Fair Work Ombudsman v Ella Group

s 716(5) of the Act. 2. Pursuant to s 546 of the Act, the second respondent pay a pecuniary penalty in the fixed amount of $7,512 in respect of her involvement in the first respondent's contravention of s 716(5) of the Act.

Note: The form of the order is subject to the entry in the Court's records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 24.04(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth)), or to record a variation to the order pursuant to r 24.04 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth).

1. These reasons relate to an application made by the Fair Work Ombudsman (the Ombudsman) seeking the imposition of pecuniary penalties on a corporate employer and its principal officer as a consequence of a contravention of the Fair Work Act 2009 (Cth) (the Act). That application came after the Court:

(a) entered default judgment against the employer and the officer; and

(b) made declarations that (i) the employer contravened s 716(5) of the Act and (ii) the officer was involved in the employer's contravention.

1. The parties were invited to make submissions on penalties. There was a delay so the parties might consider the implications of a judgment on penalties that was being delivered by her Honour Judge Given in separate proceedings involving the same parties: see Fair Work Ombudsman v Ella Group (NSW) Pty Ltd (No 2) [2025] FedCFamC2G 1429 (Ella Group (No 2)). The respondents did not take the opportunity they were provided to make submissions.
2. I have decided pecuniary penalties should be imposed. I explain the quantum of the penalties and my reasons for imposing them in the pages that follow.

The conduct that gave rise to the contravention

1. The following summary of conduct is principally based on the contents of the statement of claim and the affidavits provided by the Ombudsman. That is appropriate in circumstances where the respondents are taken to have made admissions to the facts alleged in the statement of claim when default judgment was entered.
2. The Ella Group (NSW) Pty Ltd (Ella) is the first respondent in these proceedings. Ella operates a childcare centre in Sydney. It is a 'constitutional corporation' for the purposes of s 12 of the Act, and a 'national system employer' for the purposes of s 14 of the Act.
3. Ms Louise Yaacoubian is the second respondent. She is the sole director, secretary and shareholder of Ella. Ms Yaacoubian was at all material times the individual responsible for the overall operation, management and control of Ella. Ms Yaacoubian was also responsible for ensuring Ella complied with its obligations under the Act. Of particular relevance in these proceedings, Ms Yaacoubian was also the individual who communicated with officers in the employ of the Ombudsman in relation to matters arising in these proceedings. In doing so, Ms Yaacoubian had the actual or apparent authority of Ella.
4. Ella was the employer of Ms Samantha Rahi. In or around July 2023, the Ombudsman commenced an investigation into Ella's employment of Ms Rahi. A fair work inspector employed by the Ombudsman's office found:
   • Ms Rahi had been employed by Ella on a full-time basis from 5 April 2021 to 22 May 2023 as a Children's Services Employee - Level 4;
   • Ms Rahi's employment was covered by the Children's Services Award 2010 (the Award); and
   • as of 22 May 2023, Ms Rahi had accrued annual leave that had not been taken.
5. The inspector also established Ella had not paid Ms Rahi the applicable minimum weekly wage for ordinary hours worked as required by clause 14.1 of the Award, nor had she been paid:
   • overtime at 150% of the employee's hourly rate for the first two hours of work performed outside of ordinary hours as required under clauses 23.1(a) and 23.2(a) of the Award;
   • leave loading of 17.5% of the payment required by the National Employment Standards (the Standards) for periods of annual leave that she had taken during the period of employment as required in by clause 24.3 of the Award; and
   • in respect of accrued untaken annual leave (including applicable leave loading) when her employment came to an end. The obligation to pay out that leave arises under

s 90(2) of the Act. 6. The Ombudsman says these matters provided the basis for a reasonable belief (within the meaning of s 716(1) of the Act) that Ella had contravened the Award and the Standards when it failed to make the payments referred to above. Having formed that reasonable belief, the inspector issued a compliance notice to Ella under s 716(2) in respect of those contraventions. The compliance notice was despatched by express post and email to Ella on 20 December 2023. The compliance notice required Ella to remedy the effects of the contraventions by 2 February 2024 by:

(i) calculating and paying the outstanding amount owed to Ms Rahi as a result of the contraventions (Underpayment Amount);

(ii) making a record of the amount calculated and paid as referred to in the paragraph immediately above; and

(iii) calculating additional superannuation contributions required to be paid by clause 20.2 of the Award in respect of the Underpayment Amount and paying such contributions to Ms Rahi's superannuation fund.

1. The notice also required that Ella would have until 9 February 2024 to produce reasonable evidence that it had complied with the terms of the compliance notice.
2. A copy of the compliance notice is annexed to the affidavit of Ms Hayes affirmed on 30 June 2025 (exhibit 2). That notice appears to be regular and complete on its face having regard to the requirements in s 716(3) of the Act.
3. Having issued the compliance notice, an officer from the Ombudsman's office engaged in conversations with Ms Yaacoubian. In particular, Ms Yaacoubian responded on 10 January 2024 to an email from the Ombudsman's office sent on that date which related to the compliance notice. On 1 February 2024, Ms Yaacoubian had a conversation with the author of the email I have already mentioned. That conversation related to the compliance notice and the date by which Ella had to achieve compliance.
4. The Ombudsman contended in the statement of claim - and the respondents must be taken to have accepted when the default judgment was entered - that Ella failed to comply with the requirement to undertake the remedial measures by 2 February 2024. Ella also failed to provide evidence of compliance as required. That amounted to a failure on the part of Ella to comply with the compliance notice, which is a contravention of s 716(5) of the Act.
5. As I understand it, Ella has not taken steps to remedy the contraventions since the date the default judgment was entered.

1. The Court has a power to impose a pecuniary penalty order under s 546 of the Act where the Court is satisfied a person has contravened a civil remedy provision. Section 539 identifies who may apply for orders in respect of which provisions. That section also explains the maximum penalty that may be imposed in respect of particular contraventions. A body corporate that contravenes s 716(5) (the civil remedy provision in question here) is liable to a penalty of up to 150 penalty units (per s 546(2)(b)) while an individual may be liable to a maximum of 30 penalty units. At the time of the contravention in February 2024, a penalty unit had a monetary value of $313. That means Ella faces a maximum penalty of $46,950 and Ms Yaacoubian faces a maximum penalty of $9,390.
2. Penalty orders made under s 546 of the Act are not intended as a form of punishment that does justice to a wrong-doer in proportion to the wrong-doing. They are a regulatory tool used to induce compliance with a regulatory process. The philosophy behind regulatory provisions of this kind was discussed by the High Court in Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 (see [14]-[16]). In that case, the Court discussed the imposition of a pecuniary penalty on a union and one of its officers under s 546 of the Act. The primary judge had imposed on the (second respondent) union what was, in effect, the maximum penalty available at the time. The Full Federal Court reduced the penalty on appeal because it found the maximum penalty was disproportionate to the nature, gravity and seriousness of the contraventions. The Full Court said the maximum penalty must be reserved for the most serious of contraventions. The High Court took a different view. Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ explained at [9]-[10]:
   1. ...Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU's non-compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.
   2. The Full Court's critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a "notion of proportionality", in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be "some reasonable relationship between the theoretical maximum and the final penalty imposed". That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others. [Emphasis added; citations omitted]
3. That said, I must consider what is reasonably necessary to deter further contraventions by Ella, Ms Yaacoubian and others in a similar position. The Ombudsman referred me to the oft-cited analysis of French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 (at [42]) which identified a series of matters that were potentially relevant to assessing the quantum of a penalty under s 76 of the Trade Practices Act 1974 (Cth). These include:
   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 with the Act, 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 the enforcement of the Act in relation to the contravention.
4. I note the factors discussed in CSR have been recognised as a potentially useful guide in the context of s 546 of the Act: see Pattinson (at [18], [19], [47] and [54]), although Pattinson emphasised the importance of a holistic approach. One must not lose sight of the need to focus on devising a penalty that is appropriate to achieve the public interest in compliance.

1. As I have already explained, the objective of achieving deterrence is central to my task. The pecuniary penalty must be sufficient to deter the respondents in these proceedings from further contraventions (i.e., specific deterrence), but there is also a need to 'send a message' to others that will deter them from engaging in similar conduct (i.e., general deterrence). The sting of the lash helps focus the mind of a transgressor on the need to avoid contraventions in the future; the report of the lash serves as an example pour encourager les autres.[1]
2. When I have regard to the nature, circumstances and deliberateness of the conduct, it is clear there is a real need to deter Ella and Ms Yaacoubian from engaging in similar conduct in the future. The compliance notice was brought to their attention. Ella failed to comply with the compliance notice in accordance with its terms. That failure continued after the Court entered default judgment on 12 May 2025 and made orders requiring Ella to take the steps set out in the compliance notice. As I understand it, that failure is ongoing, and it has never been explained.
3. Searches annexed to exhibit 2 confirm Ms Yaacoubian remains in control of Ella. Exhibit 2 sets out the history of contact between the Ombudsman's office and Ms Yaacoubian between January 2024 and June 2025. That history confirms Ms Yaacoubian refused to engage in a constructive way with the Ombudsman. Her insouciant attitude to the compliance notice was evident in a file note taken by an officer of the Ombudsman who called Ms Yaacoubian on 1 February 2024: annexure EH-28 to exhibit 2. The officer had explained she "was calling to offer assistance with the [compliance notice]". Ms Yaacoubian explained she had been on holiday. She effectively fobbed off the officer, saying she had forwarded everything to Ella's accountant for their attention. And that was it: Ms Yaacoubian thereafter failed to engage with the Ombudsman, even after these proceedings were commenced.
4. Importantly, this is not the first occasion on which the respondents have engaged in similar conduct. Judge Given noted a similar pattern of disengaged behaviour in Ella Group (No 2) which showed Ms Yaacoubian was aware of the compliance notice in that matter but lacked "any serious intention to comply with it": at [31]. Her Honour described a "dismissive attitude towards the regulator" that was also evident in the material provided in the current proceedings before me.
5. The Ombudsman argued in written submissions that the respondents' conduct in relation to the compliance notice and in these proceedings "demonstrates a serious and deliberate disregard for its obligations under the FW Act, the authority of the regulator and the authority of the Court. This...heightens the need for specific deterrence". That is right, and it points to the need for penalties against both respondents at the higher end of the range.
6. The Ombudsman also drew my attention to the absence of corrective action, contrition and cooperation with the regulator. I have already noted the respondents failed to seriously engage with the compliance notice, and they have not engaged with these proceedings. That sort of nonchalance demonstrates "a complete disregard for their legal obligations": Fair Work Ombudsman v Soma Kitchen Pty Ltd (No 2) [2020] FCCA 2583 at [35] per Judge Kendall. That finding suggests penalties at the higher end of the range for both respondents are appropriate in order to achieve specific deterrence. But the conduct was also contemptuous of the regulator. That sort of challenge to the authority of the regulator cannot go unanswered lest others be tempted to follow the example. These considerations suggest penalties at the higher end of the range for both respondents are appropriate to achieve the goal of general deterrence.
7. I have also had regard to the nature and extent of the loss to the employee in question. The obligations referred to in the compliance notice were ultimately for the benefit of Ms Rahi. She has not been paid what she was entitled to be paid over a significant period while employed by Ella. She remains out of pocket. That state of affairs is particularly distressing given workers in this industry are not highly paid. Penalties at the higher end of the range are necessary to deter the respondents from this conduct in the future, particularly given this is not the first failing of this kind.
8. The need to vindicate the role of compliance notices in the system established under the Act highlights the need for general deterrence. The respondents in this case exhibited a level of disregard for the compliance notice that has the potential to undermine the credibility of the compliance notice regime. That regime was introduced to provide an alternative to litigation. Litigation is time-consuming and costly for everyone involved, whereas the compliance notice regime provides a more cost-effective, timely and flexible mechanism for achieving compliance with the Act. It is important that these notices be taken seriously lest the role of the regulator and the safety net provisions in the Act be undermined, which could only lead to more litigation, loss and delay. It follows significant penalties are appropriate to send a message to other employers that they should respond to compliance notices promptly and in good faith.
9. The Ombudsman has also drawn my attention to the involvement of senior management in the contravention. I have limited information before me concerning the size and scope of the business, but Ms Yaacoubian appears to be the directing mind and will of the company given:

(a) she is listed as the sole director, secretary and shareholder of Ella on the Australian Securities and Investments Commission register; and

(b) she was the person within Ella purporting to deal with the Ombudsman (to the extent that occurred).

1. Ms Yaacoubian's approach to her duties raises real concerns over the priority which Ella gives to its legal obligations - especially those arising under the Act. That is suggestive of a culture of non-compliance. The fact the respondents have been the subject of regulatory attention in the past suggests that the unhealthy culture is more entrenched than was apparent when Judge Given made her decision on penalties in Ella Group (No 2). A penalty at the higher end of the range would send a clear signal to the respondents about the importance of developing a healthier culture of compliance. It would also send a clear signal to others about the importance of proper culture and the responsibilities of managers dealing with obligations arising under the Act, which serves the goal of general deterrence.
2. I do not have meaningful evidence about the size or financial circumstances of Ella, or the circumstances of Ms Yaacoubian. I infer Ella is a relatively small business, and I accept a penalty at the higher end of the range may create an especially heavy burden in those circumstances. Having said that, the Ombudsman pointed out in written submissions that being a small business does not provide an excuse for ignoring compliance notices, and small businesses cannot expect more lenient treatment at the penalty phase. As Judge Jarrett (as his Honour then was) explained in Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10]:

...one cannot shirk one's responsibilities imposed by law simply because one might be described as a "small business". or because the business has a particular size. It is incumbent on all employers to comply with the requirements of the Fair Work Act.

1. In the absence of evidence or submissions from the respondents, I do not think this consideration assists me in determining the penalty.

1. In Ella Group (No 2), the Ombudsman asked Judge Given to impose penalties on Ella and Ms Yaacoubian at 80% of the maximum penalty applicable to each respondent. After considering all the circumstances, her Honour decided it was appropriate to fix the penalty at 70% of the maximum for each respondent. Her Honour made clear that an important consideration was the absence of any evidence of prior contravening conduct by either of the respondents. It is apparent from these proceedings that there was a culture (or at least a habit) of non-compliance that suggests a penalty at the upper end of the range is necessary to deter the applicants and others.
2. The Ombudsman has recommended that I impose penalties at 80-90% of the maximum on each of the respondents in these proceedings.
3. When I weigh all the matters I have referred to above, I am satisfied the following penalties are reasonably necessary to deter further contraventions by Ella, Ms Yaacoubian and others in a similar position:

(a) Ella must pay $37,560, being 80% of the maximum penalty in respect of its contravention of s 716(5) of the Act; and

(b) Ms Yaacoubian must pay $7,512, being 80% of the maximum penalty in respect of her involvement in Ella's contravention of s 716(5) of the Act.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McCabe.

[1] See Masu Financial Management Pty Ltd and Australian Securities and Investments Commission [2017] AATA 97 at [48].