2025 WAIRC 00106
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2025 WAIRC 00106



CORAM
:
INDUSTRIAL MAGISTRATE T. KUCERA



HEARD
:
TUESDAY, 8 OCTOBER 2024



DELIVERED
:
MONDAY, 24 FEBRUARY 2025



FILE NO.
:
M 220 OF 2021



BETWEEN
:
NOEL JAMES WRIGHT


CLAIMANT





AND





CITY OF STIRLING (ABN 26 744 398 382)


RESPONDENT

Catchwords : INDUSTRIAL LAW – Assessment of pecuniary penalties for contraventions of Fair Work Act 2009 (Cth) – s 557 Course of conduct – s 557A Serious contravention of civil remedy provision – s 557B Liability of bodies corporate for serious contravention – s 557A(6) requirement to raise allegation of serious contravention in the originating application – Payment of penalty to claimant
Legislation : Fair Work Act 2009 (Cth)
Crimes Act 1914 (Cth)
Industrial Relations Act 1979 (WA)
Civil Judgments Enforcement Act 2004 (WA)
Instrument : City of Stirling Outside Workforce Agreement 2017
City of Stirling Outside Workforce Agreement 2020
Case(s) referred
to in reasons: : Noel James Wright v City of Stirling (ABN 26 744 398 382) [2024] WAIRC 00341
Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 4) [2024] FCA 1475
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2018] FCA 1563
Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341
Callan v Smith [2021] WAIRC 00216; 101 WAIG 1155
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607
Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595
Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450
Ponzio v B&P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543
Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244; (2016) 242 FCR 492
National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451; (2013) 234 IR 139
Result : Pecuniary penalty to be paid, respondent ordered to pay underpayment amount and pre-judgment interest
Representation:
Claimant : Ms R. Sorgiovanni (of counsel)
Respondent : Ms H. Millar (of counsel) as instructed by HWL Ebsworth Lawyers


REASONS FOR DECISION

1 On 14 June 2024, I issued reasons for decision in Noel James Wright v City of Stirling (ABN 26 744 398 382) [2024] WAIRC 00341 (liability decision).
2 I found the City of Stirling (ABN 26 744 398 382) (respondent) had breached cl 11.1 of the City of Stirling Outside Workforce Agreement 2017 (Agreement) by failing to raise the salary of one of its employees, Noel James Wright (claimant), by the correct percentage increase from July 2018, and from July 2019.
3 In the liability decision I determined the correct increase which the respondent should have applied to the claimant’s salary under cl 11.1, from 1 July 2018 and from 1 July 2019, was the percentage increase the Fair Work Commission Expert Panel determined the national minimum wage had to be raised by (FWCEP Increase).
4 Having held the respondent breached the Agreement, it follows the respondent contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act), which is a civil remedy provision for which the Court may impose a pecuniary penalty.
5 After the liability decision issued, I directed the parties to each file an outline of submissions on penalty and any remedial orders that I should make in respect of the contravening conduct.
6 Following this, the parties by agreement, extended the timetable to file their submissions. Once these materials were filed by 25 September 2024, a hearing on the issues of remedy and the penalty to be imposed was held on 8 October 2024.
7 In the decision to follow I provide my reasons on what I regard is an appropriate disposition for the respondent’s contraventions of cl 11.1 of the Agreement and the consequential orders to be made.
Issues to be decided
8 In this case there were a number of issues that needed to be determined in relation to penalty and the relief sought by the claimant.
9 The first of these was on the number of contraventions for which a penalty may be imposed. The critical matter to be decided on this point was whether the breaches of the Agreement were committed as a course of conduct within the meaning of s 557 of the FW Act (Course of conduct), thereby constituting a single contravention.
10 The second matter to be determined was whether the respondent in its failure to increase the claimant’s salary in July 2018 and again in July 2019, had committed serious contraventions of the Agreement, within the meaning of s 557A of the FW Act (serious contravention).
11 Upon the determination of these two issues, the relevant principles regarding the exercise of the Court’s discretion on whether a penalty should be imposed could then be applied.
12 The issue to be determined on the question of remedy was on the quantum of any pre-judgment interest the Court should order the claimant be paid under s 547 of the FW Act.
Materials filed by the parties
13 Counsel for the claimant filed two outlines of submissions. The first was the Claimant’s Submissions on Penalty filed on 23 July 2024. The second was the Claimant’s Submissions on Remedy filed 3 September 2024.
14 On 25 September 2024, the respondent’s solicitors filed an Outline of Submissions, which dealt with both the relief sought by the claimant as well as penalty (Respondent’s Outline). On the same date, the respondent also filed an Affidavit from Ingrid Hawkins (Ms Hawkins), the respondent’s Director of Corporate Services (Hawkins Affidavit).
Course of conduct
15 The claimant contended that because of the respondent’s failure to increase the claimant’s salary by the correct percentage amount, from 1 July 2018 until the Agreement was replaced by the City of Stirling Outside Workforce Agreement 2020 (2020 Agreement) on 21 February 2022, the respondent committed a contravention in each fortnightly pay period.
16 In total, the claimant alleged the respondent had breached the Agreement 330 times, in respect of which a penalty should be imposed for each individual contravention.
17 The respondent contended that I should find the contraventions of the Agreement arose from the same course of conduct, which by virtue of s 557 of the FW Act, are to be viewed as constituting a single contravention. On this s 557 relevantly provides:
(1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
(2) The civil remedy provisions are the following:
(a) section 44 (which deals with contraventions of the National Employment Standards);
(b) section 45 (which deals with contraventions of modern awards);
(c) section 50 (which deals with contraventions of enterprise agreements);
…
(s) any other civil remedy provisions prescribed by the regulations.
18 In Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) (No 4) [2024] FCA 1475 at [24] Katzmann J, when dealing with the imposition of a penalty for multiple contraventions of an Award observed:
The object of s 557 is to ensure that a contravener is not penalised twice for what is essentially the same wrongdoing: Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 (North, Flick and Jagot JJ). Its effect is that, save in relation to a contravention for which a court has previously imposed a pecuniary penalty for an earlier contravention of the same provision, two or more contraventions of any of these provisions are taken to be a single contravention if they were committed by the same person and arose out of a course of conduct in which that person engaged. As the Full Court confirmed in Rocky Holdings, when the section speaks of two or more contraventions of s 44 (which deals with contraventions of the National Employment Standards (NES)) or s 45 (which deals with contraventions of an award), it is referring to multiple contraventions of a particular provision of the NES and multiple contraventions of a particular clause in an award.
19 Katzmann J’s observations regarding s 557 apply to breaches of enterprise agreements and contraventions of s 50 of the FW Act that arise out of the same course of conduct. The point of difference between the parties on this issue was obvious. A finding the contraventions arose out of a course of conduct, would not only affect how the conduct is to be characterised, but the potential maximum penalties the Court could impose.
Serious contravention
20 The other matter with the potential to affect the respondent’s exposure to a pecuniary penalty is a finding that a particular breach of an enterprise agreement is a ‘serious contravention’.
21 In this matter, the claimant contended that I should find the respondent had committed a serious contravention in respect of which the Court can impose a more substantial pecuniary penalty.
22 As to what a serious contravention involves, s 557A as it appeared in the FW Act at the time the contraventions occurred, relevantly provided:
557A Serious contravention of civil remedy provisions
(1) A contravention of a civil remedy provision by a person is a serious contravention if:
(a) the person knowingly contravened the provision; and
(b) the person’s conduct constituting the contravention was part of a systematic pattern of conduct relating to one or more other persons.
Note: For the liability of bodies corporate for serious contraventions, see section 557B.
Example: Generally, subsection 323(1) requires an employer to pay an employee the full amount payable to the employee in relation to the performance of work.
A contravention of subsection 323(1) is a serious contravention if the employer knowingly does not pay the employee in full (even if the employer does not know the exact amount of the underpayment) and that contravention is part of a systematic pattern of conduct by the employer. The systematic pattern of conduct of the employer may relate to more than one employee and may consist of different contraventions.
Systematic pattern of conduct
(2) In determining whether the person’s conduct constituting the contravention of the provision was part of a systematic pattern of conduct, a court may have regard to:
(a) the number of contraventions (the relevant contraventions) of this Act committed by the person; and
(b) the period over which the relevant contraventions occurred; and
(c) the number of other persons affected by the relevant contraventions; and
(ca) the person’s response, or failure to respond, to any complaints made about the relevant contraventions; and
(d) except if the provision contravened is section 535—whether the person also contravened subsection 535(1), (2) or (4) by failing to make or keep, in accordance with that section, an employee record relating to the conduct constituting the relevant contraventions; and
(e) except if the provision contravened is section 536—whether the person also contravened subsection 536(1), (2) or (3) by failing to give, in accordance with that section, a pay slip relating to the conduct constituting the relevant contraventions.
(3) Subsection (2) does not limit the matters that a court may have regard to.
(4) Subsection 557(1) does not apply for the purposes of determining whether the person’s conduct was part of a systematic pattern of conduct.
(5) Subsection (4) does not otherwise affect the operation of subsection 557(1) in relation to serious contraventions of civil remedy provisions.
…
Application for a serious contravention order and alternative orders
(6) If a person is applying for an order in relation to a serious contravention of a civil remedy provision, the person’s application under subsection 539(2) must specify the relevant serious contravention.
23 Section 557B provides:
557B Liability of bodies corporate for serious contravention
(1) For the purposes of subsection 557A(1), a body corporate knowingly contravenes a civil remedy provision if the body corporate expressly, tacitly or impliedly authorised the contravention.
(2) This section does not limit section 793.
Maximum penalties for contraventions
24 The difference between the maximum pecuniary penalty for a contravention of an enterprise agreement and one that is held to be a serious contravention is substantial.
25 The maximum penalty for a contravention of s 50 of the FW Act is expressed under s 539(2) in terms of ‘penalty units’, as defined by s 4AA of the Crimes Act 1914 (Cth): FW Act, s 12. The value of a single penalty unit when the contraventions were committed in this matter was $210.
26 At the time the breaches of the Agreement in the present case occurred, the maximum penalty for a serious contravention under s 539(2), Column 4 of the FW Act was a fine of 600 penalty units. Where a breach of an industrial agreement occurred, but it was not a serious contravention, the maximum penalty that applied was a fine of 60 penalty units.
27 Under s 546(2)(b) of the FW Act, the maximum penalties as set out in s 539 Column 4, are increased by a multiplier of 5 where a contravention is committed by a body corporate. In the present case, the parties do not dispute that this is a matter in which the maximum penalties that apply in the case of a body corporate, may be imposed.
28 As a result, the maximum penalty for a serious contravention that applied at the time of the contraventions was 600 penalty units × $210 × 5 = $630,000. At the same time, the maximum penalty where the breach of an industrial agreement was not a serious contravention was 60 penalty units × $210 × 5 = $63,000.
29 Identifying the maximum penalty that applies in a statute for the contravention is an important consideration when determining the penalty to be imposed. As Flick J stated in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2018] FCA 1563 at [19]:
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a ‘yardstick’ against which the assessment of penalties is generally to proceed.
Principles to be applied when determining an appropriate penalty
30 In Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 (DTF World Square) Katzmann J at [16]  [19] helpfully summarised the principles to be applied, when determining an appropriate penalty for the contravention of a civil penalty provision. I have extracted the relevant paragraphs from her judgment below:
First, civil penalties, unlike criminal sentences, are imposed primarily, if not solely, for the purpose of deterrence and to promote the public interest in compliance. Consequently, the principal object of a civil penalty is to put a price on contravention that is sufficiently high to deter repetition by the wrongdoer and others who might be tempted to contravene. That may require the imposition of a total penalty which is out of all proportion to the nature and gravity of the contraventions: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450. Any civil penalty ‘must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the contravener] or others as an acceptable cost of doing business’: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; 287 ALR 249; [2012] ATPR ¶42–387 at [62] (Keane CJ, Finn and Gilmour JJ), approved in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [66] (French CJ, Crennan, Bell and Keane JJ), cited in Pattinson at [17].
What is required is ‘some reasonable relationship between the theoretical maximum and the final penalty’ and that is established where the penalty does not exceed that which is reasonably necessary to achieve the statutory purpose of deterring future contraventions of a like kind by the contravener and others: Pattinson at [10] quoting Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [156]. It makes no difference that the liability of the contravener is vicarious rather than direct or personal: Stuart v Construction, Forestry, Mining and Energy Union [2010] FCAFC 65; 185 FCR 308 (Besanko and Gordon JJ) at [52]–[57].
Second, an ‘appropriate’ penalty is one which strikes a reasonable balance between oppressive severity and the need for deterrence: Pattinson at [41]. In cases of isolated contraventions caused by inadvertence or ignorance of the law a modest penalty might reasonably be thought sufficient to provide effective deterrence against future contraventions: Pattinson at [46]. The reasonableness of the relationship between the theoretical maximum and the final penalty imposed may be established having regard to the circumstances of the conduct involved in the contravention and the circumstances of the contravener (Pattinson at [55]). That is because either the circumstances of the contravening conduct or the circumstances of the contravener may bear upon the extent of the need for deterrence in the penalty.
Third, in assessing a penalty of appropriate deterrent value, a number of factors will generally be relevant. They relevantly include the nature and extent of the contravening conduct; the gravity of the wrongdoing; the nature and extent of the losses incurred as a result of the contraventions; the size of the corporation or business; the involvement of senior management; the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and questions of contrition and corrective action. See especially Trade Practices Commission v CSR Ltd [1990] FCA 521; [1991] ATPR 41-076 at [42]; 52,152–52,153 (French J); Kelly v Fitzpatrick [2007] FCA 1080, 166 IR 14 at [14] (Tracey J). As the plurality observed in Pattinson at [19], these sorts of factors are not to be regarded as ‘a “rigid catalogue of matters for attention” as if it were a legal checklist’; the Court is still required to determine the appropriate penalty or penalties in the circumstances of the case before it.
31 The factors which inform an assessment of a civil penalty under the FW Act are consistent with and much the same as those that apply when determining an appropriate penalty under the Industrial Relations Act 1979 (WA) were set out in Callan v Smith [2021] WAIRC 00216; 101 WAIG 1155 (Callan v Smith), which the Court also follows.
32 In Callan v Smith, a Full Bench of the Western Australian Industrial Relations Commission observed that when determining penalty, the Court is required to have regard to a nonexhaustive range of considerations for the purposes of deciding, if the contravening conduct, calls for the imposition of a penalty, and if it does, the amount of the penalty to be imposed.
33 The following considerations were set out in Callan v Smith at [90], which include but are not limited to:
(a) the nature and extent of the conduct which led to the breaches;
(b) the circumstances in which that conduct took place;
(c) the nature and extent of any loss or damage sustained as a result of the breaches;
(d) whether there had been similar previous conduct by the respondent;
(e) whether the breaches are properly distinct or arose out of the one course of conduct;
(f) the size of the business enterprise involved;
(g) whether or not the breaches were deliberate;
(h) whether senior management was involved in the breaches;
(i) whether the party committing the breach had exhibited contrition;
(j) whether the party committing the breach had taken corrective action;
(k) whether the party committing the breach had cooperated with the enforcement authorities;
(l) the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m) the need for specific and general deterrence.
34 Citing the decision in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560, the Full Bench in Callan v Smith at [91] observed that ‘the task of the [C]ourt is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.’
35 Informed by the legal principles that I have extracted and set out in the preceding paragraphs, the approach that is then to be taken to the assessment of penalties, was described by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; (2017) 275 IR 148 at [36].
36 It involves:
(1) identifying the individual contraventions noting that each breach of a term of an award and each breach of an obligation is a separate contravention;
(2) considering whether each contravention should be penalised independently or whether ‘some degree of aggregation’ is required arising out of a course of conduct;
(3) considering whether there should be further adjustment to ensure that, to the extent of any overlap, no double penalty is imposed, and that the penalty is appropriate;
(4) considering the appropriate penalty in respect of each final group of contraventions taken in isolation; and
(5) assessing whether the overall penalty is appropriate.
The last consideration is commonly referred to as ‘the principle of totality’ by which a court is required to carry out a final check of the proposed penalties to ensure that the aggregate sum does not exceed that which is proper for the entire contravening conduct (Australian Competition and Consumer Commission v Employsure Ltd [2023] FCAFC 5; 407 ALR 302; 164 ACSR 103 at [52] per Rares, Stewart and Abraham JJ).
As deterrence is the object, ‘the penalty should not be greater than that which is necessary to achieve this object; severity beyond that would be oppression’: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293 (Burchett and Kiefel JJ). Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 (DTF World Square) at [20]  [21].

37 Having set out the relevant principles to be applied and the approach to be followed when determining an appropriate penalty, I now summarise the parties’ submissions on these matters.
Claimant’s submissions on penalty
38 As indicated earlier, the claimant submitted that by failing to increase the claimant’s salary in July 2018 and again in July 2019 by the correct percentage amount, the respondent had committed 330 contraventions of the Agreement.
39 The claimant disputed the contraventions ‘arose out of a course of conduct’ and contended there was an onus on the respondent to establish this. The claimant submitted there was no factual foundation upon which the Court could find the respondent’s conduct should be characterised in this way.
40 The claimant submitted the evidence suggests the respondent’s failure to comply with the Agreement did not involve a single act or decision, as the respondent had to consider and apply the Agreement more than once during the lifetime and extended lifetime of the Agreement.
41 The claimant contended the respondent had demonstrated an ability to instruct lawyers and to take advice. It was submitted that it was within the respondent’s power, especially if it was unsure about how to interpret and apply the Agreement, to obtain legal advice and follow it.
42 To the extent it was observed the Agreement was poorly drafted, the claimant submitted it was not beyond the skill of the Court and the claimant’s union to correctly interpret the Agreement. The claimant said that while the respondent was the only party that had difficulty interpreting the Agreement, it was always within its power to rectify.
43 Relying upon s 557B of the FW Act, the claimant contended the Court should find the respondent had engaged in a serious contravention of the Agreement. The claimant argued that s 557B is a ‘deeming provision’ that compels the Court to find that the respondent knowingly contravened a civil remedy provision because the respondent expressly, tacitly or impliedly authorised the contravention where a contravention is proved.
44 The claimant submitted s 557B of FW Act does not require the claimant to show that at the time the contravention occurred, the respondent had actual knowledge that its actions were a contravention and no evidence was required to apply s 557B to the facts of the case. It was submitted the section only requires that there be a contravention which the respondent expressly, tacitly, or impliedly authorised. Claimant’s Submissions on Penalty, filed 23 July 2024 at [9].

45 It was submitted the entire defence to the claim had been conducted on the basis the respondent had authorised a lower rate of salary increase, based upon its view of the wording of the Agreement. It therefore follows that because the Court has found a contravention or contraventions occurred, (depending upon whether or not it was a course of conduct) by operation of s 557B, it was a serious contravention.
46 The claimant noted that while the Court is not obliged to apply the maximum penalty for a serious contravention, it should not ignore the effect s 557B has in deeming the breach a serious contravention.
47 In relation to other matters relevant to determining penalty, the claimant variously submitted:
i. there is a need for both specific and general deterrence
ii. the matter was of such significance that it is reasonable to infer that senior management was involved in the contravening conduct.
iii. the respondent has not displayed any contrition. Contrition now would only be self-serving.
iv. the respondent has not taken any corrective action, rather the proceedings were vigorously defended.
Respondent’s submissions on penalty
48 In the Respondent’s Outline, it was submitted the respondent had engaged in two courses of conduct that breached the Agreement:
(a) the failure to pay the correct wage increase in July 2018; and
(b) the failure to pay the correct wage increase in July 2019. Respondent’s Outline lodged 25 September 2024 (Respondent’s Outline) at [2].

49 The respondent likened the contraventions in this matter to cases where an employer pays wages to an employee based on an erroneous interpretation of an enterprise agreement. The respondent submitted such matters, where there is a relationship between the legal and factual elements of two or more contraventions, provide an archetypal example of a single course of conduct, to which s 557 of the FW Act applies.
50 The respondent submitted that it would be inconsistent with established case law for the Court to find, as the claimant urged, that it had breached its obligations every fortnight between 1 July 2018 and 30 June 2021. The respondent contended there was no legal or factual basis for not applying s 557 in this matter.
51 The respondent argued the evidence establishes that it underpaid the claimant between 1 July 2018 and 30 June 2021, based on an erroneous construction of the Agreement. It was submitted that factually and legally, the respondent’s contraventions fall into two distinct categories:
(a) the underpayments made between 1 July 2018 and 30 June 2019 as a consequence of the decision by the respondent about the proper quantum of the July 2018 wage increase pursuant to clause 11.1 of the Agreement (July 2018 Contravention); and
(b) the underpayments made between 1 July 2019 and 30 June 2021 as a consequence of the decision by the respondent about the proper quantum of the July 2019 wage increase pursuant to clause 11.1 of the Agreement (July 2019 Contravention). Respondent’s Outline at [19].

52 On this basis, the respondent submitted that it should only be penalised for two contraventions of s 50 of the FW Act: the July 2018 Contravention and the July 2019 Contravention.
53 The respondent opposed the contraventions being treated as serious contraventions. The respondent said the claimant was, as a matter of procedural fairness, precluded from pressing this claim because it was not raised as an allegation in either the originating application or the amended particulars of claim.
54 The respondent submitted that if the claimant had wanted to prosecute his claim under s 557A, he needed to have done so expressly, at the time the claim was made. It was submitted the need for procedural fairness is heightened in claims made under the civil penalty regime of the FW Act.
55 The respondent said that as a general principle, respondents must be able to understand the entirety of the claim against them to be able to properly defend themselves, including allegations they had committed a serious contravention, which potentially attract a stiffer penalty.
56 To this end the respondent submitted there was no basis for the claimant to seek the imposition of penalties by reference to s 557A in circumstances where no claim was prosecuted under s 557A against the respondent.
57 Put slightly differently, the respondent submitted that if the Court finds the respondent had (as the claimant had urged it should) committed a serious contravention, the respondent would be exposed to a penalty for a contravention it was not charged with.
58 In addition to its submissions regarding procedural fairness, the respondent submitted the claimant’s submissions in respect of s 557B of the FW Act were misconceived. The respondent argued s 557B cannot be applied in circumstances where s 557A has not been invoked.
59 Having argued the ‘serious contravention’ provisions of the FW Act had no application to the present case, the respondent submitted the maximum penalty units applicable in respect of the July 2018 Contravention and the July 2019 Contravention was $63,000 per contravention. It was submitted the total maximum penalty the Court may impose was an amount of $126,000.
60 The respondent submitted that the Court cannot order a pecuniary penalty greater than necessary to achieve the object of deterrence. This is because the object of deterrence does not ‘give license to impose a disproportionate or oppressive penalty’. Respondent’s Outline at [31] citing Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 (Pattinson) at [41].
While focused on deterrence, the Court must still ensure that the pecuniary penalty ordered ‘strikes a reasonable balance between deterrence and oppressive severity’. Respondent’s Outline at [31] citing Pattinson at [40]  [41].

61 It was submitted the Court has a discretion as to whether it will impose a penalty in respect of a breach of the FW Act and there is no principle that a Court must, in all cases of proven breach, impose a penalty.
62 The respondent made the submission that where the contravention is a consequence of the employer’s ‘honest and reasonable, but erroneous, construction of a relevant instrument, a Court may exercise its discretion to decline to impose any penalty, or to limit the amount of any penalty’. Respondent’s Outline at [38] citing Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480 at [15].

63 The respondent referred to a number of cases where Courts have applied this reasoning in underpayment cases involving erroneous constructions of industrial instruments, including the decision of Justice Gordon in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607 (CEPU v Telstra) at [18] (which related to the breach of an enterprise agreement).
64 The respondent submitted there was no evidence before the Court to suggest its interpretation of the Agreement was applied other than in good faith or that its breaches were deliberate or malicious. Rather, it was contended the available evidence indicated the respondent genuinely believed that it was applying the Agreement correctly.
65 The respondent contended that in the circumstances of the present case, the legislative purpose of civil penalties would not be furthered by an imposition of a significant penalty. It was submitted that in analogous circumstances, the Court has held that neither general nor specific deterrence weigh in favour of imposing a significant penalty.
66 In relation to other matters relevant to determining penalty, the respondent variously submitted:
i. While it is a large corporate entity with a dedicated Human Resources (HR) team, the mere size of the respondent’s organisation does not carry any great weight in the assessment of the appropriate penalty.
ii. The respondent was within its rights to defend the claim against it in this matter. The Court should reject any submission the respondent’s defence of the claim should be viewed as an aggravating factor.
iii. There is no basis, inferential or otherwise to conclude that senior management were aware the Agreement was being breached. The evidence before the Court is that the personnel involved in decisions regarding pay increases understood the respondent to be complying with its obligations under the Agreement.
iv. There is evidence of the respondent’s contrition before the Court. There is also evidence of the actions the respondent has taken to avoid ambiguity in the operation of the pay provisions of its enterprise agreements and the strong payroll controls it has in place. The respondent’s apology combined with these actions demonstrates its insight and commitment to ensuring its precise compliance with its enterprise agreements.
v. There have been no previous findings made against the respondent for beaches of the FW Act. As such, the underpayment which arose in this case is not indicative of a broader failure by the respondent to adhere to industrial laws. The respondent submitted that an absence of prior contraventions is seen as evidence of good character and therefore mitigatory.
67 In the concluding paragraph of the Respondent’s Outline, the respondent submitted that if the Court was minded to impose a pecuniary penalty, then it should be less than 10% of the maximum $63,000 statutory penalty for each of the two contraventions.
Evidence of Ingrid Hawkins
68 The Court received the Hawkins Affidavit into evidence. Ms Hawkins, who is the respondent’s Director of Corporate Services, deposed that she has been employed by the respondent since 14 October 2013.
69 Ms Hawkins said she previously worked as the Manager for Finance until she became Director of Corporate Services on 6 December 2017. Ms Hawkins described the respondent as a large local government entity with approximately 1,519 employees. She said about 255 of these are employed in the outside workforce.
70 Ms Hawkins stated the respondent has a dedicated HR team made up of 26 employees which includes a workplace health and safety team.
71 Ms Hawkins said she had made enquiries and has been told the respondent had not previously been found by any court to have contravened the FW Act. She also declared that it was the respondent’s position that it did not, and would not, intentionally breach any laws including the FW Act.
72 In her affidavit, Ms Hawkins described the process that the respondent follows when a pay increase is due to be paid to employees. She said the HR team obtains all the information relevant to a pay increase and then determines what the pay increase rate should be, based on the relevant enterprise agreement. She said the HR team then prepares a memorandum to go to the Chief Executive Officer for approval.
73 Ms Hawkins stated that she could not find any record that suggested anyone considered the FWCEP increase applied to the outside workforce. I understood from her affidavit to mean that the view Ms Hawkins held, which her colleagues shared, was the percentage increases as determined by the Perth Consumer Price Index and WA Mercer Market Movement index (Mercer), were the only measures under cl 11.1 of the Agreement that had to be considered and applied.
74 Ms Hawkins said this was because she believed the respondent’s outside workforce is paid more than the minimum wage as determined under the FW Act and the minimum wage in the relevant award.
75 Ms Hawkins stated this approach to the interpretation of the Agreement was based on a genuine, but what she now understands (as a result of the liability decision), was an incorrect belief. She said that the respondent wrongly applied cl 11.1 of the Agreement because it did not believe that the FWCEP increase was relevant.
76 Ms Hawkins stated that the respondent did not make a deliberate choice to not pay an entitlement that was owed under the Agreement. For this reason, Ms Hawkins stated the respondent sincerely apologises for the error which has led to this underpayment.
77 The two memorandums that were sent to and signed by the respondent’s then Chief Executive Officer, Stuart Jardine (Mr Jardine) were attached to the Hawkins Affidavit. They each show Mr Jardine approved the salary increases effective from July 2018 and from July 2019 based on the advice that was contained in these two memorandums.
78 Ms Hawkins stated that on or about 7 December 2021, bargaining with the relevant unions who were parties to the Agreement, concluded when the 2020 Agreement was endorsed in a ballot that was held with the outside workforce. Ms Hawkins explained that the 2020 Agreement included negotiated rates of pay that were higher than those provided for under the Agreement.
79 She said that on or about 22 December 2021, the respondent paid the claimant (and all other relevant employees) a back payment in respect of the period 1 July 2021 until 19 December 2021, at the higher rates that applied under the replacement 2020 Agreement.
80 Ms Hawkins attached copy of the claimant’s pay slip for 22 December 2021 to her affidavit, which confirmed that he had received backpay for the retrospective payment of the wage increase that was agreed to under the 2020 Agreement, effective from 1 July 2021.
81 Ms Hawkins said the respondent had not yet been able to make a back payment to the claimant for any amount the claimant was entitled to receive as a result of the liability decision. She said this was because the quantum of his underpayment claim was still to be determined by the Court.
82 Ms Hawkins then stated the respondent intends on using its best endeavours to ensure that all future enterprise agreements are drafted clearly to avoid any ambiguity in the operation of the provisions that provide for pay increases.
83 She said subsequent enterprise agreements – namely, the 2020 Agreement and the City of Striling Outside Workforce Agreement 2023 – do not refer to Mercer or to the FWCEP Increase.
Crossexamination of Ms Hawkins
84 Ms Hawkins was crossexamined by the claimant’s counsel. Ms Hawkins confirmed in crossexamination, that the first time she became aware of an alleged underpayment was when the claimant submitted his claim in 2021.
85 When asked about whether the respondent took any steps to consider whether the claimant’s underpayment of wages claim had merit Ms Hawkins said:
[W]e firmly believed, um, genuinely believed that we had applied the Agreement correctly with the two percentages. ts 9.

86 Ms Hawkins was asked whether the respondent had sought advice from lawyers on the interpretation of the Agreement. She confirmed that legal advice was not sought and the reason for this was because the respondent ‘genuinely believed that [the respondent] applied the Agreement correctly.’ ts 9.

87 Under further questioning from the claimant’s counsel, Ms Hawkins confirmed the respondent did not take any corrective action at the time the claimant made his underpayment claim or at any time since.
Respondent’s further oral submissions
88 After Ms Hawkins gave her evidence, the respondent’s counsel in further oral submissions pressed the argument that far from imposing a pecuniary penalty at the range suggested in the conclusion of the Respondent’s Outline, I should decline to order that a penalty be imposed at all.
89 Relying upon the evidence from Ms Hawkins and the decision of Gordon J in CEPU v Telstra counsel for the respondent submitted the particular circumstances of this case, that would allow me to take this path, include the following:
i. the contraventions were not deliberate or malicious and were based on a genuine misunderstanding of how the Agreement operated;
ii. the contraventions arose from an erroneous but arguable interpretation of the Agreement;
iii. the respondent has not previously contravened the FW Act;
iv. the drafting of the Agreement was unclear; and
v. the respondent has apologised for the breach that led to the underpayment.
Consideration
90 Having received Ms Hawkins’s evidence and the parties’ submissions on penalty, I now explain how I have had regard to and applied the principles I am required to consider when determining an appropriate disposition in this matter.
91 In determining an appropriate penalty, I have taken into consideration both parties’ submissions and the Hawkins Affidavit, which to a large extent was unchallenged.
Nature and extent of the respondent’s conduct
92 Properly characterised and as the respondent submitted, I accept this matter involves two separate yet fundamentally similar courses of conduct, both of which give rise to and should be treated as two separate contraventions:
i. the July 2018 Contravention; and
ii. the July 2019 Contravention.
93 The July 2018 Contravention involved a decision by the respondent to increase the claimant’s salary on 1 July 2018 by 2.2% in line with the Mercer measure, when the respondent under cl 11.1 of the Agreement was required to increase the claimant’s salary by the FWCEP Increase of 3.5%.
94 Similarly, the July 2019 Contravention was the result of a decision the respondent made to increase the claimant’s salary on 1 July 2019 by 2.2% in line with the Mercer measure when the respondent under cl 11.1 of the Agreement should have increased the claimant’s salary by the FWCEP Increase of 3%.
95 As the two memorandums that were attached the Hawkins Affidavit show, the respondent twice embarked on a process that resulted in two separate decisions about the quantum of the increases that would be made to the claimant’s salary; the first effective from 1 July 2018 and the second effective from 1 July 2019.
96 Both decisions, the second of which was repeated a year after the first, had the same or similar effects; there was a shortfall in the claimant’s pay every fortnight until such time as the Agreement was renewed or replaced, which occurred on 7 February 2022 with the Fair Work Commission’s approval of the 2020 Agreement, which the respondent implemented with retrospective effect from 1 July 2021.
97 The common thread in each contravention was in the decisions the respondent twice made on how this clause of the Agreement was to be interpreted and the amount of the increases that were to be applied from 1 July 2018 and from 1 July 2019.
98 It is on this basis I respectfully disagree with the claimant’s submissions there is no factual basis for the Court to conclude that each of the fortnightly underpayment should be treated as separate contraventions and that s 557 of the FW Act does not apply to the conduct at issue in this matter.
99 While I accept the Agreement was, in effect, breached in each fortnightly pay period and the claimant was deprived of the increase that should have been paid to him under cl 11.1 of the Agreement each time he was paid, there is a clear interrelationship between the legal and factual elements of each of these breaches.
100 In view of my characterisation of the respondent’s conduct, which is supported by the evidence Ms Hawkins gave about the process the respondent followed when determining the pay increases to be applied from 1 July 2018 and from 1 July 2019, this matter is clearly one to which s 557 of the FW Act applies.
Conduct is not a serious contravention within the meaning of s 557A
101 I was not prepared to find the two contraventions the respondent engaged in were serious contraventions within the meaning of s 557A of the FW Act. Noting s 557A of the FW Act has since been amended, there are three reasons I have reached this conclusion.
102 Firstly, the allegation the respondent had engaged in a serious contravention was not raised in the claimant’s originating application or particulars of claim, which is a specific requirement under s 557A(6) of the FW Act.
103 Secondly, even if I was permitted to consider whether the respondent had engaged in a serious contravention which attracts a higher potential pecuniary penalty, I do not consider the respondent’s conduct in this case, would have fallen within the category of matters s 557A and s 557B were intended to apply to.
104 When determining penalties to be imposed in a case involving both a systematic and significant underpayment of wages by a hospitality industry employer, Katzmann J in DTF World Square at [29] observed;
Section 557A was one of a suite of provisions that came into effect on 15 September 2017 following the passage of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) and in the wake of several inquiries into the exploitation of vulnerable workers. As the Explanatory Memorandum to the Bill stated:
The Bill addresses increasing community concern about the exploitation of vulnerable workers (including migrant workers) by unscrupulous employers, and responds to a growing body of evidence that the laws need to be strengthened.
The exploitation of vulnerable workers has been examined in a range of reports, including the Senate Education and Employment References Committee’s report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, March 2016; the Fair Work Ombudsman’s A Report of the Fair Work Ombudsman’s Inquiry into 7-Eleven, April 2016 and A Report on the Fair Work Ombudsman’s Inquiry into the labour procurement arrangements of the Baiada Group in New South Wales, June 2015; and the Productivity Commission’s Productivity Commission Inquiry Report: Workplace Relations Framework, No. 76, November 2015.
…
The Bill also addresses concerns that civil penalties under the Fair Work Act are currently too low to effectively deter unscrupulous employers who exploit vulnerable workers because the costs associated with being caught are seen as an acceptable cost of doing business. The Bill will increase relevant civil penalties to an appropriate level so the threat of being fined acts as an effective deterrent to potential wrongdoers.
105 So, in addition to the requirement under s 557A(6) to put the respondent on notice that a serious contravention is alleged from the beginning of proceedings Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Explanatory Memorandum) at [29].
it is apparent the conduct to which findings of serious contraventions are more likely to be made, are those involving flagrant breaches of the FW Act; the category of cases that bear all the hallmarks of systematic exploitation or ‘Wage-theft’.
106 I am not satisfied the respondent’s conduct in this case falls within the category of cases in respect of which the Court could reasonably conclude the respondent had knowingly set out to exploit the claimant. Rather, the respondent’s conduct falls at the other end of the range of contravening behaviour, a point that I will return to.
107 Thirdly, I do not consider the claimant’s submissions regarding the application of s 557B of the FW Act are correct. It seems clear the Court is required under s 557A (as it applies now and when the claim was brought), to reach a conclusion on whether particular contravening conduct gives rise to a serious contravention before s 557B comes into play.
108 Section 557B applies where a body corporate denies that serious contraventions committed by its officers, employees, or agents were not authorised. In other words, s 557B was included in the FW Act to deal with the requirements of proof in matters where a serious contravention has been established but a body corporate claims its directors, employees or agents have ‘gone rogue’. Explanatory Memorandum at [31]  [34].

109 Although s 557B may be a deeming provision, evidence that particular conduct was authorised by a body corporate, whether by an individual within the organisation (see s 793 of the FW Act), via a policy, rule, course of conduct or practice that exists within the organisation is required. Explanatory Memorandum at [31]  [34].

110 If in the present case, I had concluded the two breaches were serious contraventions and made a finding whether the respondent as a body corporate, had knowingly contravened the Agreement, the two memorandums would have likely provided sufficient evidence the respondent had authorised the contraventions.
111 Notwithstanding this, and as I have indicated, I do not consider the evidence regarding the two contraventions even with the involvement of members of senior management, would have placed them into the category of cases that I would find the respondent had committed a serious contravention of a civil penalty provision.
112 Accordingly, for the reasons set out in the preceding paragraphs [101]  [111], I have determined the respondent has not committed serious contraventions within the meaning of s 557A(1) of the FW Act. As a result of this finding, the maximum combined pecuniary penalty that may be imposed for the two contraventions is the sum of $126,000.
Extent of conduct and the circumstances in which the breach occurred
113 Due to the respondent’s decision to only increase the claimant’s salary by 2.2% in July 2018, when it should have been raised by the 3.5% FWCEP Increase, the claimant was underpaid an amount of $31.10 per fortnight.
114 This conduct continued until the respondent applied a further increase in July 2019, which the parties have agreed, resulted in a total underpayment in the amount of $808.80.
115 In relation to the July 2019 Contravention; the respondent’s decision to only increase the claimant’s salary by 2.2%, when it should have been raised by the 3% FWCEP Increase, meant the claimant was underpaid an amount of $51.60 each fortnight, from 1 July 2019.
116 The conduct which is the subject of the July 2019 Contravention differed from the July 2018 Contravention in that it continued for a longer period. While the duration of the July 2018 Contravention was for 12 months, the July 2019 Contravention continued until the Agreement was replaced by the 2020 Agreement.
117 The July 2019 Contravention was of a longer duration because the Agreement made no provision for a wage increase from 1 July 2020. As a result, the incorrect wage rate that applied from 1 July 2019 continued to be paid until 22 December 2021, the date the respondent agreed to apply the 2020 Agreement with retrospective effect from 1 July 2021.
118 It is my view that although breaches of the Agreement continued every fortnight until 20 December 2021, the retrospective payment the claimant received had the effect of rectifying any underpayment that occurred in the period 1 July 2021 to 20 December 2021.
119 The parties have agreed that due to the July 2019 Contravention, the claimant was underpaid a total amount of $2,683.48. Together, the two contraventions resulted in a total underpayment of both contraventions in the sum of $3,492.28 (the underpayment amount).
120 For clarity I have extracted below the table Ms Hawkins attached to her affidavit, which shows the extent of the underpayment that resulted from the two contraventions (table of loss).
Date
Explanation
Loss
30 June 2018
Salary  $61,296.29

1 July 2018 – 30 June 2019
· Increase applied: 2.2% to $63,584.48
· Increase required: 3.5% to $64,393.28
· Difference: $808.80
$808.80
1 July 2019 – 30 June 2020
· Increase applied: 2.2% to $64,983.34
· Increase required: 3% to $66,325.08
· Difference: $1,341.74
$1,341.74
1 July 2020 – 30 June 2021
See above as there was no increase payable on 1 July 2020.
$1,341.74
TOTAL
$3,492.28
121 In the final Orders to follow, I will make an order requiring the respondent to pay the claimant the underpayment amount.
Nature and extent of any loss or damage sustained
122 The nature and extent of the loss and damage in this matter is at two levels. Firstly, and as I have acknowledged, the claimant who is employed by the respondent to maintain reticulation systems in its parks and gardens, was deprived of the full percentage wage increases he should have received for three years while the Agreement was in force, in the amounts set out in the table of loss.
123 At a second level, the claimant incurred further loss after he made the claim by having to go without the benefit of the wage increases, he should have received, while he awaited the outcome of these enforcement proceedings.
124 Other than the two categories of losses I have described, both of which may be quantified and remedied with an order requiring the respondent pay the claimant the underpayment amount plus an amount of pre-judgment interest, there was no evidence on the other impacts the contraventions may have had on the claimant that I should have regard to when determining a penalty.
Conduct was deliberate
125 It is my view the respondent’s choice regarding its interpretation of cl 11.1 of the Agreement was deliberate, even if it was based upon a mistaken and genuinely held belief. In reaching this conclusion, I have carefully weighed the evidence Ms Hawkins gave against my findings in the liability decision.
126 It is my view that what has occurred in this case is the industrial law equivalent of not looking properly to the left and right at a roundabout and assuming it was safe to drive on through, when there is already a car in the roundabout, driving towards you.
127 In the same way driving into a roundabout with the mistaken belief that it is safe to go when you have not looked properly in both directions, also involves deliberate acts, the respondent’s failure to take greater care and make further inquiries as to why the quantum of the FWCEP Increase was included in cl 11.1 of the Agreement as an amount by which the salary of an outside employee could have been increased, also involves deliberate decisions.
128 While both may involve mistakes, which the contravener may later regret and apologise for, they still involve acts or decisions, with consequences that follow. By not paying more attention on why cl 11.1 of the Agreement included an additional measure by which the claimant’s annual salary could have been increased (the FWCEP Increase), the respondent exposed itself to the risk of a contravention.
129 As I noted at [71] of the liability decision, an interpretation of cl 11.1 where particular terms of the Agreement were left without a purpose, should have been avoided. It is well established that a construction of an industrial agreement that results in each part of an instrument having some operation or work to do, is to be preferred. Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595 at [22].

130 The fact the outside workforce may have been paid more than the minimum wage as determined under the FW Act and the minimum wage in the award that applies to outside local government employees, does not explain why a reference to the FWCEP Increase was included in cl 11.1 of the Agreement. After all, the Agreement was by virtue of cl 3, a stand-alone industrial instrument that ousted all other awards and previous enterprise agreements.
131 It is my view that the inclusion of the FWCEP Increase in cl 11.1 of the Agreement as an amount by which outside employee salaries could be increased is a matter the respondent ought to have paid more attention to.
132 It is on this basis that I find the July 2018 and July 2019 Contraventions were deliberate. Having said this, I do not consider the respondent was acting maliciously with the construction it chose to apply. The claimant’s salary was increased, even though it was by a lesser and incorrect amount.
133 Further, and as I indicated in the liability decision, cl 11.1 of the Agreement could have been drafted more clearly. That said, I am not convinced, having regard to my application of the principles that apply to the construction of industrial instruments in the liability decision, that this was a matter in which the respondent’s interpretation could have gone either way.
134 Although I have reached a finding that the contraventions were deliberate, having regard to the quantum of the underpayment amount, the non-payment of which may be rectified, it is reasonable to conclude the contraventions at issue in this matter do fall at the lower end of the range of contravening conduct.
Scale and size of the business
135 I accept the respondent properly described, is a large well-resourced employer with a dedicated HR team. While the size of an employing entity may not carry much weight in the assessment of a penalty under the FW Act, it is reasonable to expect a large and wellresourced organisation could have done more to prevent a contravention.
136 However, and as her affidavit revealed, Ms Hawkins was not the only person who failed to look more closely as to why cl 11.1 of the Agreement included the FWCEP Increase as an amount by which the claimant’s annual salary could have been increased.
137 It appears neither the Manager for Human Resources, Ms Natalia Smith who drafted the memorandums nor Mr Jardine who signed off on the two increases (both of which were below the 2.5% increase the respondent had budgeted to outlay as an increase for its outside workforce) had considered why the additional measure of a FWCEP Increase was included in cl 11.1.
138 During her crossexamination, Ms Hawkins conceded the respondent did not seek or obtain advice from the respondent’s external solicitors before making the decisions that resulted in the July 2018 and the July 2019 Contraventions. Ms Hawkins said this was because she thought the Agreement had been applied correctly. In other words, the respondent (returning to my traffic analogy) had already made its decision that it was safe to drive on.
Financial position of the respondent
139 The financial position of the respondent in this matter, as in most cases, does not carry any great weight in the assessment of an appropriate disposition. However, as a wellresourced employer, it is expected the respondent will at the very least, have the means to pay a fine and to ensure that corrective action is taken (which includes rectifying any underpayment).
Corrective action, contrition, and cooperation
140 In relation to cooperation, this is not a case where the contraventions were admitted at an early stage, thereby saving the parties and the Court the costs of a contested hearing.
141 The case did however proceed efficiently to the extent that much of the material evidence upon which the matter had to be decided was agreed or not disputed and the issues in the liability hearing were confined to matters of interpretation.
142 I accept the respondent’s decision to defend the action is not an aggravating factor when determining an appropriate penalty. However, by contesting the proceedings, the respondent is unable to claim anything in mitigation that would otherwise have been available if it had admitted the contraventions prior to the liability hearing.
143 Although the respondent has, since the liability decision, provided an apology for the contraventions and provided assurances that it will not engage in future conduct of this type, the respondent has not yet taken corrective action by paying the claimant for the underpayment amount prior to 1 July 2021.
144 This is despite the respondent being able to quantify and confine the extent of any loss, because of the contraventions, to an identifiable sum.
145 The respondent says it has not yet paid the claimant the underpayment amount because it is still awaiting final orders from the Court before making a payment to the claimant. In my view however this does not provide a reasonable excuse for delaying the payment of the underpayment amount, which at a minimum is the corrective action that would need to be taken to rectify the contraventions at issue in the present case.
146 Despite the claimant at one stage having a different view on what may have been payable as the underpayment amount, it was clear from the Hawkins Affidavit that the quantum of the amount by which the claimant was underpaid because of the contraventions, is something that was known to the respondent.
147 While the apology the respondent has provided may present as contrition, until such time as corrective action in the form of rectifying the underpayment amount has occurred, it is difficult to conclude the respondent’s apology is anything but functionary.
148 The payment of the underpayment amount to the claimant following the liability decision is corrective action that could have already been taken. The payment of this sum to the claimant prior to the penalty hearing is something I consider, would have bolstered the respondent’s arguments in mitigation.
An outcome that results in no pecuniary penalty
149 I have had regard to the authorities the respondent’s counsel relied upon to submit that this was a case in which it was appropriate that no financial penalty be imposed.
150 However, I note that in Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2018] FCA 480 at [15] Rangiah J stated;
I do not consider the AIPA v Qantas or CEPU v Telstra establish any general principle that where the unlawful conduct arises out of an arguable construction of a relevant instrument, there should be no penalty. I accept that where a contravention of a civil penalty provision has arisen from the contraveners’ honest and reasonable, but erroneous construction of a relevant instrument, that is a powerful factor in favouring the exercise of the discretion to decline to impose any penalty or to limit the amount of any penalty. However, each case must turn upon its own circumstances.
151 I have also noted the cases the respondent referred to where no penalty was imposed, which include CEPU v Telstra, were prior to a substantial increase in penalties that apply to the present case for contraventions of s 50 of the FW Act.
152 Community sentiment regarding contraventions of the FW Act resulting in the underpayment of employee wages has shifted significantly, something which is reflected in the substantial increase in penalties that has since followed these decisions. In addition to this, I do not regard the circumstances in the present case are such that no penalty is justified.
Specific and general deterrence
153 Noting the respondent’s breach of cl 11.1 of the Agreement was deliberate, even though it was at the lower end of the range of contravening behaviour, it is my view a penalty to deter the respondent from repeating or engaging in similar conduct, needs to be imposed.
154 On the issue of general deterrence, the authorities make it clear that if a penalty is to be imposed, it must be set at a level that will not only deter the respondent from engaging in further contravening conduct, but others who may be contemplating taking a similar path.
155 The penalty cannot be so low that it will be viewed by the respondent or others as an acceptable cost of doing business: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 at [98].
156 ‘The penalty should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by likeminded persons or organisations’: Ponzio v B&P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93].
157 It is my view that a pecuniary penalty that operates as a deterrent to further contraventions, that is not greater than what is necessary to achieve this outcome, can and should be imposed in the present case.
Conclusion - Penalty to be imposed
158 Accordingly, I have determined that a global fine of $10,000 to be the most appropriate disposition in the circumstances of this case.
159 In relation to this, I accept the respondent’s submission that an appropriate penalty that is commensurate with the conduct committed in this particular case, is a penalty less than 10% of the statutory maximum.
160 The quantum of the pecuniary penalty is in my view, appropriate having regard to all the circumstances of this matter including the following:
i. the duration of the two courses of conduct giving rise to the two contraventions;
ii. the extent of the loss the claimant has sustained as result of the two contraventions;
iii. the respondent has not engaged in any prior contraventions of the FW Act;
iv. the outcome in the decision has at least clarified the quantum of the wage increase the claimant should have received under cl 11.1 of the Agreement;
v. while the breaches fall at the lower end of the range of contravening behaviour, the claimant was, as a result of deliberate decisions the respondent made in July 2018 and in July 2019, deprived of an entitlement that he was entitled to receive;
vi. noting the size and scale of its business, the respondent ought to have taken greater care to ensure it did not engage in the contraventions that followed;
vii. the claimant hasn’t yet received payment for the underpayment amount.
161 In reaching this global penalty I have considered that a lower penalty should be imposed for the first contravention, which acknowledges the July 2018 Contravention was of a lesser duration than the July 2019 Contravention. The quantum of the fine I have determined is appropriate for this contravention is an amount of $4,000.
162 For the July 2019 Contravention, which continued for at least 12 months more than the 2018 Contravention and resulted in a larger underpayment, I have determined the appropriate penalty is a fine of $6,000.
163 In applying the totality principle, I note that the individual fines for the July 2018 and July 2019 Contraventions and when added together (the combined / global penalty), are both less than 10% of the statutory maximum for the two contraventions.
164 Noting the statutory maximum penalties for each contravention, I do not consider the penalty to be imposed is an oppressive response to the contraventions that have occurred.
Penalty to be paid to the claimant
165 The claimant, in his originating application, asked the Court to make an order that any penalty be paid to the claimant. In relation to this, s 546(3) of the FW Act provides:
Payment of penalty
(3) The court may order that the pecuniary penalty, or a part of the penalty be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
166 The matter of how the Court is to exercise its discretion under s 546(3), on who is to receive the penalty in an underpayment of wages claim, was considered by Her Honour Mortimer J (as she then was) in Milardovic v Vemco Services Pty Ltd (No 2) [2016] FCA 244; (2016) 242 FCR 492 . At [40]  [44] Her Honour made the following observations:
Were I free to do so, I would, in the exercise of the Court's discretion under s 546(3), order that the penalty be payable to the Commonwealth rather than to [the applicant]. However that course is not open to me following the Full Court's decision in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4. The Full Court's decision requires the Court to make an order that [the respondent] pay the penalty the Court has imposed on it to [the applicant].
That the Full Court's decision in Sayed requires me to make such an order arises from several aspects of the Full Court's reasons. First, at [72] their Honours identified ‘a certain symmetry between the person or entity authorised to prosecute an enforcement proceeding and the person or entity to whom the penalty, if imposed, might be paid’.
[A]t [101] the Full Court [in Sayed] held:
[T]he power conveyed by s 546(3) is ordinarily to be exercised by awarding any penalty to the successful applicant. We accept that there may be cases … where the penalty, or a part of the penalty, should be paid to another person in the circumstances described by Gray J in [Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170] at [44].
The reference to Gray J in Plancor is a reference to the following passage of his Honour’s reasons … at [44]:
[T]he initiating party is normally the proper recipient of the penalty as part of a system of recognising particular interests in certain classes of persons… in upholding the integrity of awards and agreements the subject of penal proceedings. Where a public official vindicates the law by suing for and obtaining a penalty, it is appropriate that the penalty be paid to the Consolidated Revenue Fund. Otherwise, the general rule remains appropriate, that the penalty is to be paid to the party initiating the proceeding, with the Gibbs (Gibbs v The Mayor, Councillors and Citizens of City of Altona [1992] FCA 553; 37 FCR 216) … exception that the penalty may be ordered to be paid to the organisation on whose behalf the initiating party has acted.
Subject then to the ‘Gibbs exception’ … the Full Court’s decision in Sayed is authority for the proposition that where a proceeding is brought by an applicant on his or her own behalf, the discretion in s 546(3) is to be exercised to make any penalty the Court orders payable to that applicant. Aside from the identity of the person who brings the proceedings, and taking into account the ‘Gibbs exception’, the Full Court’s judgment does not appear to provide for any other basis upon which a penalty should be made payable to another person or entity set out in s 546(3).
167 While neither party specifically addressed this matter in their submissions on penalty, the reasoning in the authorities I have referred to, sets out the path I am required to take in exercising this discretion. For this reason, I have determined the penalty should be paid to the claimant under s 546(3) of the FW Act.
Pre-judgment interest calculations
168 By way of relief, the claimant in his originating application sought an order for pre-judgment interest under s 547 of the FW Act which relevantly provides:
Interest up to judgment
(1) This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument.
(2) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.
(3) Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made.
169 In relation to this aspect of the claimant’s claim, the parties agreed that the Court should calculate interest on the underpayment amount by reference to the interest rate that applies under s 8(1)(a) of the Civil Judgments Enforcement Act 2004 (WA) of 6% per annum.
170 For the pre-judgment interest calculations, I have determined that in the circumstances of this case, it is appropriate that interest should only be paid up to the date on which the liability decision issued, rather than the date of the order requiring the respondent to pay the claimant the underpayment amount.
171 While interest usually follows the event by reference to the orders made, the Court retains a discretion on the interest that may be ordered in appropriate cases: National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451; (2013) 234 IR 139 at [154].
172 Noting the various extensions that were made to the timetable for the filing of submissions prior to the penalty hearing, it is reasonable in the circumstances that pre-judgment interest be calculated up to the date on which the liability decision issued.
173 The manner and method by which I have calculated the quantum of the pre-judgment interest to be paid is set out in the table below.
Number of days365 × interest rate × loss=interest owing
Date
Interest
30 June 2019 – 14 June 2024 (2,176 days)
$289.31
30 June 2020 – 14 June 2024 (731 days)
$322.46
TOTAL
$611.77

Orders to issue
174 As a result of the conclusions I have reached in the preceding paragraphs, the following declarations and orders will issue:
Declarations
1. The Court declares that the respondent on 1 July 2018, contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act) by failing to increase the claimant’s salary by the correct percentage amount in accordance with cl 11.1 of the City of Striling Outside Workforce Agreement 2017 (Agreement) (July 2018 Contravention).
2. The Court declares that the respondent on 1 July 2019, contravened s 50 of the FW Act by failing to increase the claimant’s salary by the correct percentage amount in accordance with under cl 11.1 of the Agreement (July 2019 Contravention).
3. The Court declares that as a result of the July 2018 Contravention and the July 2019 Contravention, the claimant was underpaid the total sum of $3,492.28 (underpayment amount).
Orders
1. Pursuant to s 545(3) of the FW Act, the Court orders the respondent pay the claimant the sum of $3,492.28 within 28 days.
2. Pursuant to s 547 of the FW Act, the Court orders the respondent pay the sum of $611.77 being the amount of pre-judgment interest on the underpayment amount within 28 days.
3. Pursuant to s 546(1) of the FW Act, the Court orders the respondent to pay a pecuniary penalty fixed in the sum of $10,000 (penalty);
4. Pursuant to s 546(3) of the FW Act, the Court orders the respondent pay the penalty to the claimant within 28 days.


T. KUCERA
INDUSTRIAL MAGISTRATE