Fair Work Ombudsman v Lam

PERRAM J: 1 The Applicant, the Fair Work Ombudsman ('FWO'), seeks declarations against, and the imposition of pecuniary penalties upon, the Respondents, Mr Lam and Ms Tong. Mr Lam and Ms Tong were at the times relevant to this case married with two young children. They lived as a family near Haymarket in Sydney. On 3 May 2016 Mr Lam employed Ms Romero as the family's domestic worker and nanny. Ms Romero ceased working for Mr Lam (and the family) on 2 May 2017 and so worked for him for exactly a year. During that year, Mr Lam paid into Ms Romero's bank account in the Philippines as wages an amount in Philippine pesos equivalent to $12,574.39. 2 It is now accepted by Mr Lam and Ms Tong that Ms Romero's employment was, in fact, governed by the Miscellaneous Award 2010 (Cth) ('the Award'). When regard is had to all of the hours worked by Ms Romero and the terms of the Award the parties agree that Mr Lam ought to have paid her an amount equivalent to $105,809.72. There was therefore an underpayment by Mr Lam of some $93,235.33. 3 On 19 June 2019 the FWO commenced proceedings in this Court under the provisions of the Fair Work Act 2009 (Cth) ('the Act') seeking orders that Mr Lam pay Ms Romero the sum of the underpayment. The FWO also sought the imposition of pecuniary penalties upon both Mr Lam and Ms Tong together with a number of prayers for declaratory relief. 4 The liability of Mr Lam was said to arise directly but in the case of Ms Tong her liability was said to be accessorial. It has not been necessary for the Court to determine whether Mr Lam ought to pay Ms Romero the shortfall. Following a successful mediation, the Court on 1 May 2020 ordered by consent that Mr Lam pay the shortfall amount which, on 29 May 2020, he did. 5 There remains, however, for resolution the determination of the appropriate penalties to be imposed upon Mr Lam and Ms Tong and the scope of the declaratory relief which the Court ought to grant. 6 Insofar as the penalties are concerned, the FWO seeks penalties which lie in a range between $32,130 and $38,556 for Mr Lam and in a range between $4,590 and $5,508 for Ms Tong. Mr Lam and Ms Tong do not dispute the range suggested by the FWO but they do urge that the penalties should be set at the lower end of that range. 7 Insofar as the declarations are concerned, both sides are content for there to be declarations that Mr Lam and Ms Tong have infringed various provisions of the Act relied upon by the FWO. However, whilst the parties accept for the purposes of the present hearing that the Award did indeed apply to Ms Romero during the relevant period, the Respondents submit that the Court should forebear from declaring that to be so. The Respondents argue that the question is in fact a reasonably difficult one and the evidence before the Court is not sufficient to justify a formal declaration by the Court that the Award did apply to Ms Romero's employment as a domestic worker and nanny. 8 For the reasons which follow I will impose civil penalties totalling $32,500 on Mr Lam and $5,000 on Ms Tong. I will grant some of the declaratory relief sought together with some consent injunctions requiring Mr Lam to undergo online education. As is usual in proceedings under the Act there will be no order as to costs. 9 The FWO read affidavits by Ms Romero dated 2 June 2020 and 31 July 2020 and an affidavit by Ms Blee, a solicitor with the FWO. There were no objections. The Respondents read an affidavit by Mr Lam dated 27 July 2020, not reading s10, and an affidavit by Ms Tong dated 6 July 2020. In addition the parties agreed a statement of facts which was placed before the Court ('SOAF'). 10 Ms Romero is a citizen of the Philippines. She was recruited in the Philippines and then employed in Australia by Mr Lam as a domestic worker and nanny for the period 3 May 2016 to 2 May 2017. She had not previously worked in Australia. During this time Ms Tong was married to Mr Lam and they lived together with their two young children. Whilst Ms Romero worked for Mr Lam she lived at the couple's home. She shared a bedroom with one or possibly both of the children. Her duties were various. She did the cleaning, the cooking, the laundry, the ironing and the grocery shopping. She also attended to household maintenance. In addition, she looked after the two children and, when required, ran personal errands for Mr Lam and Ms Tong. 11 Although Ms Romero was legally employed by Mr Lam she in fact reported to Ms Tong as well. It seems that Mr Lam was responsible for her overall direction, management and supervision. In conjunction with Ms Tong he decided her hours of work and directed her as to her duties. 12 It is not in dispute that Ms Romero worked very long hours. Frequently she started work at 6 am on weekdays and 7 am on the weekends. Most days she would not finish her work until 10 pm at night. During the day she usually had around 4 hours of breaks. The FWO contended that this meant that she worked up to 82 hours per week which would appear to be the case. 13 The parties agreed that in the 365 days that she was employed by Mr Lam she had only 12 days off work. Turning then to the issue of her wages, it would seem that Mr Lam paid Ms Romero a monthly wage of 40,000 Philippine pesos which he transferred to a bank account in her name maintained by her in the Philippines. Despite fluctuations in the exchange rates, the parties proceeded on the basis that this amounted to a payment of $12,574.39 for the period involved and I will proceed on the same basis.

Declarations of Contravention And Penalties 19 Having concluded that the Court ought not to declare that the Award applied to Ms Romero's employment, I am unable to see how it can sensibly declare Mr Lam to have contravened the Act where the contravention alleged is founded on the application of the Award either, for example, a declaration that Ms Romero was not paid the correct wage. A declaration of such a contravention would carry with it a necessary implication of the anterior application of the Award. On the other hand, I see no reason why the Court ought not to grant declaratory relief in relation to those contraventions of the Act which do not depend on the application of the Award. 20 Mr Lam admits eight sets of contraventions of the Act as follows: (i) Contraventions of s 45 of the Act in failing to comply with a term of an award (being a failure to pay Ms Romero the minimum wage specified in cl 14.1 of the Award); (ii) Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero penalty rates for work performed outside the hours of 7 am to 7 pm specified in cl 22.3(a) of the Award); (iii) Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero the overtime specified in cl 22.1 of the Award); (iv) Contraventions of s 45 in failing to comply with a term of an award (being a failure to pay Ms Romero penalty rates for work performed on public holidays as required by cl 22.3(e) of the Award); (v) Contraventions of s 44(1) in failing to comply with the National Employment Standards (being a failure to pay accrued annual leave on termination contrary to s 90(2)); (vi) Contraventions of s 44(1) in failing to comply with the National Employment Standards (by unreasonably requiring Ms Romero to work more than 38 hours per week contrary to s 62(1)); (vii) Contraventions of s 535(1) in failing to make and keep prescribed records; and (viii) Contraventions of s 536(1) in failing to provide Ms Romero with pay slips. 21 I am satisfied that Mr Lam did contravene each of the provisions just set out on many occasions. For example, each time Mr Lam underpaid Ms Romero he committed a fresh contravention of s 45. Each of the eight sets of contraventions represents therefore a single course of conduct under s 557 (ie there are 8 courses of conduct). Section 557 requires each course of conduct to be treated as a single contravention. Further, in terms of assessing any penalty, I am also satisfied that the wrongdoing implied by each of the courses of conduct will be adequately addressed if each course of conduct were treated as if it were a single contravention. I do not think the penalty needs to be set with a view to deterring Mr Lam from future contraventions because I am quite satisfied that he will not contravene again. However, cases such as this do require the penalty to be set with a view to deterring others who might otherwise be tempted to contravene the Act. 22 The appropriate maximum penalty for each of the contraventions in (i) to (vi) is $10,800 whilst the maximum penalty for the contraventions in (vii) and (viii) is $5,400. The maximum theoretical penalty which could be imposed on Mr Lam is therefore $75,600. 23 Mr Lam's conduct was deliberate in the sense he decided to hire a domestic worker and nanny from overseas and to pay her outside the Australian regulatory framework. I accept that it is unlikely he was aware of the Award or even the Act. In my view the underpayment contraventions (i)-(iv) and the contraventions relating to working excessive hours (vi) are quite serious. I view the failure to pay accrued annual leave (v) as less serious and the record keeping contraventions (vii) and (viii) as less serious still. I accept that Mr Lam is to a degree largely contrite and that contrition is evidenced to some extent by the fact that he paid Ms Romero her entitlements, although only after more than 3 years. 24 Mr Lam has some factors in his favour. First, although the proceeding was initially contested, Mr Lam has since co-operated including in the preparation of a statement of agreed facts. Secondly, I take into account the fact that the media coverage of the litigation resulted in Mr Lam and Ms Tong being wrongly branded as having engaged in the practice of modern slavery. The FWO was in no way responsible for this suggestion and it was the result of irresponsible journalism. Despite the innocence of the FWO in all of this, the chain of events resulting from the FWO's proceeding has resulted in Mr Lam being widely and unfairly pilloried as a person who has engaged in the practice of modern slavery. This suggestion was false and unjustified. I do not accept the FWO's submission that this unjustified harm to Mr Lam's reputation ought not to be brought to account. This is not a case where the harm to the reputation of the person being subjected to the penalty is harm of a kind naturally flowing from the misconduct committed such as in Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) [2014] FCA 1308; 322 ALR 45, see at [357] per Murphy J. 25 In principle the following penalties should be imposed: For contravening s 45 by failing to pay the minimum wage $6000 For contravening s 45 by failing to pay penalty rates $4000 For contravening s 45 by failing to pay overtime $6000 For contravening s 45 by failing public holiday penalty rates $4000 For contravening s 44(1) by failing to pay accrued annual leave on termination $3500 For contravening s 44(1) by unreasonably requiring Ms Romero to work more than 38 hours per week $5000 For contravening s 535(1) by failing to make and keep prescribed records $2000 For contravening s 536(1) by failing to provide pay slips $2000 Total $32,500

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