WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES LIQUOR HOSPITALITY AND MISCELLANEOUS UNION

CLAIMANT

-v-

Daycare Australia Pty Ltd

(ACN 107055783)

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD Wednesday, 25 August 2010

DELIVERED Wednesday, 25 August 2010

CLAIM NO. M 12 OF 2010

CITATION NO. 2010 WAIRC 00900

Legislation   Fair Work Act 2009

Industrial Instruments Notional Agreement Preserving the Childrens' Services (Private) Award 2006 Childrens' Services Award 2010

Result  Penalty imposed

Representation 

Claimant   Mr M Aulfrey instructed by the LHMU appeared for the Claimants

Respondent   No appearances for the Respondent

REASONS FOR DECISION

(Edited by His Honour from the transcript)

Default Judgement

1         I am dealing with a Claim made by the Liquor Hospitality and Miscellaneous Union against Daycare Australia Pty Ltd.  The Claimant alleges that the Respondent has failed to comply with the Notional Agreement Preserving the Children's Services Private Award 2006 and the Children's Services Award of 2010.  The allegation, in short, is that the Respondent has failed to pay its employees on time.  Nine employees were affected and there were 173 separate occasions on which payments were not made on time.  The lateness of payment of wages ranged between one and twenty seven days.

2         The Respondent was served with the Claim and the Application for default judgement.  On 11 August 2010, when the matter was last before me, the Respondent's Director Ms Sykes appeared by way of audio-link from Sydney.  She had, prior to that hearing made the necessary arrangements for the audio link to occur.  On that day she informed me that she accepted that default judgment should be entered but asked for the opportunity to appear in person be heard in mitigation.  For that reason the matter was adjourned to today.   Ms Sykes told me that she would be in Perth today and she would attend to be heard. She has however not attended.  In the circumstances I will proceed in her absence.

3         On 11 August 2010 I ordered that default judgment be entered for the Claimant against the Respondent.  I find that the Respondent has between 1 July 2009 and 31 December 2009 failed to comply with the Notional Agreement Preserving the Children's Services Private Award 2006 and, further, has between 1 January 2010 and 23 April 2010 failed to comply with the Children's Services Award of 2010.   Those failures to comply, as the Claimant suggests, constitute one course of conduct and therefore one breach for the purposes of these proceedings.

Penalty

4         When considering the penalty to be imposed, it is important to recognise the fundamental right of an employee to be paid on time.   Employees can be significantly affected if they are not paid on time. The failure to pay an employee on time may affect their ability to arrange their financial affairs with the consequent problems that flow from that.  They may include late payments, defaults, difficulties with credit ratings and so forth.

5         The evidentiary material before me indicates that the Respondent has been tardy in payments over a lengthy period of time and in some instances the length of delay has been quite significant.  There have been several instances where the lateness in payment has been in excess of 10 days.  I accept that in many instances the payment has been only one day late.  Although serious such delay is not as significant as where there has been a substantial delay in the payment.

6         The Respondent faces a maximum a civil penalty of $33,000. The Claimant seeks the imposition of that maximum penalty.  It is appropriate for the Court to have regard to the maximum penalty provided for by legislation. That indicates of the Parliament's view about a particular breach.  Notwithstanding that, the authorities make it clear that Courts will not usually impose the maximum penalty for a first offence. The imposition of a maximum penalty is reserved for the worst offences of its type most often in circumstances where an offender has incurred prior convictions or breaches. That is not the case here. Although the Claimant presses for the imposition of a maximum penalty, Counsel for the Claimant concedes that the authorities would tend not to support his submissions.

7         In delivering these reasons I have interchangeably used the phrases "offending", "offences" and "breaches". I do that purposely because the imposition of a civil penalty ought to be treated substantially the same way as the imposition of criminal penalties. In so doing the Court needs to take into account the nature of the offence, any aggravating factors and then consider any mitigating factors that may be relevant.

8         The starting point in my considerations is that the Parliament has seen fit to provide a significant penalty for this type of breach.  In this matter there has been late payment over a significant period involving nine employees. In some instances the payments have been significantly late, being an important factor to be considered.  The Court should consider the imposition of a deterrent penalty to ensure that employees can rely on the payment of their wages in a timely manner.

9         In this instance, the employees concerned were low paid employees and as such they probably did not have the ability to compensate for the late payment of wages.  The impact upon an employee receiving an income at the lower end of the pay scale is probably more significant than in cases of lateness of payment to someone with greater financial means.  I accept that in this case real hardship was caused to those employees who failed to receive their wages on time. Those employees were in a vulnerable position. The materials before me indicate that although the Respondent has acknowledged the need to ensure that payment of wages are made on time it explained that its financial commitments and other difficulties had precluded it from making timely payment of wages.  It was however a question of priorities.  The Respondent had to ensure that its first priority was to its employees.  The late payments were made against the background of numerous protests by staff about late payment.  Such causes the Court to consider the breach by the Respondent to be very serious. This was not a single or accidental event. It was an ongoing approach in which the Respondent prioritised its other financial considerations ahead of its employees.  I agree with the submissions made by the Claimant that this is a particularly serious example of a breach of this type.

10      However, I must take into account matters in mitigation for the Respondent and although no matters in mitigation have been put before me, it has not been suggested by the Claimant that the Respondent has incurred prior breaches or convictions in this regard.  The Respondent is a first offender.  Given that, the starting point cannot be the maximum penalty. Generally speaking, the starting point for the imposition of a penalty for a person or a corporation without record is somewhere between 10 per cent and 25 per cent of the maximum penalty, but that is entirely inappropriate in this matter because of the very nature of the breach and the implications to the employees. There is a need for a strong personal and general deterrent penalty to be imposed to ensure that this conduct is simply not repeated.

11      That which would normally apply to a first offender does not apply in this particular instance. It is a question of finding the appropriate level of penalty, having regard to those factors to which I have referred.   In my view the imposition of a penalty constituting half the maximum penalty will bring home to the Respondent and others that this type of conduct is treated seriously and that there is grave concern when employees are not paid on time.  It is the deterrence aspect which is needed in a matter of this type.  For those reasons, I have concluded that the appropriate penalty is $16,500 which shall be payable to the Claimant. The penalty is not insignificant but is not so crushing that it will cause the Respondent financial ruin. It sends a strong message to the Respondent and others.

Costs

12      The only other matter that I need to consider in view of the submissions made is whether I should make a costs order.

13      Section 570(2) of the Fair Work Act 2009.provides:

 (2) The party may be ordered to pay the costs only if:

 (a)  the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b) the court is satisfied that the party’s unreasonable act or omission caused the   other party to incur the costs; or

(c) the court is satisfied of both of the following:

(i)  the party unreasonably refused to participate in a  matter before FWA;             

               (ii) the matter arose from the same facts as the proceedings

14      It was put to the Court that the Respondent's unreasonable acts have caused the Claimant to incur the costs. The reality however is that by failing to respond and failing to appear the Respondent did what it was entitled to do. It did not have to respond to the Claim. It does not have to do anything in the matter.  That is just part of the normal process.  It is for the Claimant to pursue the matter. I do not think the Respondent has done anything out of order in this matter and it cannot be said that the Respondent's failure to appear constitutes an unreasonable act or omission.  What is required by s 570 (2)(b) of the Fair Work Act 2009 is not met.  I do not propose to make an order for costs in this matter.

G Cicchini

Industrial Magistrate