Jewell v Magnium Australia Pty Ltd

Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484

Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 4) [2024] FCA 1475

Flight Centre v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68; [2018] FCAFC 53

Jewell v Magnium Australia Pty Ltd [2025] FedCFamC2G 201

Kelly v Fitzpatrick [2007] FCA 1080

Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; [2014] FCAFC 62

Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC

Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20

Trade Practices Commission v CSR Ltd (1991) ATPR 41-076; [1990] FCA 521

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

1. Magnium Australia Pty Ltd pay penalties totalling $18,600.
2. Under s. 546(3)(c) of the Fair Work Act 2009 (Cth), Magnium Australia Pty Ltd pay the penalties to Dr Daniel Jewell on or before 22 June 2025.
3. There is no order as to costs.

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. On 20 February 2025 in my principal judgment as to liability in Jewell v Magnium Australia Pty Ltd [2025] FedCFamC2G 201 (PJ) I made three declarations as to contraventions of s. 44 of the Fair Work Act 2009.
2. The three declarations I made were each as to s. 44 of the FW Act as to the First Respondent's failure:

(1) to give the Applicant notice or pay the Applicant in lieu of notice in contravention of s. 117(2) of the FW Act (Notice Contravention);

(2) to pay the Applicant redundancy pay in contravention of s. 119 of the FW Act (Redundancy Contravention); and

(3) to pay the Applicant his accrued and untaken annual leave in contravention of s. 90(2) of the FW Act (Annual Leave Contravention).

1. I held over consequential issues as to costs and penalties.
2. I made orders that any party that intended to make a costs application ought to do so within 28 days of 20 February 2025. No party made any application for costs.
3. These reasons are as to the only remaining matters about appropriate penalties as to the three contraventions. Neither party relied on any additional evidence at the penalty hearing.

1. So as to provide the necessary context for my decision as to penalties, the following factual background needs to be repeated.
2. On 21 April 2023 Magnium dismissed Dr Jewell from employment effective that day.
3. In its dismissal letter (PJ, [128]; Ex A1, Annexure DJ-53), Mr Cross (Magnium's Chief Financial Officer who handled the dismissal) wrote (among other matters):

As per the statutory requirements and your employment contract, you are not entitled to any redundancy payment, but you will receive two weeks' paid notice in lieu and are not required to work your notice period.

The details of your final payment include any outstanding salary up to and including 21 April 2023, two weeks' notice paid in lieu, and any accrued annual leave (if any) owed by the company

1. Magnium did not pay on 21 April 2023 - on the cessation of Dr Jewell's employment, as it was legally required to do - a payment in lieu of notice which constituted the Notice Contravention.
2. Magnium did not pay on 21 April 2023 - on the cessation of Dr Jewell's employment, as it was legally required to do - a payment for accrued and unused annual leave which constituted the Annual Leave contravention.
3. As is set out in the dismissal letter, as of 21 April 2023, Mr Cross (and Magnium) held a view that Dr Jewell was not entitled to redundancy pay because it was a "small business employer" (which employed fewer than 15 employees) and therefore it did not have to pay redundancy pay as a minimum legal entitlement because of s. 121 of the FW Act which exempts small business employees from the obligation to pay redundancy pay. Once Dr Jewell asserted that Magnium was not a "small business employer," Mr Cross instructed Magnium's bookkeeper to pay an additional amount of redundancy pay "to avoid any dispute" (PJ, [198]).
4. There were some limited differences of detail between the parties as to the exact amounts which ought to have paid been paid but which were not paid in fact. Any differences are not material to the penalties I will impose. I accept Magnium's submissions that the amounts outstanding were as follows:

(a) payment in lieu of notice $13,326 (gross);

(b) accrued and unused annual leave $32,805 (gross);

(c) redundancy pay $26,653 (gross)

1. As a result, the non-payments totalled $72,784.
2. By the date of the trial, the issue was in fact late payment of entitlements rather than non-payment. Magnium took reasonably prompt corrective action. On 2 May 2023 it paid the notice payments and the accrued annual leave payments. On 18 July 2023 it paid the redundancy pay. On 3 August 2023 it paid Dr Jewell a further amount of $7,978.
3. Magnium submitted that the payment of $7,978 on 3 August 2023 was an overpayment (Mr Cross, [156]). It was apparent that the payment of $7,978 had its genesis in an email of Magnium's bookkeeper sent on 9 May 2023 as to outstanding entitlements (Ex A1, DJ-54). The situation was complicated by details that, as of 21 April 2023 (the last day of employment), Magnium also owed wages to Dr Jewell for the period 17-21 April 2023 and by the fact that certain amounts were remitted to the ATO under Magnium's withholding obligations. In the same way as a precise quantification of the amounts as to notice, redundancy pay and accrued and unused annual leave is not now necessary, a precise accounting reconciliation of which payments made after the end of employment remedied which amounts owing is not now material to the penalties I will impose. Suffice to say, for the purposes of fixing appropriate penalties, I find:

(a) Magnium has proved that within two weeks it had remedied most of the late payments;

(b) Dr Jewell was held out of his money as to redundancy pay for approximately 3 months until 18 July 2023; and

(c) Magnium has not proved that that there was an overpayment of $7,978.

1. Even if Magnium had proved there was an overpayment, it pointed to no authority that would cause me to reduce the amount of penalties I would otherwise order on account of the overpayment. I have not regarded the payment on 3 August 2023 as material to the penalties I will impose.

1. It was common ground that the value of a penalty unit at the date of the contravention was $275. As a result, the maximum penalty for Magnium as a corporate contravener for each contravention is $82,500 [s. 546(2)(b)].

1. Dr Jewell submitted that "in relation to each of the 3 contraventions, a penalty of 10% of the maximum is appropriate": $8,250 x 3 = $24,750.
2. Magnium submitted that "penalties, if awarded, at the lower end of the range are appropriate" and that the penalties for which Dr Jewell contended were disproportionate.

1. Under s. 546(1) of the FW Act I may order a person to pay a pecuniary penalty that is "appropriate".
2. Each contravention involved a failure to pay a distinct entitlement of the NES. As a result, I cannot group the contraventions and impose a right penalty on the basis that the contraventions constituted a single course of conduct under s. 557 of the FW Act (Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; [2014] FCAFC 62; Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 4) [2024] FCA 1475, [24]).
3. As to the purpose of civil penalties, in Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 540_;_ [2022] HCA 13 the High Court said at [9]:

... 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...

1. Deterrence encompasses both specific and general deterrence.
2. In Pattinson, the High Court explained the various factors - pertaining both to the character of the contravening conduct and to the character of the contravener - which French J (as he then was) identified in Trade Practices Commission v CSR Ltd (1991) ATPR 41-076; [1990] FCA 521, [42] - were relevant to determining the quantum of the penalty which would achieve deterrence in a particular case (Pattinson, [18], [55]).
3. The deterrence objective requires the imposition of a penalty with "a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business": Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20, [62].
4. Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 distilled nine non-exhaustive factors at [14] (which reflect the factors French J had identified in CSR) relevant to the fixing of a penalty:
   • The nature and extent of the conduct which led to the breaches.
   • The circumstances in which that conduct took place.
   • The nature and extent of any loss or damage sustained as a result of the breaches.
   • Whether there had been similar previous conduct by the respondent.
   • Whether the breaches were properly distinct or arose out of the one course of conduct.
   • The size of the business enterprise involved.
   • Whether or not the breaches were deliberate.
   • Whether senior management was involved in the breaches.
   • Whether the party committing the breach had exhibited contrition.
   • Whether the party committing the breach had taken corrective action.
   • Whether the party committing the breach had cooperated with the enforcement authorities.
   • The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
   • The need for specific and general deterrence.
5. The High Court noted these matters do not constitute a "rigid catalogue of matters for attention" (Pattinson, [19], citing Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; [2008] FCAFC 8, [91]).
6. I turn next to those factors as far as they are relevant in this case.

1. Both parties referred me to the decision of Raper J in Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484. In Dorsch, Raper J noted that "the deliberateness of a contravention is a factor indicating an increased need for specific deterrence." Her Honour said the concept of deliberateness was "spectral." Her Honour wrote that the concept of deliberateness at [12] "may also include additional aggravating features such as deliberately flouting the law, being reckless, wilfully blind, "courting the risk" or otherwise being negligent."
2. In this case, there was some distinction between Magnium's reasons for non-payment of notice and non-payment of accrued and unused annual leave (considered together) and the non-payment of the redundancy payment.
3. As to that distinction, as to the non-payment of the notice and the annual leave, Mr Cross, who handled the dismissal of Dr Jewell for Magnium, did not know that the law required the payments to be made no later than the date of dismissal. I infer from the content of the dismissal letter that Magnium at all times intended to pay these amounts and did so, in practical terms, in the next pay run. Magnium was careless in that it did not trouble to find out before effecting the termination that it had obligations to pay dismissal entitlements not later than the end of the employment.
4. In the primary judgment, I found that Mr Cross, the Second Respondent, was not an intentional participant in the entitlement contraventions so as to give rise to accessorial liability because he did not know the payments had to be made no later than the termination of employment.
5. On balance, I find that the reasons for the contravention were that the Magnium effected the dismissal of the Applicant's employment in a way which was careless as to whether (or not) it had met its obligations under the FW Act as to each of the contraventions. I do not consider that the evidence establishes that it acted in a way which deliberately flouted the law in not meeting those obligations. The dismissal letter weighs against any conclusion that there was a deliberate flouting of legal obligations.
6. On reading the dismissal letter, it is apparent that the non-payment of redundancy pay was in a slightly different category. Magnium did not pay the redundancy pay because it did not then believe it legally had to pay redundancy pay. It is apparent that Magnium was on the cusp of being a "small business employer." Although the dismissal letter dealt with redundancy pay slightly differently from the way in which it dealt with other entitlements, my conclusion is similar to the extent that that Magnium was insufficiently careful in ascertaining whether it legally had to pay redundancy pay.
7. The carelessness of the conduct, as contrasted with a deliberate flouting of the law, which would fix the conduct at a different point on the spectrum in terms of its seriousness (see Dorsch, above) is one factor that has led me to conclude a penalty at the lower end of the spectrum is appropriate to achieve the objectives of specific and general deterrence.

The nature and extent of any loss or damage sustained

1. The non-payment of entitlements as of 21 April 2023 concerned a substantial amount of approximately $70,000. The amount was substantial even in the context of Dr Jewell's high level of remuneration - by reference to community standards - of approximately $346,000 (PJ, [63]). I accept that there would have been an adverse impact on Dr Jewell of the abrupt loss both of his recurrent income and the non-payment of his entitlements which to some extent would have ameliorated the lost income if paid on time.
2. Nonetheless, progressively, and reasonably promptly, Magnium remedied the default. Within a fortnight - on 3 May 2023 - Magnium had paid in full the accrued and unused annual leave payments. As noted, Dr Jewell was held out of his redundancy payment - of approximately $26,653 - for longer, for approximately 3 months, until 18 July 2023.
3. At latest, by 3 August 2023, some 3½ months after the employment ended, Magnium had paid the Applicant's entitlements in full.
4. The (reasonably) prompt corrective action also is a factor which points towards appropriate penalties being fixed at the lower end of the spectrum.

1. There is no evidence of any similar previous conduct of Magnium.

1. Magnium was a start-up. I, nonetheless, accept as applicable the following passage from Tracey J's judgment in Kelly at [28]:

... No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur...

Whether the breaches were properly distinct or arose out of the one course of conduct

1. I find that non-payment of the notice and non-payment of the accrued and unused annual leave arose out of one course of conduct. Mr Cross (and Magnium) was careless as to the obligation to pay these amounts not later than the cessation of employment.
2. As noted, the non-payment of the redundancy payment was in a slightly different category. In the dismissal letter, Mr Cross wrote that Dr Jewell was "not entitled to any redundancy payment" on the basis that the small business employer exemption applied. Only later, in July 2023, he accepted the exemption did not apply. I accept as applicable in this case the Full Court's observations in Flight Centre v Australian Competition and Consumer Commission (No 2) (2018) 260 FCR 68; [2018] FCAFC 53 at [64] "where a party committed a contravention (in the belief of its innocence) but is now disabused of that belief that may suggest that the need for specific deterrence in this case is reduced".

Whether senior management was involved in the breaches

1. Senior management was involved in the breaches. I accept Dr Jewell's submission that involvement in the breaches in this context is a different and broader concept than the statutory concept of knowing involvement within the meaning of s. 550 of the FW Act (for the purposes of proving accessorial liability).
2. Senior management was involved because Mr Cross was the First Respondent's Chief Operating Officer and functionally responsible for the day to day running of the business, including payment of staff entitlements, Mr Cross handled the dismissal.

Whether the party committing the breach has exhibited contrition/taken corrective action

1. As set out above, Magnium took (relatively) prompt corrective action.
2. At trial, it admitted each of the contraventions.
3. It has not otherwise exhibited contrition.

The need for compliance with minimum standards and specific and general deterrence

1. The need for general and specific deterrence ought to be taken into account. Contraventions of minimum entitlements are to be viewed seriously. It was Dr Jewell's minimum entitlement to have each of his notice entitlement, his accrued and unused annual leave and his redundancy entitlement paid on the cessation of his employment on 21 April 2023 and not sometime later. Magnium was careless as to its obligations.
2. As Raper J said in Dorsch at [29]:

In order to achieve general deterrence a clear signal must be sent to the Australian community at large that all employers have an obligation to know and understand their obligations under the FW Act and that lack of care and ignorance of the law is no excuse: Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [156].

1. With reference to that passage, I find that as to each of the 3 contraventions Magnium's conduct was a result of a lack of care and ignorance of the law and that was no excuse.

1. The fixing of appropriate penalties continues to require a process of instinctive synthesis to the extent that the court must integrate a number of identified input factors into a single, numerical outcome with the aim of achieving deterrence (Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25; [2016] FCAFC 181, [175]. As Justice Bromwich (writing extra-judicially) and Anna Holtby noted in "What's in the Box? Instinctive Synthesis in the Determination of Civil Penalties" in The Law of Civil Penalties (Federation Press, 2023, 34), instinctive synthesis is not the application of a complex mathematical formula and is "not the incremental development of a numerically consistent set of additions and subtractions for sentencing judges to make based on the nature of each factor present in a case and the weight given to it".

1. I will impose penalties as to each contravention approximately equal to 7.5% of the maximum penalty (rounded up) as follows:

(a) a penalty of $6,200 as to the notice contravention;

(b) a penalty of $6,200 as to the non-payment of the accrued and unused annual leave; and

(c) a penalty of $6,200 as to the redundancy entitlement.

1. By way of a final check and application of the totality principle, I must ensure that the total penalty is not, in all the circumstances excessive. I am satisfied that the total penalties of $18,600 is appropriate.

1. It was common ground that there was no reason to deviate from the usual order that the penalty be paid to the Applicant (Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC, [101]).

1. I will make orders accordingly. I will order that the penalties be paid within 28 days of the date of these orders.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Champion.