The applicant, Trudy Lehmann, issued proceedings in the Tribunal against Benjamin Hage, seeking orders that he make the superannuation contributions that she was entitled to, as well as civil penalties under the Fair Work Act 2009 (Cth) (the FW Act).
When this matter was called on for hearing, Mr Hage was not in attendance. As I was satisfied that he was aware of the hearing and having been provided with no explanation as to why he did not attend, I resolved to proceed in his absence.
Ms Lehmann gave sworn evidence. I accept her evidence and make the following findings.
Ms Lehmann had for some time worked at the Bakery on the Green at Murray Bridge (the Bakery). On or about 8 November 2021, Mr Hage announced that he had taken over the Bakery and Ms Lehmann understood that as from that date she was employed by Mr Hage. For now, the evidence does not permit me to make that finding. There is evidence that suggests that when Mr Hage took over the Bakery, Ms Lehmann was in fact employed by Zainberi Foods Pty Ltd, being a company that Mr Hage controlled. There is correspondence on the Court file from Mr Hage that indicates that Zainberi Foods Pty Ltd has since been de-registered.
Ms Lehmann last worked at the Bakery on 25 November 2022. It seems that from that date the Bakery closed. Although Ms Lehmann was paid her full wages for the period of her employment, despite repeated assurances from Mr Hage, no superannuation has been paid on her account since he took over the Bakery on 8 November 2021. Contributions should have been made quarterly and all up the amount of $6,275 is outstanding.
Because I am not yet satisfied that Mr Hage was Ms Lehmann's employer, for now, I am not prepared to make an order that he pay the outstanding superannuation contributions.
I grant Ms Lehmann liberty to apply in respect of this.
I now turn to the issue of civil penalties.
Whilst Ms Lehmann's employment at the Bakery was probably covered by an Award that almost certainly would have contained a provision requiring the timely payment of superannuation contributions, the evidence does not enable me to make any findings about this. But even if it were otherwise, from 1 January 2024, s 116B of the FW Act of itself imposed such an obligation. It provides:
[2]
An employer must make contributions to a superannuation fund for the benefit of an employee so as to avoid liability to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the employee.
[3]
Either way, the failure of Ms Lehmann's employer to make any superannuation contributions on her account amounts to a contravention that potentially attracts civil penalties.
Even without proof that Mr Hage was Ms Lehmann's employer, if I am satisfied that he was "involved in" the breach, I can order that he be liable to civil penalties. This is so because s 550(1) of the FW Act extends the reach of the power to order civil penalties to include persons involved in the contravention. The concept of "involved in" is defined by s 550(2) of the FW Act as follows:
[4]
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
[5]
(b) has induced the contravention, whether by threats or promises or otherwise; or
[6]
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
[7]
Based on Ms Lehmann's evidence, I find that Mr Hage was responsible for paying her wages and superannuation contributions. Ms Lehmann tendered copies of exchanges of text messages in which Mr Hage acknowledged that the superannuation contributions were outstanding and he made repeated commitments to her to pay those contributions.
One of many examples was the following text exchange that occurred on 7 February 2022:
[8]
Ms Lehmann:
Hi Ben..Just wondering when super will be paid into my super fund..fortunately or quarterly .. as none has gone into my account as yet ... thanks
Mr Hage:
Hi Trudy Yes quarterly I'll get to it this week Thanks Ben
[9]
Ms Lehmann followed this up a month later and received the following text message from Mr Hage:
[10]
Hello Not yet sorry, met accountant this morning so will tidy up for you next week Thanks Ben
[11]
Based on these, and others, I draw the inference that Mr Hage was stringing Ms Lehmann along, and that although he knew that she was entitled to superannuation contributions, he had no real intention of making the necessary arrangements to pay them.
I find that Mr Hage was knowingly concerned in the contravention for the purposes of s 550(2) of the FW Act such that he is potentially liable to a civil penalty.
In Basi v Namitha Nakul Pty Ltd (No 2)[1] Halley J set out the principles to be applied in determining the amount of the penalty to be imposed. These were distilled in Luigi Rossi v Sustainable Infrastructure Systems Pty Ltd & Nick Wotton[2] as follows:
[12]
The primary, if not the sole focus of penalties is personal and general deterrence, by putting a price on the contravention that is sufficiently high to deter repetition by the specific contravener and to generally deter others who might be tempted to contravene the FW Act. Although the process is different to sentencing in the Criminal Law, concepts such as totality, parity and course of conduct may assist in determining the amount of a civil penalty that is reasonably necessary. But unlike the Criminal Law, it is not appropriate to focus on the objective seriousness or gravity of the contravention and to then apply a "yardstick" approach to fix the amount. Ultimately, what is involved is a value judgment, based on the identification and balancing of all the factors relevant to the contravention and the circumstances of the contravener that strikes a reasonable balance between deterrence and oppressive severity. These factors include:
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 contravener;
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.[3]
[13]
In this case there are several aggravating features.
The evidence satisfies me that Mr Hage made a conscious decision not make arrangements to enable Ms Lehmann's superannuation entitlements to be paid. It is reasonable to draw the inference that he did so for his own benefit.
Ms Lehmann is in her early sixties. She is approaching an age where she might be expected to access her superannuation in the not too distant future. Her employer's failure to pay her superannuation contributions can be expected to be a matter of grave concern to her. She has not only lost the benefit of the income that these contributions could have generated had that been paid on time, but they may not be paid at all. This is the direct result of Mr Hage's deliberate failure to arrange for the timely payment of her superannuation contributions.
A substantial pecuniary penalty is called for the bring home to Mr Hage and to others responsible for making arrangements for the payment of superannuation contributions that the deliberate failure to do so is not on.
To reflect this I impose upon Mr Hage a single penalty of $10,000.