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

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

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

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

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

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

The full decision can be read here.