, as evidenced by its market share and ease of entry into the market.

6.     The deliberateness of the contravention and the period over which it extended.

7.     Whether the contravention arose out of the conduct of senior management or at a lower level.

8.     Whether the company has a corporate culture conducive to compliance, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.

9.     Whether the company has shown a disposition to co-operate with the authorities responsible for enforcement of the Act in relation to contravention.

8    In this case Ms Danaratna submits that penalties, totalling the sum of $117,028.90, are to be imposed on Ms Arunatilaka with respect to each of the following 10 contraventions:

9    A maximum of 60 penalty units can be imposed for each contravention. In this case, the maximum penalty amount changed during the employment claim period. As at 12 March 2016, (the beginning of the employment claim period) one penalty unit was fixed at $180 (and therefore the maximum penalty was $10,800). From 1 July 2017 until 14 August 2018 (the end of the employment claim period), one penalty unit was fixed at $210 (and therefore the maximum penalty was $12,600).

10    It is apparent from the above table that the later fixed maximum penalty is claimed for contraventions three and 10, by reason of them both relating to the failure to pay annual leave and the loading, where the right crystallises on termination, and therefore at the time when the maximum penalty of $12,600 was applicable.

11    Otherwise, Ms Danaratna has submitted that the sum of $11,478.60 is the appropriate amount to be applied to each of the other contraventions, where the amount is fixed by a calculation based on the proportion of time during the employment claim period that each of the relevant maximum penalties applied. It was submitted that during 62.3% of the employment claim period the former maximum penalty (of $10,800) applied and during 37.7% of the period the higher $12,600 applied. As a consequence, a lesser “blended” amount was appropriate, because it represented the maximum as it applied, on a proportionate basis, for the period, adopting (as best as was able to be discerned) the method deployed by Katzmann J in Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 8) [2024] FCA 483 at [149], [229]–[230], [235(1)(c)].

12    The maximum penalty is “but one yardstick” amongst a number of other relevant factors to be considered (including those identified immediately above). There must be “some reasonable relationship between the theoretical maximum and the final penalty imposed”: Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [55], cited with approval in Pattinson at [53]. In Pattinson, Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ opined that the relationship of “reasonableness” may be established by consideration of the circumstances of the contravener as well as by the circumstances of the conduct involved in the contravention because each inform the need for deterrence: at [55].

13    The Court is required to strike a reasonable balance between deterrence and oppressiveness. In Pattinson at [41], the holding in Reckitt Benckiser at [152], was approved:

152     If it costs more to obey the law than to breach it, a failure to sanction contraventions adequately de facto punishes all who do the right thing. It is therefore important that those who do comply see that those who do not are dealt with appropriately. This is, in a sense, the other side of deterrence, being a dimension of the general deterrence equation. This is not to give licence to impose a disproportionate or oppressive penalty, which cannot be done, but rather to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance.

14    As previously observed in Shergill v Singh (No 2) [2024] FCA 261 at [16], the sixth of the CSR factors referred to above, state of mind and intention, have relevance. The concept of deliberateness within the civil penalty context is spectral: Conduct may be deliberate if done consciously, in the sense of being aware of each of the essential facts constituting the elements of the contravention without understanding them to be unlawful, or while apparently believing them to be lawful or otherwise due to an innocent mistake: Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; 260 FCR 68 at [61]–[65]. As observed by the Full Court in Flight Centre, the precise basis of purported “innocence” may give rise to the need for consideration when determining deterrence.

15    Consideration must be given to whether the contravention involves a relevant state of mind including, a deliberate flouting of the law, recklessness, wilful blindness, “courting the risk”, negligence or innocence: Reckitt Benckiser at [131]. Furthermore, where there is any degree of awareness (noting the spectrum) of the actual or potential unlawfulness, the contravention is necessarily more serious. It is worthwhile extracting the Full Court’s holding in full:

131    If a contravention does not involve any state of mind then it is for the party asserting any particular state of mind (be it a deliberate flouting of the law, recklessness, wilful blindness, “courting the risk”, negligence, or innocence or any other characterisation of state of mind) to prove its assertion. If, in the event, neither party discharges its onus to establish any particular state of mind in relation to the contraventions, the Court determines penalty on no more than the fact of the proscribed nature of the conduct (see, by analogy see R v Olbrich (1999) 199 CLR 270; 166 ALR 330; [1999] HCA 54 (Olbrich) at [22]–[28]). However, if any degree of awareness of the actual or potential unlawfulness of the conduct is proved then, all other things being equal, the contravention is necessarily more serious. Such awareness may be able to be inferred from the very nature of the conduct or representations constituting the conduct. However absence of such proof does not establish a mitigatory state of mind (see, by analogy, R v Storey [1998] 1 VR 359 at 369, quoted with approval by the majority in Olbrich at [27]; see also [25]). It means only that the neutral state of mind required for liability has not been disturbed for the purposes of penalty. If a contravening party wishes to go beyond the neutral statutory state of mind for liability and positively assert a lack of consciousness of the character of the conduct for the purposes of penalty, that is a circumstance of mitigation which the contravening party must prove.

There are 10 contraventions given it is appropriate to aggregate certain contraventions

16    It is useful to travel along the instructive path set by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; 275 IR 148 at [36]:

(1)     Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.

(2)     Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.

(3)     Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.

(4)     Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.

(5)     Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; Commonwealth v Director, Fair Work Building Industry Inspectorate 255 IR 87 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick (2007) 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [23], [71] and [102].

17    Each of the abovementioned 10 contraventions are distinct (to the extent that they involve separate breaches of the FW Act and/or the Miscellaneous Award 2010 (Cth)). However, it may be accepted that, save for contraventions three and 10 (the failure to pay her accrued but untaken annual leave and leave loading on termination), each contravention occurred on many occasions over the entirety of the employment claim period: see LJ [50], [53]–[54], [60]. As a consequence, contraventions one, two and four to nine should be dealt with some degree of aggregation or be grouped by operation of s 557. This is consistent with the long arc of authority including, most recently, the Full Federal Court’s reasoning in Fair Work Ombudsman v Ho [2024] FCAFC 111 at [21] which cited with approval Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; 221 FCR 153.

18    Accordingly, I accept, as submitted by Ms Danaratna, that the 10 contraventions which were the subject of the declarations already made should each attract a penalty: (a) one contravention of each of s 323(1), s 536(1) and s 44; and (b) seven contraventions by operation of s 45 for breaches of seven separate clauses of the Award, being cll 10.2, 20.1, 20.2, 21, 22.1, 22.2(e)/22.3(e) and 23.2.

19    It is my view, for the following reasons, that the penalties proposed by Ms Danaratna are appropriate given the nature of, and circumstances surrounding, the contravening conduct and the absence of any mitigatory factors.

The egregious conduct was extremely serious

20    It can be without dispute that the nature of the contravening conduct is extremely serious. Ms Arunatilaka, a senior diplomat, brought Ms Danaratna to Australia to work as her domestic servant (LJ [5], [16]–[17]) in circumstances where she could not speak or read English: LJ [7].

21    Ms Danaratna remained and resided at Ms Arunatilaka’s private residence, at 1 Gawler Crescent, Deakin where she worked every day at her home until she left. The evidence established that Ms Danaratna undertook all the domestic tasks of Ms Arunatilaka’s household, cooking and preparing meals, cleaning, washing and ironing. In addition, she undertook all necessary preparations and cooking when Ms Arunatilaka held parties at her home for up to 30 or 40 guests. A glimpse through the window of that household, was described in this following extract from Ms Danaratna’s evidence:

31.     I worked seven days a week. I woke up at 5:30am, and by 6am I was working. I prepared breakfast at home and lunch for Ms Arunatilaka to take to the High Commission. I laid out the clothes for Ms Arunatilaka to wear to work.

32.     I worked from around 6am to around 10pm on a normal day. On a special occasion such as when Ms Arunatilaka held a party, I would work from around 5am until midnight or 1 am.

33.     I would usually have a break during the day while Ms Arunatilaka was at work. If it was not a busy day, I would have around 90 minutes to two hours' break.

34.     Sometimes Ms Arunatilaka had house guests or her brother stay at the residence. and I had to cook. clean and look after them too.

35.     On one occasion during my employment with Ms Arunatilaka, I burned my hand on hot oil in the kitchen. It was badly burned. I called Ms Arunatilaka at work, and she came home and took me to the hospital. I had two days off work. Apart from these two days, I did not take any time off while working for Ms Arunatilaka.

36.     Ms Arunatilaka did not allow me to leave the house without permission. She gave me permission from time to time to go for a short walk around the neighbourhood. I was not allowed to go to the shops or do other activities outside the house by myself. Sometimes Ms Arunatilaka would take me to the shops if I wanted to buy something.

37.     The only contact that I had with other people while I was in Canberra was with three other domestic servants referred to in paragraph [28]. I spoke to them in Sinhala when the four of us attended the High Commission to assist in preparing for functions.

38.     Ms Arunatilaka would sometimes travel interstate or overseas. She would brief me on the work to do while she was away, and I would continue working during these periods. I recall one instance where Ms Arunatilaka went overseas while her husband and I remained in the Canberra residence.

39.     Ms Arunatilaka was not impolite to me and never made threats to me. However, she did not provide me with satisfactory clothing and food. I did not feel like I was being treated properly.

Ms Danaratna was effectively deprived of the full spectrum of her entitlements

22    Despite being entitled to over $374,000 in unpaid wages and entitlements, Ms Danaratna worked for over two years and five months, and only received $11,212.70. This equated to being paid less than $0.90 an hour. To speak of the extent to which she was underpaid and the period over which this occurred, in a sense, is enough to satisfy the Court as to why there is a need for specific and general deterrence. Ms Arunatilaka failed to pay not only the minimum basic rate, but her overtime and public holiday penalty rates.

23    However, the egregiousness of the conduct arises from the complete deprivation of the full spectrum of minimum entitlements owed to her. The Dickensian nature of her conditions arose, not only from how little she was paid, but by how much she was required to work – namely in excess of what the Award sought to prevent, namely, in excess of 6 days a week and in excess of 10 ordinary hours a day and without a break. This was compounded by the failure to allow her to take annual leave and the failure to pay her those accrued entitlements upon termination. Further, there was no certainty as to the amount of and when she was to be paid. This is not a minor infraction – the right to regular, known payments is an essential entitlement. Rather, Ms Arunatilaka was paid in irregular, sporadic payments into a Sri Lankan bank account or received small amounts in cash: LJ [53]. Similarly, the failure to provide her with payslips is not a trivial breach: LJ [60]. As recently observed in Shergill (No 2) at [28], the requirement that an employer provide payslips is an essential part of a functioning industrial system. The evidence revealed that Ms Danaratna did not know how her pay was calculated and how much she had received. The lack of transparency deprived her of any ability to hold (to the extent that she could ever have) Ms Arunatilaka to account, even to the paltry sum contained in the unlawful contractual bargain they had made. The purpose of each of these basic minimum entitlements is meant to ensure that the modern workplace is the anthesis of the domestic servitude of the Victorian era.

24    Ms Danaratna was deprived of any semblance of work and life divide. Her conditions bore no resemblance to what one would expect under Australian law and were egregious and exploitative.

Ms Danaratna was deliberately isolated from the community and effectively entrapped within the household

25    The whole scheme of exploitation stemmed from a number of factors. First, Ms Danaratna was vulnerable and wholly reliant on Ms Arunatilaka. She was unable to read or speak English and had no connections in the community: LJ [6]–[7], [16]–[18]. Secondly, by being cloistered in Ms Arunatilaka’s household Ms Danaratna was invisible from and unable to participate in Australian society. Thirdly, Ms Arunatilaka engaged in practices that entrapped Ms Danaratna in the household: Ms Arunatilaka took away Ms Danaratna’s only means of identification, her passport when she arrived in Australia and never returned it to her: LJ [16]. Ms Danaratna was not allowed to leave the residence without permission: LJ [18]. She never attended any public places (save for short walks in the neighbourhood) except when accompanied by Ms Arunatilaka: LJ [18]. Ms Danaratna had no access to money, save for the small sums of cash, she received from Ms Arunatilaka: LJ [21].

Ms Arunatilaka’s conduct was deliberate

26    Ms Arunatilaka’s contravening conduct was deliberate. As observed in Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484 at [14], the concept of deliberateness in a civil penalty context is spectral:

[T]he deliberateness of a contravention is a factor indicating an increased need for specific deterrence. The concept of deliberateness in the civil penalty context is spectral: Assessing deliberateness involves consideration of the contravener’s state of mind and intention. A contravention may be deliberate where it is engaged in with the knowledge of the essential facts giving rise to the contravention. However, the concept may also include additional aggravating features such as deliberately flouting the law, being reckless, wilfully blind, “courting the risk” or otherwise being negligent. It is for the party asserting the relevant state of mind to prove it: Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [131].

27    The evidence revealed that it was Ms Arunatilaka who determined from the outset Ms Danaratna’s terms and conditions of employment and thereafter exercised complete oversight of the circumstances in which she worked. Ms Arunatilaka prepared all the paperwork, required by the Australian government. Ms Arunatilaka “assisted” Ms Danaratna with the completion of the Application for Temporary Work (International Relations) Visa (Form 1403). As part of the application, Ms Arunatilaka represented to the Australian government that she had completed the “Employer’s declaration”, “acknowledging that payment will be in accordance with the standards for wages and working conditions under relevant Australian law”. The evidence also contained the “Subclass 403 domestic worker stream – Employer’s declaration” in which Ms Arunatilaka declared on 20 July 2015 that she had:

…entered into an employment agreement with the domestic worker …, which is in accordance with the standards for wages and working conditions provided for under the relevant Australian legislation and awards and is in relation to their undertaking full-time domestic duties in my private household in Australia.”

28    Despite this declaration, Ms Arunatilaka entered into employment contracts with Ms Danaratna on 20 July and then 12 August 2015 which, in no way, accorded with the standards for wages and working conditions provided for under Australian legislation and the relevant Award.

29    Furthermore, the evidence revealed that Ms Arunatilaka did not even honour the terms of these contracts: LJ [21]. Ms Arunatilaka chose not to pay even the contracted amount she was entitled to and deprived her of the day’s rest she was entitled to per week. Further, contrary to the contract, she did not provide Ms Arunatilaka with the monthly sums (or services of a value in kind) that were promised to Ms Danaratna by clause 5 of the contract, including in relation to clothing, a phone, and access to the internet: LJ [15], [20].

30    Further, the evidence revealed how conscious Ms Arunatilaka would have been not only of the failure to pay Ms Danaratna under Australian law, but also of her breaching the terms of the contracts they had entered. When prompted by Ms Danaratna to give her the details of the payments, Ms Arunatilaka, in August 2018 (after Ms Danaratna had been in Australia working for Ms Arunatilaka already close to three years), gave Ms Danaratna a spreadsheet which comprised a form of ledger indicating the amounts paid in the form of a monthly salary less deductions. Those amounts accorded with Ms Danaratna’s recollection of what she had received.

31    This suite of evidence, together with the direct supervision and control of Ms Danaratna at every moment of her life during the employment claim save for when Ms Arunatilaka was away, reveals that Ms Arunatilaka was fully aware of all the elements which made up each of the contraventions. She even accounted to the last cent what Ms Danaratna received.

32    Ms Arunatilaka, then being the Deputy High Commissioner for Sri Lanka, is no doubt highly educated and had significant resources at her disposal to assist her in knowing and applying Australian law. It should be expected that any person in the diplomatic corps would understand their obligation to know and abide by the laws of the foreign State. Ms Arunatilaka was clearly put on notice by the Australian government, when she filled in the forms for Ms Danaratna in support of the visa and her own declaration to the Australian government that the employment contract she had entered into was required to comply with Australian law.

There are numerous reasons why there is a need for specific deterrence

33    There are numerous reasons for the need for specific deterrence. First, the deliberateness of the contravening conduct. Secondly, Ms Arunatilaka has taken no steps to rectify the conduct. She has not paid Ms Danaratna the amounts owing, has shown no remorse or contrition and has taken no steps to ensure that this does not happen again. Thirdly, the evidence reveals that Ms Arunatilaka remains in the diplomatic corps and has continued to work as a diplomat and represent Sri Lanka. There remains a possibility that she will return to Australia and engage in like conduct again: LJ [30].

34    The absence of a record as to past non-compliance or contravention is not a mitigating factor in this case. Ms Arunatilaka was only in Australia for the period over which Ms Danaratna was employed for the purpose of the specific diplomatic post. It can be inferred like conduct to that of the contravening conduct occurred over the entirety of that period. All that the absence of prior contravening conduct reveals in this case is that there was an absence of opportunity.

There are additional reasons for why there is a need for general deterrence in this case

35    There is a heightened need for general deterrence. The arresting features of this case unfortunately are not dissimilar to those of Shergill v Singh [2023] FCA 1346; 326 IR 428 and the other international cases involving indentured servitude within the households of diplomats: Shergill (No 2) at [37]. They reveal that this kind of contravening conduct is occurring in Australia and amongst those who serve in the diplomatic corps and may come to Australia. There is a particular need for penalties to be imposed which deter diplomat employers from exploiting foreign workers who they bring to Australia to work in their private, diplomatic residences: Shergill (No 2) at [36]–[38]. A strong, clear message needs to be sent to those involved in the diplomatic corps as to the consequences for engaging in like conduct and to deter contravening conduct of this kind.

36    The need for general deterrence is heighted by the invisibility of these vulnerable workers and that they are routinely foreign workers. As observed by Katzmann J in Foot & Thai (No 8) at [221]–[222], foreign workers are particularly susceptible to exploitation:

221    In May 2023 the Grattan Institute, in a document annexed to Mr Thomas’s affidavit in chief, noted that exploitation of foreign workers is widespread in this country: Coates B, Wiltshire T, and Reysenbach T (2023), Short-changed: How to stop the exploitation of migrant workers in Australia, Grattan Institute. The authors reported that between five and 16 percent of employed recently arrived migrants (between 27,000 and 82,000 workers) are paid below the national minimum wage. They observed:

Recent migrants are at higher risk of exploitation because they tend to be younger, have less experience, and work in industries where exploitation is common. And migrants have additional vulnerabilities because of visa rules, their weaker bargaining power, cultural and social norms, and information barriers. Recent migrants are 40 per cent more likely to be underpaid than long-term residents with the same skills and experience and who work in the same job.

222    The authors noted that exploitation of migrant workers typically includes, among other things, underpayment of wages, unpaid superannuation, unpaid penalty rates, unpaid leave, and “cash back arrangements” whereby employers demand payments in cash after they have paid employees — all features of the contravening conduct in the present case. They commented that the exploitation of foreign workers not only hurts them but also weakens the bargaining power of Australian workers, harms businesses which try to do the right thing, undermines confidence in our migration program, and damages our global reputation.

37    To achieve general deterrence, there is a need to ensure that it costs more to obey the law than to breach it. As observed by the Full Court in Reckitt Benckiser, a failure to sanction contraventions adequately, by de facto, punishes all those who do the right thing. As the Full Court observed, this does not mean that there is a licence to impose a disproportionate or oppressive penalty, but rather “to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance”: at [152]. It is notable that, in this case, even the maximum penalty unfortunately will not cost more than to disobey the law: The maximum represents less than half the value of the entitlements owing to Ms Danaratna (noting that the employment claim period does not include the entirety of the period over which Ms Danaratna was employed): LJ [1], [44].

38    With respect to the change in the maximum penalty amount during the relevant contravening period, Ms Danaratna urged upon the Court that regard may be had to the fact that the lower amount applied for part of the period (and to effectively adjust the penalty amount accordingly): Foot & Thai (No 8) at [149]. I note that there has been some discussion in single instance authorities of this Court as to whether the higher or lower maximum penalty is applicable over the one contravention period: see for example Foot & Thai (No 8) and Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 at [394]–[401]. This argument was not developed in any detail before me. I note that the Court’s holding, in the above-mentioned decisions, as to the application of the higher penalty arose from reliance, in part, on an unreported decision of the Court of Appeal in 1991: R v White (BC9101745, NSWCCA, 25 July 1991, unreported). I am unaware of the currency of this reasoning. In any event, there is no need for me to decide this issue given the approach taken by Ms Danaratna. It is my view that it is appropriate that a penalty ought be no higher than the maximum penalty amount that applied during the period in which the contravening conduct occurred. A way to ensure this ordinarily would be to claim two separate contraventions (which was not done in this case). Accordingly, I agree with Ms Danaratna’s approach to the penalties arising from contravening conduct that occurred over a period in which two different maximum penalty amounts applied. This will ensure that a penalty is not awarded that is higher than that which applied when the conduct occurred.

39    Lastly, I am of the view that no adjustment to the total penalty of $117,028.80 is required on account of the principal of totality, specifically so in circumstances where the continuing contravention of the same civil remedy provisions has already provided Ms Arunatilaka with benefits from the inherent leniency afforded by the grouping exercise under s 557(1).

Conclusion

40    The appropriate penalty in all the circumstances is $117,028.80 which is required to be paid within 60 days.

Associate:

Dated:    12 December 2024