This extract from a recent Federal Circuit Court of Australia case sets out the principles which Australian courts will apply when determining penalties for breaches of the Fair Work Act suc h as underpayments of award, NES and and statutory entitlements.
- The court is authorised to impose a penalty in respect of a contravention of a civil remedy provision of the Act.Civil remedy provisions include a provision referred to in column one of the table in s 539(2) of the Act, and in column one of the table in reg 4.01A of the Regulations.
- The purpose of imposing a civil penalty (including under this Act) is primarily protective of the public interest in securing compliance with the law and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravenor and others who might be tempted to contravene legislation: Commonwealth v Director, Fair Work Building Industry Inspectorate (FWBII). The penalty that is fixed should reflect that statutory purpose with a view to ensuring that the penalty is not regarded as merely an acceptable cost of doing business.
- In fixing the amount of the penalty, the court is required to identify and balance all relevant facts, circumstances and to make a value judgment as to what is considered to be an appropriate penalty. The court is authorised to adopt a process of instinctive synthesis which evaluates all factors that are considered relevant to the penalty, and make a value judgment as to an appropriate penalty in all the circumstances.
- The approach to be adopted in determining penalties is well settled,and was common ground. It involves the following distinct steps:
- a)Step One: The court is to identify the separate contraventions involved. For the purposes of s 539(2), each contravention of an obligation located in the Act, Regulations and Award constitutes a separate contravention of a civil remedy provision of the Act;
- b)Step Two: The court is required to consider whether any of the breaches should be taken together to constitute a single course of conduct by operation of s 557(1), such that multiple contraventions should be treated (or grouped) as a single contravention;
- c)Step Three: To the extent that two or more contraventions have common elements, this should be taken into account in considering what an appropriate penalty is in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the court should be an appropriate response to the respondents’ actions.Importantly, this third task is distinct from, and in addition to, the final application of the ‘totality principle’;
- d)Step Four: The court will consider an appropriate penalty to impose in respect of each contravention, whether a single contravention, a course of conduct, or group of contraventions, having regard to all of the circumstances of the case; and
- e)Step Five: Having fixed an appropriate penalty for each contravention, the court should then review the aggregate penalty so as to determine whether it is an appropriate response to the contravening conduct.In doing so, the court should apply an ‘instinctive synthesis’ in making this assessment. This final step is commonly known as the ‘totality principle’.
FAIR WORK OMBUDSMAN v NOBRACE CENTRE PTY LTD (IN LIQUIDATION) (ACN 121 556 447) & ORS (No.2)  FCCA 2970 delivered22 October 2019 per Kelly J