The Construction, Forestry and Maritime Employees Union (the claimant) brought a claim in the Industrial Magistrates Court of Western Australia (Court) alleging that Bhagwan Marine Limited (the respondent) contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a clause in its Enterprise Agreement requiring the conversion of eight casual positions to permanent within four weeks of registration (the conversion clause), being by 16 October 2024. The claimant sought the imposition of a civil penalty payable to itself. 

The respondent initially denied the contravention but, in its amended response, admitted that it had failed to comply with the conversion clause within the prescribed timeframe. Nonetheless, the respondent contended that a penalty was not warranted, relying on its belief that there was an informal understanding with the claimant permitting delayed compliance, the complexity of its industrial operations, its 27 year history with no prior contraventions, and the fact that the delay was not deliberate and resulted in employees receiving a financial benefit of $125,967.69, as permanent entitlements were backdated and the casual loading was not recovered.

As the respondent admitted to the contravention, the sole issue for determination was the appropriate penalty, if any. The Court found that the conversion clause was clear and unambiguous, and that the four-week timeframe was a product of a negotiated agreement between the parties and not “arbitrary” as contended by the respondent. The Court rejected the existence of any agreed deferral of compliance, noting the absence of supporting evidence and preferring the claimant’s evidence of repeated follow-up requests for compliance. The Court held that, having agreed to the clause, the respondent was required to comply with it once the agreement acquired statutory force under s 50 of the FW Act.

In assessing the contravention, the Court found that the respondent was aware of its obligations but knowingly deferred compliance, with the conversion process commencing approximately two months after the deadline and concluding over four months late. While the delay was not motivated by any intention to secure a financial or industrial advantage and, in fact, resulted in a financial detriment, the Court characterised the breach as not inadvertent. The involvement of multiple levels of management, coupled with a lack of evidence explaining inaction during the initial compliance period, weighed against the respondent.

The Court accepted that the employees did not suffer financial loss, having received both backdated entitlements and ongoing casual loading, and that the respondent had no prior contraventions and acted in circumstances involving a one-off obligation. It also accepted evidence of contrition, cooperation, and steps taken to reinforce compliance. However, the Court emphasised that the financial consequences of the delay were a product of the respondent’s own decision-making and did not replace the need for a civil penalty. 

The Court held that both specific and general deterrence warranted the imposition of a penalty. While specific deterrence was moderated by the respondent’s history and the one-off nature of the obligation, general deterrence was significant in ensuring adherence to negotiated timeframes and maintaining confidence in and the integrity of the collective bargaining process.

Having regard to all relevant factors, the Court imposed a pecuniary penalty of $5,634 (being 6% of the maximum penalty of $93,900), reflecting the lower end of seriousness, in recognition of the absence of a deliberate attempt to gain financial or industrial advantage, the respondent’s contrition, the lack of financial loss suffered by employees and the fact it was the respondent’s first contravention. The Court ordered that the penalty be paid to the claimant.

The full decision can be read here.