1. The purpose of imposing civil penalties under the FW Act is to promote compliance by deterring non-compliance by employers, and by 'involved' persons, with the minimum National Employment Standards. A penalty is intended to impose a higher cost on non-compliance than the unlawful gains made from doing so. A penalty is intended to serve as both an individual and general deterrent. A penalty aims to balance "deterrence and oppressive severity".[1] The judicial discretion to impose a civil penalty must be exercised fairly and reasonably. A penalty is not intended as retribution, or to be proportional to the value of the entitlements in issue. A civil penalty is not a criminal penalty.
2. After Mr Bailey admitted the annual leave contravention at the directions hearing, he was advised that a relevant consideration in assessing a potential penalty is evidence of remedial action taken to ensure the same or similar contraventions will not be committed against other current and future commission-only, and other, employees. He was also encouraged to seek specialist legal advice.
3. The maximum possible penalty for each contravention in May 2024, and for involvement in one, is $93,900 for a company and $18,780 for an individual person.
4. The court must now consider whether it is appropriate to impose penalties for each contravention, and if so, in what amounts.

1. The circumstances of the notice contravention commenced with the applicant giving two-weeks' written notice of her resignation on 15 May 2024, as required by cl 21.4 of the contract of employment.
2. Mr Bailey wrote to the applicant on 16 May 2024 to reject her resignation date, and to state that her employment would end after the first week of notice. He cited cl 29.1(b) of the Award, which generally only requires an employee to give one week of notice, with longer periods to be mutually agreed. He did not respond to the stated reliance on the contractual notice period. Consistent with this stance, the employer did not make any payment for the second week of the notice period.
3. The applicant worked the first week, despite being removed from the first respondent's data systems. She did not make any sales, and no commissions from previous sales were due when she was terminated at the end of that week. If commission had been earned in the notice period, the week's pay in lieu of service, and the accrued annual leave, could have been debited against the owed commission.
4. Mr Bailey stated he phoned the office of the Fair Work Ombudsman ('FWO') to seek advice about whether the notice period was one or two weeks.[2] He did not make any note of that phone call. He claims to have been directed to the Award which only required one week without the employer's consent. He says this advice reinforced his view that the notice period was only one week.
5. Mr Bailey did not raise the two-week notice term in cl 21.4 of the written contract. That is a significant omission given he had provided the contract to the applicant in the first place, they both signed it, and the applicant referred to the contract notice period in her resignation notice.
6. The applicant's agent, Mr Clarke, wrote to Mr Bailey on 3 June 2024 seeking payment of the applicant's entitlements and foreshadowing that recovery and penalty proceedings would be issued if the entitlements were not paid immediately. The notice claim was then pitched at two weeks, on the basis the employment was terminated on the day after notice was given and was mistakenly sought at the base rate. The annual leave claim was for the full accrued leave calculated at the base rate.
7. Mr Bailey replied by email to Mr Clarke later that day. He restated his view that only one week of notice was required. He did not mention the annual leave claim.
8. The following summarised oral reasons were given to the parties at the end of the hearing. The written contract required the applicant to give two weeks' notice of resignation. The applicant was terminated at the end of the first week of notice, not when notice was given. The issue was whether the applicant was entitled to pay in lieu of service for the second week, and if so at what rate. The Award generally only required an employee to give one week's notice, but with two relevant exceptions. The first exception allowed a longer period with the employer's agreement. The second exception allowed for different notice terms by a separate written agreement between the parties. Here, the contract reflected the employer's agreement to a longer period than the Award. The contract term prevailed over the Award requirement for the employer's agreement to the second week of notice. The contract terms were legally superior as they were more favourable to the applicant than the minimum Award term.
9. Furthermore, the second exception applied because the written contract recorded different terms of an agreement for the applicant to give a two-week notice period, and for the employer to pay the Award 'full rate' in lieu of requiring service in that period: cl 21.5. Clause 16.6(d)(ii) of the Award provided for the 'full rate' to be based on the employee's average commission earnings over the previous 12 months.
10. The court also rejected the broad submission that nothing was payable because the employer could not debit those entitlements against future commissions as the employment had ended.

1. The second contravention was of s 90 by not paying 5.846 weeks of accrued annual leave at the end of the employment on 21 May 2024.
2. Clause 10.2 of the contract provided that "during a period of annual leave" the applicant would be paid the "base rate" for her classification as per the Award. This contract term matched cl 16.6(a) of the Award.
3. Clause 9 of the contract permitted paid annual leave to be debited against any future commissions. This clause was partly inconsistent with cl 16.6(a) of the Award, which only permitted commissions paid at more than 31.5% to be debited.
4. Clause 21.5 of the contract recorded the positive term that on termination of employment the applicant was "entitled to payment for any untaken annual leave."
5. The contract included a set-off clause, but that had no application as the annual leave and commission are both contractual entitlements which cannot be set-off against each other.
6. The applicant gave evidence of the content of a phone call with Mr Bailey on 15 May after giving notice. In response to her request for payment of accrued annual leave, Mr Bailey offered to credit her with 50% of the commission earned by a colleague over an identified sale transaction, which would then partly offset her annual leave. The applicant rejected this offer as scandalous treatment of her and the colleague because the sale resulted from the colleague's listing, and he had done all the work.
7. The applicant's evidence is of Mr Bailey then saying that she would have a debt of $5,000 for her final entitlements and that the debt would not look good for her to another employer.[3] She felt this was an attempt to shame her into giving up her annual leave.
8. The next communication after Mr Bailey's email of 16 May 2024 was Mr Clarke's email of 3 June 2024. There was no more communication about either claim before the annual leave was fully paid at the specified base rate on 19 September 2024, the day before the initial directions hearing of the application. This contravention was admitted by Mr Bailey for both respondents at the hearing.
9. Mr Bailey states he had also sought the FWO's advice about not paying the accrued annual leave at the end of employment because it could not be reclaimed or debited against future commissions. He produced a letter from an officer of the FWO to him dated 18 July 2024. His query was stated to be whether accrued annual leave could be retrospectively offset against previously paid commissions for a commission-only employee. The FWO's letter contained no support for doing so.
10. The FWO officer provided 'guidance' by citing a 2017 review of the Award by a Full Bench of the FWC.[4] The decision clarified that annual leave entitlements for commission-only employees cannot be paid in advance, as that would be inconsistent with the NES, absent satisfaction of the cashing out provisions found in ss 92 and 93 of the FW Act. The officer correctly explained that retrospectively offsetting annual leave against past commission payments was a form of pre-payment of leave and did not appear to be authorised by the Award.
11. The FWO officer also correctly pointed out that cl 16.6(a) of the Award only permits debiting annual leave payments against that part of commissions paid for the "additional percentage" above the minimum commission rate of 31.5%.
12. The essence of the respondents' argument regarding annual leave is a refusal to pay for it because it could not be recovered. The respondents then came up with a spurious defence that the annual leave had already been paid. The elaborate argument is that the accrued annual leave was pre-paid out of some unspecified past commissions. But the 'payment' was only made in a conceptual or theoretical sense because this occurred without anyone's knowledge, and with no amounts or dates of payment identified. And it supposedly took place contrary to the employer and employee's written acquittal of debits and credits when the commissions were calculated and paid.
13. Mr Bailey now attests to paying the annual leave only due to receiving "increasing pressure" from, and being "repeatedly badgered"[5] by, the applicant's advocate, and to feeling "intimidated" by him over his "demands".[6] The respondents still contend, notwithstanding conceding the annual leave contravention, that they have a reasonable argument that no annual leave was properly payable because it was non-refundable post termination,[7] in the sense that it could not be debited against future commissions.
14. Mr Bailey also admits to a level of animosity against the applicant after she resigned and the proceedings commenced.[8] He attributes the same feeling to the applicant, although there is no evidence of that, and it was not even suggested to her in cross examination. He denies he acted to shame her, or that he acted improperly.[9]
15. Mr Bailey has also expressed disappointment at not having a "genuine opportunity"[10] to try to settle the claims at a conciliation conference. He implies the hearing of the notice claim was unnecessary.
16. In view of this complaint, some of the procedural history needs to be explained.
17. The respondents did not file any formal response to the claims at any stage of the proceedings. The served application clearly spelled out the need to do so. A conciliation conference was listed for 21 June 2024. On 20 June 2024, the respondents were advised by the South Australian Employment Tribunal ('SAET') that their responses were overdue.
18. Later that day Mr Bailey wrote to SAET to object to the conciliation conference being held on the grounds that he had sought an opinion from "our solicitor" and from "Fairwork", and that "any hearing and outcome from SAET would be contrary to Fairwork" or would conflict with Mr Bailey's process.
19. On 21 June 2024, the conciliation Commissioner directed the respondents to file and serve an Answer/Response by 28 June 2024 and adjourned the conciliation conference to 30 July 2024. The respondents did not respond to the direction.
20. On 2 July 2024, the Commissioner requested an explanation from the respondents for why the directions had not been complied with. Mr Bailey did not provide one.
21. On 17 July 2024, the Commissioner again sought an explanation for the respondents' disregard of her direction and warned them the allegations may be taken to be admitted if no response was filed. There was no response.
22. On 23 July 2024, the Commissioner cancelled the conciliation conference due to the respondents' continuing unexplained defaults.
23. After referral of the application to my Chambers, the respondents were given another extension of time in which to file a formal response by 20 August 2024. Again, there was no response.
24. Despite receiving these clear warnings and opportunities, Mr Bailey stated he "genuinely believed"[11] that he did not have to provide any response to the claims. His only explanation was a vague reference to not having to respond in SACAT's tenancy jurisdiction, but he did not explain why he disregarded the multiple unambiguous written directions from officers of this Tribunal to do so.
25. Mr Bailey says the employer has since engaged an HR consultant "to review and restructure all employment agreements used by the business".[12] He asserts that a payroll audit has been conducted with no errors identified. No information was offered of how agreements for future employees have changed, and how existing commission-only employees will be treated with respect to their notice periods and accrued annual leave on termination.

1. The respondents submit the contravening conduct of not paying the second week of notice or any annual leave was based on genuine uncertainty, after taking reasonable steps to ascertain the parties' rights and liabilities from the office of the FWO.
2. They submit the second respondent reasonably relied on 'advice' to not pay the entitlements when they were due, and by denying the notice claim all the way to trial, while conceding the annual leave claim at the eleventh hour. Their interpretations and arguments to deny the second week of notice were reasonably based, although they turned out to be incorrect. The respondents submit that because all entitlements have now been paid in full there is no or very little need for a penalty.
3. The respondents' given explanation for the contraventions and their response to the claims is disputed by the applicant, who contends the true explanation is simply a deliberate attempt to disentitle her of known entitlements, initially through use of improper tactics.
4. The applicant also submits Mr Bailey's complaint over not being able to participate in a conciliation conference is misleading, as he was responsible for that situation through his own repeated defaults and lack of co-operation with the Tribunal.
5. The applicant submits the second respondent has not taken responsibility for his inappropriate conduct to her, and there is little reason to assume a change of behaviour towards other employees. There is a lack of contrition and corrective action, other than to eventually pay her after she had been put to great trouble, time and expense. She submits that high penalties are required to deter the respondents from similar conduct.

1. In view of the disputed circumstances, a number of factual findings need to be made. These are relevant to a consideration of contrition and corrective action, and hence to specific deterrence.
2. I accept the applicant's unchallenged evidence of her conversation with Mr Bailey on 15 May 2024. I find she was subjected to inappropriate pressure to not claim her accrued annual leave for her 17 months of work. This took the form of Mr Bailey's offer of 50% of a colleague's commission that the applicant reasonably considered was not hers, and Mr Bailey's implied threat of professional damage from being portrayed as a debtor of $5,000 to her former employer.
3. I reject Mr Bailey's complaint of being inappropriately pressured by the applicant's agent. I accept there was pressure, but that came from simply being asked to pay entitlements and being told that court action would follow if they remained unpaid. That was not unreasonable or inappropriate. Nor did Mr Bailey explain why only the leave was paid, and not the notice, if he felt so much pressure.
4. I find Mr Bailey also reacted poorly to the applicant's claim by developing animosity towards her, by attempting to attribute same to her, and by his entirely baseless complaint over Mr Clarke's reasonable and polite email of 3 June 2024.
5. I reject Mr Bailey's complaint about the SAET dispute resolution process. His criticism of not having had a genuine opportunity to settle the claims is disingenuous. It was his own persistent and still unexplained lack of co-operation that resulted in the conference being vacated. Mr Bailey's failure to co-operate continued after rejection of his attempt to halt the proceedings in favour of him getting legal advice and asking questions of the FWO. The respondents were also free to make a direct offer to the applicant at any point, but they did not do so. Despite all this, Mr Bailey's orally pleaded defence to the notice claim at the first direction hearing was accepted and a hearing of that dispute was scheduled.
6. I make no finding about whether Mr Bailey genuinely believed only one week of notice was required by the applicant. It was clearly not a reasonable stance to adopt given the clear terms of the contract and the lack of support from the FWO's letter. The state of mind of the employer's decision maker when the contraventions occurred is of little relevance to their prospects of future compliance, now that the court has ruled against the previously adopted stance. It is the respondents' acceptance of and rectification of their errors that are relevant considerations to future compliance.
7. The respondents' submission that the Award arguably permits not paying accrued annual leave at termination needs answering. While the annual leave contravention was admitted without the need for judicial determination of the parties' rights and obligations, the concession was legally correct. The absence of a judgement following a contested hearing does not leave the door open to the respondents to persist with their argument, or to apply it to other employees.
8. I find there has been a lack of contrition and rectification of systems for other current and future commission-only employees. That is an important factor. The respondents were warned of the relevance of these considerations. There is no evidence of any notice or advice to current employees of their rights to be paid annual leave on termination, and that a two week notice period in a contract is correct irrespective of the Award. There is only mention of unspecified changes of contracts, which cannot be retrospective, and of an 'audit'.
9. The absence of evidence of rectification, other than the belated payment of entitlements, without interest, adds to concerns about the respondents maintaining their argument that no leave was properly payable at law.
10. I also take into account the $8,633 value of the entitlements. That was a substantial amount for an employee who banked their annual leave for 17 months and then changed jobs, knowing there would be a delay until she received her first commissions.
11. In summary, I find the above factors do not augur well for future compliance. The respondents have not acknowledged or shown contrition for Mr Bailey's conduct towards the applicant regarding the debt threat and the colleague's commission. Mr Bailey lacks objectivity over his own serious lack of cooperation with, and criticism of SAET. Mr Bailey has made a serious baseless complaint about the applicant's agent while continuing to justify his decision to not initially pay the annual leave. And, most importantly he has not committed to apply the outcome of both legal issues to other current and future employees.
12. Having regard to the above considerations, I consider the second respondent requires a much greater level of deterrence than does the first respondent. The second respondent initially responded inappropriately to the applicant after she asked for her annual leave. He remains the employing legal entity's controller and decision maker.
13. Regarding general deterrence, I adopt the following reasons of the Federal Court in Yu v ACT Education Directorate[13], which arose in a slightly different context:

However, there remains a strong need for general deterrence for all persons, whether governmental agencies or otherwise, to not breach enterprise agreements and to be incentivised (by the awarding of penalties) to know and conform with their obligations under industrial instruments.[14]

1. I consider a penalty of $5,000 should be imposed on the first respondent for each contravention, and that a penalty of $10,000 should be imposed on the second respondent for each contravention. I consider the total penalty imposed on each respondent is a just outcome.
2. I conclude the penalty should be paid to the applicant, as she was put to the time trouble and expense of claiming her rights and prosecuting this application.

1. I order Bailey Property Sales (SA) Pty Ltd to pay to AnnaMaria Varelias within 14 days a penalty of $5,000 for contravention of s 323, plus a penalty of $5,000 for contravention of s 90 of the Fair Work Act 2009.
2. I order Mark Bailey to pay to AnnaMaria Varelias within 14 days a penalty of $10,000 for involvement in the contravention of s 323, plus a penalty of $10,000 for involvement in the contravention of s 90 of the Fair Work Act 2009.

[1] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [38] to [41].

[2] Affidavit of Mark Bailey 23 January 2025, paragraphs 8 to 10.

[4] 4 yearly review of modern awards - Real Estate Industry Award 2010 [2017] FWCFB 3543.

[6] Affidavit of Mark Bailey 23 January 2025 paragraph 15.

[8] Affidavit of Mark Bailey 23 January 2025, paragraph 20.

[9] Affidavit of Mark Bailey 23 January 2025, paragraph 21.

[10] Affidavit of Mark Bailey 23 January 2025, paragraph 18.

[12] Affidavit of Mark Bailey 23 January 2025, paragraph 23.

[13] [2025] FCA 335.