Fair Work Ombudsman v Port Melbourne Cosmetic Clinic Pty Ltd [2025] FedCFamC2G 1356

(a) section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the Compliance Notice that was given to the First Respondent on 8 June 2023; and

(b) section 536(3) of the FW Act by giving Ms Zulfija a pay slip that was false and misleading in a material particular.

1. The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in:

(a) the First Respondent's contravention declared in paragraph 1(a) above; and

(b) the First Respondent's contravention declared in paragraph 1(b) above.

1. Pursuant to section 546(1) of the FW Act, the First Respondent pay pecuniary penalties of $23,496 to the Commonwealth for the contraventions set out in paragraph 1 above within six months of this order.
2. Pursuant to section 546(1) of the FW Act, the Second Respondent pay pecuniary penalties of $4,699 to the Commonwealth for the contraventions set out in paragraph 2 above within six months of this order.
3. The Applicant have liberty to apply on 7 days' notice in the event that any of the preceding orders are not complied with.

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 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

1. By an Application and Statement of Claim filed in this Court on 18 December 2024, the applicant (FWO) seeks relief against the first respondent (PMC Clinic) and the second respondent (Mr Abdelmalek) in respect of non-compliance with a compliance notice (Compliance Notice) in contravention of s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) and a contravention of s 536(3) of the FW Act relating to the giving of a pay slip that was false and misleading to a former employee of PMC Clinic.
2. By the time the matter came before me for hearing, the parties had reached agreement regarding the orders proposed in relation to both liability and relief, including as to penalties. A Statement of Agreed Facts was filed on 18 March 2025 (Agreed Statement). By that document, the parties have agreed a substantial proportion of the factual background contended by the FWO. This is summarised below. PMC Clinic has admitted to contravening both s 716(5) relating to the Compliance Notice and s 536(3) relating to the pay slip information. Based upon the admissions contained within the Agreed Statement I accept that these two contraventions have occurred.
3. Mr Abdelmalek has admitted his involvement in these two breaches within the meaning of s 550(2) of the FW Act, by reason of which he is taken to have also contravened ss 716(5) and 536(3) of the FW Act. Again, based upon these admissions and the factual underpinnings identified in the Agreed Statement, I accept that accessorial liability should be attributed to Mr Abdelmalek.
4. The parties' agreement that certain declarations ought to be made concerning the conceded breaches is recorded in the Agreed Statement. I accept that it is appropriate to make these declarations. The parties have more recently reached agreement that orders ought to be made, pursuant to s 546(1) of the FW Act, requiring PMC Clinic to pay a pecuniary penalty in the amount of $23,496 to the Commonwealth and Mr Abdelmalek to pay a pecuniary penalty in the amount of $4,699 to the Commonwealth. The parties agree that the respondents should be relieved from making these payments for a period of six months from the date of order.
5. Despite the parties reaching agreement about each of these matters, the Court still bears the ultimate responsibility for penalty, is not bound by the parties' agreement, and must consider for itself what constitutes an appropriate penalty: Ministry for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51(i)], [56] and [79] per Branson, Sackville and Gyles JJ (as confirmed by the High Court in The Commonwealth of Australia v Director, Fair Work Building Inspectorate and Others [2015] HCA 46; (2015) 258 CLR 482 (Civil Penalty Decision) at [32] and [47]-[50] per French CJ, Kiefel, Bell, Nettle and Gordon JJ and [68] per Gageler J.)
6. For the following reasons I consider it appropriate to make orders for the payment of pecuniary penalties in accordance with those sought by the parties.

1. The following factual summary is taken from the Agreed Statement which has been prepared by the parties and which, pursuant to s 191 of the Evidence Act 1995 (Cth) contains facts evidence of which is not required to prove their existence and of which evidence may not be adduced to contradict or qualify them.
2. PMC Clinic is the operator of a business in the health and medical services industry comprising a cosmetics clinic trading as "Bayside Skin and Laser Clinic". Mr Abdelmalek is its sole director and secretary.

1. In around November 2022, the FWO commenced an investigation into PMC Clinic in respect of the employment of two individuals, Ms Zulfija and Ms Camili (Employees). As a result of the investigation, a Fair Work Inspector formed a reasonable belief pursuant to ss 716(1)(a) and (b) of the FW Act, that PMC Clinic engaged in the following contraventions of a term of a modern award and the FW Act (Contraventions):

(a) clause 15.4 of the Nurses Award 2020 by failing to pay Ms Zulfija part-time minimum rate entitlements;

(b) section 90(2) by failing to pay Ms Zulfija her accrued but unused annual leave on termination;

(c) section 117(2)(b) by failing to make payment to Ms Camili in lieu of notice of termination.

1. On 8 June 2023, the FWO issued PMC Clinic with the Compliance Notice in respect of the Contraventions, pursuant to s 716(2) of the FW Act.
2. The Compliance Notice required PMC Clinic to remedy the effects of the Contraventions by 12 July 2023, by calculating and paying outstanding amounts owed to the Employees, including any superannuation, and to make records of the amounts calculated and paid (Specified Action). The Compliance Notice also required PMC Clinic to produce reasonable evidence to the FWO of its compliance with the Compliance Notice by 19 July 2023.
3. PMC Clinic did not take the Specified Action in accordance with the Compliance Notice by the required date. Nor did it produce, by the required date, reasonable evidence to the FWO of its compliance with the Compliance Notice.
4. On 20 January 2025, PMC Clinic paid the Employees the amounts outstanding in respect of the Contraventions.

1. Pursuant to s 536(3) of the FW Act, PMC Clinic was prohibited from giving a pay slip to an employee which it knew to be false or misleading.
2. On 10 October 2022, PMC Clinic gave Ms Zulfija a pay slip (Final Pay Slip) which recorded:

(a) the "Pay Period" as 26 September 2022 to 9 October 2022 (Final Pay Period);

(b) the "Payment Date" as 10 October 2022; and

(c) the "Net Pay" as $1,398.

1. On or about 11 October 2022, Ms Zulfija received a payment of $606.67 via electronic fund transfer by PMC Clinic. Other than this payment, PMC Clinic did not make, and Ms Zulfija did not receive, any payments from PMC Clinic in relation to the Final Pay Period.
2. The Final Pay Slip was false and misleading because it recorded an amount that was not paid to Ms Zulfija.

1. By reason of matters, including those referred to in paragraph 8 above, Mr Abdelmalek had actual and apparent responsibility for ensuring PMC Clinic complied with its obligations under s 716(5) of the FW Act in respect of the Compliance Notice.
2. By reason of matters, including that the Compliance Notice was sent to an email address used by Mr Abdelmalek to communicate with the FWO, Mr Abdelmalek:

(a) had actual knowledge of the Compliance Notice that was given to PMC Clinic;

(b) had actual knowledge that PMC Clinic was required to comply with the Compliance Notice;

(c) had actual knowledge that the First Respondent failed to comply with the Compliance Notice; and

(d) was an intentional participant in PMC Clinic's failure to comply with the Compliance Notice.

1. By reason of the matters referred to in paragraphs 18 and 19 above, Mr Abdelmalek:

(a) was involved, within the meaning of s 550(2)(c) of the FW Act, in the contravention by PMC Clinic of s 716(5) of the FW Act; and

(b) pursuant to s 550(1) of the FW Act, is taken to have also contravened s 716(5).

1. By reason of the matters, including those referred to in paragraph 8 above, Mr Abdelmalek had actual or apparent responsibility for ensuring that PMC Clinic complied with its obligations under s 536(3) of the FW Act in respect of the Final Pay Slip.
2. At all relevant times, Mr Abdalmalek:

(a) had actual knowledge of the contents of the Final Pay Slip;

(b) was aware that the Final Pay Slip was false or misleading in a material particular, because the amount recorded as payment had not been made to Ms Zulfija and would not be made in accordance with the Final Pay Slip; and

(c) was an intentional participant in the conduct of PMC Clinic of giving a false and misleading pay slip to Ms Zulfija.

1. By reason of the matters referred to in paragraphs 21 and 22 above, Mr Abdelmalek:

(a) was involved, within the meaning of s 550(2)(c) of the FW Act, in the contravention by PMC Clinic of s 536(3) of the FW Act; and

(b) pursuant to s 550(1) of the FW Act, is taken to have also contravened s 536(3).

1. As noted above, the FWO commenced the current proceeding on 18 December 2024. On 24 January 2025, the Court made orders that reflected the consent position of the parties, and which facilitated the filing of the Agreed Statement and the filing by the parties of affidavits and submissions directed at the issue of penalty. The time for compliance with these orders was extended on three occasions at the request of the parties.

1. For the purpose of imposing penalties in this case, there are two contraventions, namely contraventions of s 716(5) and s 536(3) of the FW Act.
2. In the case of the contravention of s 716(5) of the FW Act, the maximum penalty that the Court may impose on PMC Clinic is $46,950 and on Mr Abdelmalek, the amount of $9,390.
3. In the case of s 536(3) of the FW Act, the maximum penalty that the Court may impose on PMC Clinic is $66,600 and on Mr Abdelmalek, the amount of $13,320.

1. The primary purpose of deterrence was re-emphasised by the High Court in Australian Building and Construction Commission v Pattinson [2022] HCA 13; (2022) 274 CLR 450. In that decision, the majority upheld the Commissioner's appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with provisions of the FW Act by those responsible and by (like) others. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that "[t]he 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 a civil penalty regime".[1] However, the High Court did accept that s 546 requires the Court to ensure that any penalty "strikes a reasonable balance between deterrence and oppressive severity".[2] It was only in this more qualified sense that the concept of "proportionality" had any role to play.
2. The High Court in Pattinson also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. The list revealed that both the circumstances of the contravener and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for.[3]
3. As I noted earlier, where parties have agreed a range or amount of civil penalty, this agreement does not operate to absolve the Court of all responsibility to determine that the penalty sought accords with principle. However, in the Civil Penalty Decision, the High Court recognised that provided that the proposed settlement is based upon an accurate account of the circumstances and is appropriate, it is "highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty" (at [58]).

1. The FWO relied on the following material in support of its penalty proposal:

(a) the Statement of Claim filed on 18 December 2024;

(b) the Agreed Statement;

(c) the affidavits of Fair Work Inspector Phillip Khoo (FWI Khoo) filed on 4 April 2025 (Khoo affidavit) and 16 May 2025 (Khoo reply affidavit); and

(d) submissions on penalty filed on 16 May 2025 and reply submissions on penalty filed on 4 August 2025.

1. The respondents relied on the Agreed Statement as well as:

(a) the affidavit of Mr Abdelmalek filed on 29 April 2025; and

(b) the outline of submissions filed on 20 July 2025.

1. At the beginning of the hearing, the parties (through their representatives) informed the Court that agreement had been reached regarding objections to parts of the Abdelmalek affidavit, with the result that parts of that affidavit were no longer read and parts of the submissions on penalty filed by both parties were no longer relied on. As I indicated at the hearing, the concessions made by the respondents were sensible and properly based. They had the effect of streamlining the hearing and provided tangible evidence of cooperation with the regulator, a matter which of course the Court can take account of when fixing penalty.
2. Turning then to the penalty considerations.

Nature, circumstances and deliberateness of the conduct

1. The compliance notice regime was introduced as a means to quickly and inexpensively resolve underpayment claims. I accept that had PMC Clinic complied with the Compliance Notice by taking the Specified Action within the time frame specified, this litigation would likely have been avoided.
2. The evidence filed by the respondents suggests that at least as far as the payment in lieu of notice was concerned, Mr Abdelmalek took a different view to the regulator as to whether this applied in the circumstances of Ms Zulfija's employment. However, as the respondents also properly concede, no steps were taken by them to challenge the Compliance Notice, including on the basis that they allegedly did not commit the contraventions which it identified. Neither did the respondents seek to establish that they had a defence of reasonable excuse that would exculpate their failure to take the Specified Action.
3. As far as the pay slip contravention is concerned, I note the evidence and submission of the respondents, that the error reflected the mistaken view of Mr Abdelmalek that he was entitled to withhold funds from Ms Zulfija. However, I accept and place greater emphasis on the submission of the FWO that it captures a species of contravention that recognises the utility of the pay slip as a source of information and accountability that when compromised, undermines the ability of an employee to understand and, if necessary, challenge their entitlements. It has a similar inhibiting effect on the ability of the FWO as industrial regulator, to investigate contraventions.
4. The FWO submits that in circumstances where the Compliance Notice was given to PMC Clinic on 8 June 2023, these proceedings were commenced on 17 December 2024 and PMC Clinic rectified the effects of its non-compliance with the Compliance Notice on 20 January 2025, the Court should infer the only reason rectification took place was because litigation had started, and that absent such action being taken, the respondents never intended to comply with the Compliance Notice. I consider this inference is available.

1. The submissions of the FWO properly recognise that the Court's focus should be directed to the non-compliance with the relevant compliance notice, rather than the underlying contraventions and the loss directly associated with them. However, in circumstances where amounts owing to the Employees have been calculated such that a cognisable loss can be identified, I consider it appropriate to recognise that payment of outstanding entitlements did not occur for a significant period of time.
2. There is also the loss that accrues on each occasion that a person fails to comply with a compliance notice that involves an impost on the regulator, and ultimately, the Court, which is absorbed by the tax-payer.

1. The submissions of the FWO recognise that the respondents have demonstrated cooperation by admitting liability to the contraventions at an early stage of the proceeding by way of the Agreed Statement and by signing consent orders to facilitate the effective conduct of the matter. The FWO also notes that although delayed, the outstanding payments have now been rectified.
2. The FWO submits that this cooperation justifies a discount of 20%, which it has factored into the penalty figures which have now been agreed by the parties.
3. The FWO submits that the respondents have not shown remorse for the contraventions and have not committed to compliance moving forward. As far as remorse is concerned, I accept that the respondents have not offered an apology for the conduct that underscored the contraventions. However, Mr Abdelmalek's affidavit does contain acknowledgements that views previously held about the withholding of funds, on reflection, were not defensible. I also take account of the concessions made by the respondents around their evidence and submissions which had the effect of narrowing the issues in dispute and simplifying the hearing on penalty.

Size and financial circumstances of the respondents

1. The respondents submit that PMC Clinic is in a "very weak financial position" which they say is evidenced by the company's balance sheet as at December 2024 and profit and loss statement for the period July to December 2024. The former records a total equity position of -$865,420.37 and the latter records a loss (across the whole of the report period) of -$13,426.18. The respondents also rely on what is described as a debt to the ATO of $8,838 in respect of GST and an outstanding balance on a credit card in the amount of $76,949.23. While they acknowledge that Mr Abdelmalek owns property assets, they submit that where they are owned subject to mortgages, their value should not be overstated.
2. The FWO submits that the evidence of the respondents' true financial position is flimsy and indicates that even in the worst-case scenario, Mr Abdelmalek has significant equity (in excess of $1.2 million) in his four properties. Furthermore, it is open to infer and I do draw the inference, that the agreement on penalty reached by the parties suggests that the respondents have formed the view that payment of the amounts put forward to the Court, albeit to be paid within six months of order, would not be crushing or unduly oppressive.

1. It has been repeatedly emphasised in penalty cases that general deterrence must serve a purpose that ensures that any penalty imposed is not seen as "the cost of doing business": see for example, Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR 102-690 at [27]. Penalties must be set at a level which demonstrates that there are serious consequences for non-compliance, to deter others from failing to comply.
2. The FWO has observed that PMC Clinic operates in the hairdressing and beauty services industry (Industry) and put into evidence the FWO Industry profile and FWO Interactions report for the period July 2023 to June 2024. The FWO noted that the report recorded that 531 requests for assistance had been completed across the reporting period which when scaled, produced a "moderate" rating for the Industry. The FWO submitted that this indicated that the Industry required deterrence to ensure that compliance was encouraged. I accept this submission as well as the submission that there is a continued need to remind the community of the important role that payslips play in the protection of employee entitlements.
3. I also accept that there is a need for specific deterrence. This is in circumstances where PMC Clinic remains registered and continues to trade, and where Mr Abdelmalek remains the sole director. I do however also acknowledge that there is no evidence (and it was not suggested by the FWO) that either PMC Clinic or Mr Abdelmalek have engaged in previous instances of non-compliance.

1. When all of the factors above are considered, I am satisfied that the amount of penalty agreed by the parties is a proportionate response to the conduct involved and will operate with sufficient deterrent force to satisfy the objectives of the civil penalty regime given effect by the provisions of the FW Act.
2. I will make declarations and orders as set out at the commencement of these reasons.

I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons.