Penalties for general protections’ breaches

In proceedings in the Federal Court of Australia or Federal Circuit Court of Australia for a breach of the general protections of the Fair Work Act, the court can award compensation to the victim, and also order that the respondent (usually but not always an employer) pay a penalty either to the consolidated revenue of the Commonwealth or the victim. Here is an extract from a recent case which sets out the principles which the judges use when considering the quantum or amount of the penalty.

“Consideration of penalty

Power to impose penalty

  1. In my principal judgment, I found that Rotary had dismissed Mr Pezzimenti because he commenced these proceedings.[2]  By so acting, Rotary took adverse action against Mr Pezzimenti (dismissing him) because he had exercised the workplace right of initiating proceedings under a workplace law (s.340(1)(a)(ii) and 341(1)(b) Fair Work Act 2009 (Cth) (Fair Work Act).

[2] at [97]–[99]

  1. It follows that pursuant to s.539(2) of the Fair Work Act read with item 11 in the table to that section and s.546, Mr Pezzimenti, as a person affected by the contravention, may apply to this Court for an order penalising Rotary, and the Court may impose a penalty up to the maximum.

Maximum penalty

  1. The maximum penalty is 300 penalty units being five times the amount specified in column 4 of item 11 of the table (s.546(2)(b)).
  1. The dismissal occurred on 30 June 2017 and at that date a penalty unit within the meaning of s.4AA of the Crimes Act 1914 (Cth) meant the amount of $180. It follows that the maximum penalty that may be imposed is $54,000.

Principles

  1. The principles for setting such a penalty are well established and were most recently restated by the Full Federal Court in Australian Building and Construction Commissioner v Construction Forestry Mining and Energy Union.[3]

[3] (2017) 254 FCR 68 at [98] and [100]–[107]

  1. While the factors there identified are a form of checklist or guide they are not intended to be exhaustive nor to replace the essential judicial function of fact finding in consideration of all relevant circumstances.  They are not a rigid catalogue of matters for attention.[4]

[4] Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [58]

  1. The following are to be especially noted on the facts of this case as found.

Objective seriousness

  1. First, the contravention was deliberate.  I did not merely find that Rotary had not discharged its onus of proof.  I positively found that:

[97]…the goalposts of the PIP themselves changed following the commencement of proceedings.  It was as if Mr Pezzimenti was from that point set up to fail.

[98]…the commencement of these proceedings changed and hastened the process that led to the dismissal of Mr Pezzimenti. … Rotary went looking for additional reasons to dismiss Mr Pezzimenti, and thought it had found it in the so-called breach of confidence.  That was the charge Mr Pezzimenti was called to answer and he was dismissed when he failed to do so.  The charge has the air of artificiality to it. … it is very hard to accept the proposition that the communication of a concern by the International Office Manager of Rotary to the Rotary regional director responsible for that office involves a breach of confidence.

  1. Secondly, the contravention was by a corporation acting through a very senior officer.  I found the most senior officer involved in the contravention was Ms Berg who was the Deputy General Secretary of Rotary reporting to the General Secretary.  That is, she was the second-most senior person in the global operations of Rotary International.  While I accepted at [97] that her role was probably a formal one acting on the advice of Mr Huerta, Mr Huerta himself reported directly to Ms Berg and was a very senior officer filling the role of Director of International Operations in which he was responsible for all international offices in the global Rotary International Group.
  1. Thirdly, and as submitted by Mr Pezzimenti, it is difficult to conceive of a more objectively serious contravention.  The adverse action was at the top end of detriments which might be imposed upon an employee: dismissal.  The reason for it, the commencement of Court proceedings, marked the conduct as particularly egregious.  I declined to accept, at [97], that Mr Huerta who I found to be a “clear thinking and dynamic senior official” of a global not for profit corporation could have thought it lawful or appropriate to take adverse action, outside the Court system, because a person had commenced Court proceedings.  This was a contravention which struck at the heart of the system of workplace protections for which Australian law provides.
  1. Fourthly, there is no evidence of a compliance system or a culture of compliance within Rotary International.  In my principal judgment I found that Mr Huerta, together with the Global Director of Human Resources Mr Switzer, engaged in conduct having the effect of setting up Mr Pezzimenti to fail and securing his dismissal because he had commenced legal proceedings.  Mr Pezzimenti submits that they were permitted, if not expressly authorised, to engage in that course of conduct by Ms Berg.  I accept that there appears to have been nothing, even at those very senior levels of the organisation, which led any of those people to pause before engaging in the conduct.

Contravenor’s circumstances

  1. Rotary is incorporated in Illinois and operates throughout the United States and outside the United States through a network of international offices.  It is obviously a corporation of some substance.  There is no evidence to suggest that by reason of its size or financial position it would have any difficulty in meeting the payment of a penalty.
  2. There is no evidence of prior contraventions.
  3. There is no evidence that Rotary has improved or modified its compliance systems since the contraventions.  There has been no demonstration of contrition or remorse.  However, the compensation awarded was paid.
  4. I note that Rotary, facing the imminent judgment of this Court, terminated the retainer of its solicitors and has caused itself to remain unrepresented in this Court.[5]

[5] Ms Forster’s affidavit at [14]–[24]

  1. In circumstances where the Court has found that the reason for the dismissal was the commencement of proceedings the requirements of general deterrence should be given significant weight.
  2. The case for specific deterrence is overwhelming in circumstances where:
  3. a)           Rotary’s compliance system and culture of compliance were each apparently inadequate;
  4. b)           there has been nothing shown directed to improvement or modification of its compliance systems;
  5. c)           Rotary knew that it had dismissed Mr Pezzimenti because he commenced these proceedings;
  6. d)           Rotary defended the proceedings on the basis of Mr Huerta’s evidence when it must have known that evidence, in so far as it concerned the reasons for dismissal might be rejected; and
  7. e)           Rotary has, despite expressing a wish to do so, not participated in this aspect of the proceedings.
  8. The objective seriousness of the contravention is at the top end of the range.
  9. In all the circumstances Mr Pezzimenti submits the appropriate penalty is the maximum penalty of $54,000.
  10. I accept Mr Pezzimenti’s submission that the objective seriousness of the contravention and the other factors referred to, places the appropriate penalty at the top end of the range.  I will not, however, impose the maximum penalty.  I will instead order that Rotary pay a penalty of $50,000 to Mr Pezzimenti.
  11. I accept Mr Pezzimenti’s submission that the Court should order that the penalty be paid to him.”

 

PEZZIMENTI v ROTARY INTERNATIONAL (No.2) [2020] FCCA 95 delivered 24 January 2020 per Driver J