WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION, WESTERN AUSTRALIAN BRANCH

CLAIMANT

-v-

Cuddles Management Pty Ltd (ACN 092 353 047)

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD Wednesday, 20 August 2008

DELIVERED Wednesday, 20 August 2008

CLAIM NO. M 86 OF 2007

CITATION NO. 2008 WAIRC 01311

CatchWords Enforcement of Notional Agreement Preserving Award; Failure to pay superannuation; Judgment entered for the Claimant by cinsent; Quantum of underpayment agreed; Imposition of penalty

Result Penalty imposed

Representation 

CLAimant  Mr M Aulfrey (of Counsel) of the Claimant appeared for the Claimant.

RESPONDENT Mr LMA Carver, a Director of the Respondent, appeared for the Respondent.

Reasons for Decision

(Given extemporaneously at the conclusion of the hearing, extracted from the transcript of proceedings and edited by His Honour)

1. The Respondent has breached the Notional Agreement Preserving the Childrens’ Services (Private) Award 2006 by its failure to pay its employees superannuation.  The parties have agreed a quantum of underpayment in respect of each employee totalling $71,855.49.  In addition the Respondent has agreed to pay interest with respect to that amount in the sum of $11,619.03.  In total, the Respondent has agreed to pay $83,474.52 to the Claimant, for disbursement to the employee’s superannuation fund. The individual amounts making up the underpayment ranges from $4.70 in one instance to $4,595.81 in another, with other varying amounts in between.
2. The failure to pay superannuation is a serious matter.   In general terms the Respondent has not explained its failure to pay the same other than to say that it was experiencing financial pressures at the time.  That submission has been made in a generalised sense. Nothing has been put before the Court to precisely detail what those particular pressures were. 

3. In any employment relationship the obligation to pay employees their entitlement is paramount. In my view the obligation to pay superannuation sits at the same level as the obligation to pay wages.  An employee is entitled to his or her weekly pay and superannuation.  The two are not to be viewed distinctively.  It is not open for an employer to just pay the weekly wage and not superannuation.  There is an obligation at law to pay the superannuation and indeed it is an important and fundamental aspect of the employment relationship that such is paid.  Unfortunately the failure to pay superannuation may not necessarily be apparent to an employee, especially when an employee is given a pay slip or a statement which declares that such payment has been made when in fact it has not.  That puts the employee at real risk.  The employee might therefore be in the position of thinking that he or she has accumulated certain amounts in superannuation when in fact that is not the case at all. That could lead to disastrous consequences.  For those reasons it is important that breaches of this type are viewed seriously and that a deterrent penalty be imposed so that employers will strictly comply with their obligations and not put employees at the risk of not having their superannuation payments paid.  Clearly the failure by an employer to meet its obligation to pay superannuation has serious consequences for the particular employee.
4. The Claimant in this matter calls for the maximum penalty.  However, it would have been apparent from my discussions with him during the course of submissions that the maximum penalty provided for in any piece of legislation is reserved for the worst cases where the offender is a repeat offender, where there is no remorse shown and where there is little or nothing in mitigation.  Mr Aulfrey suggests that this is one of the worst cases from the union’s perspective having regards to its records.  However this matter is not to be viewed solely against the union’s records.  It is to be viewed against the whole gamut of matters that might come before the courts in respect to matters of this type.   I am far from convinced that this matter is in the worst case category.  Having said that I am not suggesting for one moment this is not a serious matter, but the Court, with the evidentiary material that is before it, could not possibly conclude that this is a worst case scenario.
5. The Court takes into account that there are a large number of employees involved in this particular matter.  There are in excess of forty.  Another matter for consideration is the quantum not paid.  In mitigation the Respondent has consented to the claim notwithstanding it initially opposed it.  By the Respondent admitting the claim the Claimant has been spared a considerable expense in proving its claim.  Although Mr Aulfrey says it would have been a simple matter, the fact is that as a matter of practicability there would have been a great deal of time and resources spent in bringing each of the employees before the Court to prove each of the elements requiring proof.  There is inevitable benefit to the Claimant as a result of the Respondent having conceded the claim.  Given the costs provision of the Workplace Relations Act 1996 had the matter gone to trial it is unlikely that the Claimant would have been able to recover the considerable expense it would have inevitably had to expend.  I also take into account that the Respondent has agreed to pay interest at a commercial rate. I agree with Mr Aulfrey that the interest agreed should not be treated as a penalty.   Nevertheless the agreement to pay the interest is a reflection of the Respondent’s remorse in this matter.  Its cooperation in agreeing to pay interest directly benefits the employees.  It does not have a record of other relevant breaches.
6. As indicated earlier, the maximum penalty ($33,000.00) is reserved for the worst case.   Whilst this Court must take into account the seriousness of the breach this is not one of those cases in the worst case category.   Accordingly the starting point is substantially below the maximum penalty available.  The Court must also take into account the cooperation and remorse displayed.  That discounts the penalty.  The Court must arrive at a penalty which properly reflects the culpability of the Respondent, taking into account the mitigating factors.  Further, the Court must have some regard to the capacity of the Respondent to pay.  Although I do not have any financial details of the Respondent what I do know from what I have heard from both parties is that the Respondent and its associated companies have been in some financial difficulty.  Capacity to pay is a matter to be taken into account. 
7. The exercise of arriving at an appropriate penalty is neither precise nor a scientific one but is one which requires the Court to balance all aggravating and mitigating factors.   Having considered all relevant matters I have taken the view that a penalty in the sum of $13,000.00 is an appropriate penalty to be imposed in this case.   That amount is not an insignificant amount particularly for a company that is facing some financial difficulty.  The penalty will act as a deterrent to the Respondent in particular and others who may be like minded.  It sends the message that the failure to pay superannuation will have serious consequences.  
8. I agree with Mr Aulfrey that the penalty should be paid to the Claimant.  The Claimant’s role is to police the legislation by means of this type of matter and should be rewarded for having done so.  It is important that action be taken against employers who fail to comply because it is only in that way that the employers are brought to task in respect of their obligations.
9. As a consequence of what I have said I make the following orders in addition to those previously made by consent:

THAT the Respondent is to pay a penalty of $13,000.00 for its breach of the Notional Agreement Preserving the Childrens’ Services (Private) Award 2006;

THAT the penalty is to be paid to the Claimant; and

THAT there is no order as to costs, the Claimant having abandoned its claim in that regard.

G Cicchini

Industrial Magistrate