The parties' submissions on penalty
15 The FW Ombudsman submits that the failure to make and keep the records required by the FW Act and FW Regulations is a serious matter.
16 The FW Ombudsman submits the record keeping obligations are directed at ensuring the creation and retention of records that are a critical tool in assessing compliance with Commonwealth workplace laws.
17 In short, it is submitted, unless an employer complies with the law and makes and keeps the employment records required to maintain an effective safety net for its employees, it makes them more vulnerable to exploitation and deprives them and the regulator (the FW Ombudsman) of an effective means of detecting and protecting their legal entitlements as employees.
18 The FW Ombudsman also submits that that the failure to keep the required records should not be seen as a lower order contravention. It strikes at the very foundation of a regulatory scheme designed to ensure employees are paid their legal entitlements, by making it much more difficult to determine when something has been wrongly denied and what it is that has been denied.
19 The FW Ombudsman contends that, in this case, the failure is particularly egregious in the case of employees who, for a variety of reasons, are uninformed or poorly informed about, and are denied, their legal entitlements. In such cases, the records and the regulator's ability to review them, detect any wrongdoing and act on it is of vital importance.
20 In the case of vulnerable employees, the FW Ombudsman says, particularly temporary visa workers whose employment and residence in Australia is often transient and dependent on the ongoing support of their employer, the difficulties associated with detection and remedial action where the required records are not made and kept, or properly made and kept, is often further aggravated by an unwillingness by some such employees to take any action which might jeopardise their employment or continued residence. In such cases, the ability of the regulator to detect and act is essential. The safety net for all employees should not depend for its effectiveness on the visa status of those employees.
21 The parties accept that the general approach and principles governing the assessment of penalty are well understood. There are three purposes, at least, for imposing penalties for breaches of industrial law, being punishment, deterrence and rehabilitation.
22 It is understood that deterrence, both specific (or personal) and general, have the potential to assume great importance in pecuniary penalty cases like the present.
23 In that regard it is generally understood that the purpose of a civil penalty is to promote the public interest in seeing compliance with relevant regulations.
24 By a process of instinctive synthesis or intuitive synthesis, the Court is required to take into account all relevant factors and arrive at a single result that takes account of them all.
25 In that process, proportionality and consistency commonly operate as a final check on the penalty. The totality principle is considered in that context.
26 The overriding principle, however, is to ensure that a penalty is proportionate to the gravity of the conduct.
27 The parties have identified and addressed a range of applicable penalty assessment considerations. I now deal with each of them.
28 As to the nature and extent of the conduct, the FW Ombudsman is at pains to emphasise that in its estimation the contravening conduct was deliberate and not relevantly to be explained away by the personal circumstances relied on by Mrs Han, including domestic violence that she suffered at material times and her other personal circumstances.
29 Having regard to this contest between the parties as to what factors, personal to Mrs Han, might relevantly be considered in mitigation of the admitted contraventions, it is useful to set out the precise submissions made by the FW Ombudsman.
48. The nature of the respondents' unlawful conduct must first and foremost be seen in the context of the interaction which the second respondent, Mrs Han, previously had with the applicant. From as early as April 2013, she had interactions with the applicant's office. In April 2013, following an underpayment complaint by an employee, the FWO facilitated a resolution of that complaint, during which the second respondent was referred to the existence of the applicable Restaurant Industry Award 2010 (Restaurant Award). At the very least from that time onwards, the second defendant could have been under no misapprehension as to the relevance of the Restaurant Award to her businesses, the rates payable under it and the assistance available to her through the applicant's office (should she need it). It is telling that there is no reference to this significant interaction and acquired knowledge in the second respondent's affidavit sworn 16 February 2017 (second respondent's affidavit).
49. The respondents' contraventions the subject of these Proceedings were initially drawn to the attention of the applicant following an audit into the accommodation and food services industry.
50. Following an initial audit into the Han Entities, it became apparent to the applicant that appropriate records were not being kept. Following the initial provision of a limited number of records by the second respondent, she told one of the applicant's inspectors that she would have to close her business if she had to pay weekend penalty rates. It is open (and reasonable) to infer from this assertion by her, that the second respondent knew of the Han Entities' obligations to pay penalty rates. This assertion, in the context of the interaction of April 2013 (described in paragraph 46 herein) and failures to keep records which would disclose the full extent of the failure to pay those rates, is a strong indication of the purpose behind the failures to make and keep the required employment records the subject of these Proceedings. In short, deliberate avoidance of those obligations.
51. The applicant offered further assistance to the Han Entities in 2014. On 4 July 2014, the applicant's inspectors met with the second respondent and (again) explained the applicable pay rates to her, referred her to the relevant www.fairwork .gov.au website and told her the applicant was able to help her businesses adhere to the FW Act and FW Regulations. There is no evidence from the respondents that the second respondent, or any of the Han Entities, sought then to take up or have ever taken up this offer of assistance. On the contrary, the respondents appear to have continued on with their noncompliant practices in respect of record keeping, largely unabated. Again, it is open (and reasonable) to infer this was a deliberate course of conduct.
52. The applicant sought the production of relevant records from the Han Entities on 6 August 2014, pursuant to s.712 of the FW Act (NTPs). In response to these notices to produce records, the Han Entities only provided time sheets for a 2 week period. The pay slips which were also provided disclosed flat rates of pay and were clearly devoid of the detail required by the FW Regulations.
53. It was following the provision of these patently inadequate records in response to the NTPs, that the applicant's office questioned why only 2 weeks of timesheets were produced. In response, the second respondent advised the applicant that:
[W]e don't keep any rosters beyond a 2 week period, maximum a month, and there is no way [I] can get rosters for the last financial year ...I don't know why you want to squeeze our company. There is no way we can pay extra on weekends
54. Again, the second respondent's deliberate linkage of the failure to make and keep the required records with the assertion that the Han Entities could not afford to pay their employees their legal entitlements is a strong indication of the reasons why the records were not made and kept. Again, the inference is that the failures were deliberate.
55. Relying on the woefully inadequately records provided by the Han Entities, the applicant was nonetheless able to assess a not insignificant total underpayment of $30,440.06. Given the:
(a) very short and limited number of periods for which the relevant records were made and kept, and then produced ;
(b) significant periods of time for which no relevant records were kept or produced; and
(c) absence in those records of time recorded for evening or weekend work,
it is entirely plausible that, if the required record had been made and kept by the respondents, the underpayments would have been considerably greater in both number and amount. This significant hole in the required records is a very significant factor, which should be given full weight in the exercise of assessing the appropriate penalties to impose.
Records of hours worked: Regulation 3.33(2)
56. HI has admitted not keeping records which specified the hours worked for its employees (save for a document setting out the hours worked for 5 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).
57. The second respondent has admitted that HCM did not keep records which specified the hours worked for its employees (save for a document setting out the hours worked for 13 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).
58. HC has admitted not keeping records which specified the hours worked by its employees (save for a document which recorded the hours worked for 6 employees for a 2 week period in 2014) in contravention of Regulation 3.33(2).
59. This remarkable dearth of records is a proper basis on which to conclude that significant damage has been caused to the ability to detect, and if necessary enforce compliance against, failures by the first respondents to meet their obligations to pay their employees their legal entitlements. In the applicant's respectful submission, it is difficult not to be driven to the conclusion that those failures were not a very deliberate course of conduct. Even if the respondents did not know of a specific requirement to keep particular kinds of pay records, which in the applicant's submission is unlikely, it beggars belief to suggest that having been informed of the relevant pay rates (to which these records relate) in April 2013 and subsequently, the need for these records would not have been obvious.
Records of penalty rates and loadings: Regulation 3.33(3)
60. During the period I July 2013 to 3 August 2014, employees of HI had entitlements to weekend penalty rates and overtime rates. Despite HI's business operating at times when such rates would have been payable (and applicable to employees working during those times), HI paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and has admitted not keeping records of such penalty rates and loadings
61. During the period 1 July 2013 to 30 September 2015, employees of HCM had entitlements to weekend penalty rates, overtime rates and payment of annual leave loading. Despite HCM's business operating at times when such rates would be payable (and applicable to employees working during those times), HCM paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and the second respondent has admitted that it did not keep records of such penalty rates and loadings.
62. During the period I July 2013 to 3 August 2014, employees of HC had entitlements to weekend penalty rates, overtime rates and annual leave loading. Despite HC's business operating at times when such rates would be payable (and applicable to employees working during those times), HC paid the same rate of pay regardless of when the work was performed (in contravention of Regulation 3.33(3)) and has admitted not keeping records of such penalty rates and loadings.
63. Again, the need to keep those records would, in the applicant's submission, have been obvious.
Overtime records: Regulations 3.34(a) and Cb)
64. During the period 1 July 2013 to 3 August 2014, employees of HI performed work that would be overtime and would have been entitled to overtime rates under the Restaurant Award. HI has admitted that it did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.
65. During the period 1 July 2013 to 30 September 2015, employees of HCM performed work that would be overtime and would be entitled to overtime rates under the Restaurant Award. The second respondent has admitted that HCM did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.
66. During the period 1 July 2013 to 3 August 2014, employees of HC performed work that would be overtime and would be entitled to overtime rates under the Restaurant Award. HC has admitted that it did not keep records which specified the overtime hours worked and when employees started and ceased working overtime hours.
67. The need to keep those records would, in the applicant's respectful submission, have been obvious.
Leave records: Regulations 3.36(1)
68. During the period 1 July 2013 to 3 August 2014, employees of HI were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. HI has admitted that it did not keep records which specified any leave taken by its employees and the balance of the employee's leave entitlements from time to time.
69. During the period 1 July 2013 to 30 September 2015, employees of HCM were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. The second respondent has admitted that, save for a limited number of such records, HCM did not keep records which specified any leave taken by its employees and the balance of the employee's leave entitlements from time to time.
70. During the period 1 July 2013 to 3 August 2014, employees of HC were entitled to accrue and take paid annual leave and paid personal/carer's leave pursuant to the FW Act. HC has admitted that, save for a limited number of such records, it did not keep records which specified any leave taken by its employee s and the balance of the employee's leave entitlements from time to time.
71. The need to keep those records would, in the applicant's respectful submission, have been obvious. The respondents' own employment documents reinforce this conclusion.
30 In this case, the FW Ombudsman says there is a compelling need for general and specific deterrence and, to use the language of the authorities, a price needs to be put on the contraventions that is sufficiently high to deter repetition by both the contraveners in this case, and by others who might be tempted to contravene the FW Act in a like manner.
31 Reflecting the submissions made above, that I have accepted, the FW Ombudsman says the making and keeping of employment records should not be assumed to be a trivial or technical obligation. In this case, where the absence of the required records is so extensive and so markedly undermines the legislative purpose, it submits a significant penalty is required on account of both specific and general deterrence.
32 The FW Ombudsman submits that the sophistication of the business model of the respondents emphasises the need for a stern warning.
33 The FW Ombudsman observes that the industry in which these contraventions arose is notorious for non-compliance with workplace laws. She refers to and relies on a report into the cafes, restaurants and the takeaway industry, accompanying the affidavit of Mr Victor Josue Acevedo (a Fair Work inspector) dated 24 March 2017, from which it is clear that:
the industry accounted for the highest number of dispute lodgements with the FW Ombudsman's office;
the industry has the highest proportion of disputes from vulnerable visa workers;
workers in the industry tend to be, on average, young, less educated and lower paid; and
the number of employees in the industry are projected to increase by around 12% by 2020.
34 So far as contrition or remorse is concerned, and relating that consideration to the question of the need for specific deterrence in this case, the FW Ombudsman submits that no demonstrable remorse has been shown by any of the respondents. She notes, however, that the relevant corporate respondents have agreed, as part of the resolution of these proceedings, to take positive compliance steps by registering with the FW Ombudsman's online compliance portal and to complete training.
35 Notwithstanding that, the FW Ombudsman says neither Han Investments Pty Ltd nor Han Café Pty Ltd has yet taken any steps to do anything and nor has Mrs Han. The submission is made that they should have already taken steps by the time of this hearing and should not be awaiting formal orders by the Court in that regard.
36 In any event, the FW Ombudsman submits that there is a need for specific deterrence, particularly in relation to Mrs Han, for the following reasons.
37 Mrs Han remains a current director of a number of entities in the restaurant industry, including these corporate respondents. They are still trading and she is still involved in them, and given the prior history of non-compliance, there is a need for penalties to be set out which will deter or direct compliant behaviour in the future.
38 The FW Ombudsman submits there is a demonstrated pattern of failing to comply with the FW Act by the Han entities and Mrs Han, highlighted by her flagrant disregard for known obligations, demonstrated by the following events:
She told Inspector Acevedo on 4 November 2015 that she does not keep timesheets for more than one week after payday.
She told the FW Ombudsman's office on 29 August 2015 that she has always used another Award (which she must have known was wrong because she had been clearly advised about the application of the Restaurant Award in 2014) to pay her employees and would continue to do so in the future.
She implicitly told an inspector of the FW Ombudsman's office on 17 June 2014 that she did not pay weekend penalty rates.
39 The FW Ombudsman says this is conduct by Mrs Han, as the directing mind and will of the corporate respondents, which demonstrates a persistent disregard for the need to comply with the relevant obligations under the FW Act, even after the need and manner of compliance was or should have been abundantly clear to her. The FW Ombudsman submits this is not conduct deserving of any significant discount but deserving of opprobrium. More so, when the conduct involved a highly vulnerable class of employees who were, in effect, entitled to expect compliant behaviour from their respective employers but who got otherwise.
40 As to the making of injunctions, which the parties acknowledge is a matter in the discretion of the Court, the FW Ombudsman submits that the Court has the power to make relevant injunctions and there is an appropriate need to do so by way of specific deterrence.
41 Noting that the proposed orders do no more than require Mrs Han to comply with the law, there is benefit, the FW Ombudsman submits, in deterring her from being involved in future contraventions. This is particularly important because she continues to act as a director of a number of companies which operate in the restaurant industry and is the directing mind of the franchisor of the Han's Café franchises.
42 The relevant respondents, including Mrs Han, submit that the Court should, in effect, take into account the extenuating circumstances that Mrs Han experienced which help to explain, in many respects, the contravening conduct.
43 Mrs Han put on a number of affidavits relating to these mitigating circumstances, being those dated 16 February 2017, 1 May 2017 and 4 May 2017.
44 On behalf of Mrs Han, the relevant Family Court materials and submissions were made concerning proceedings between Mrs Han and her husband, Mr Han, which resulted in her obtaining orders against him in relation to property and other matters on an undefended basis. Her submissions included noting evidence in those proceedings of family violence against her, as set out in affidavits in the Family Court of 25 June 2015 and 16 February 2016, which were provided to this Court in her affidavits.
45 Included amongst the materials provided to the Court were letters of relevant treatment that she received concerning her condition, which need not be dealt with, for privacy reasons, in any greater detail here.
46 On behalf of Mrs Han, it was also noted that in the Family Court an interim property settlement order was made in circumstances where the magistrate was satisfied in light of an earlier violence restraining order which had been made final and unopposed by the husband, that it was "not practicable for the parties to operate the various entities together".
47 On behalf of Mrs Han, a number of official publications were provided to the Court, including of the Australian Law Reform Commission concerning family violence and Commonwealth laws, which emphasise that family violence can have a significant effect on employees, co-workers and workplaces and, more broadly, workplace productivity and safety.
48 On behalf of Mrs Han, a number of passages in those materials were highlighted for the Court's attention.
49 Mrs Han then made the following submissions, by reference to this material:
24. In the present matters, the second respondent, a director of the respondent companies, has experienced family violence from the Husband in their domestic and work settings. She has experienced 'internal violence' (i.e. violence in the employment setting), and violence at home. Her young children have also been affected by the violence.
25. The second respondent has provided evidence of this violence on affidavit to the Family Court and to this Court. Evidentiary support for this violence has also been provided through the letters of her psychiatrist and through the grant of a violence restraining order.
26. The above-described employment-related initiatives in relation to disclosure of family violence, flexible working arrangements and awards with family violence provisions have been of no assistance to the second respondent in her employment setting given her role as a company director rather than employee. The circumstance where the perpetrator of the violence against her and her children over many years has been her husband, the sole co-director of the respondent companies until the Family Court order of 28 August 2015, placed the second respondent in an intractable situation.
27. With the Husband being the co-director of the three family companies, the approach to the family violence issue favoured by Watson VP where 'employees feel they can be open with their manager, and in a cooperative and collaborative manner, develop solutions to assist the employee deal with the issues while remaining in productive employment' was simply not available to the second respondent. Nor is it apparent that any government regulator, including the applicant, has been in a position to assist the second respondent in her predicament.
50 The respondents also point to what they call the context of interaction which Mrs Han previously had with the FW Ombudsman from April 2013 in relation to underpayment complaints, in the course of addressing the nature and extent of the conduct that led to the contraventions. After referring to the complaints which are annexed to the affidavit of Mr Acevedo at exhibits VJAA 29 to 31, the submission is made that on 10 January 2014 an inspector of the FW Ombudsman sent a letter to "Han's Café" requesting copies of records of rates of pay and numerous other records to be submitted by 11 February 2014. That letter was stated to have been sent under the "National hospitality campaign 2012-2015 take away food sector".
51 A further submission is made that Mrs Han sent an email to that inspector on 10 February 2014 stating that she had posted the requested documents on that date and they included the template "Australian work place agreement for permanent employees" used by Han's Café.
52 The respondents say that an officer of the FW Ombudsman, Ms Marcello, made follow-up telephone calls in June 2014 to Mrs Han concerning those records, in particular rates of payment. During the first of those calls on 11 June 2014, the officer made the following record of what Mrs Han said:
The reason for getting the AWA was because the business just could not afford to pay weekend penalty rates and she had 2 government ee's call in and help the business set up the AWA's. She still uses the AWA and gives them to every new ee to read and sign.
53 They note that during the second of those calls on 17 June 2014, the officer and Mrs Han further discussed the AWA and penalty rates, and the officer recorded that she said:
She was not up to date with all the Workplace laws and was trying to run a business.
54 The respondents note that the officer concluded her file note with the following comment (bold emphasis added):
ACTION: DISCUSS WITH MANAGER FOR INSTRUCTIONS TO PROCEED FURTHER MY SUGGESTION WOULD BE TO Refer back to WA as this Er would be a good candidate for apersonal education visit Educate Er about IFA's (going forward) Advise that Ee's could lodge claims in future Do not enforce back payment on Er at this point as Er has been doing what she thought was correct.
55 The respondents further note that in a third telephone call on 19 June 2014, the officer had a further discussion with Mrs Han concerning the AWA and wage rates, and recorded the following details of that call (emphasis added):
She explained again that she was told that as long as she paid the current award rates she could use the AWA's I advised that AWA's were no longer valid and that I really felt that she should either visit our WA office or have an inspector call out and she said either would be OK but she felt that she was being attacked and victimised, She kept on repeating that she was trying to do the right thing and did not think she was breaking any laws, She said she has been very stressed since my first phone call 2 weeks ago and I told her that she may need to start paying weekend penalty rates. I reassured her that she was not getting picked on and that we had visited may restaurants and fast food outlets in all the states and all of them had been asked to provide records, She said that she was adamant that a lot of Asian restaurants in WA were not keeping records like she was nor were they paying rates like she was and they were not getting picked on. Again I told her not to stress about the situation. I said that she would be brought up to date with the legislation and if need be the Association may me call upon also, I said that moving forward the FWO would work with her and advise as to what she could do in place of AWA's perhaps IFA's or even Collective Agreements, I said she had my number and if she felt she needed/wanted to discuss anything she was free to call me but in the meantime try not to stress over the situation as the FWO was not trying to close businesses down and just wanted her be advised of her rights and obligations as and employer, franchisor, small business etc.
56 The respondents note the officer concluded her record of the conversation with the following note (emphasis added):
several times during conversation er said she did not want to be seen that she was breaking the law and she was just doing what she thought was right and needed all the help that the government could give her, she was just trying to run a business Again she thanked and hoped that whoever met with her was as compassionate as I had been, and I said I was sure they would be and terminated the call.
57 The respondents say Mr Acevedo's affidavit shows that a field visit took place on 4 July 2014 at which Mr Acevedo discussed the issue of correct rates under the award with Mr and Mrs Han. Subsequent to that discussion, on 6 August 2014, he issued notices to produce various employment records. Those notices were addressed to Mrs Han. The respondents say it does not appear that any such notices were sent to Mr Han.
58 Mrs Han says she produced various documents and submits that she responded to the notices as best she could under the circumstances.
59 She further notes that on 14 October 2014, Mr Acevedo sent an email addressed to the second respondent personally requesting all employees' annual leave and sick leave records to be provided to him by 29 October 2014. This email was sent by Acevedo during the period in which the second respondent was admitted to the Marian Centre for treatment between 20 September 2014 until 27 October 2014, and she was therefore unable to respond to the request within the deadline given.
60 Mrs Han says that she eventually responded to that request by email dated 17 February 2015, after Mr Acevedo had issued three notices to produce records or documents dated 13 January 2015 and addressed to the proper officer of the Han entities.
61 The respondents note that subsequently, Mr Acevedo made findings of contravention against the three respondent companies and notified these findings to Mrs Han by letter dated 28 April 2015. These contraventions were failing to pay the minimum hourly rate and overtime under the relevant award.
62 Mrs Han says that on 4 May 2015, she sent the following email to Mr Acevedo (emphasis added):
Hello Victor
I am very disappointed upon receiving the notices from Fair Work WA.
I have always believed we've always done the right thing and kept our records up to date.
Nevertheless I do want to correct these as soon as possible but I do hope you understand there is no way I can make all the payments at once and ask that you give me until the end of June 2015.
As you already know, my husband has left the country for over 5 months now and I'm stuck with running all our businesses and the franchise and looking after 2 young kids as well.
I'm behind with my taxes and the March BAS is overdue. I have recently surrendered 2 leases; I request an extension of time.
Also; majority of the employees on the list are no longer working for me and may have already returned to their country. What do I do with those employees?
Regards Tram
63 Mrs Han submits that the highlighted sentence in the above email suggests that she had notified Mr Acevedo about some of the difficulties she was facing. However, there is no record of these issues having been notified in Mr Acevedo's affidavit. Further, Mr Acevedo's email to Mrs Han of 14 October 2014 refers to a telephone conversation on Friday 26 September (that is, during the period Mrs Han was admitted to the Marian Centre) there is also no record of that telephone conversation in his affidavit.
64 Following the findings of contravention, Mrs Han said that she liaised with Mr Acevedo over the question of locating previous employees and other issues, and the outstanding payments were made to current employees and former employees who could be located.
65 Mrs Han says that Mr Acevedo continued to contact her to ascertain the attempts made to contact the remaining employees who were still owed money - see email dated 6 August 2015. That email did not give a timeframe for responding to the request.
66 Mrs Han says that by letters dated 26 August 2015, Mr Alan Wells, Assistant Director, Campaigns Operations Group emailed Mrs Han letters notifying her of pending enforcement action in relation to contraventions of the award by the respondent companies.
67 Mrs Han says that she replied to Mr Wells' email and letters on 29 August 2015 referring to her personal difficulties including:
stress, depression and anxiety;
that she was under a lot of medication;
that she was about to lose her house; and
that her husband and business partner had fled Australia.
68 Mrs Han says that she concluded her email of 29 August 2015 with the following request:
I would be very grateful if you could help me find a solution as I cannot handle any more stress and is terrified of relapsing.
69 Mrs Han says that by letter dated 27 October 2015, Ms Michelle Carey, Acting Principal Lawyer of the FW Ombudsman responded to Mrs Han's email, in which Ms Carey requested proof of payments made, to be provided by 12 November 2015.
70 Mrs Han says she responded to Ms Carey's letter with a bundle of documents sent through the post, including timesheets and payroll records.
71 The respondents submit that the above history demonstrates that Mrs Han responded to the FW Ombudsman's inquiries as promptly, diligently and honestly as she could in all the circumstances, which include her personal health difficulties, the toxic relationship in the workplace and at home that she had with the husband, and the exigencies of running hospitality businesses in a strained economic environment.
72 The respondents note they have admitted that their record keeping fell short of the legislative requirements, but say it should not be inferred that Mrs Han or any of the Han entities failed to make and keep records as part of a deliberate course of conduct to avoid their obligations in relation to payment of award rates to employees.
73 The respondents submit that Mrs Han has been characterised by the FW Ombudsman as deliberately non-cooperative. However, she is more appropriately understood as someone struggling to come to terms with the extent of the problems within the Han entities and attempting, albeit slowly, to correct the companies' record-keeping deficiencies.
74 As to the circumstances in which the relevant conduct took place, the respondents say that the personal circumstances of Mrs Han should be taken into account and that at the time of the contraventions she was "doing her best" to conduct the restaurants as profitable businesses in the following circumstances:
She had responsibility for caring for two young children without any assistance from Mr Han. In the cultures of herself and Mr Han, it is the woman's responsibility to take care of the children.
Mr Han had abandoned the Han entities from January 2015 by leaving Australia.
She had commenced litigation in the Family Court of Western Australia on or around 12 June 2015 in relation to financial matters.
She was the victim of family violence from Mr Han at home.
She was the victim of family violence from Mr Han in the workplace.
She was suffering from anxiety and depression.
She was heavily medicated during this time.
75 She again refers to her Family Court affidavit of 16 February 2016 and medical reports concerning her diagnosis of anxiety and depression on 17 September 2014. She says this was made during the relevant contravention period in WAD 248/2016, and it was shortly after the end of the contravention periods in WAD 247/2016 and WAD 249/2016.
76 She submits that it should not be inferred that she or any of the Han entities failed to make and keep records as part of a deliberate course of conduct to avoid their obligations in relation to payment of award rates to employees.
77 In relation to the question of any loss or damage sustained as a result of the contraventions, the respondents submit that Mrs Han, as the directing mind and will of the corporate respondents, has admitted that the required records were not kept, but, nonetheless, it should be borne in mind that the present matters are not ones where the employees were not paid, let alone not paid for months at a time. They are matters in which underpaid employees were identified and reimbursed.
78 The respondents also note that they have not been the subject of previous contravention findings. They note that previous complaints for underpayment have been successfully resolved by other means.
79 They also submit that the FW Ombudsman's submission that the respondents have taken no or no adequate steps to comply with workplace laws and have instead chosen to ignore those requirements should be rejected in light of the co-operation Mrs Han has shown, as acknowledged by officers of the FW Ombudsman outlined above.
80 As to the size of the business enterprises involved, the respondents say Mrs Han has explained the current trading circumstances, and has produced financial records. She notes that Han's Cafe Management Pty Ltd has gone into liquidation since the proceedings were commenced and the companies are otherwise not in a position to be able to pay large penalties.
81 Additionally, she says, she has filed further evidence that Han's Cafe Pty Ltd is no longer trading and as at 20 April 2017 has an outstanding tax bill, that is being paid in instalments by Han Investments Pty Ltd. She also notes that Han Investments Pty Ltd receives approximately $20,000 per month and currently has a payment plan in place to pay payroll tax, which currently stands at $12,000.
82 As to whether the contraventions were deliberate, the respondents note that Mrs Han has admitted that she knew of the various matters alleged in these proceedings, but nonetheless, the contraventions should be seen in the context of what is clearly "an industry-wide deficiency" in record-keeping, the misunderstanding on her part, and her husband, of their companies' industrial law obligations, and in light of the extensive pressures on Mrs Han occasioned by her "toxic home and work environments".
83 While Mrs Han admits accessorial liability for the contraventions, she submits that the FW Ombudsman liaised only with her in its investigation as to whether the respondents were contravening the FW Act, apart from the field visit that took place on 4 July 2014 when Mr Han was present.
84 As to the office holders of corporate companies at material times, Mrs Han sets out the period that she was a director and secretary, and when her husband was a director of each of the companies.
85 As a result, she says that she was company secretary for only one of the three companies, Han Investments Pty Ltd, prior to the Family Court order of 28 August 2015 and her estranged husband was the sole secretary of the other two companies prior to that order. He was, therefore, equally involved in the contraventions but left all the responsibility for dealing with the FW Ombudsman over the investigation of the contraventions with her.
86 As to contrition, corrective action or cooperation, she submits that she responded in the best way she could to the various complaints and investigations made and she was honest in reporting the stress she was under to the officers concerned. She submits there is nothing to suggest she deliberately attempted to frustrate their investigatory processes. She says her cooperation was noted by Mr Acevedo. She also notes that Ms Marcello considered she was a "good candidate for a personal education visit" and recommended that backpayment of wages not be enforced on the respondents at that stage as she had been doing what she thought was correct.
87 In relation to the backpayment of wages, the respondents say the records show that Mrs Han responded to all of the FW Ombudsman's requests for information, doing the best she could in the circumstances. At material times when Mr Acevedo was making requests between July 2014 to May 2015, she says she was subject to sustained physical and verbal abuse from Mr Han, was diagnosed with anxiety and depression, and receiving medication, as well as being separated finally from her husband on 24 September 2014 after a 20 year relationship and had commenced litigation in the Family Court. She was also hospitalised and obtained an interim Violence Restraining Order against her husband.
88 She emphasises the extent to which she and her children obtained counselling and medical assistance during these periods.
89 As to the need for general and specific deterrence, and the need to uphold the regulatory scheme of the FW Act, the respondents and Mrs Han submit that they have accepted their wrongdoing in failing to keep the specified records and consider it is difficult to see how there would be any utility in the respondents now offering an apology to the many past and present Han entity employees whose wages may have been affected by the record keeping deficiency. They say it would have been an impossible administrative task for Mrs Han to contact each of those employees and offer an apology to them. They say the best apology that they could have made was by paying the lawful entitlements, which was done to the extent possible.
90 Ultimately, the respondents make the submission that in setting penalties, the Court should take into consideration the respondents' compliance with what Mr Acevedo's findings required to be done - that is, make payments to affected employees. They submit that Mrs Han's proactive responses to those findings have substantially contributed to the aim in this litigation of ensuring that the respondents are specifically deterred from again committing the contraventions that they have made.
91 The respondents say they are committed to further educative activity and submit that a large monetary penalty is not needed in order to affect specific deterrence.
92 In relation to general deterrence, they say the Court should take into account that the gravity of the record keeping contraventions in these matters is vastly different from those in some of the authorities cited by the FW Ombudsman. The present matters, by contrast, involve admitted contraventions in respect of a failure to keep records of employment and are not matters when the employer was benefitting from free labour.
93 They also say the respondents were not bereft of the necessary administrative and accounting systems to make wage payments to employees each fortnight. They employed a bookkeeper who took instructions from the husband and an external accountant.
94 Finally, it is submitted on behalf of the respondents that the extenuating circumstances of Mrs Han, the actions of her husband and the findings of the Family Court raise the question whether any financial penalties should be imposed on the respondents at all, and Mrs Han in particular.
95 Further, if financial penalties are to be imposed, they should not involve an additional penalty on Mrs Han or that any penalty on Mrs Han should be suspended so that it is not payable unless the corporate respondents fail to pay the penalty imposed on them.
96 In her reply submissions, the FW Ombudsman does not accept that Mrs Han has proved that the domestic violence and other health circumstances that she has referred to affected the performance of her work and the discharge of her duties and responsibilities as an officer of the corporate respondents. The FW Ombudsman says that the evidence cannot be used to contradict the agreed facts on contravening conduct and accessorial liability.
97 In relation to the nature and extent of the conduct that led to the contraventions, the FW Ombudsman says that whether Mrs Han was as responsive, diligent, honest and cooperative in her dealings with the FW Ombudsman as she could have been and whether the failures to keep records were part of a deliberate course of action, are matters which should be assessed objectively in all the evidence and, when done so, there is evidence she may not have been as responsive, diligent, honest or cooperative as she could have been in the circumstances. In particular, paras [9] to [36] of Mr Acevedo's affidavit are relied on. That evidence included records of Mrs Han telling Inspector Marcello that if she had to pay weekend penalties she would just have to close the current business. It also included advice that Ms Han gave to Mr Acevedo that she did not keep any rosters beyond a two week period and only to a maximum of a month and there was no way she could get rosters for the last financial year. During this conversation, she added she did not know why the FW Ombudsman wanted to "squeeze our company" and added that "there is no way we can pay extra on weekends".
98 That evidence also included findings by the FW Ombudsman of underpayments for various entities totally $30,440.06.
99 It further included evidence that on 4 November 2015, Mrs Han indicated that the entities did not keep timesheets of more than one week after payday and they only provide timesheets for the latest payroll week.
100 In particular, the FW Ombudsman submits that when one takes account of Mr Acevedo's affidavit evidence at [9], [11] to [23], [32] and [35] to [36] and the exhibits referred to, as well as the Bhatia affidavit at [3] to [15] and the exhibits referred to, it is open to find that the failures to make and keep records were deliberate with the intended effect of avoiding some of the obligations owed by the Han entities to their employees.
101 In reply, as to the circumstances in which the relevant conduct took place, the FW Ombudsman says the Court should not accept the invitation of the respondents to accept Mrs Han's personal circumstances should be taken into account when assessing the culpability of the contravening conduct and coming to a finding about whether or not the failures were part of a deliberate course of action.
102 The FW Ombudsman says that the expert medical evidence on which the respondents seek to rely, when examined closely, does not clearly establish that Mrs Han's personal circumstances were a complete explanation for her role in the contravening conduct.
103 As to the respondents' submission that the present matters before the Court are not ones where the employees were not paid, let alone not paid for months at a time, and therefore are distinguishable, the FW Ombudsman says that they miss the point, as does a submission that they are matters in which underpaid employees were identified and reimbursed. The FW Ombudsman says the failures to keep records are spread across a number of different legal entities, covered significant periods of time and involved a number of significant and different types of pay records.
104 The FW Ombudsman submits the magnitude of the record keeping failures, when seen in the context of businesses which operated on weekends and at night, and the limited number of instances where underpayments of only minimum rates for hours actually recorded on payslips for employees were able to be calculated and reimbursed, is a strong indication that if required records were made and kept, the scale and periods of underpayment would more than likely be much larger.
105 The FW Ombudsman further submits that the evidence of who was underpaid, what they were underpaid, and how those calculations were made in the limited circumstances in which they were made and the evidence of how the lack of record keeping created underpayment exposures for at least one employee, Mr Bhatia, all go to show how unsustainable the respondents' submission is in this regard. The loss and damage was very likely real and much more significant than suggested, and the lack of records simply made it incalculable.
106 The FW Ombudsman submits that the history of previous contraventions by the respondents demonstrates that the respondents should have known, and most probably did know, about their legal obligations in respect of payments to employees of the Han entities, and so the need to make and keep records.
107 The FW Ombudsman repeats there is no evidence the respondents have altered their record keeping practices despite sufficient reminders of their need to do so.
108 As to the size of the business enterprise involved, the FW Ombudsman submits that the evidence which has been put on by the respondents show the respondents were part of a structurally, financially and legally sophisticated business which had the means at its ready disposal to ensure that proper records were made and kept.
109 The FW Ombudsman submits that the respondents' reference to notorious industry-wide deficiency in record keeping cannot excuse or be used in some way to lessen the respondents' culpability in this case. If anything, it reinforces the need for a penalty which will effect general deterrence.
110 In reply, the FW Ombudsman repeats its submissions, in effect, concerning the involvement of senior management in the breach and the lack of contrition, corrective action and cooperation with enforcement authorities.
111 The need for specific and general deterrence is again pressed in reply by the FW Ombudsman. Any reduction or suspension of the payment of penalties is opposed by the FW Ombudsman.