Industrial Magistrates Court of Western Australia

The Industrial Magistrates Court of Western Australia has issued $217,950 in penalties following proceedings brought by an industrial inspector with the Department of Energy, Mines, Industry Regulation and Safety (the Department) against five respondents who operated the food business ‘Ocean Keys Hi Thai’ in Clarkson. The penalties were sought by the Department in relation to the respondents’ admitted contraventions of the Restaurant, Tearoom and Catering Workers’ Award (Award) and the Industrial Relations Act 1979 (WA) (Act).  

The respondents admitted to 485 instances of breaching the Award by underpaying two casual employees (affected workers) over several years. The respondents paid flat hourly rates, failed to provide meal breaks, and did not pay appropriate loadings for weekends or public holidays. The Industrial Magistrate viewed the underpayments as significant, with one affected worker being underpaid $61,192.03 and the other $39,411.10. After the admission, the Court issued orders for the outstanding entitlements totalling $100,603.13 along with an order for $19,952.07 in pre-judgment interest.

In addition to the Award contraventions, the respondents admitted to a total of 1,478 contraventions of section 49D(2) of the Act and clause 32 of the Award by not keeping proper employment records. The respondents failed to record the employees’ start dates, job designations under the Award, daily work times, pay periods, meal break information, gross and net pay for each period, and all deductions with their reasons. The Court noted that the lack of proper employment records made it difficult to ascertain the full extent of the underpayments, particularly for one of the affected workers. The Industrial Magistrate commented on the seriousness of the records contraventions, describing the respondents’ recordkeeping as ‘utterly lacking and put simply, unacceptable.’ The Court found that the failure to keep adequate or accurate records facilitated the underpayments and hindered the Department’s ability to investigate. The Industrial Magistrate emphasised that such failures are very serious, especially in the hospitality sector, which is susceptible to exploitation of vulnerable workers.

When assessing appropriate penalties, the Industrial Magistrate grouped the 1,963 contraventions into two groups to avoid double punishment, with the first group being the 485 underpayment contraventions and the second group being the 1,478 records contraventions. The Industrial Magistrate initially considered the total maximum penalty for each group. Then, in accordance with the reasoning in Callan v Smith [2021] WAIRC 00216; (2021) 101 WAIG 1155 at [94] – [97], the Industrial Magistrate applied the ‘course of conduct’ principles to adjust the individually assessed penalties of clause 11(3) and clause 11(4) of the Award, and the breaches of three separate provisions of section 49D(2) of the Act, for each effected employee relevant to the claim. After consideration of all relevant factors with a focus on both specific and general deterrence, an aggregate penalty of $242,500 resulted for the underpayment contraventions, and an aggregate penalty of $484,000 resulted for the records contraventions. 

A 50% reduction was then made to avoid any double penalty being imposed due to overlap between the contraventions, as well as a further 20% reduction due to the respondents admitting the contraventions at the commencement of the proceedings which negated the need for a trial. Finally, a further 20% reduction was made in consideration of the totality principle to ensure that the multiple penalties were just, appropriate and proportionate to the whole of the conduct. The Court therefore imposed a total penalty of $72,750 for the underpayment contraventions and $145,200 for the records contraventions. The penalties were ordered to be paid to the Department.

The Department also sought a formal declaration from the Court that the respondents had engaged in ‘wage theft’. This was carefully considered but ultimately declined by the Industrial Magistrate. Her Honour found that due to the way the case was pleaded and the evidence regarding the respondents’ knowledge and intent such a declaration could not be made as it would have been procedurally unfair. Further, the Industrial Magistrate concluded that while there was insufficient evidence to find that the partnership as a whole engaged in deliberate and systematic non-compliance, the lack of supervision and ignorance of regulatory obligation resulted in serious and sustained breaches.

The full decision can be read here.

Jillian Dixon (the claimant), an industrial inspector with the Department of Mines, Industry Regulation and Safety, brought proceedings against Kahraman Karakuyu and Done Karakuyu (the respondents), proprietors of Newroz Kebab & Turkish Bakery (Newroz) in East Perth. Findings on liability were made by the Court in respect of the respondent’s failure to keep employment records in accordance with the requirements of s 49D(2) of the Industrial Relations Act 1979 (WA) (IR Act), as well as numerous breaches of the Restaurant, Tearoom and Catering Workers’ Award (award). It was found that the respondents:

• contravened the requirements under s 49D(2) to keep employment records on 738 separate occasions between 19 December 2016 and 31 December 2018 (records contraventions); and
• during the same period, breached the award 392 times (award breaches) which resulted in Mr Zeyrek being underpaid, in respect of which the Court ordered the respondents to pay the sum of $102,483.74 (underpayment amount).

The claimant submitted that the respondent had engaged in ‘wage theft’, involving the systematic and deliberate underpayment of a vulnerable worker in the hospitality industry. Noting the number of contraventions, the objective seriousness of these contraventions and the need for general deterrence, particularly in response to the reported prevalence of wage theft in the hospitality industry, the claimant submitted a penalty in the upper range to be appropriate. 

The respondents submitted that Newroz operated mainly as a family business, with most work performed by family members, and they were not involved in the day-to-day operations. They argued that any contraventions were due to carelessness or ignorance, not intentional or deliberate actions, and that they believed they were treating Mr. Zeyrek fairly and lawfully. Additionally, they contended that there was no need for specific deterrence as they no longer operate a business or employ anyone.

The Industrial Magistrate considered the parties’ submissions alongside the various findings made in the liability decision and applied established principles to determine the appropriate penalties. The records contraventions and award breaches were dealt with separately.

Records Contraventions

When applying the principles set out in Callan v Smith [2021] WAIRC 00216, the Court noted that a maximum aggregated penalty for each of the records contraventions would be very large. His Honour concluded that if the more appropriate penalty of $1,500 for each contravention was imposed, a total aggregate penalty in this amount would not be a just and proportionate response. Having regard to the ‘one transaction principle’, the records contraventions were grouped together to set a theoretical maximum penalty by reference to the pattern of conduct that was committed week to week. This was to ensure that the aggregate penalty to be imposed was neither crushing nor oppressive and that there would be no double penalty. Given this, the Industrial Magistrate imposed a penalty of $1,500 for each of the 106 pay periods that fell during the contravention period, equating to a theoretical aggregate penalty of $159,000.

Due to the respondents having admitted the records contraventions, the Industrial Magistrate considered a 20% reduction to this amount appropriate. The totality principle was also applied to reduce the amount by a further 40%. This resulted in a total penalty of $76,320 for the records contraventions.

Award Breaches

The Industrial Magistrate noted that the award breaches committed by the respondents were serious, for which the Court should impose stiff penalties. However, when applying the principles in Callan v Smith, the total theoretical maximum penalty for the award breaches would also be very large. His Honour considered that a penalty of $300 per award breach, resulting in an overall theoretical aggregate penalty of $117,600, be appropriate.

Although committed as part of a single, continuous course of conduct, the amounts of the underpayments were such that His Honour did not consider it appropriate to apply the one transaction principle by grouping the award breaches together to reduce the penalty amount. A 20% reduction was however given due to the effort the respondents had made towards rectifying the underpayment amount. The totality principle was also applied, resulting in a further 40% reduction to ensure the total penalty to be imposed for the award breaches was just, appropriate and a proportionate response to the conduct the respondents engaged in. Therefore, a total penalty of $56,448 was imposed for the award breaches.

The sum of the penalties imposed for both the records contraventions and award breaches totalled $132,768, to be paid to the claimant under s 83F of the IR Act. The full decision on penalty can be read here.

Pre-trial conferences (PTC) are compulsory, private meetings between parties, facilitated by a Clerk of the Court. They give parties an opportunity to discuss and settle the case. The respondents allege that, on 20 June 2024 they reached a binding settlement agreement (BSA) with the claimant and sought to enforce it. The claimant denied a binding agreement between the parties was reached, and the following was put to the Industrial Magistrate as a preliminary issue:

(a) On 20 June 2024 at a PTC, did the parties reach a BSA with immediate effect?

(b) If a BSA with immediate effect was reached, what were the terms of the BSA? 

(c) If a BSA with immediate effect was reached, was it enforceable or void? 

(d) What is the effect of the determinations or outcomes of the issues in (a), (b) and (c) above on the claimant’s claim?

The preliminary issue was heard in June 2025. The respondents bore the burden of proving the preliminary issue on the balance of probabilities. Each named party at the time of the PTC, and the claimant’s lawyer at the time, gave evidence about what occurred during, and after the PTC.  

The Industrial Magistrate adopted principles approved by the Victorian Court of Appeal in Sully v Englisch [2022] VSCA 184. Whether a BSA exists is determined objectively, having regard to the parties’ intentions. Whether parties intend to form an agreement is a question of fact, determined in light of all the surrounding circumstances.

After recounting each witness’s evidence, the Industrial Magistrate found that the that a BSA was reached at the PTC. 

The PTC lasted over three hours. First, the Clerk addressed the parties in a joint session on the purposes of PTCs, and there was an exchange between each party’s lawyers about the claim and response. After this, the parties split into private sessions and the Clerk shuttled between each room to convey settlement offers and counteroffers. The claimant’s evidence of what occurred during the private sessions differed from his former lawyer’s, and the respondents’. While the claimant argued that his lawyer did not leave their private session room, each respondent and the claimant’s former lawyer gave consistent evidence that the lawyer entered the respondents’ private session room and conveyed the claimant’s acceptance of their offer. There was no evidence that the claimant’s lawyer did not have authority, or acted outside their instructions, when conveying the claimant’s acceptance. The evidence given by the claimant’s former lawyer was not challenged and they were not cross-examined at the hearing.  

The BSA’s terms required the respondent to make a monetary payment to the claimant. After which, the claimant was required to discontinue the claim. This and other ancillary terms (which were also discussed at the PTC) would then be reduced to a written deed of settlement to be produced by the respondent’s lawyers and provided to the claimant’s representative to be confirmed and executed. Based on the evidence, these ancillary terms were uncontroversial, and included such terms like full and final settlement, non-disparagement and confidentiality. 

The Industrial Magistrate held that a reasonable person observing the PTC would have concluded that the parties entered into a binding agreement. As the claimant accepted the respondents’ offer, the BSA remained enforceable. Having determined the first three parts of the preliminary issue, the Industrial Magistrate held that the claimant was precluded from prosecuting the claim. 

The full decision can be read here.