2026 WAIRC 00148
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2026 WAIRC 00148



CORAM
:
INDUSTRIAL MAGISTRATE C. TSANG



HEARD
:
TUESDAY, 14 OCTOBER 2025



DELIVERED
:
MONDAY, 16 MARCH 2026



FILE NO.
:
M 11 OF 2025



BETWEEN
:
CONSTRUCTION, FORESTRY AND MARITIME EMPLOYEES UNION


CLAIMANT





AND





BHAGWAN MARINE LIMITED


RESPONDENT

CatchWords : INDUSTRIAL LAW – Application for imposition of civil penalties for noncompliance with cl 12.3 of the Agreement requiring the employer to convert eight casual positions to permanent positions within four weeks of registration of the Agreement – Admitted contravention – First contravention – No financial loss to employees – Specific deterrence – General deterrence
Legislation : Fair Work Act 2009 (Cth)
Instrument : Bhagwan Marine Ltd Offshore Vessel Operations and MUA Offshore Oil and Gas Enterprise Agreement 2024
Cases referred
to in reasons: : Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Construction, Forestry and Maritime Employees Union v OSM Australia Pty Ltd [2025] WAIRC 00349
Construction, Forestry and Maritime Employees Union v Qube Ports Pty Ltd [2025] WAIRC 00785
Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244
Construction, Forestry and Maritime Employees Union v Qube Ports Pty Ltd [2025] FCA 208
Result : Penalty imposed
Representation:
Claimant : Ms S Sayed (of counsel)
Respondent : Mr J McLean (of counsel)


REASONS FOR DECISION
1 These reasons concern the claimant’s (CFMEU) claim for the following orders:
(a) The respondent pay a civil penalty; and
(b) Any civil penalty imposed on the respondent be paid to the CFMEU.
Background
2 On 28 January 2025, the CFMEU lodged an Originating Claim, claiming that Bhagwan Marine Limited (respondent) contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act) by failing to convert eight casual positions to permanent positions within four weeks of the registration of the Bhagwan Marine Ltd Offshore Vessel Operations and MUA Offshore Oil and Gas Enterprise Agreement 2024 (Agreement), pursuant to cl 12.3 of the Agreement.
3 On 7 March 2025, the respondent filed a Response, stating that it:
1. Admits paragraphs [1]–[5].
2. Denies paragraphs [6]–[7] and says further that the obligations required under clause 12.3 of the [Agreement] was complied with as 8 casual employees were converted to permanent and their permanent employment commenced on 15 October 2024.
3. In relation to paragraph [8], the Claim should be discontinued or otherwise dismissed.
4 On 26 June 2025, the CFMEU filed an Amended Outline of Claim, removing the reference to seeking a declaration that the respondent had contravened s 50 of the FW Act.
5 On 27 June 2025, the respondent filed an Amended Response admitting to noncompliance with cl 12.3 of the Agreement, and therefore s 50 of the FW Act; contending that a pecuniary penalty is inappropriate considering the following matters:
a. that the Respondent understood that it had reached an agreement with the [CFMEU] that it would convert casual employees to permanent employment after collecting and considering expressions of interest and that that process would occur some time after 16 October 2024;
b. on or around 28 January 2025, the Respondent offered permanent contracts to 8 casual employees, with such contracts said to operate retrospectively;
c. the Respondent converted 8 casual employees to permanent employment by 27 February 2025 and their permanent entitlements (including leave accruals) were backdated to 15 October 2024;
d. the Respondent did not reconcile the difference in casual rates and permanent rates (i.e. 25% casual loading) as an overpayment. As a result, these employees received between $9,000 - $23,000 more than what they would have received had the conversion been effected on 15 October 2024[.]
6 On 21 July 2025, the parties lodged a Statement of Agreed Facts, stating:
1. The [CFMEU] was at all material times:
1.1 capable of suing in its own name;
1.2 a registered organisation under the Fair Work (Registered Organisations) Act 2009 (Cth); and
1.3 an employee organisation for the purposes of the [FW Act].
2. [The Respondent] was at all material times:
2.1 a corporation able to sue and be sued;
2.2 a ‘national system employer’ for the purposes of the FW Act; and
2.3 conducting business in the oil and gas industry.
3. The [Agreement] was approved by the Fair Work Commission (FWC) on 18 September 2024. …
4. The Agreement:
4.1 was registered on 18 September 2024;
4.2 commenced operation on 25 September 2024;
4.3 has a nominal expiry date of 1 August 2027; and
4.4 at all [material] times applied to the Respondent and covered the CFMEU.
5. Clause 12.3 of the Agreement states: ‘The Employer will convert 8 casual positions to permanent positions within 4 weeks of registration of this Agreement.’
6. As the FWC approved the Agreement on 18 September 2024, the time for compliance with clause 12.3 was 16 October 2024.
The evidence
7 On 4 August 2025, the CFMEU filed the witness statement of George Gakis (Mr Gakis), Assistant State Secretary for the Western Australia Branch of the Maritime Union of Australia Division of the CFMEU, stating:
3. I was involved in the bargaining negotiations for the [Agreement] that commenced around midDecember 2023 and concluded on or around 1 July 2024.
4. The Agreement was registered on 18 September 2024 and commenced operation on 25 September 2024.
5. In those bargaining negotiation meetings, a total of about 10 that were held, the representative for the Respondent was Abhinav Agrawal (Mr Agrawal), Head of Human Resources/Industrial Relations for the Respondent.
6. Sometime around mid-November 2024, I became aware that the Respondent had not made 8 casual employees permanent within 4 weeks of registration of the Agreement. On 13 November 2024, Mr Agrawal and I had a meeting where I raised this with him. Mr Agrawal told me that he was aware and that he was going to ensure that the permanency occurred.
7. On 3 December 2024, I became aware that the permanency of casual employees still had not occurred. I emailed Mr Agrawal and reminded him that the 4 week period had expired on 15 October 2024.
8. On 19 December 2024, I sent another email to Mr Agrawal and asked him for an update on whether the permanency had occurred. On 30 December 2024, Mr Agrawal emailed me saying that: ‘we hope to make the permanent offers by end of the upcoming week if not earlier.’ This did not occur.
8 On 8 September 2025, the respondent lodged the witness statement of Kerren Kannikoski (Ms Kannikoski), General Manager, Corporate Services for the respondent, stating: [references to attachments omitted]
My role and Bhagwan’s operations
3. My role for Bhagwan encompasses dealing with HR, crewing of vessels, payroll, information systems, business systems and marketing.
4. Bhagwan is a marine services provider operating in both the inshore and offshore sectors. In the offshore sector, the business [sic] offshore vessel support services to its clients in the North West Shelf, Western Australia.
5. One of the enterprise agreements that covers the business and employees who perform work offshore includes the [Agreement].
6. Bhagwan employs approximately 800 to 1000 employees at any given time. Those employees are covered by nine different enterprise agreements across various States and Territories in Australia. This presents a particularly challenging industrial landscape for Bhagwan to navigate.
Discussions between Bhagwan and the CFMEU following approval of the Agreement
7. The delay in making the permanent conversions the subject of this claim was a regrettable consequence of the various challenges and complexities that Bhagwan was attempting to navigate following the Agreement commencing operation.
8. Specifically, between around October and December 2024, and following the commencement of the new Agreement, Bhagwan was required to negotiate with the [CFMEU] for exemptions under Schedule 2 of the Agreement for two hybrid vessels, being the Bhagwan Renegade and Tempest. These negotiations were protracted and required multiple meetings/discussions with the [CFMEU]. At those meetings, various topics were discussed like alternative vessels to the hybrid vessels, the structure of the hybrid vessels (like amenities, bedding etc) and the type of work to be completed by the hybrid vessel. There was back and forth discussions, and both Bhagwan and the [CFMEU] were navigating these exemption provisions. I know this from speaking with Bhagwan’s then Head of HR around the times of the meetings.
9. As the negotiation of these exemptions was taking up considerable time and resources, Bhagwan understood (based on what I was made aware of by Bhagwan’s then Head of HR) that Bhagwan and the [CFMEU] had formed an understanding in or around October 2024 that the conversions would be revisited once the exemptions – a matter of pressing operational priority – had been resolved.
Bhagwan’s Change of Position
10. At the time that the claim was filed, Bhagwan believed that the understanding it considered it had reached with the [CFMEU] could potentially provide a defence of estoppel. Further, the claim initially sought a declaration of contravention which Bhagwan opposed. That motivated Bhagwan (admittedly incorrectly) to not admit the contravention.
11. However, following the decision of Construction, Forestry and Maritime Employees Union v OSM Australia Pty Ltd [2025] WAIRC 00349 [(OSM)] which considered the issue of casual conversion, Bhagwan better understood the issues it would face with defending the claim.
12. In conjunction with the [CFMEU] confirming that it would no longer seek a declaration by the Court, the parties filed consent orders which permitted Bhagwan to file an Amended Response and the [CFMEU] to file an Amended Outline of Claim to remove their claim for a declaration.
Conversion Timing and Employee Financial Benefit
13. On 17 December 2024, Bhagwan issued expressions of interest to relevant employees covered by the Agreement which were open until 24 December 2024 (EOIs).
14. From 30 December 2024, following returning to work after the Christmas and Boxing Day public holidays, Bhagwan’s HR department began considering the received EOIs and engaging in internal discussion about which employees should be offered permanent contracts.
15. From as early as around 14 January 2025, Bhagwan began contacting the successful employees by phone (and subsequently text message) to advise them that they had been successful with their EOI and that they would be receiving permanent contracts of employment. As part of that process, Bhagwan explained to the successful employees the mechanics of backdating the commencement of their permanent contracts and future permanent entitlements. This process took about a month to complete and then Bhagwan issued the contracts of employment.
16. On 24 February 2025, Bhagwan emailed eight casual employees attaching their permanent contract of employment.
17. Those eight casual employees (Employees) were:
a. Ross Palmer;
b. Graeme Naylor;
c. Brian Parkinson;
d. John Walker;
e. Benjamin Culloton;
f. Rory Hodgkinson;
g. Mark Criddle; and
h. Vaughn Barkhuizen.
18. The last Employee accepted permanent employment and was converted on 27 February 2025. All [Employees] had their permanent entitlements (including leave accruals) were [sic] backdated to 15 October 2024.
19. Bhagwan did not seek to recover the difference in casual rates and permanent rates (i.e. 25% casual loading) as an overpayment. As a result, the Employees received between $9,000 [–‍] 23,000 (as set out in the table below) more than what they would have received had the conversion been effected on 15 October 2024:
Employee
Financial Benefit
Ross Palmer
$16,920.48
Graeme Naylor
$11,614.91
Brian Parkinson
$23,423.88
John Walker
$15,167.15
Benjamin Culloton
$9,388.14
Rory Hodgkinson
$18,387.54
Mark Criddle
$17,857.51
Vaughn Barkhuizen
$13,208.08
20. The Employees did not suffer any non-financial detriment as a result of the delay in casual conversion.
21. Bhagwan did not (and never intended to) gain any financial benefit as a result of the delay in processing the conversions, but instead incurred a financial detriment of $125,967.69 being the sum of the above amounts.
No past contraventions
22. Bhagwan has been operating for over 27 years, and takes compliance with its industrial obligations very seriously. Bhagwan prides itself on its culture of compliance, on being perceived as a good corporate citizen, and ensuring that its employees are looked after and receive any and all amounts to which they are entitled.
23. Notwithstanding the complexity of Bhagwan’s industrial arrangements, this proceeding represents, as far as Bhagwan is aware, the first occasion on which Bhagwan has contravened the [FW Act]. Myself and the leadership team are disappointed that Bhagwan has found itself in this position.
Contrition and remediation
24. Bhagwan regrets that it did not comply with the obligation to convert under clause 12.3 of the Agreement by the required time, and Bhagwan apologises to the eight Employees for the delay in securing their conversion to permanency. Bhagwan appreciates that the conversions were required to be completed and in no circumstances did Bhagwan intend to breach its obligation under the agreement or deprive employees of the benefit of clause 12.3.
25. Bhagwan has sent a HR and IR compliance reminder to managers in the business highlighting why compliance is important, and outlining practical measures to ensure future compliance with Bhagwan’s obligations. This reminder should serve as a prompt for leaders in the business to being aware of relevant compliance obligations including obligations found within Bhagwan enterprise agreements.
26. Bhagwan is optimistic that it will not breach the Agreement in the future given its past record of compliance and this reminder to managers.
27. The individual who Mr Gakis says he was in contact with about this issue, Mr Agrawal, is no longer employed by Bhagwan.
9 The CFMEU submits that:
(a) Clause 12.3 provides in very clear terms that the employer will convert eight casual positions to permanent positions within four weeks of registration of the Agreement.
(b) At the time of the making of the Agreement, there were a total of four permanent employees covered by it.
(c) The respondent’s contravention arises with respect to the former part of cl 12.3, that it will convert eight casual positions to permanent positions. The parties agree that four weeks of registration of the Agreement is 16 October 2024. Statement of Agreed Facts [6].
The respondent did not make any casual positions permanent by that date.
(d) In midNovember 2024, Mr Gakis became aware that the respondent had not made any casual positions permanent and raised the issue with the respondent. The discussions between Mr Gakis and the respondent occurred up until 30 December 2024. Witness Statement of George Gakis [6]–[8].

(e) Despite this, the respondent did not send out an EOI until 17 December 2024. Witness Statement of Kerren Kannikoski: KK-1.

(f) On 28 January 2025, the CFMEU commenced these proceedings.
(g) The respondent submits that it converted eight casual employees to permanent positions on 27 February 2025. Amended Response [3.c.]; Witness Statement of Kerren Kannikoski [18].
The conversion occurs shortly before the respondent files its Response on 7 March 2025, denying a breach of cl 12.3 and stating that ‘8 casual employees were converted to permanent and their permanent employment commenced on 15 October 2024’. Response [2].

(h) On 26 June 2025, the CFMEU filed an Amended Outline of Claim, which amended the Originating Claim by removing the reference to the CFMEU seeking a declaration that the respondent has breached s 50 of the FW Act by its contravention of cl 12.3.
(i) On 27 June 2025, the respondent filed its Amended Response, admitting to the breach of cl 12.3, and admitting that it only converted the casual employees to permanent on 27 February 2025.
(j) The respondent has submitted that ‘the four week period stipulated for compliance was arbitrary, at least in a legal sense’. Respondent’s Submissions [16].
However, the four week period for compliance was a timeframe that was agreed to by the parties during the negotiation of the Agreement and is a term of an enterprise agreement. Furthermore, there are other time periods in the Agreement by which certain obligations are to occur. The respondent’s submission that the time period for compliance with cl 12.3 is arbitrary in a legal sense causes concerns because it speaks to dismissive conduct.
(k) Ms Kannikoski states in her witness statement the process that the respondent undertook prior to the conversion of permanency, which commenced with obtaining EOIs from employees. While the CFMEU accepts that the conversion of permanency involves a process, any discussion about the process and commensurate time periods, should have taken place during the bargaining negotiations, prior to the Agreement being drafted and the employees voting for it.
(l) While the respondent submits that senior management was not involved in its contravention of cl 12.3, and that the HR Manager who was involved, Mr Agrawal, is no longer employed by the respondent; the emails attached to Ms Kannikoski’s witness statement, particularly that dated 2 January 2025, indicate that those involved in the decisionmaking include the following senior decisionmakers:
(i) Tom Kannikoski, General Manager – Operations WA.
(ii) Kerren Kannikoski, General Manager – Corporate Services.
(iii) Katie Sukiennik, HR Coordinator.
(iv) Loui Kannikoski, Managing Director and CEO.
(m) Ms Kannikoski states in her witness statement that the respondent ‘regrets that it did not comply’ with cl 12.3 and that it ‘apologises to the eight Employees for the delay in securing their conversion to permanency.’ However, Ms Kannikoski’s witness statement and attachments are close to 300 pages, and while it contains screenshots of text messages and emails sent to the employees, there is no evidence that the respondent has apologised to the employees.
(n) Ms Kannikoski states in her witness statement that the respondent ‘has sent a HR and IR compliance reminder to managers in the business highlighting why compliance is important.’ However, the compliance reminder consists of an email on 4 September 2025, one day before Ms Kannikoski lodged her witness statement. Given the timing, the CFMEU considers this a step taken by the respondent to mitigate penalties.
(o) Ms Kannikoski refers to OSM. However, OSM involved an enterprise agreement that contained a clause with multiple steps and timeframes, including the sending of an EOI within a specific timeframe, and the making of offers of employment within seven days thereafter; such that it was permissible for the employer to argue that the wording was potentially confusing and the employer was uncertain of the time for compliance. However, in the case of the Agreement, cl 12.3 is clear, concise, straightforward, and without any confusing steps. There is no basis for the respondent to argue any ambiguity with its obligation to comply with cl 12.3.
(p) Ms Kannikoski states in her witness statement that the respondent has a large number of employees, covered by nine enterprise agreements. However, the respondent is a sizeable business with a dedicated HR team. There is no reason why the respondent cannot comply with its obligations under the Agreement.
(q) While Mr Agrawal is no longer employed with the respondent, management that were involved in the contravention are still employed with the respondent in their senior roles. Specific deterrence is required, as the most senior management were involved and have not shown any contrition, but engaged in a ‘box ticking exercise’.
(r) Ms Kannikoski states in her witness statement that the respondent understood that there was an understanding between the respondent and the CFMEU, reached in October 2024, essentially that the respondent would not be held to comply with cl 12.3 until a later period. However, there is no evidence of the CFMEU having agreed to this, nor is there evidence from the respondent that this was a matter that was discussed. While Ms Kannikoski gives evidence of the respondent’s understanding, she was not involved with the conversations about cl 12.3 that occurred between Mr Gakis and Mr Agrawal. Accordingly, the witness statement of Mr Gakis should be given greater weight. Mr Gakis gives evidence of his discussions with Mr Agrawal, and relevantly, does not refer to any understanding regarding delayed compliance with cl 12.3.
(s) The CFMEU seeks that a penalty be imposed; payable to the CFMEU: Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2) [2016] FCA 244.
(t) The CFMEU accepts this is the respondent’s first contravention.
(u) The CFMEU relies on Construction, Forestry and Maritime Employees Union v Qube Ports Pty Ltd [2025] WAIRC 00785 (Qube), where this court, differently constituted (Court) imposed a penalty of $11,268 on Qube, which constituted 12% of the maximum penalty, payable to the CFMEU.
(v) Qube involved a breach of an agreement that contained a clause requiring a certain payment to be made to an employee, which Qube breached by not making that payment to the employee. The CFMEU commenced the Court proceedings, following which, Qube rectified the breach. In Qube’s response, it claimed that given the rectification that there was no loss to the employee, such that no penalties ought to be imposed. While a distinguishing feature in Qube is Qube’s prior contraventions, Qube supports the contention that the court should give little weight to the respondent’s submission that no penalty should be imposed where an employer rectifies the contravention postinstitution of proceedings.
(w) With respect to specific deterrence, there is no dispute that the respondent was aware of its obligation under cl 12.3. Therefore, the respondent’s breach was not inadvertent. The CFMEU does not contest that the respondent did not obtain an industrial advantage and did not engage in a deliberate contravention. However, the CFMEU submits that the respondent was aware of its obligation under cl 12.3, was aware of the requirement to convert the casuals to permanency within four weeks of the Agreement’s registration, yet were reckless and the delays continued to occur.
(x) With respect to general deterrence, the CFMEU relies on Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson), that compliance with the terms of an enterprise agreement is not a ‘box ticking exercise’, to deter employers from only complying with an agreement following the commencement of proceedings. Furthermore, it is an important aspect of general deterrence that employers honour the timeframes that they agreed to when negotiating an enterprise agreement.
(y) While the respondent elected not to recover the casual loading from the employees, this does not mitigate from the necessity for general deterrence.
10 The respondent submits that:
(a) The contravention involves an approximately fourmonth delay in converting eight employees to permanent positions.
(b) The contravention is its first contravention of the FW Act, involves no loss or damage, it has exhibited contrition, and therefore, it is neither appropriate nor necessary to award a penalty in the circumstances.
(c) The CFMEU relies on the considerations in Pattinson, As cited in Construction, Forestry and Maritime Employees Union v Qube Ports Pty Ltd [2025] FCA 208 [74] (Feutrill J).
however, the considerations each weigh in the respondent’s favour and supports the respondent’s submission that no penalty is warranted:
Matters pertaining to both the character of the contravening conduct and the character of the contravenor may be relevant to the balance. Factors that may be relevant to deterrence include the following: [18]–‍[19], [46]–‍[48]
(a) The nature and extent of the contravening conduct.
(b) The amount of loss or damage caused.
(c) The circumstances in which the conduct took place.
(d) The size (and financial resources) of the contravening company.
(e) The deliberateness of the contravention and the period over which it took place.
(f) Whether the contravention arose out of the conduct of senior management or at a lower level.
(g) Whether the company has a corporate culture conducive to compliance with the Act.
(h) Whether the company has shown a disposition to co-operate with regulators in relation to the contravention.
(d) The considerations at Pattinson (a) and (c), the nature and extent of the contravening conduct and the circumstances in which the conduct took place, are addressed in Ms Kannikoski’s witness statement. Witness Statement of Kerren Kannikoski [6], [8].
Relevantly, it has a relatively complex industrial regime, and the Agreement introduced for the first time an obligation to convert eight casual positions to permanent employment.
(e) Clause 12.3 provides a fourweek period to convert the casual employees to permanent. The fourweek period was ‘ambitious’, given a conversion process, if done properly, entails circulating EOIs, allowing the employees an opportunity to consider and nominate the conversion, assessing the nominations received, taking feedback, selecting the successful candidates, preparing the relevant employment documentation, and ultimately effecting those conversions.
(f) It does not deny that it had an obligation to convert eight employees, nor does it suggest it was not going to honour that obligation and effect the conversion. It was simply a question of when the conversion would actually be effected.
(g) Ms Kannikoski’s evidence for the delay was unchallenged:
(i) First, the parties were attempting to deal with the challenges associated with implementing a new enterprise agreement.
(ii) Second, as is reflected in the process adopted, it wanted to ensure that the conversion process was done properly through an EOI and that employees had an opportunity to apply through an open and transparent process.
(iii) Third, it understood that there was some agreement on the part of the CFMEU that the conversions would be dealt with after the more pressing operational changes that needed to be implemented were attended to.
(h) In relation to the considerations at Pattinson (d), the deliberateness of the contravention and the period over which it took place: the delay was not deliberate, in the sense that it was designed to deliver any financial windfall.
(i) In relation to the considerations at Pattinson (b), the amount of loss or damage caused: the delay resulted in employees being better off financially. The employees continued to be paid at casual rates which included a 25% casual loading during the period that they were not converted. On conversion, their permanent entitlements including leave accruals, were backdated to 15 October 2024, and it elected not to claw back the casual loading. Ms Kannikoski states in her witness statement that the employees received between $9,000 and $23,000 more than they would have, had the conversion been effected on 15 October 2024. The extra amount the employees received from the delay totalled $125,967.69.
(j) Accordingly, there was no financial loss, with any deprivation of entitlements rectified by the backdating of the accruals to the date when the conversion should have taken place.
(k) Ms Kannikoski’s evidence is that it first sent EOIs on 17 December 2024 and then contacted the successful applicants to advise them that they would be converted to permanent employment from 14 January 2025; which is more than two weeks before the CFMEU lodged the Originating Claim.
(l) In relation to the consideration at Pattinson (f), whether the contravention arose out of the conduct of senior management or at a lower level: the evidence is confined to the involvement of Mr Agrawal, a human resources manager. Firstly, Mr Agrawal was not part of the senior management team, but middle management from the human resources team. Secondly, the evidence of Mr Gakis indicates that Mr Agrawal continually told Mr Gakis that he was working to ensure the conversion to permanency occurred. That evidence was not challenged, and in any event, is not reflective of a manager working to frustrate the conversion or to avoid it happening.
(m) While the CFMEU refers to members of the Kannikoski family who hold senior leadership positions, the dates of the emails referenced by the CFMEU post-date the date that EOIs were issued and closed. The emails indicate that it is an approximate 12-day time period between the successful employees being contacted and informed that they have been selected for the conversion and being issued with permanent employment contracts. Accordingly, it cannot be said that at that point in time the senior management are acting in a way that is contrary with compliance with the obligation, or frustrating or delaying or not actioning the correspondence quickly.
(n) In relation to the consideration at Pattinson (g), whether it has a corporate culture conducive to compliance with the FW Act, Ms Kannikoski’s evidence is that:
(i) It has been operating for over 27 years.
(ii) It takes compliance with its industrial obligations seriously, and prides itself on a culture of compliance.
(iii) Notwithstanding the complexity of its industrial instruments, this is the first occasion where it has contravened the FW Act.
(o) In relation to the consideration at Pattinson (h), whether it has shown a disposition to cooperate with regulators in relation to the contravention: it has admitted the contravention.
(p) While the CFMEU criticises it for not initially admitting the contravention, Ms Kannikoski explains the reasons for filing a Response denying the contravention in her (unchallenged) witness statement. Witness Statement of Kerren Kannikoski [10]–[11].
In any event, no prejudice flowed from it filing an Amended Response, as the breach the subject of this proceeding, had been fully remediated prior to the Response being filed, indicating that it was not denying the existing obligation to convert eight casual employees to permanency. Furthermore, no substantive steps were taken by the CFMEU between the filing of the Response and the Amended Response. Indeed the filing of an Amended Response was unavoidable given the CFMEU initially sought declaratory relief it was not entitled to claim and would have been required to, and was required to, file an Amended Outline of Claim.
(q) In relation to contrition, Ms Kannikoski gives evidence of its expression of regret and apology. While the apology appears in Ms Kannikoski’s witness statement, the witness statement is a document offered up to the court and is the most appropriate form for a party to exhibit contrition.
(r) Ms Kannikoski was not required for crossexamination, therefore her evidence of sending a HR and IR compliance reminder should be accepted as a meaningful attempt to improve compliance so that there are no future instances of non-compliance.
(s) Furthermore, it has assisted with the efficient conduct of the proceedings, including by assisting with the preparation of the Statement of Agreed Facts.
(t) In relation to specific deterrence:
36. Despite a complex industrial regime, and over 20 years in business, this is the Respondent’s first contravention. The Respondent has acknowledged its error, has fully remedied the contravention, and has exhibited contrition. The Respondent has taken steps to upskill its operations teams and remind them of the importance of compliance with the Respondent’s industrial obligations. The individual that the Complainant appears to attribute the blame for the delay to – Mr Agrawal – is not [sic] longer employed by the [Respondent].
37. The nature of the clause breached is such that a repeat breach is not a matter the Court needs to be concerned with nor take steps to deter – conversion was a one off obligation under the Agreement. Moreover, the failure to convert the Employees within the prescribed period has left the Respondent approximately $125,967 worse off – a strong deterrent against the Respondent failing to comply with its obligations in a timely manner.
(u) In response to the CFMEU’s criticism of its written submissions [16] that ‘the four week period stipulated for compliance was arbitrary, at least in a legal sense’; the submission was not intended to downplay the importance of compliance with cl 12.3, but observes that:
(i) There was no particular significance that attached to the four-week period; and the employees ultimately did receive the full benefit of the casual conversion.
(ii) The benefit of the casual conversion was not defeated, deprived of purpose, or made redundant, by the delay.
(v) Its culture of compliance, lack of past contraventions, the steps taken to remind managers of their obligations, ultimately allow Ms Kannikoski to credibly express the view in her witness statement that it will not breach the Agreement in the future.
(w) Furthermore, the delay has resulted in it paying about $125,000 more to employees than it otherwise would have, which in many respects is a deterrent in its own right.
(x) In all the circumstances, in response to its first offence, no penalty should be imposed.
(y) In relation to general deterrence, the $125,000 it paid to employees serves as both specific and general deterrence. Secondly, responding to the proceedings, also serves as a deterrent.
(z) It has admitted the contravention, which will appear on its record. If there is any future non-compliance, its admission of a contravention will weigh against it on penalty and will deprive it of the ability to run a similar case that no penalty is appropriate given this is a first offence.
(aa) While its primary position is that no penalty should be imposed against it in the circumstances; in the alternative, if a penalty is to be imposed then it should be at the lower end of the potential range.
(bb) The 12% imposed in Qube is not an appropriate reference point. A relevant, and distinguishing factor in Qube, was that Qube had a significantly greater number of past contraventions. Qube [55].
Furthermore, in Qube, there was a financial loss sustained by the affected employee, whereby the affected employee was delayed in receiving payment by several months. Qube [34].

(cc) If a penalty is payable, it accepts that the penalty should be paid to the CFMEU.
Consideration
11 The respondent has admitted the contravention, therefore, the sole issue for determination is the appropriate penalty, if any.
12 Section 546(2)(b) of the FW Act provides that, for a body corporate, the maximum penalty for a contravention of a civil remedy provision is five times the maximum number of penalty units applicable to an individual. For a contravention of s 50 of the FW Act, the maximum for an individual is 60 penalty units (s 539(2), Item 4). Accordingly, the maximum penalty for the respondent is 300 penalty units. The contravention crystallised on 16 October 2024, when the fourweek period under cl 12.3 expired without compliance. At the time, the value of a penalty unit was $313. Between 1 July 2023 and 6 November 2024, a penalty unit is $313: s 4AA of the Crimes Act 1914 (Cth) and Crimes (Amount of Penalty Unit) Instrument 2023.
The maximum penalty is therefore $93,900.
13 In Pattinson [9], the High Court confirmed that the primary purpose of a civil penalty is deterrence:
Under the civil penalty regime provided by the [FW Act], the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the [FW Act] by the deterrence of further contraventions of the [FW Act].
14 The assessment of an appropriate penalty requires consideration of factors relevant to deterrence, including those identified in Pattinson [18], which are addressed in turn below; noting that the factors for consideration are not ‘a rigid catalogue for attention’ and that the ‘court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case’. Pattinson [19].

The nature and extent of the contravening conduct; The circumstances in which the conduct took place
15 While cl 12.3 refers to ‘registration of this Agreement’, the FW Act uses the term ‘approved by the FWC’ in relation to enterprise agreements. Section 12 of the FW Act defines ‘approved by the FWC’ as follows: ‘approved by the FWC, in relation to an enterprise agreement, means approved by the FWC under section 186 or 189.’
However, nothing turns on the distinction because the parties agree that:
(a) The Agreement was approved by the FWC on 18 September 2024. Statement of Agreed Facts [3].

(b) The Agreement was registered on 18 September 2024. Statement of Agreed Facts [4.1].

(c) The time for compliance with cl 12.3 was 16 October 2024. Statement of Agreed Facts [6].

16 Accordingly, I accept the CFMEU’s submission that cl 12.3 is clear, concise, straightforward, and without any confusing steps; such that there is no basis for the respondent to argue any ambiguity with its obligation to comply with cl 12.3. At [9(o)].

17 The respondent does not contend that cl 12.3 is ambiguous; nor does it deny that it had an obligation to comply with cl 12.3, and that the relevant date for compliance was 16 October 2024. The respondent submits that it was operating on the belief that the parties had formed an understanding that strict compliance with cl 12.3 was not required, and that ‘the conversions would be revisited’ once its operational priorities had been resolved. Witness Statement of Kerren Kannikoski [9].

18 Ms Kannikoski gives evidence to having an understanding that the parties had agreed to defer the time for compliance with cl 12.3 until after the negotiations regarding the respondent’s vessels, the Bhagwan Renegade and Tempest were concluded, and that such understanding potentially provided the respondent with an estoppel defence. Witness Statement of Kerren Kannikoski [10].

19 Whether estoppel could operate to excuse noncompliance with a term of an enterprise agreement was not addressed by either party. Instead, the parties’ submissions focus on Ms Kannikoski’s evidence of the respondent’s understanding that the parties agreed to defer compliance with cl 12.3.
20 Ms Kannikoski does not provide any detail of the circumstances in which this understanding was reached, other than to say that it was ‘based on what I was made aware of by Bhagwan’s then Head of HR’ (Mr Agrawal). Witness Statement of Kerren Kannikoski [9].
Ms Kannikoski does not provide any specifics of how Mr Agrawal made her aware of the understanding, nor does she include any evidentiary support for the understanding and for Mr Agrawal making her aware of it. Relevantly, Ms Kannikoski does not provide any details to support the reasonableness of the respondent holding such an understanding.
21 Mr Gakis’ evidence is that he raised the issue of the respondent’s noncompliance with cl 12.3 with Mr Agrawal on 13 November 2024, 3 December 2024 and 19 December 2024. Witness Statement of George Gakis [6]–‍[8].

22 Accordingly, I accept the CFMEU’s submission that the respondent has not produced any evidence to support the contention of a common understanding that the respondent could delay compliance with cl 12.3.
23 I also accept the CFMEU’s submission, to the effect that, cl 12.3 is unambiguous: ‘the employer will convert 8 casual positions to permanent positions within 4 weeks of registration of this Agreement.’
24 Furthermore, that the four-week period was agreed to by the parties, during the negotiations of the Agreement, which took place over a 6.5 month period (mid-December 2023 to 1 July 2024) and involved 10 bargaining negotiation meetings. Witness Statement of George Gakis [3], [5].

25 Once approved by the FWC, the Agreement acquires statutory force under s 50 of the FW Act. The agreed deadlines are binding.
26 I do not accept the respondent’s characterisation of the fourweek period as ‘arbitrary’. The period was a product of negotiation between the parties over 6.5 months across 10 bargaining meetings. Having agreed to it, the respondent’s characterisation of it as arbitrary risks undermining the integrity of the collective bargaining process.
27 I therefore accept the CFMEU’s submission that if the conversion could not be implemented within a four-week period, that the time for raising that was during the negotiations and not after the period for compliance has passed.
28 In any event, I am not satisfied that the conversion could not be implemented within a fourweek period, for the reasons that follow.
29 While Ms Kannikoski has given evidence of a challenging industrial landscape of employing 800 to 1,000 across Australia, who are covered by nine different enterprise agreements, the annexures to Ms Kannikoski’s witness statement indicate that the following members of the respondent’s managerial, HR and administration team, each played a role in effecting the conversion:
(a) Abhinav Agrawal – Head of HR/IR. Witness Statement of Kerren Kannikoski: KK-1.

(b) Katie Sukiennik – HR Coordinator. Witness Statement of Kerren Kannikoski: KK-2.

(c) Kerren Kannikoski – General Manager – Corporate Services. Witness Statement of Kerren Kannikoski [1].

(d) Tom Kannikoski – General Manager – Operations WA. Witness Statement of Kerren Kannikoski: KK-2.

(e) Kayla Dingle – Administration Officer (Crewing). Witness Statement of Kerren Kannikoski: KK-2.

(f) Dipa Bhudia – HR Advisor. Witness Statement of Kerren Kannikoski: KK-4.

30 Ms Kannikoski’s witness statement indicates that:
(a) The EOIs were sent out on 17 December 2024.
(b) Following the Christmas and Boxing Day public holidays, the respondent’s HR team commenced contacting the employees to inform them that they had been selected for conversion from casual to permanency on 14 January 2025.
(c) The period from 17 December 2024 to 14 January 2025, is exactly four weeks.
(d) While Ms Kannikoski states that the respondent did not issue the employment contracts to the employees until 24 February 2025, she does not explain why the respondent required a further six weeks to issue the contracts.
(e) The evidence indicates that once the contracts were issued to the employees on 24 February 2025, they promptly signed and returned them, with the last employee signing and returning the employment contract on 27 February 2025.
31 Having negotiated and agreed upon cl 12.3, the respondent had an obligation to comply with it.
The amount of loss or damage caused
32 During the period of noncompliance, the eight employees remained classified as casual and therefore did not have access to the benefits of permanent employment, including job security and access to paid leave (notwithstanding the subsequent backdating of leave accruals).
33 However, Ms Kannikoski’s evidence that the employees ‘did not suffer any nonfinancial detriment as a result of the delay in casual conversion’ Witness Statement of Kerren Kannikoski [20].
was unchallenged. In the absence of evidence to the contrary, I accept that assertion; while observing that the inherent insecurity of casual employment is a matter that the conversion obligation in cl 12.3 was designed to address.
34 Furthermore, I accept that the eight affected employees did not suffer any financial detriment, as they received:
(a) Casual loading payments of $9,000–$23,000 each, totalling $125,967.69; and
(b) Their leave accruals backdated to 15 October 2024. Witness Statement of Kerren Kannikoski [18].

The size of the contravening company
35 I accept the CFMEU’s submission that the respondent is a large employer, with a sizeable HR team, and provides no cogent reasons for being unable to comply with its industrial relations obligations.
36 I accept that the respondent has, through its delayed compliance with cl 12.3, incurred a financial detriment of $125,967.69.
37 The respondent did not make any submissions to the effect that it could not absorb the costs of the penalties that may be imposed.
The deliberateness of the contravention and the period over which it extended
38 The contravention involved a delay of less than 4.5 months (from 16 October 2024 to 27 February 2025).
39 I accept the respondent’s submission that the delay was not designed to achieve an industrial or financial advantage, and to the contrary, the respondent has incurred a financial detriment.
40 However, the evidence establishes that the respondent was aware of its obligations under cl 12.3 and of the fourweek deadline yet did not commence the conversion process until 17 December 2024.
41 While the respondent commenced the EOI process on 17 December 2024, approximately six weeks before the CFMEU lodged its Originating Claim on 28 January 2025, the conversions were not completed until 27 February 2025, which is one month after these proceedings were commenced.
42 The EOIs were issued two months after the four-week deadline had expired, and after Mr Gakis had raised the issue with Mr Agrawal on three occasions.
43 While the respondent may have held a genuine, though mistaken, belief that the CFMEU had agreed to defer compliance, I accept the CFMEU’s characterisation of the breach as ‘not inadvertent’. The respondent knowingly deferred compliance with a binding obligation, albeit without any intention to gain an advantage.
Whether the contravention arose out of the conduct of senior management or at a lower level
44 From the emails attached to Ms Kannikoski’s witness statement, I accept that numerous members of the respondent’s senior and middle management, HR and administration teams were aware the respondent had an obligation to convert casual employees to permanency.
45 However, there is a dearth of information regarding the respondent’s conduct in the four-week period following the FWC’s approval of the Agreement.
46 The CFMEU filed the witness statement of Mr Gakis on 4 August 2025, in which Mr Gakis states that he became aware in midNovember 2024 that the respondent had not converted the casuals as required by cl 12.3, and on 13 November 2024 he raised the matter with Mr Agrawal, who informed him that he was aware and was going to ensure the permanency occurred. Mr Gakis also stated that he emailed Mr Agrawal on 3 December 2024, and Mr Agrawal emailed on 30 December 2024 stating that ‘we hope to make the permanent offers by end of the upcoming week if not earlier’. Witness Statement of George Gakis [6]–‍[8].

47 Ms Kannikoski does not deal with any aspect of Mr Gakis’ evidence in her witness statement. Where the evidence of Mr Gakis and Ms Kannikoski conflicts, I prefer Mr Gakis’ evidence. Mr Gakis provides a direct account of his discussions with Mr Agrawal. Ms Kannikoski’s evidence regarding any purported understanding between the respondent and the CFMEU to defer compliance with cl 12.3 is hearsay, and appears based on what she was told by Mr Agrawal. It is also unsupported by any documentary evidence (as discussed further below).
Whether the company has a corporate culture conducive to compliance with the FW Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention
48 I accept the respondent’s unchallenged evidence that it has operated for 27 years without prior contraventions of the FW Act, despite operating in a complex industrial environment with nine enterprise agreements across multiple jurisdictions.
49 This evidences a corporate culture conducive to compliance with the FW Act.
50 The compliance reminder email sent to senior managers on 4 September 2025, while proximate to the hearing, is a step that reinforces this culture and reduces the likelihood of future contraventions.
Whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the FW Act in relation to the contravention
51 The respondent’s Response filed on 7 March 2025, filed eight days after the respondent completed the casual conversions on 27 February 2025, states that ‘the obligations required under clause 12.3 of the [Agreement] was complied with as 8 casual employees were converted to permanent and their permanent employment commenced on 15 October 2024.’ Response [2].

52 At best, this was a characterisation that elided the delay in effecting the conversions; given the conversions were not effected until 27 February 2025 and were backdated to 15 October 2024.
53 However, I accept that no substantive prejudice flowed given the subsequent filing of the Amended Outline of Claim and the Amended Response.
54 I accept that upon the CFMEU filing its Amended Outline of Claim, that the respondent promptly filed an Amended Response admitting to the contravention.
55 This has obviated the need for the court to hold a liability hearing.
56 I accept that the respondent has contributed to the filing of a Statement of Agreed Facts.
57 Furthermore, Ms Kannikoski’s unchallenged witness statement, attaches her 4 September 2025 compliance reminder to senior managers, and the respondent’s statement of regret, which is on the following terms:
Bhagwan regrets that it did not comply with the obligation to convert under clause 12.3 of the Agreement by the required time, and Bhagwan apologises to the eight Employees for the delay in securing their conversion to permanency. Bhagwan appreciates that the conversions were required to be completed and in no circumstances did Bhagwan intend to breach its obligation under the agreement or deprive employees of the benefit of clause 12.3.
Specific deterrence
58 I consider the respondent’s contravention to have occurred due to a lack of diligence of ensuring compliance with cl 12.3, coupled with a potential misunderstanding of the CFMEU’s position concerning the need for the respondent to comply with cl 12.3 either pending resolution of the issues involving its hybrid vessels or regardless of resolution of those issues.
59 While the respondent’s breach of cl 12.3 was not deliberate in the sense of being designed to gain an industrial or financial advantage; the respondent was aware of its obligation and the deadline and chose to defer compliance with cl 12.3.
60 Accordingly, I consider that there is a need to impose a penalty to ensure specific deterrence, for the reasons that follow.
61 This is the respondent’s first contravention in 27 years of operation.
62 The contravention arose out of unique circumstances involving a oneoff obligation that is unlikely to reoccur.
63 The CFMEU does not deny that the respondent incurred a financial detriment of $125,967.69. The CFMEU characterises this as a consequence of the respondent’s poor decision making; it was not a consequence of the respondent seeking to pay the employees compensation for not effecting the casual conversion in accordance with cl 12.3.
64 I accept the CFMEU’s submission.
65 It is trite to say that the conversion of casual employees to permanent employees is a matter of importance, in industrial relations generally, and to the parties particularly such that they sought to specifically bargain for cl 12.3.
66 It is also trite to say that the casual loading that was paid to the affected employees is a compensatory payment for the absence of permanent entitlements. The respondent characterises the financial detriment of $125,967.69 as arising because of its decision not to ‘claw back’ the casual loading as an overpayment. Witness Statement of Kerren Kannikoski [19], [21].
However, the employees were entitled to receive the casual loading for the period that they remained casual employees, and the casual conversion was not effected until 27 February 2025. Amended Response [3.c.].

67 However, whether the respondent could have lawfully recovered the casual loading upon conversion is not a matter I need to determine. I accept that the employees did not incur a financial loss as a result of the respondent’s delay in complying with cl 12.3, and that the respondent has incurred a financial detriment as a result of its delay in complying with cl 12.3.
68 While I accept that the respondent has incurred a financial detriment, I note that this was a result of the respondent’s voluntary decisionmaking. It was not a consequence imposed by operation of law; and is qualitatively different from a courtimposed penalty for noncompliance with a term of an enterprise agreement.
69 Nevertheless, it is a relevant consideration insofar as it demonstrates that the respondent has not profited from its noncompliance and has, to the contrary, incurred a financial detriment.
General deterrence
70 The integrity of the enterprise bargaining framework depends upon the parties to an agreement honouring the terms they have negotiated and agreed to, including timeframes for compliance.
71 Employers should honour the timeframes bargained for, to uphold the integrity of collective bargaining.
72 If employers could defer compliance with bargainedfor obligations without consequence, the incentive for employees and their representatives to negotiate such terms would be diminished, and confidence in the bargaining system would be undermined.
73 The respondent submits that the $125,967.69 it paid to employees and its participation in these proceedings, serve as adequate general deterrence. I do not accept this submission. The financial detriment was an incidental consequence of the delay; not a sanction for noncompliance. Other employers in similar circumstances may not face the same financial consequences. A courtimposed penalty sends a clearer and more consistent signal than a variable financial byproduct of delay.
74 I also accept the CFMEU’s submission that general deterrence requires a penalty sufficient to signal to employers that noncompliance with clear bargainedfor obligations attracts consequences, to uphold the integrity of collective bargaining.
75 Accordingly, I consider there is a moderate need to impose a penalty to ensure general deterrence and to reinforce the importance of employers honouring bargainedfor timeframes in enterprise agreements.
Conclusion
76 I accept the respondent’s submissions that Qube is distinguishable. In Qube, the respondent had a significant history of prior contraventions, and the affected employee suffered a financial loss through delayed payment. Neither feature is present here. The respondent has no prior contraventions in 27 years of operation, and the affected employees suffered no financial loss. On the contrary, the employees received between $9,000 and $23,000 more than they would have received as a result of the delay, with the respondent incurring a financial detriment of $125,967.69.
77 These distinctions warrant a lower penalty than the 12% of the maximum penalty imposed in Qube.
78 For the preceding reasons, I consider a penalty of 6% of the maximum penalty is appropriate in circumstances where:
(a) This is the respondent’s first contravention of the FW Act in its 27-year history;
(b) No employees suffered any financial loss, and in fact, each employee received more than they would have received had the conversion been effected on time;
(c) The respondent has demonstrated contrition and has taken corrective action to prevent future contraventions; and
(d) The contravention was not designed to achieve an industrial or financial advantage and arose in the context of a mistaken belief that the CFMEU had agreed to defer compliance.
79 The penalty of $5,634 represents 6% of the maximum penalty of $93,900. This is toward the lower end of the available range, reflecting the particular circumstances of this case. It is, in my assessment, neither so low as to be perceived as a mere cost of doing business, nor so high as to be disproportionate to a first contravention that caused no financial loss and has been fully remediated.
80 I consider a penalty of 6% of the maximum penalty is sufficient to serve the purpose of the civil penalty regime of promoting both specific and general deterrence of future contraventions of the FW Act, while reflecting the particular circumstances of this case.
81 Pursuant to s 546(3) of the FW Act, the court may order a pecuniary penalty to be paid to the Commonwealth, a particular organisation or a particular person. The respondent accepted that if a penalty is to be imposed, that it should be paid to the CFMEU. Therefore, I will order the penalty to be paid to the CFMEU.
Orders
82 The respondent is ordered to pay a civil penalty of $5,634.
83 The penalty is to be paid to the CFMEU.


C. TSANG
INDUSTRIAL MAGISTRATE