FEDERAL COURT OF AUSTRALIA Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd (No 2) [2016] FCA 1563 File number: SAD 22 of 2015 Judge: BESANKO J Date of judgment: 22 December 2016 Catchwords: INDUSTRIAL LAW – penalty hearing – where contraventions concern minimum wages, casual loading, overtime, meal allowances, Saturday penalties, annual leave, annual leave loading, personal leave, record keeping and pay slips – where director involved in company's contravention – consideration of relevant factors in determining penalty – where some contraventions were deliberate or reckless – whether respondents have exhibited contrition – whether need for general or specific deterrence – whether contraventions constitute a single course of conduct or should otherwise be grouped – where Fair Work Ombudsman issued a press release and respondents received adverse publicity – whether declarations should be made. Legislation: Fair Work Act 2009 (Cth) ss 44, 45, 99, 536, 539, 545, 546, 550, 557 Fair Work Regulations 2009 (Cth) reg 3.34 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 16 items 2, 5 Federal Court of Australia Act 1976(Cth) s 21 Federal Court Rules 2011 (Cth) rr 8.03, 16.02 Workplace Relations Act 1996 (Cth) ss 182, 185, 717, 718, 719, 727, 728, 841 Workplace Relations Regulations 2006 (Cth) regs 19.1, 19.4, 19.20 Cases cited: Commonwealth v Director, Fair Work Building Industry Inspectorate and Others [2015] HCA 46; (2015) 326 ALR 476 Fair Work Ombudsman v Al Hilfi [2016] FCA 193 Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd [2016] FCA 621 Date of hearing: 6 October 2016 Date of last submissions: 13 October 2016 Registry: South Australia Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 68 Counsel for the Applicant: Mr A Manos Solicitor for the Applicant: Fair Work Ombudsman Counsel for the Respondents: Mr D Krips Solicitor for the Respondents: EMA Legal ORDERS SAD 22 of 2015 BETWEEN: FAIR WORK OMBUDSMAN Applicant AND: COMPLETE WINDSCREENS (SA) PTY LTD (ACN 090 479 324) First Respondent LINDSAY DEAN Second Respondent JUDGE: BESANKO J DATE OF ORDER: 22 DECEMBER 2016 THE COURT DECLARES THAT: Minimum wage (including unpaid work contraventions) 1. The First Respondent contravened section 182(1) of the Workplace Relations Act 1996 (Cth) (Workplace Relations Act) by not paying Flynn at least the guaranteed basic periodic rate of pay in the Australian Pay and Conditions Scale (APCS) during the period 29 November 2007 to 30 June 2009. 2. The First Respondent contravened Item 5 of Schedule 16 of the Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) by not paying Flynn at least the guaranteed basic periodic rate of pay in the APCS in accordance with section 182(1) of the Workplace Relations Act during the period 1 July 2009 to 31 December 2009. 3. The First Respondent contravened section 45 of the Fair Work Act 2009 (Cth) (Fair Work Act) by not paying Flynn at least the hourly rate for ordinary hours of work in accordance with clause 33 of the Vehicle Manufacturing Repair Service and Retail Award 2010 (Modern Award) during the period 1 January 2010 to 30 November 2011. Casual Loading 4. The First Respondent contravened section 185(2) of the Workplace Relations Act by not paying Moala, in addition to his guaranteed basic periodic rate of pay, the guaranteed casual loading percentage of 25% of the basic periodic rate of pay as provided for in item 1 of subsection 185(3) of the Workplace Relations Act during the period 12 February 2009 to 30 June 2009. 5. The First Respondent contravened Item 5 of Schedule 16 of the Transitional Act by not paying Moala, in addition to his guaranteed basic periodic rate of pay, the guaranteed casual loading percentage of 25% of the basic periodic rate of pay provided for in item 1 of subsection 185(3) of the Workplace Relations Act during the period 1 July 2009 to 31 December 2009. 6. The First Respondent contravened section 45 of the Fair Work Act by not paying Mathews, Priest, Moala and Waretini−Rewita, in addition to the hourly rate of pay for ordinary hours of work, the applicable casual loading in accordance with clause 41.1(b) of the Modern Award during the period 1 January 2010 until 30 November 2011. Overtime 7. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by not paying Flynn and Nakhoul the overtime rates when they were required to work outside their ordinary hours in accordance with clause 6.3 of the Vehicle Industry-Repair, Service and Retail Award 2002 (NAPSA) during the period 29 November 2007 to 30 June 2009. 8. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act not by not paying Flynn and Nakhoul the overtime rates when they were required to work outside their ordinary hours in accordance with clause 6.3 of the NAPSA during the period 1 July 2009 to 31 December 2009. 9. The First Respondent contravened section 45 of the Fair Work Act by not paying Flynn, Mathews, Nakhoul, Priest and Shaw the applicable overtime rates when they were required to work outside their ordinary hours in accordance with clause 28.2 of the Modern Award during the period 1 January 2010 until 30 November 2011. Meal Allowances 10. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Moala and Priest the applicable meal allowance in accordance with clause 19.5(b) of the Modern Award during the period 1 January 2010 until 30 November 2011. Saturday Overtime 11. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by not paying Moala at the rate of time and a half of his guaranteed basic periodic rate of pay when Moala worked ordinary hours on a Saturday in accordance with clause 6.5 of the NAPSA during the period 1 July 2009 to 31 December 2009. 12. The First Respondent contravened section 45 of the Fair Work Act by not paying Mathews and Moala at the rate of time and a half of their hourly rate for ordinary hours of work when they worked ordinary hours on a Saturday in accordance with clause 38.2 of the Modern Award during the period 1 January 2010 until 30 November 2011. Annual Leave 13. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by failing to pay Flynn before going on annual leave, the guaranteed basic periodic rate of pay that Flynn would have received in respect of the ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 29 November 2007 to 30 June 2009. 14. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by failing to pay Flynn before going on annual leave, the guaranteed basic periodic rate of pay that Flynn would have received in respect of the ordinary time he would have worked had he not been on annual in accordance with clause 7.1 of the NAPSA during the period 1 July 2009 to 31 December 2009. 15. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Flynn before going on annual leave, the hourly rate for ordinary hours of work that Flynn would have received in respect of the ordinary hours he would have worked had he not been on annual leave in accordance with clause 29.7(a) of the Modern Award during the period 1 January 2010 until 30 November 2011. Annual Leave Loading 16. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the guaranteed basic periodic rate of pay that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 29 November 2007 to 30 June 2009. 17. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the guaranteed basic periodic rate of pay that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 1 July 2009 to 31 December 2009. 18. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the hourly rate for ordinary hours of work that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 29.7(a) of the Modern Award during the period 1 January 2010 until 30 November 2011. Personal Leave 19. The First Respondent contravened Item 3 of subsection 718(1), section 717(a)(iii) and section 727 of the Workplace Relations Act by not paying Flynn at least the guaranteed basic periodic rate of pay when he was absent from work on account of personal illness or on account of injury by accident in accordance with clause 7.2 of the NAPSA during the period 29 November 2007 to 30 June 2009. 20. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by not paying Flynn at least the guaranteed basic periodic rate of pay when he was absent from work on account of personal illness or on account of injury by accident during the period 1 July 2009 to 31 December 2009. 21. The First Respondent contravened section 44 of the Fair Work Act by not paying Flynn at least his hourly rate of pay for his ordinary hours of work when Flynn took a period of paid personal/carer's leave in accordance with section 99 of the Fair Work Act during the period 1 January 2010 until 30 November 2011. Employee Records 22. From 29 November 2007 to 30 June 2009, the First Respondent contravened Regulation 19.4 of the Workplace Relations Regulations 2006 (Cth) (WR Regulations) by not specifying the number of overtime hours worked by Flynn each day or when Flynn started and ceased working overtime hours in accordance with regulation 19.1(1) of the WR Regulations. 23. On and after 1 July 2009, the First Respondent contravened section 535 of the Fair Work Act by failing to keep employee records in relation to Shaw and Waretini−Rewita that specified the number of overtime hours worked by them on each day or when they started and ceased working overtime hours in accordance with regulation 3.34 of the Fair Work Regulations 2009 (Cth). Pay slips 24. From 29 November 2007 to 30 June 2009, the First Respondent contravened Regulation 19.20 of the WR Regulations by not issuing pay slips to Flynn, Mathews, Priest, Moala, Shaw, Nakhoul and Waretini−Rewita (Employees), within one working day of paying remuneration to the Employees. 25. From 1 July 2009 to 30 November 2011, the First Respondent contravened section 536 of the Fair Work Act by not giving pay slips to some or all of the Employees within one working day of paying an amount to the Employees in relation to the performance of work. Second Respondent 26. The Second Respondent was involved, within the meaning of section 728 of the Workplace Relations Act and section 550 of the Fair Work Act, in the First Respondent's contraventions outlined in: (a) to the extent each contravention involved Flynn, paragraphs 1, 2, 3, 7, 8, 9, 13, 15, 16, 17, 18, 19, 20, and 21 above; (b) to the extent each contravention involved a failure to pay for 30 minutes of work on each day worked, paragraphs 1, 2 and 3 above excluding Flynn; (c) to the extent each contravention involved a failure to pay two hours' overtime when the employee worked a 40 hour week, paragraphs 7, 8 and 9 above; (d) paragraphs 24 and 25 above. 27. As a result of the contraventions outlined at paragraphs 1 to 21 above, the First Respondent underpaid the Employees the amount of $59,969.18 (Total Underpayment). THE COURT ORDERS THAT: 28. Pursuant to subsection 719(1) of the Workplace Relations Act and s 546 of the Fair Work Act, the first respondent is to pay a total penalty of $73,425 for its contraventions declared in paragraphs 1 to 25 above. 29. Pursuant to subsection 719(1) of the Workplace Relations Act and section 546 of the Fair Work Act, the second respondent is to pay a total penalty of $11,220 for his involvement in the first respondent's contraventions, as declared in paragraph 26 above. 30. Pursuant to subsections 719(6) and 719(7) of the Workplace Relations Act and/or subsection 545(2) of the Fair Work Act that the first respondent pay the total underpayment underpaid to the employees to the applicant within 28 days of these orders, with the applicant to: (a) within 14 days of receipt of the compensation, pay the employees the following amounts: (i) Mr Flynn in the amount of $17,990.92; (ii) Mr Mathews in the amount of $2,220.92; (iii) Mr Moala in the amount of $12,652.63 (iv) Mr Nakhoul in the amount of $10,846.54 (v) Mr Priest in the amount of $11,631.74; (vi) Mr Shaw in the amount of $3,317.98; and (vii) Mr Waretini-Rewita in the amount of $1,308.45; (b) in the event that the applicant cannot locate any of the employees, pay the applicable amount due to each employee that cannot be located to the consolidated Revenue Fund of the Commonwealth within a further 7 days. 31. The first respondent pay all outstanding superannuation contributions arising from the contraventions outlined at paragraphs 1 to 21 above. 32. Pursuant to subsection 841(a) of the Workplace Relations Act and subsection 546(3) of the Fair Work Act, the total penalties set out in orders (28) and (29) above be payable to the Consolidated Revenue Fund of the Commonwealth within 28 days. 33. The applicant's application is otherwise dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BESANKO J: Introduction 1 These reasons deal with the Fair Work Ombudsman's application for declarations, pecuniary penalties, orders for compensation and associated orders against Complete Windscreens (SA) Pty Ltd and Mr Lindsay Dean. After a trial, I found that Complete Windscreens had contravened certain industrial provisions and that Mr Lindsay Dean had been involved in a number of the company's contraventions: Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd [2016] FCA 621. It remains for me to determine the relief which should be granted. My earlier reasons should be read with these reasons. I will use the abbreviations and descriptions which I used in the earlier reasons. 2 I indicated in my earlier reasons that I wished to hear further from the parties concerning the alleged contraventions involving the failure to pay meal allowances (at [67](5) and [307]). I have heard from the parties and the position now is that the facts are not in dispute. They are that the employees, Mr Moala and Mr Priest, were not paid meal allowances to which they were entitled totalling $413.58 in the case of Mr Moala, and $69.99 in the case of Mr Priest. That represents a substantial reduction in the claim made by the FWO. Further Evidence 3 The respondents adduced further evidence at the penalty hearing by way of an affidavit of Mr Lindsay Dean sworn on 24 August 2016. By that affidavit, Complete Windscreens sought to establish the following: (1) that it never intended to breach the law; (2) that it had, in fact, treated the employees well by allowing them to use their work vehicles for private purposes; and (3) that it has cooperated with the FWO as best it could. 4 Mr Lindsay Dean's affidavit is, to some extent, argumentative. He seeks to comment on findings I made in my earlier reasons or provide further evidence as to matters which were the subject of findings (see the affidavit at [20]-[33]). 5 Mr Lindsay Dean said that the employees (other than Mr Mathews and Mr Waretini-Rewita) were provided with fully maintained vehicles in the course of their employment. Complete Windscreens paid for the petrol for these vehicles and, except for Mr Shaw whose vehicle was taken away from him after he tampered with the GPS in the vehicle, the employees could use the vehicles for private purposes. Mr Lindsay Dean argues in his affidavit that, in those circumstances, the Court should reject the submission made by the FWO that Complete Windscreens exploited the employees. 6 Mr Lindsay Dean describes the company's cooperation with the FWO by way of compliance with the notices to produce (see the affidavit at [52]-[63]). I will not set out the details. They are, to some extent, described in my earlier reasons (at [223]-[227]). Mr Lindsay Dean refers to a press release issued by the FWO on 23 April 2013 and a press article which appeared in The Advertiser newspaper on the same day. He states he is aggrieved by the reference in the press release to a "prosecution" and to the reference to the employees not being allowed meal breaks. He notes that the latter allegation was ultimately rejected (see my earlier reasons at [291]). These matters do not appear in the press article. He said that he is aggrieved by the heading to the press article which was "Company Underpaid Workers $100,000". 7 Mr Lindsay Dean identifies and explains the measures Complete Windscreens has adopted to ensure that there are no breaches of workplace laws in the future. They include the engagement on 15 May 2014 of a workplace relations consultancy firm, the engagement on 8 August 2014 of a new payroll provider, the purchase of an employee time card machine, the implementation of an induction program, and the engagement of an experienced business manager. 8 Finally, Mr Lindsay Dean identifies his personal response to the Court's findings. He states: 82. I very deeply regret these circumstances. It was absolutely never my intention to underpay staff in any way. As described above, I believed that the business was meetings its Award obligations due mainly to the lack of a directly applicable award classification. I was not aware of any changes needed when the modern Award system commenced (or indeed that a new system had started then). 83. From my perspective, the Court's decision demonstrates why it was necessary to contest the proceedings. I found the assertion that employees were forced to keep working instead of taking breaks to be horrifying – particularly after the FWO put out a press release saying I was being 'prosecuted' for that and the other allegations. That was a matter that we simply could not concede. 9 Mr Lindsay Dean was cross-examined on his affidavit and he agreed that the employees who were provided with work vehicles were never told that they could use their work vehicle for private purposes or use petrol (paid for the company) for private purposes. He admitted that in an affidavit he swore on 21 May 2014 he said that Mr Nakhoul and other windscreen fitters were informed that they could not use their work vehicles "out of hours". He referred to employees abusing the privilege of using a work vehicle to travel to and from work and Complete Windscreens turning a blind eye to it. The window tinters were not provided with a work vehicle and, it seems that a work vehicle would not necessarily remain with a windscreen fitter if he went on leave. The Number of Contraventions 10 There is no dispute that, having regard to the findings in my earlier reasons, there were contraventions by Complete Windscreens of provisions dealing with the following matters: Relevant Industrial Matter Employee(s) Involved 1 Minimum Wages (inclusive of unpaid work) Flynn, Moala, Nakhoul, Mathews, Priest and Shaw 2 Casual loading Moala, Mathews, Priest, Shaw 3 Overtime Flynn, Nakhoul, Mathews, Waretini-Rewita 4 Casual Overtime Mathews, Moala, Priest, Waretini-Rewita 5 Meal Allowances Moala and Priest 6 Saturday Overtime Mathews and Moala 7 Annual Leave Flynn 8 Annual Leave Loading Flynn 9 Personal Leave Flynn 10 Employee Records Flynn, Shaw, Waretini-Rewita 11 Pay slips All Employees 11 The precise obligations which were contravened by Complete Windscreens are identified in my earlier reasons and I will not repeat them (at [10] and [67]). 12 As I understand it, the parties are agreed that the application of the statutory course of conduct provisions (i.e., s 719(2) of the WR Act and s 557 of the FW Act), that is to say, the provisions which provide that two or more contraventions are taken to constitute a single contravention if the contraventions are committed by the same person and the contraventions arose out of a course of conduct by the person and appropriate principles of grouping (which I explain below) result in the 11 contraventions as set out in the table. 13 The FWO accepts that for the purposes of imposing pecuniary penalties there should be a further reduction in the "number" of contraventions by reference to the approach, referred to in submissions as "grouping", that provides that a person should not be punished twice for contraventions which have a common element. Under the FWO's approach, the annual leave and annual leave loading should be grouped, and overtime, casual overtime and Saturday overtime should be grouped. This approach results in eight contraventions for the purpose of the imposition of pecuniary penalties. The respondents agree with this approach, subject to one qualification. They contend that the category of minimum wage (inclusive of unpaid work) and the category of casual loading should also be grouped. Under this approach, there would be seven contraventions for the purpose of the imposition of pecuniary penalties. 14 In my opinion, the minimum wage (inclusive of unpaid work) and casual loading should not be grouped for the purposes of the imposition of pecuniary penalties. It is true that there is a common element in both these contraventions in that there is a failure to comply with an obligation to pay an employee his or her proper entitlements, but that is true of a number of obligations and is not a sufficient common element for the purposes of the approach which involves grouping. Furthermore, the employees who are the subject of these contraventions are not identical. Mr Flynn is a member of group one (i.e., minimum wages (inclusive of unpaid work)), but not group two (i.e., casual loading), and Mr Waretini-Rewita is a member of group two, but not group one. 15 The maximum pecuniary penalty for Complete Windscreens for each of the first nine contraventions set out in the above table is $33,000 and for Mr Lindsay Dean is $6,600, and is half those amounts for the contraventions identified in paragraphs 10 and 11. Declarations 16 The FWO seeks the following declarations: Minimum wage (including unpaid work contraventions) 1. The First Respondent contravened section 182(1) of the Workplace Relations Act 1996 (Cth) (Workplace Relations Act) by not paying Flynn at least the guaranteed basic periodic rate of pay in the Australian Pay and Conditions Scale (APCS) during the period 29 November 2007 to 30 June 2009. 2. The First Respondent contravened Item 5 of Schedule 16 of the Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) by not paying Flynn at least the guaranteed basic periodic rate of pay in the APCS in accordance with section 182(1) of the Workplace Relations Act during the period 1 July 2009 to 31 December 2009. 3. The First Respondent contravened section 45 of the Fair Work Act 2009 (Cth) (Fair Work Act) by not paying Flynn at least the hourly rate for ordinary hours of work in accordance with clause 33 of the Vehicle Manufacturing Repair Service and Retail Award 2010 (Modern Award) during the period 1 January 2010 to 30 November 2011. Casual Loading 4. The First Respondent contravened section 185(2) of the Workplace Relations Act by not paying Moala, in addition to his guaranteed basic periodic rate of pay, the guaranteed casual loading percentage of 25% of the basic periodic rate of pay as provided for in item 1 of subsection 185(3) of the Workplace Relations Act during the period 12 February 2009 to 30 June 2009. 5. The First Respondent contravened Item 5 of Schedule 16 of the Transitional Act by not paying Moala, in addition to his guaranteed basic periodic rate of pay, the guaranteed casual loading percentage of 25% of the basic periodic rate of pay provided for in item 1 of subsection 185(3) of the Workplace Relations Act during the period 1 July 2009 to 31 December 2009. 6. The First Respondent contravened section 45 of the Fair Work Act by not paying Mathews, Priest, Moala and Waretini−Rewita, in addition to the hourly rate of pay for ordinary hours of work, the applicable casual loading in accordance with clause 41.1(b) of the Modern Award during the period 1 January 2010 until 30 November 2011. Overtime 7. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by not paying Flynn and Nakhoul the overtime rates when they were required to work outside their ordinary hours in accordance with clause 6.3 of the Vehicle Industry-Repair, Service and Retail Award 2002 (NAPSA) during the period 29 November 2007 to 30 June 2009. 8. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act not by not paying Flynn and Nakhoul the overtime rates when they were required to work outside their ordinary hours in accordance with clause 6.3 of the NAPSA during the period 1 July 2009 to 31 December 2009. 9. The First Respondent contravened section 45 of the Fair Work Act by not paying Flynn, Mathews, Nakhoul, Priest and Shaw the applicable overtime rates when they were required to work outside their ordinary hours in accordance with clause 28.2 of the Modern Award during the period 1 January 2010 until 30 November 2011. Meal Allowances 10. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Moala and Priest the applicable meal allowance in accordance with clause 19.5(b) of the Modern Award during the period 1 January 2010 until 30 November 2011. Saturday Overtime 11. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by not paying Moala at the rate of time and a half of his guaranteed basic periodic rate of pay when Moala worked ordinary hours on a Saturday in accordance with clause 6.5 of the NAPSA during the period 1 July 2009 to 31 December 2009. 12. The First Respondent contravened section 45 of the Fair Work Act by not paying Mathews and Moala at the rate of time and a half of their hourly rate for ordinary hours of work when they worked ordinary hours on a Saturday in accordance with clause 38.2 of the Modern Award during the period 1 January 2010 until 30 November 2011. Annual Leave 13. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by failing to pay Flynn before going on annual leave, the guaranteed basic periodic rate of pay that Flynn would have received in respect of the ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 29 November 2007 to 30 June 2009. 14. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by failing to pay Flynn before going on annual leave, the guaranteed basic periodic rate of pay that Flynn would have received in respect of the ordinary time he would have worked had he not been on annual in accordance with clause 7.1 of the NAPSA during the period 1 July 2009 to 31 December 2009. 15. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Flynn before going on annual leave, the hourly rate for ordinary hours of work that Flynn would have received in respect of the ordinary hours he would have worked had he not been on annual leave in accordance with clause 29.7(a) of the Modern Award during the period 1 January 2010 until 30 November 2011. Annual Leave Loading 16. The First Respondent contravened Item 3 of subsection 718(1), subsection 717(a)(iii) and section 727 of the Workplace Relations Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the guaranteed basic periodic rate of pay that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 29 November 2007 to 30 June 2009. 17. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the guaranteed basic periodic rate of pay that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 7.1 of the NAPSA during the period 1 July 2009 to 31 December 2009. 18. The First Respondent contravened section 45 of the Fair Work Act by failing to pay Flynn during a period of annual leave, a loading of 17.5% calculated on the hourly rate for ordinary hours of work that Flynn would have received for ordinary time he would have worked had he not been on annual leave in accordance with clause 29.7(a) of the Modern Award during the period 1 January 2010 until 30 November 2011. Personal Leave 19. The First Respondent contravened Item 3 of subsection 718(1), section 717(a)(iii) and section 727 of the Workplace Relations Act by not paying Flynn at least the guaranteed basic periodic rate of pay when he was absent from work on account of personal illness or on account of injury by accident in accordance with clause 7.2 of the NAPSA during the period 29 November 2007 to 30 June 2009. 20. The First Respondent contravened Item 2 of Schedule 16 of the Transitional Act by not paying Flynn at least the guaranteed basic periodic rate of pay when he was absent from work on account of personal illness or on account of injury by accident during the period 1 July 2009 to 31 December 2009. 21. The First Respondent contravened section 44 of the Fair Work Act by not paying Flynn at least his hourly rate of pay for his ordinary hours of work when Flynn took a period of paid personal/carer's leave in accordance with section 99 of the Fair Work Act during the period 1 January 2010 until 30 November 2011. Employee Records 22. From 29 November 2007 to 30 June 2009, the First Respondent contravened Regulation 19.4 of the Workplace Relations Regulations 2006 (Cth) (WR Regulations) by not specifying the number of overtime hours worked by Flynn each day or when Flynn started and ceased working overtime hours in accordance with regulation 19.1(1) of the WR Regulations. 23. On and after 1 July 2009, the First Respondent contravened section 535 of the Fair Work Act by failing to keep employee records in relation to Shaw and Waretini−Rewita that specified the number of overtime hours worked by them on each day or when they started and ceased working overtime hours in accordance with regulation 3.34 of the Fair Work Regulations 2009 (Cth). Pay slips 24. From 29 November 2007 to 30 June 2009, the First Respondent contravened Regulation 19.20 of the WR Regulations by not issuing pay slips to Flynn, Mathews, Priest, Moala, Shaw, Nakhoul and Waretini−Rewita (Employees), within one working day of paying remuneration to the Employees. 25. From 1 July 2009 to 30 November 2011, the First Respondent contravened section 536 of the Fair Work Act by not giving pay slips to some or all of the Employees within one working day of paying an amount to the Employees in relation to the performance of work. Second Respondent 26. The Second Respondent was involved, within the meaning of section 728 of the Workplace Relations Act and section 550 of the Fair Work Act, in the First Respondent's contraventions outlined in: (a) to the extent each contravention involved Flynn, paragraphs 1, 2, 3, 7, 8, 9, 13, 15, 16, 17, 18, 19, 20, and 21 above; (b) to the extent each contravention involved a failure to pay for 30 minutes of work on each day worked, paragraphs 1, 2 and 3 above excluding Flynn; (c) to the extent each contravention involved a failure to pay two hours' overtime when the employee worked a 40 hour week, paragraphs 7, 8 and 9 above; (d) paragraphs 24 and 25 above. 27. As a result of the contraventions outlined at paragraphs 1 to 21 above, the First Respondent underpaid the Employees the amount of $59,969.18 (Total Underpayment). 17 These declarations cover the contraventions before grouping, except for casual overtime which is not included as a separate heading for reasons which are not explained. 18 This Court's power to grant the declarations sought by the FWO is contained in s 21 of the Federal Court of Australia Act 1976 (Cth). 19 The respondents submit that the Court should not make a number of the declarations sought, being those identified in paragraphs 7, 8, 11, 13, 14, 16, 17, 19 and 20 because the Further Amended Statement of Claim ("FASOC") does not contain a proper claim for these declarations. The alleged deficiency can be illustrated by taking one example. Paragraph 150 of the FASOC sets out the declarations which the FWO seeks and it includes a claim for a declaration that Complete Windscreens contravened: (f) Clause 6.3 of the Vehicle NAPSA during the Second Overtime Period. The respondents submit that the provision contravened and which is designated a civil remedy provision (and therefore subject to pecuniary penalties) is, in fact, item 2 of Schedule 6 of the Transitional Act (made a civil remedy provision under s 539(1) of the FW Act by virtue of item 16 of Schedule 16 of the Transitional Act) and that it prohibits a contravention of the Vehicle NAPSA. The statutory provision is pleaded in the body of the FASOC (at [45]), but not in paragraph 150. 20 I do not understand the respondent to claim that they were misled in any way as to the relevant statutory provision or the declaration sought. Such an argument would, in any event, be untenable. As I understood it, the thrust of the respondents' submission was that the declarations could not be made in the absence of an amendment and the FWO did not make an application to amend. 21 The respondents sought to support their argument about the obligation on the FWO to define clearly the declarations it seeks by reference to two Rules of Court, one dealing with the required content of an Originating Application (r 8.03(2)) and the other dealing with the content of pleadings (r 16.02(4)). I do not think that these rules are of assistance. This proceeding was not commenced in this Court. The proceeding was commenced in the then Federal Magistrates Court of Australia, and as I understand it, the Application complied with the Rules of that Court. The Application referred to the claim filed with the Application. This means it is necessary to come back to the FASOC. 22 The matter raised by the respondents goes to discretion, not the Court's jurisdiction. I reject the submission because it is too late for the respondents to raise the point. It was not raised at trial and I have delivered reasons for judgment indicating that I would make orders giving effect to my conclusions. I should say that even if the point had been raised at trial, I would have allowed the FWO to amend to the extent necessary. There is no prejudice to the respondents whatsoever. 23 In this case, declarations should be made to mark the Court's disapproval of the respondents' conduct. Furthermore, I think they are a way of furthering general deterrence because they provide a convenient and ready means in a case involving multiple contraventions of identifying the contravening conduct. Pecuniary Penalties 24 I identified matters which are commonly addressed when considering the imposition of pecuniary penalties under the Fair Work Act 2009 (Cth) in Fair Work Ombudsman v Al Hilfi [2016] FCA 193 at [20]. The list of matters is not exhaustive. I turn to consider each matter. The nature and extent of the conduct which led to the breaches, and the nature and extent of the loss or damage sustained as a result of the breaches 25 The conduct is the failure to pay employees their entitlements as employees under the relevant industrial instruments identified in my earlier reasons. 26 The conduct involved underpayments to seven employees which, in the case of some employees, were underpayments over a substantial period of time. For example, in the case of Mr Flynn, the conduct concerned over the period from 29 November 2007 to 30 November 2011, and in the case of Mr Moala, the conduct occurred over the period from 12 February 2009 to 19 October 2011. 27 The loss and damage is the underpayment to employees as follows: Mr Flynn $17,990.92 Mr Moala $12,652.63 Mr Mathews $2,220.92 Mr Priest $11,631.74 Mr Waretini-Rewita $1,308.45 Mr Nakhoul $10,846.54 Mr Shaw $3,317.98 The circumstances in which the conduct took place 28 The conduct involved low paid employees who, as far as I can see, had limited education. Complete Windscreens, as I will explain in due course, made no or no adequate inquiries about the pay and conditions of these employees. Pay slips were not distributed regularly so the employees were unable to ascertain whether they were being paid the correct amount. In this respect, I refer to my earlier reasons at [305]-[306]. 29 The FWO submits that it should be inferred that Complete Windscreens exploited the employees in the sense of taking advantage of their youth, inexperience and lack of education by paying them less than their proper entitlements. I will return to this submission when considering the submission about the provision of a fully maintained vehicle to the employees which could and was used for private purposes. 30 As I said in my earlier reasons, Mr Haydn Dean gave evidence that a consultant had prepared an induction manual for Complete Windscreens in or about 1995. There is no dispute about this. I set out some of the statements in the induction manual in my earlier reasons (see at [256]). It seems clear that the company had access to industrial advice. Nevertheless, it did not pay the employees their proper entitlements. Furthermore, I note that the induction manual referred to normal hours of 38 hours and two hours of paid overtime per week, and it seems to me reasonable to infer that Complete Windscreens knew of the requirement to pay overtime for hours worked beyond 38 hours. 31 As I recorded in my earlier reasons, Mr Haydn Dean said that the company became a member of the MTA (SA) in 2006, and that after that date, he made inquiries of the MTA (SA) on a six monthly basis or thereabouts as to minimum rates of pay. If he heard in the media that the rates of pay had changed, he would contact either the relevant government department or the MTA (SA) to ascertain how this affected the company (at [260]). 32 Mr Lindsay Dean said that he did not recall receiving any notice or other material in around 2010 when there were changes to the award system. He said that it was not until the FWO investigation in this matter that he heard of the Vehicle Industry (South Australia) Repair Service and Retail Award or the Modern Award (at [238]). He too referred to the company's engagement of a private consultant in 1995 who prepared an induction manual for the company (at [239]). 33 Mr Lindsay Dean said that since the company had been established, his brother, Haydn, had generally been responsible for determining the rates of pay for windscreen fitters. He referred to information that had been provided to him by Mr Haydn Dean. 34 As I indicated in my earlier reasons, I have difficulty in accepting a number of aspects of Mr Lindsay Dean's evidence (at [252] and [253]) and difficulty in accepting Mr Haydn Dean's evidence generally (at [279]). I said whilst I was prepared to accept that Mr Haydn Dean had some contact with a government department, I was not satisfied that it was to the extent that he indicated (at [279]). 35 I am not prepared to find on the evidence of Mr Haydn Dean or Mr Lindsay Dean that they made adequate inquiries about the terms and conditions of the employees' employment. Even if (contrary to my findings) adequate inquiries were made, that cannot explain the failure to pay overtime above 38 hours in a week, or the hourly rate paid to Mr Flynn or any difficulties with the classification of the employees after the introduction of the Modern Award which referred to a windscreen fitter or repairer. Whether there had been similar previous conduct by the respondents 36 It is not alleged that there has been similar previous conduct by the respondents. Whether the breaches were properly distinct or arose out of the one course of conduct 37 I have already dealt with this matter. The size of the business enterprise involved 38 I referred to the history of Complete Windscreens in my earlier reasons and I will not repeat what I said in those reasons (at [39]). It is sufficient for me to say that the company was and is a family business and that between 2006 and 2011, the company employed an average of 20 employees at any one time. In June 2015, the company employed approximately 15 windscreen fitters and two window tinters. 39 With respect to the size and financial circumstances of Complete Windscreens, the FWO's argument is essentially negative and it is to the effect that the relatively small size of the company cannot be used to excuse a failure to pay minimum entitlements. I should say that there is no evidence as to the financial circumstances of the company. The way in which the respondents sought to make the size of Complete Windscreens relevant was to argue that it is not as culpable as a large organisation which has dedicated human resources and accounting resources. I do not think that this circumstance is to the point. The question is what inquiries the organisation made as to its industrial obligations and I have already addressed that matter. Whether the breaches were deliberate 40 I find that Complete Windscreens and Mr Lindsay Dean must have known that Mr Flynn was being underpaid. His hourly rate was considerably lower than other employees who were both younger and less experienced. Mr Flynn was paid $12.50 per hour over 10 years and nearly every other employee was earning more than him, including the trainees with no experience. As I explained in my earlier reasons, Mr Lindsay Dean gave evidence that the company had an arrangement with Mr Flynn and I described that alleged arrangement (at [246]). However, I also noted that the evidence of the arrangement was improbable and not consistent with the company's records. I said that the evidence of Mr Lindsay Dean and Mr Haydn Dean concerning the suggested arrangement was unimpressive. I also noted that the respondents' counsel did not rely on such an arrangement in his closing submissions (at [296]). 41 I think the following contraventions were deliberate or, at the very least, reckless: (1) deducting one hour rather than 30 minutes for a lunchbreak; (2) the failure to pay overtime after 38 hours; (3) the failure to keep records; and (4) the failure to issue payslips (see [252] of my earlier reasons). Whether senior management were involved in the breaches 42 As I have said, Complete Windscreens is a family business. Mr Lindsay Dean was involved in the contraventions as previously found. Whether the party committing the breaches has exhibited contrition, whether the party committing the breaches has taken corrective action and whether the party committing the breaches has cooperated with the enforcement authorities 43 Mr Lindsay Dean purported to give evidence of contrition. However, I did not find that evidence particularly persuasive. I have already referred to his statements in his most recent affidavit. I should mention that, in addition to what I have already set out, he said that it was absolutely never his intention to pay any staff less than their minimum entitlements or to breach any requirements relating to records or pay slips. He said that the business made mistakes and deeply regrets it (at [4] of his affidavit). He also refers to the fact that Mr Nakhoul returned to work for Complete Windscreens in June 2015 and is still employed (at [84] of his affidavit). 44 Mr Lindsay Dean refers to the corrective action taken by the company and he identifies the corrective action in [78]-[80] of his affidavit. I have set out the details at [7] above. I am satisfied that the company has taken appropriate corrective action. 45 Mr Lindsay Dean refers to the company's cooperation in responding to the two notices to produce issued by the FWO. I refer to my earlier reasons (at [223]-[227]). This indicates a level of cooperation. However, in terms of the proceeding before this Court, there was not a great deal of cooperation by Complete Windscreens. I refer, for example, to the Notice to Admit Facts of the FWO and the response by Complete Windscreens in a Notice of Dispute. The need for general deterrence 46 The High Court noted the importance of general deterrence in the case of civil penalties in Commonwealth v Director, Fair Work Building Industry Inspectorate and Others [2015] HCA 46; (2015) 326 ALR 476 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ: No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance: Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act. (Citations omitted.) The need for specific deterrence 47 The FWO submitted that there was a particular need for specific deterrence in this case because of the respondents' lack of contrition and its attempts to coerce the employees, or some of them, to sign statutory declarations and other documents (see my earlier reasons at [129]-[134] (Mr Flynn); [191] (Mr Priest); [213] (Mr Nakhoul)). As I have said, I did not find the evidence of contrition persuasive and I think the incidents involving statutory declarations and other documents did take place. At the same time, the measures the company has put in place to prevent a reoccurrence of the contraventions suggests to me that the company and Mr Lindsay Dean are unlikely to reoffend. On balance, I think that while reoffending is reasonably unlikely, I do not think it can be said that specific deterrence is not irrelevant. Other issues 48 There are two other issues. The respondents raised these matters under the rubric of totality, but I think that they are more appropriately raised as relevant considerations. 49 The respondents claim that I should take into account in assessing the pecuniary penalties, the press release issued by the FWO on 23 April 2013 and the press article which appeared in The Advertiser newspaper on the same day. The respondents particularly complain about the fact that the press release refers to the FWO commencing a "prosecution" and the fact that employees were often directed to work through lunchtime without taking a break. As to the first matter, the respondents contend that the proceeding by the FWO was not a prosecution, and as to the second matter, the respondents contend that they were successful in defending the claim that the employees were directed to work through lunchtime. I do not think a great deal of weight can be placed on this circumstance because it is the press article which gave wide publicity to the proceeding. In that article, the author does not refer to a prosecution, but rather to "Federal Court action" and other than the fact that the amount of the underpayments is overstated as these reasons reveal, the article is uncontroversial. As to the heading of the press article, I reject the submission that the press release led to the heading of the press article. I accept and take into account the fact that the company and Mr Lindsay Dean received adverse publicity as a result of the press release and that the amount of the underpayments found by the Court is significantly less than the amount identified in the press article. 50 The second circumstance which the respondents contend should be taken into account is that the employees were allowed to use their work vehicles for private purposes before and after work and on weekends. They could be used for social, sporting or family journeys. In addition, the vehicles were refuelled at the company's expense and the company had no way of determining, or at least had no system for determining, separate private fuel usage from work usage (at [39] and [45] of Mr Lindsay Dean's affidavit). The claim is that the employees were provided with fully maintained motor vehicles in the course of their employment and, in those circumstances, it could not be contended that they were exploited. 51 This circumstance did not relate to all the employees. Mr Mathews and Mr Waretini-Rewita did not have motor vehicles. Mr Shaw's vehicle was taken from him because he had tried to interfere with a GPS device and actually removed it from his vehicle. Mr Lindsay Dean said that he lost all trust in him and required him to leave the vehicle at the premises of Complete Windscreens at the end of each day rather than take it home. 52 In my earlier reasons, I referred to evidence from Mr Flynn that after he returned to Complete Windscreens in 2000, he was supplied with a motor vehicle which he took home each night and on weekends. Mr Flynn understood that he could use the vehicle for personal use as long as he paid for petrol (at [118]). I also referred to the fact that Mr Priest said that Complete Windscreens provided him with a vehicle which he was allowed to take home after work (at [175]) (see also the reference to Mr Lindsay Dean's evidence at [240]). Mr Moala said that he used his work vehicle for private purposes occasionally and when he did he paid for the petrol he put in the vehicle. Mr Nakhoul said that after a GPS was placed in his vehicle in approximately 2009, he did not generally use it for private purposes. He used his own vehicle for private purposes, although he did use the work vehicle if he needed to pick up or move something that did not fit into his vehicle. 53 Prior to the trial, Mr Lindsay Dean swore a number of affidavits and in each of those affidavits, he said that the windscreen fitters were informed that they could not use the work utility out of work hours, but that despite this, the windscreen fitters did so and their use was recorded on the GPS records. 54 Mr Lindsay Dean was cross-examined about these previous statements. He said that the employees were initially told that they should only use the work vehicles for travelling to and from work, but that over time, private use of the vehicles was tolerated. He said that the company turned a blind eye to private use. I think that that is what happened. The employees were told to use their vehicles only for travelling to and from work. Over time, they did use them for private purposes and the company turned a blind eye to this practice. The amount of private use is impossible to determine on the evidence. This is a matter I take into account, but it does not in any way counterbalance the contraventions involving underpayments. I think that to the extent the contraventions were deliberate or reckless, they did involve an element of exploitation. The pecuniary penalties 55 The FWO prepared a helpful schedule showing the grouping of the offences, the maximum penalties and the penalties she suggested in relation to each contravention. I attach to these reasons as Appendix A that schedule with the addition of the penalties which I have decided to impose, subject to considerations of totality. Mr Lindsay Dean was not involved in the contraventions referred to as casual loading and record keeping. 56 As to the minimum wages under the APCS and Modern Award, this primarily involves Mr Flynn where the contraventions were deliberate and occurred over a substantial period of time. A penalty of 70% of the maximum is appropriate. 57 As to personal leave, this relates to Mr Flynn and the amount involved is not significant (i.e., $714.44). A penalty of 15% of the maximum is appropriate. 58 The same applies to annual leave and annual leave loading. 59 Casual loading is intended to compensate an employee for the fact that he or she does not receive the benefits of a permanent employee. In this case, the contravention involved four employees. I think a penalty of 40% of the maximum is appropriate. 60 I take the same approach to overtime, casual overtime and Saturday overtime. 61 As to meal allowances, I would not impose a pecuniary penalty. The amount is relatively small (i.e., $483.57) and there will be declarations and orders for compensation in relation to the meal allowances. 62 As to the absence of pay slips, I view this contravention as significant because it means employees are not properly informed. A penalty of 60% of the maximum is appropriate. 63 As to record keeping, I think a penalty of 25% of the maximum is appropriate. Totality 64 I have considered the overall or aggregate penalty and whether it represents an appropriate response to the conduct of each respondent. I think that it is, despite the respondents' submissions to the contrary, and I am not persuaded that it is disproportionate in terms of the conduct or crushing effect as far as the respondents are concerned. 65 With respect to pecuniary penalties, I will make the following orders (the paragraph numbers referred to therein are a reference to the declarations set out at [16] of these reasons): (28) Pursuant to subsection 719(1) of the Workplace Relations Act and s 546 of the Fair Work Act, the first respondent is to pay a total penalty of $73,425 for its contraventions declared in paragraphs 1 to 25 above. (29) Pursuant to subsection 719(1) of the Workplace Relations Act and section 546 of the Fair Work Act, the second respondent is to pay a total penalty of $11,220 for his involvement in the first respondent's contraventions, as declared in paragraph 26 above. Compensation to Employees 66 It is not in dispute that on the basis of the findings set out in my earlier reasons, the employees were underpaid in the amounts set out in paragraph [27] above. 67 I will make the following orders: (30) Pursuant to subsections 719(6) and 719(7) of the Workplace Relations Act and/or subsection 545(2) of the Fair Work Act that the first respondent pay the Total Underpayment underpaid to the employees to the applicant within 28 days of these orders, with the applicant to: (a) within 14 days of receipt of the compensation, pay the employees the following amounts: (i) Mr Flynn in the amount of $17,990.92; (ii) Mr Mathews in the amount of $2,220.92; (iii) Mr Moala in the amount of $12,652.63 (iv) Mr Nakhoul in the amount of $10,846.54 (v) Mr Priest in the amount of $11,631.74; (vi) Mr Shaw in the amount of $3,317.98; and (vii) Mr Waretini-Rewita in the amount of $1,308.45; (b) in the event that the applicant cannot locate any of the employees, pay the applicable amount due to each employee that cannot be located to the consolidated Revenue Fund of the Commonwealth within a further 7 days. Conclusion 68 In addition to the declarations, pecuniary penalty orders and compensation orders, I will make the following orders (again, the reference to paragraph numbers is a reference to the declarations set out at [16] of these reasons): (31) The first respondent pay all outstanding superannuation contributions arising from the contraventions outlined at paragraphs 1 to 21 above. (32) Pursuant to subsection 841(a) of the Workplace Relations Act and subsection 546(3) of the Fair Work Act, the total penalties set out in orders (28) and (29) above be payable to the Consolidated Revenue Fund of the Commonwealth within 28 days. (33) The applicant's application is otherwise dismissed. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate: Dated: 22 December 2016 Appendix A