Coffee Company Fined for Employee Underpayments and Record-Keeping Failures

OUTCOME: Allowed

Federal Court of Australia

[NAME] v [NAME] [COMPANY] [2022] FCA 1317 File number: NSD 1297 of 2020

Judgment of: [NAME] of judgment: 4 November 2022

Catchwords: INDUSTRIAL LAW – application for declaratory relief and pecuniary penalties for contraventions of numerous provisions of the [NAME] 2009 (Cth) (FWA) – where the employer made admissions to contraventions of underpaying award entitlements in relation to minimum wages, weekend and public holiday penalty rates, overtime and annual leave, superannuation, and a related failure to keep employment records and provide payslips – where there is a proposed a range of pecuniary penalties proposed by the applicant and not opposed by the respondent, so as to be effectively an agreed range – whether the quantum of penalties within that range is sufficient and appropriate to meet the objective of deterrence – Held: respondent to pay the Commonwealth a pecuniary penalty of $475,200 being at the top of the range effectively agreed upon

Legislation: [NAME] 2009 (Cth) ss 44(1), 45, 90(2), 125(1), 535(1), 535(2), 536(1), 546, 546(1), 546(2), 577, 577(1), 715 [NAME] 2009 (Cth) regs 3.31(1)(a), 3.32(a), 3.32(b), 3.32(c), 3.32(d), 3.33(1)(b), 3.33(3)(b), 3.34(a), 3.36(1) [NAME] (Cth) cll 20.1, 29.2, 30.2(f), 33.1(a), 33.6, 33.7 [NAME] 2010 (Cth) cll 17, 18.2, 22.2, 29.2(a), 29.2(c), 29.4(b), 29.4(c), 29.4(d)

Cases cited: [NAME] Commissioner v [NAME] [2022] HCA 13; 314 IR 301 [NAME] Commission v [NAME] (Australia) [COMPANY] [2016] FCAFC 181; 340 ALR 25 [NAME] v The Queen [2014] HCA 2; 253 CLR 58 Commonwealth v Director, [NAME] [2015] HCA 46; 258 CLR 482 [NAME] v [COMPANY] (t/as [NAME]) [2017] FCA 1301; 275 IR 148 [NAME] v [NAME] [COMPANY] [2021] FCA 60 [COMPANY] v Jordan [2008] FCAFC 70; 168 FCR 383 [COMPANY] v [NAME] Commission [1996] FCA 1134; 71 FCR 285 [NAME] v [NAME] Commissioner [2020] FCAFC 177; 299 IR 404 [COMPANY] v [NAME] Union [2008] FCAFC 170; 171 FCR 357

Division: [NAME]: New South Wales

National Practice Area: Employment and Industrial Relations

Number of paragraphs: 54

Date of last submissions: 3 June 2022

Date of hearing: 27 April 2022

Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the Respondent: [redacted]

Solicitor for the Respondent: [redacted] BETWEEN: [NAME] Applicant

AND: [COMPANY] Respondent

order made by: [NAME] OF ORDER: 4 November 2022

THE COURT DECLARES THAT:

1. The respondent, [NAME] [RESPONDENT] ([NAME]), contravened the following civil remedy provisions in the period between 1 July 2016 to 26 June 2017: (a) section 535(1) of the [NAME] 2009 (Cth), by failing to make and keep for seven years, the following employee records of the kind prescribed by the [NAME] 2009 (Cth) in relation to each of [NAME] [NAME] [NAME], [NAME] [NAME] [NAME], [NAME] [NAME] [NAME], [NAME] [NAME] [NAME], [NAME] [NAME] [NAME], [NAME] [NAME] [NAME], [NAME] [NAME] [NAME] and [NAME] [NAME] (collectively, Employees): (i) a record that specified whether each of the Employees' employment was full-time or part-time, as prescribed by reg 3.32(c) of the [NAME]; (ii) a record that specified whether each of the Employees' employment was permanent, temporary or casual, as prescribed by reg 3.32(d) of the [NAME]; and (iii) a record of the number of overtime hours worked by each of the Employees, as prescribed by reg 3.34(a) of the [NAME]; (b) section 535(2) of the [NAME], by failing to make and keep for seven years, in the English language (as required by reg 3.31(1)(a) of the [NAME]), employee records of the following kind in relation to each employee: (i) a record that specified the employee[NAME] name, the name of their employer and the date on which their employment began, as prescribed by reg 3.32(a), (b) and (e) of the [NAME]; (ii) a record that specified the gross and net amounts paid to the employee, including any bonuses paid, as prescribed by reg 3.33(1)(b) and (3)(b) of the [NAME]; and (iii) a record that specified any leave that the employee took and the balance of their entitlement to any leave from time to time, as prescribed by reg 3.36(1) of the [NAME]; (c) section 536(1) of the [NAME], by failing to give each of the Employees a pay slip within one working day of paying an amount to each of the Employees in relation to the performance of work; (d) section 44(1) of the [NAME], by failing to: (i) give each of the Employees a [NAME] before, or as soon as practicable after, the employee started employment, pursuant to s 125(1) of the [NAME]; (ii) pay each of the Employees for their untaken paid annual leave when their employment ended, pursuant to s 90(2) of the [NAME]; (e) section 45 of the [NAME], by: (i) failing to pay each of [NAME] [NAME] (from 1 July 2016 to 27 February 2017 only) and [NAME] [NAME] (collectively, [NAME]), the minimum junior rates of pay to which they were entitled pursuant to cl 18.2 of the [NAME] 2010 ([NAME]); (ii) failing to pay each of the [NAME] the minimum rates of pay to which they were entitled pursuant to cl 17 of the [NAME]; (iii) failing to pay each of the [NAME] penalty rates for work on a Saturday to which they were entitled pursuant to cl 29.4(b) of the [NAME]; (iv) failing to pay each of the [NAME] penalty rates for work on a Sunday to which they were entitled pursuant to cl 29.4(c) of the [NAME]; (v) failing to pay each of the [NAME] rates for work on a public holiday to which they were entitled pursuant to cl 29.4(d) of the [NAME]; (vi) failing to pay each of the [NAME] rates for overtime to which they were entitled for overtime hours worked on Monday to Saturday, pursuant to cl 29.2(a) of the [NAME]; (vii) failing to pay each of the [NAME] rates for overtime to which they were entitled for overtime hours worked on Sunday, pursuant to cl 29.2(c) of the [NAME]; and (viii) failing to make superannuation contributions in relation to each of the [NAME] pursuant to cl 22.2 of the [NAME]; (f) section 45 of the [NAME], by: (i) failing to pay each of [NAME] [NAME] (from 28 February 2017 to 26 June 2017 only), [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME] and [NAME] [NAME] (collectively, [NAME]) the minimum rates of pay to which they were entitled pursuant to cl 20.1 of the [NAME] ([NAME]); (ii) failing to pay each of the [NAME] rates for work on a public holiday to which they were entitled pursuant to cl 30.2(f) of the [NAME]; (iii) failing to pay each of the [NAME] overtime rates to which they were entitled for overtime hours worked on Monday to Friday, pursuant to cl 33.1(a) of the [NAME]; (iv) failing to pay each of the [NAME] overtime rates to which they were entitled for overtime hours worked on Saturday, pursuant to cl 33.6 of the [NAME]; (v) failing to pay each of the [NAME] (except [NAME] [NAME]) overtime rates to which they were entitled for overtime hours worked on Sunday, pursuant to cl 33.7 of the [NAME]; and (vi) failing to make superannuation contributions in relation to each of the [NAME] pursuant to cl 29.2 of the [NAME].

THE COURT ORDERS THAT:

1. Pursuant to s 546(1) of the [NAME] 2009 (Cth), the respondent pay to the Commonwealth a pecuniary penalty of $475,200 within 28 days.

2. The parties have leave to make any application to vary the above declarations and order within 14 days, or such longer time as may be allowed, with notification of such application to be provided by email to the associate to [NAME]. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

[NAME]

Introduction 1 This penalty determination is for serious contraventions of numerous civil penalty provisions of the [NAME] 2009 (Cth) involving underpayment of award entitlements in relation to minimum wages, weekend and public holiday penalty rates, overtime and annual leave, non-payment of superannuation, and a related failure to keep employment records and provide payslips. The applicant is the [NAME]). The respondent is [NAME] [RESPONDENT]. 2 The [COMPANY] in Taiwan had an internship program for its students. Participating students could gain paid work experience and at the same time earn academic credits. The University asked [COMPANY], the [COMPANY] of [NAME], to provide internship opportunities. An internship arrangement was subsequently entered into between [NAME] and the University, with the internship placements presently in issue being with [NAME] in Australia. 3 In the relevant period between about 1 July 2016 and about 26 June 2017, [NAME] employed students from the University as 12 month internees. During that period, [NAME] operated a number of [NAME] stores in New South Wales, including [NAME] and [NAME]. Those stores sold baked goods, including cakes and drinks to customers. The baked products were manufactured in factories operated by [NAME]. [NAME] worked in [NAME]' factories or the [NAME] stores, but were only paid about $1,650 to $1750 per month, being about 30% of their lawful entitlements. [NAME] still operates one [NAME], but no longer operates any [NAME] stores. Instead, it is a [NAME] for 14 [NAME] outlets where the produced [NAME] goods are sold under exclusive supply arrangements. 4 The aggregate of the underpayments and non-payments for the [NAME] was just over $470,000 ($40,792.37 for superannuation and $429,393.18 for all the other underpayments). The breaches in relation to record keeping and payslips had the practical effect of concealing the underpayments. The individual underpayments were between just over $50,000 and just over $58,000 in the single year constituting the relevant period. 5 The initial calculation of underpayments was $452,148.33, but was revised down on 8 October 2020. Following this revision, each of the [NAME] were contacted in Taiwan by [NAME] about being paid their outstanding entitlements in December 2021. [NAME] were directly paid their outstanding entitlements (apart from superannuation) on 13 January 2021, totalling $429,393.18 for amounts ranging from $50,213.14 up to $58,248.82, an average of just under $54,000. This was a prompt and important response by [NAME], which has weighed substantially in its favour as a tangible acceptance of wrong-doing and rectification of its effect. The outstanding superannuation entitlements, plus interest, were paid to the [NAME] much later on 15 March 2022, six weeks after an amended assessment was received by [NAME]. [NAME] accepts that this payment could and should have been made at the same time as the other rectification payments. Those voluntary payments have also obviated the need for any compensation order to be made and enforced, as sought by the [NAME]. 6 [NAME] also refers to additional voluntary payments of $4,297 that it made over the year of employment to seven of the [NAME], and of $1,917 made to the eighth employee, being a food allowance and an end of year bonus, which were not paid due to any legal obligation. It submits that these voluntary payments should be taken into account in considering the appropriate penalty to be imposed. The [NAME] submits that those payments should not be brought to account at all because, having been designated as such, they had nothing to do with the contravening conduct. I have not fully acceded to either stance. Instead, I have taken those payments into account only insofar as they had some limited bearing on the actual effect of the contravening conduct on the individual employees, but otherwise not given them much weight at all. It does not change the fact of, or quantum of, the payments that were not made as required. 7 The contravening conduct took place in breach of enforceable undertakings given by [NAME] to the Commonwealth of Australia (represented by the [NAME]) under s 715 of the [NAME], proffered by [NAME]' [NAME] director, [NAME] [NAME] ([NAME], on 30 April 2015 and by another director, [NAME] [NAME] [NAME] on 14 May 2015, and accepted by the [NAME] on 5 June 2015. This was only a little over a year before the present contraventions commenced in July 2016, in relation to similar behaviour and in part involving breaches of the same two industrial awards. That undertaking included express formal admissions that [NAME] had failed to: (a) pay employees the correct minimum wage; (b) pay some employees some hours worked; (c) pay employees the applicable casual loading; (d) pay some employees the applicable overtime rates for additional hours worked; (e) pay some employees the applicable penalty rates for working on Saturday, Sunday and Public Holidays; (f) keep employee records required by law; (g) issue payslips to employees in the form required by law. 8 It follows that there can be no argument as to a lack of awareness on the part of [NAME] via its senior management as to the nature and existence of the legal obligations that were not complied with. The conduct was therefore intentional rather than inadvertent, and to that extent, necessarily more serious than, e.g., an innocent contravention: see [NAME] Commission v [NAME] (Australia) [COMPANY] [2016] FCAFC 181; 340 ALR 25 at [131]-[132]. 9 There is no direct evidence of contrition or remorse on the part of [NAME], but there have been early admissions and substantial cooperation, albeit in the face of an essentially unanswerable case, as well as reimbursement of the underpayments in full, and in part going beyond the contravention allegations. Such cooperation is always important and needs to be recognised, with the weight to be given forming part of the matrix of considerations to be taken into account in arriving at an appropriate penalty, including in determining whether a proposed or agreed range is appropriate and if so, where in that range it should fall. 10 The [NAME] seeks declarations of contravention, compensation for translation expenses, and pecuniary penalties in the range from $416,880 to $475,200 (out of an aggregate statutory maximum of $729,000). [NAME] does not take issue with the declarations or compensation sought, nor with the range of penalties proposed, making that effectively an agreed range. However, [NAME] submits that the bottom of the [NAME] penalty range is sufficient and appropriate in all the circumstances. As will be seen, I do not accept that the bottom of the range proposed by the [NAME] is either sufficient or appropriate. Indeed, I have had to consider carefully whether the top of that range is enough. 11 For the reasons that follow, I will make the declarations in substance as sought and agreed to, and will impose a penalty at the top of the range sought by the [NAME] of $475,200 and accepted to be within an appropriate range by [NAME], rather than the lesser amount at the bottom of that agreed range of $416,880 sought by [NAME]. That conclusion follows a number of observations and submissions from the [NAME] to justify an aggregate penalty of only 65% of the aggregate statutory maximum, with reference to a decision of the High Court in April 2022, [NAME] Commissioner v [NAME] [2022] HCA 13; 314 IR 301 ([NAME]), which held that there is no principle guiding penalty imposition that requires there to be any proportionality between the seriousness of the conduct and the penalty imposed having regard to the maximum penalty, nor that the maximum penalty be reserved for the most serious category of contravention. I return to [NAME] later in these reasons.

The key events proven by agreed facts and affidavit evidence, the contraventions and the penalties sought 12 The penalty hearing took place by reference to the pleadings, including the amended defence admitting to the alleged contraventions, lengthy and detailed agreed facts, limited additional affidavit evidence, written submissions by both sides, and supplementary submissions by the [NAME] addressing aspects of [NAME]. Some of those facts have already been set out in the introduction to these reasons. The key aspects of those facts, and further facts beyond them, are summarised in the [NAME]'s submissions in chief, which are overtly stated not to be in dispute in the submissions for [NAME]. There is some degree of dispute as to what should be made of those facts. 13 [NAME] places some stock in the underlying legitimacy of the internship arrangement, I prefer and accept the [NAME]'s argument that this circumstance has little material bearing on the question of penalty. It is more in the nature of an absence of a feature indicating a greater need for deterrence, than a feature supporting any argument for any lesser need for deterrence. The common experience of the Court is that contraventions of the present kind often occur within otherwise lawful employment arrangements. The need for deterrence arises from otherwise lawful businesses conducting this aspect of their affairs unlawfully. A business that is itself unlawful, and those involved in running it, may be better candidates for criminal investigation, prosecution and punishment for the overall illegal enterprise, perhaps including imprisonment. 14 As noted above, the [NAME] [NAME] Employees worked in [NAME]' factories and [NAME] outlets. They were paid monthly by a lump sum, split between electronic deposits into bank accounts in Taiwan, which fluctuated according to the prevailing exchange rate, typically in the range from about $871 to $927, and $400 in cash paid in Australia, being only about 30% of what they were entitled to by reason of the underpayments. Only the cash was readily available in Australia, although it seems only one employee experienced insurmountable difficulty in accessing money paid into a Taiwanese bank account, and therefore had to use her savings and borrow money from friends to meet living expenses. 15 The content of the contraventions of civil penalty provisions of the [NAME], as reflected in the declarations to be made by consent, is able to be succinctly stated as follows: (a) s 535(1): failing to make and keep for seven years, employee records prescribed by the [NAME] 2009 (Cth) (Regulations), specifying their status as full-time or part-time, and permanent, temporary or casual and recording overtime hours worked for all [NAME] [NAME]; (b) s 535(2): failing to make and keep for seven years, in the English language as required by reg 3.31(1)(a) of the Regulations, employee records in relation to each employee specifying: (i) their name, the employer name, the date of commencement: reg 3.32(a); (ii) the gross and net amounts paid, including any bonus: reg 3.33(1)(b) and (3)(b); (iii) any leave taken and the leave entitlements balance: reg 3.36(1); (c) s 536(1): failing to give each employee a pay slip within one working day of paying an amount to each employee in relation to the performance of work; (d) s 44(1): (i) failing to give each employee a [NAME] before, or as soon as practicable after, the start of employment, pursuant to s 125(1); (ii) failing to pay each employee their untaken paid annual leave when their employment ended, pursuant to s 90(2); (e) s 45, in relation to [NAME] [NAME] [NAME] (from 1 July 2016 to 27 February 2017) and [NAME] [NAME] and their entitlements under clauses of the [NAME] 2010 ([NAME]), failing to: (i) pay minimum junior rates of pay: cl 18.2; (ii) pay minimum rates of pay: cl 17; (iii) pay penalty rates for work on a Saturday: cl 29.4(b); (iv) pay penalty rates for work on a Sunday: cl 29.4(c); (v) pay rates for work on a public holiday: cl 29.4(d); (vi) pay rates for overtime for overtime hours worked on Monday to Saturday: cl 29.2(a); (vii) pay rates for overtime for overtime hours worked on Sunday: cl 29.2(c); and (viii) make superannuation contributions: cl 22.2; (f) s 45, in relation to [NAME] [NAME] [NAME] (from 28 February 2017 to 26 June 2017), [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME] and [NAME] [NAME] and their entitlements under clauses of the [NAME] ([NAME]), failing to: (i) pay minimum rates of pay: cl 20.1; (ii) pay for work on a public holiday: cl 30.2(f); (iii) pay each overtime rates for overtime hours worked on Monday to Friday; cl 33.1(a); (iv) pay overtime rates for overtime hours worked on Saturday: cl 33.6; (v) pay (except [NAME] [NAME]) overtime rates for overtime hours worked on Sunday: cl 33.7; and (vi) make superannuation contributions: cl 29.2. 16 The proposed declarations also made reference to cl 11(h) of the written undertaking given by [NAME] to the [NAME] on 5 June 2015 being breached, but that was not developed in oral or written submissions, and I am therefore not satisfied that it is necessary or appropriate to make an imprecise declaration to that effect. 17 The penalties sought by the [NAME] were furnished in the following table (with some adjustments): Contravention Employees Affected Maximum Penalty Maximum Penalty with 20% discount Proposed Penalty Range Percentage Proposed Penalty Range

Contraventions of the [NAME] 535(1) by: All Employees $27,000 $21,600 70% – 80% $15,120 – $17,280 • failing to make and keep records relating to status, as required by reg 3.32(c) and (d); and • failing to make and keep records of overtime hours worked as required by reg 3.34(a). Section 535(2) by failing to make and keep the following records in the English language: All Employees $27,000 $21,600 70% – 80% $15,120 – $17,280 • records of an employee[NAME] name, employer and start date, required by reg 3.32(a), (b) and (e); • records of amounts paid to an employee, required by reg 3.33(1)(b) and (3); and • records relating to leave accrued and taken, required by reg 3.36(1). Section 536(1) by failing to provide pay slips to the Employees. All Employees $27,000 $21,600 70% – 80% $15,120 – $17,280 Section 44 by failing to provide a [NAME] to each of the Employees pursuant to s 125 All Employees $54,000 $43,200 40% – 50% $17,280 – $21,600 Section 44 by failing to pay accrued annual leave entitlements on termination pursuant to s 90(2) All Employees $54,000 $43,200 80% – 90% $34,560 – $38,880

Contraventions of Section 45 of the [NAME] resulting from contraventions of the [NAME] Cl 17 and 18.2 of the [NAME] by failing to pay adult and junior base rates. [NAME] [NAME] and [NAME] [NAME] ([NAME] $54,000 $43,200 70% – 80% $30,240 – $34,560 Employees) Cl 29.4(b) of the [NAME] by failing to pay Saturday rates. [NAME] $54,000 $43,200 70% – 80% $30,240 – $34,560 Cl 29.4(c) of the [NAME] by failing to pay Sunday rates. [NAME] $54,000 $43,200 70% – 80% $30,240 - $34,560 Cl 29.4(d) of the [NAME] by failing to pay public holiday rates. [NAME] $54,000 $43,200 70% – 80% $30,240 – $34,560 Cl 29.2(a) of the [NAME] by failing to pay overtime rates. [NAME] $54,000 $43,200 70% – 80% $30,240 – $34,560 Cl 22.2 of the [NAME] by failing to make superannuation contributions. [NAME] $54,000 $43,200 70% – 80% $30,240 – $34,560

Contraventions of Section 45 of the [NAME] resulting from contraventions of the [NAME] Cl 20.1 of the [NAME] by failing to pay base rates. [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME], [NAME] [NAME] and [NAME] [NAME] ([NAME] $54,000 $43,200 80% – 90% $34,560 – $38,880 Employees) Cl 30.2(f) of the [NAME] by failing to pay public holiday rates. [NAME] $54,000 $43,200 80% – 90% $34,560 – $38,880 Cl 33.1(a) of the [NAME] by failing to pay overtime rates [NAME] $54,000 $43,200 80% – 90% $34,560 – $38,880 Cl 29.2 of the [NAME] by failing to make superannuation contributions. [NAME] $54,000 $43,200 80% – 90% $34,560 – $38,880 Total $729,000 $583,200 $416,880 – $475,200

18 In arriving at the above grouping of contraventions and associated dollar figures and ranges, the [NAME] has had regard to: (a) the statutory course of conduct provision in s 557(1) of the [NAME], which provides that two or more contraventions of a term of the same civil penalty provision are to be treated as a single contravention when committed by the same person and arising out of the same course of conduct. This does not allow for grouping of contraventions of different civil penalty provisions, and that provisions that address breaches of national employment standards or awards operate at the level of the individual clauses of those standards or awards, resulting in the aggregations in the table above; (b) common law course of conduct principles, to avoid double punishment for the same contravening conduct, which do not have any practical effect in this case; (c) relevant considerations of the kind identified by the [ADDRESS] in [COMPANY] v [NAME] Union [2008] FCAFC 170; 171 FCR 357 per [NAME] and [NAME] at [57], being both general and specific deterrence, the nature and extent of the conduct and loss suffered, the size and resources of the [NAME], the involvement of senior management and contrition and cooperation, noting that following [NAME] each of the features other than deterrence must now be regarded as means of assessing the penalty needed to meet that sole consideration; (d) totality, to the extent that this principle meaningfully has any work to do as it has always functioned in practice as a final check on proportionality in the sense dispensed with by [NAME], although it does also potentially go to the question of oppression, which is a measure of proportionality allowed by the High Court.

[NAME] and related observations 19 [NAME] was decided, I would have had little reason to doubt that a penalty in the range proposed by the [NAME] would have been proportionate and just in all the circumstances, and therefore "appropriate" as required by s 546(1) of the [NAME], having regard to the role of the maximum penalty provided for in s 546(2), while giving primacy to the objective of deterrence. This would have entailed following the reasoning in the decision of the [ADDRESS], of which I was a non-plurality concurring member, in [NAME] v [NAME] Commissioner [2020] FCAFC 177; 299 IR 404 ([NAME]) that was overturned by [NAME]. However, following [NAME], the need for proportionality between the contravening conduct and the penalty imposed described in [NAME] has been dispensed with and the penalty imposed is therefore no longer required to be in proportion to the contravening conduct. Moreover, the maximum penalty is no longer to be treated as one of the yardsticks for penalty imposition. That principle of proportionality, and the role of the maximum penalty, both drawn from the criminal law, have no role to play in relation to the imposition of civil penalties. [ADDRESS] is therefore obliged to proceed upon that basis in all [NAME] civil penalty proceedings. The same regime must presumably apply in all other civil penalty proceedings unless the legislation in question supports a different conclusion than the High Court reached in relation to s 546 of the [NAME]. 20 [NAME] may have the practical effect of respondents needing to make a selection between the potentially stark choices of: (a) defending civil penalty proceedings, irrespective of whether they are truly contestable, in the hope of successfully defending them at least in part on liability, because, in any given case, the maximum penalty or close to it will be imposed no matter what, because that is what deterrence demands; (b) advancing evidence and arguments at a penalty hearing as to why severe penalties, or even penalties at or approaching the aggregate maximum, should not apply in a given case as they go beyond what is necessary in all the circumstances to advance the sole objective of deterrence (specific and/or general); or (c) negotiating an agreed penalty or range of penalties. 21 It seems likely that the last of these options of agreed penalties (as to a single figure or even a range) will assume even greater importance than it did before April 2022, when [NAME] was handed down. As a result, Commonwealth v Director, [NAME] [2015] HCA 46; 258 CLR 482 (Agreed Penalties Case) may then likely prevail, in a practical sense, over [NAME], because of the strong support given to accepting and applying an agreed penalty. 22 In the Agreed Penalties Case, per [NAME], [NAME], and [NAME] [NAME] at [57], it was observed that, in contrast to criminal sentence proceedings following [NAME] v The Queen [2014] HCA 2; 253 CLR 58, which held that the prosecution cannot furnish or support a penalty range in civil proceedings, and therefore there is generally very considerable scope for agreement as to the appropriate remedy and for the Court to be persuaded as to it being appropriate, and as part of [58] (emphasis is original, footnote omitted): Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in [NAME], highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. 23 Thus, the touchstone for acceptance of the proposed penalty is a conclusion that it is appropriate. [NAME] specifically endorsed the Agreed Penalties Case, including at [42], citing [59], dealing with it being unexceptional for a court to accept agreed submissions as to the nature and quantum of relief in a range of civil cases involving the public interest. 24 An unfortunate by-product of greater resort to agreed penalties than might otherwise have been the case is that there will be fewer decided cases in which judicial reasoning in support of particular levels of penalty imposition emerge to provide a body of penalty imposition yardsticks to develop the jurisprudence in this area. But it may be that there is no longer as much need for such jurisprudence to be developed any more in contested penalty cases, given that so much of it was focused on reasoning derived by analogy from the retributive aspect of criminal sentencing, applied for a non-retributive purpose in civil penalty proceedings in an effort to arrive at a just result directed to deterrence. This always used to go beyond proportionality and extend to principles also originally sourced in retribution, including in particular, the course of conduct principle at common law (cf s 577 of the [NAME]), totality, and parity, all of which, as understood in ordinary day-to-day practice, functioned in much the same way, shining substantially the same conceptual analytical light from different perspectives. 25 In light of the foregoing, I have engaged in a searching justification for not imposing penalties in excess of the top of the range proposed by the [NAME] and not opposed by [NAME], and perhaps closer to the aggregate statutory maximum, noting my prior observations on the reasons for ordinarily not exceeding a [NAME]'s suggested penalty range in [NAME] v [COMPANY] (t/as [NAME]) [2017] FCA 1301; 275 IR 148 at [44]-[45]. It is of some importance that the range proffered by the [NAME] is agreed to by [NAME], thereby engaging the Agreed Penalties Case so as to be given effect to ordinarily unless outside the range that this Court is willing to accept, and as a contrast to the effect of [NAME] in the absence of such an agreement being reached. 26 While the [NAME] suggests in post-hearing supplementary submissions addressing [NAME] that I am free to depart from the range advanced and agreed upon, in the sense of going above that range, I would not do so without notice and giving [NAME] a chance to be heard. That is because a [NAME] ought to be entitled to proceed upon the basis that the [NAME] will adhere to the range communicated in the course of negotiations, and proffered to a court. A court needs to have a good reason to depart from that range, and may have to give such a respondent an opportunity to withdraw concessions made upon that basis. 27 A further observation is that had this proceeding gone to trial and the [NAME]'s case succeeded in full, I doubt I would have had any real alternative to imposing the maximum available aggregate penalty of $729,000, or something close to it, as being necessary in all the circumstances to meet the single objective of deterrence mandated more clearly than ever by [NAME], no matter how unfair and even counterproductive that might have been, especially for future cases by deterring admissions of contravention, or even admissions to individual facts and circumstances, rather than insisting upon proof by admissible evidence. That is because the maximum aggregate penalty was no longer limited to the worst category of contravening conduct, and that penalty, while disproportionate in relation to the seriousness of the conduct, would not, on the evidence, have been oppressive in the sense identified in [NAME]. 28 The difference in the outcome of the maximum available aggregate penalty of $729,000 and the upper end of the range sought by the [NAME] of $475,200 turns on the assessment of what is necessary to achieve the objective of deterrence, unfettered by any concept of proportionality between conduct and sanction or limit as to the imposition of the maximum penalty. The measure or degree of a largely unfettered sanction considered necessary to achieve deterrence is a difficult fact to ascertain for the purpose of the proper exercise of the judicial function. There is limited judicial reasoning involved in imposing penalties without regard for proportionality or the maximum penalty, because, at least in some cases, it is simply an exercise of crude utilitarianism directed to reducing the incidence of contravening conduct through a form of economic terror, long abandoned in the criminal law as a function of the proper administration of justice and the proper application of the rule of law: see [NAME], per Allsop CJ, [NAME] and [NAME] [NAME] at [41]-[93], especially at [42]. 29 As noted above, the [NAME] furnished supplementary submissions, addressing [NAME]. The burden of those submissions is that the reasoning of the plurality in the High Court did not preclude giving significant weight to cooperation, including as a means of ameliorating the need for a higher penalty to advance deterrence. I have taken those submissions into account, but only to the extent permitted by [NAME]. 30 The features that I now rely upon in imposing the lower penalty at the top of the range agreed upon, rather than closer to the maximum available penalty for repeated contravening conduct, would have been either substantially absent or overwhelmed by the adverse implications unavoidably drawn in the event of continued denial of the contraventions, calling for enhanced deterrence. Of course, had the proceeding gone to trial, there is every possibility that at least some of the admitted contraventions would not have been proved because of a potential shortfall in the quality of evidence needed to prove them, even to the civil standard given their seriousness, especially given that none of the [NAME] reside in Australia. However, even such a shortfall may not have been enough to produce a lower penalty than the top of the range proffered by the [NAME].

The competing submissions 31 [NAME], which in turn reinforced the Agreed Penalties Case, the focus on penalty imposition is exclusively on deterrence in its widest sense, with all other factors directed to assessing what is needed to achieve that objective, while also avoiding the imposition of an oppressive penalty. 32 Below is a concise precis of the case on penalty advanced by the [NAME], which I largely accept, subject to limited further considerations advanced by [NAME] below. One aspect I do not consider in detail was the personal circumstances of one of the Employees, in particular the difficulties she had in accessing the money paid into her Taiwanese account, referred to above. Rather than descending into that individual detail, the payment of money into bank accounts in Taiwan was a feature of the approach taken by [NAME] which had a tendency to contribute to additional difficulties for the Employees on top of the fact of significant underpayments. 33 The [NAME] places emphasis on three features of the contraventions giving rise to a particular need for general deterrence, as follows. First, the underpayments were for a significant amount, with there being an incentive for employers to underpay to increase profits, avoid tax obligations, and obtain a competitive advantage over other employers, which are particularly prominent in areas where the largest costs are labour. This submission finds ample support in [NAME] [NAME] at [152], quoted with approval by the plurality in [NAME] at [41]: If it costs more to obey the law than to breach it, a failure to sanction contraventions adequately de facto punishes all who do the right thing. It is therefore important that those who do comply see that those who do not are dealt with appropriately. This is, in a sense, the other side of deterrence, being a dimension of the general deterrence equation. This is not to give licence to impose a disproportionate or oppressive penalty, which cannot be done, but rather to recognise that proportionality of penalty is measured in the wider context of the demands of effective deterrence and encouraging the corresponding virtue of voluntary compliance. 34 Secondly, there is a particular need for general deterrence in the [NAME] and food manufacturing industries, with the [NAME] industry in particular being recognised in prior decisions as having a "heightened need for general deterrence" by reason of generally employing unskilled workers who are more likely to be young or from overseas: [NAME] v [NAME] [COMPANY] [2021] FCA 60 per [NAME] at [69]. This submission is supported by industry profiles compiled by the [NAME] that are in evidence which indicate that the [NAME] and food manufacturing industries generally experience moderate to high rates of disputes, emphasising the importance of encouraging a self-regulating culture of compliance. Reliance on submissions of this kind, which may be grounded in such evidence, is supported by the Agreed Penalties Case per [NAME], [NAME], [NAME], [NAME] and [NAME] at [60] (citing [COMPANY] v [NAME] Commission [1996] FCA 1134; 71 FCR 285 at 290-295): … it is the function of the relevant [NAME] to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the [NAME] will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance. 35 Thirdly, there is a particular need for general deterrence to ensure that employers are discouraged from exploiting overseas workers, with the evidence before the court being to the effect that despite such workers comprising only 4% of the workforce, they were involved in 19% of the disputes dealt with by the [NAME] in the period from January 2018 to June 2021 (being after the relevant period), and with employees from Taiwan being particularly overrepresented. This again reflects the value of the input and assistance of a [NAME], recognised in the quote from the Agreed Penalties Case at [60], reproduced above. 36 [NAME] seeks to qualify the first three features of general deterrence advanced by the [NAME] by suggesting: (a) that its conduct was better explained as a disconnect between the requirements of Taiwanese law and Australian law than an attempt at profit maximisation and tax minimisation, while accepting that was a practical effect of what took place; (b) that the Employees were genuine [NAME], and there was no evidence that it had set about to exploit them; and (c) that there was no premediated exploitation, a point addressed above. I am unable to accept that any of these considerations have any material bearing on general deterrence, and little even to assist on specific deterrence. Deterrence is directed to conduct, and in a case in which nature of the legal requirements were brought to [NAME]' attention by the enforceable undertaking. Moreover, if an innocent state of mind is relied upon to reduce the penalty to be imposed, it needs to be proven, not merely asserted: [NAME] [NAME] at [131]. 37 As to specific deterrence, the [NAME] points to a further five factors as follows. First, there were prior contraventions of a like kind, as reflected in the enforceable undertakings that were breached. [NAME] accepts that is so, but submits that this also points to steps taken to comply with those undertakings. This does not assist [NAME] because the contraventions then took place anyway. 38 Secondly, contraventions detected in each of the five audits conducted by the National [NAME] Association between 2016 and 2017, including some of the same contraventions that are now before the Court, had resulted in advice being given to [NAME] as to employee entitlements. [NAME] points to self-audits and progress made. Again, this does not help [NAME] given the instant contraventions that then followed. 39 Thirdly, the involvement of senior management of [NAME], being the [NAME] director, [NAME] [NAME] ([NAME]) [NAME], and another director, [NAME] [NAME] [NAME], both of whom had signed the enforceable undertaking, and had undertaken training, knew the facts establishing the contraventions, and were still directors. [NAME] submits that as those directors are its public face, the sanction imposed will have its own specific deterrence effect. I am unable to see how this offsets their involvement or reduces the need for deterrence. 40 Fourth, the current and ongoing business activities give rise to a need for operative deterrence. [NAME] no longer operates [NAME] shops, it is a [NAME] to entities who do, and it continues to be involved in food manufacturing. There remains a need for deterrence even in those circumstances, and in relation to its continuing [NAME] operations. 41 Fifth, [NAME] has not adduced any evidence to give any basis for confidence that there will be voluntary compliance in the future. [NAME] points to the involvement of the two directors in cooperation, admission of contravention and a measure of acceptance of wrongdoing in the rectification payments made. The conclusion I reach is that the risk of further contraventions is hard to assess, which suggests a strong and important role for specific deterrence in penalty assessment and imposition. Of course, should [NAME] contravene again, it would seem that an accessorial case against the directors in person would be more likely. It may also be that criminal offences of wage theft will be in place in the not-too-distant future. 42 In relation to specific deterrence more generally, [NAME] submits that there was not a determined refusal to comply with the law, or to disobey it, an argument that seems to rise no higher than a suggestion of ignorance of the law which is hard to accept given the audits which identified the looming problem, and the enforceable undertaking that reflected that the problem had manifested. To continue this sort of conduct at least reflected a stubborn determination not to take positive steps to ensure compliance. There is plainly a significant need for specific deterrence. 43 On the topic of the nature and extent of the conduct and the loss suffered, the [NAME] submits that the circumstance of the employees travelling to Australia and doing the internship as a part of their university program, along with their youth, difficulties with English and lack of familiarity with local laws and practices, made them particularly susceptible to exploitation. [NAME] points to each [NAME] having the option of doing the internship in Taiwan or overseas, so that reliance on an employer to do the right thing was present wherever it took place. I am unable to see how that assists [NAME]. The simple fact is that it was able to take advantage of the circumstances that arose from the internships taking place here. It is not to the point, as [NAME] advances, that there were no overt threats made and the [NAME] Employees signed up to working flexibly, because that was not paid for properly at the time. I am unable to accept that the [NAME] Employees were anything other than highly susceptible to exploitation in the sense of being in no realistic position to resist being overworked and underpaid. 44 It does not help to submit, as [NAME] does, that visa information pointed each [NAME] employee to the obligation on them to comply with labour laws here. Rather, those circumstances made it easier for [NAME] to deny the Employees their entitlements, which was also concealed by the record-keeping breaches. The long hours that were not paid for by overtime or penalty rates, longer than other employees, exacerbated the poor living conditions and general amenity brought about by not being able to pay for suitable accommodation. The exploitation that in fact took place had these additional dimensions directly flowing from the illegality. 45 Additionally, the principal objectives of the [NAME] and the two awards as to minimum standards were undermined, and needed to be reinforced. 46 The underpayments were objectively large, with the smallest underpayment being more than a full-time employee would ordinarily earn in a single year on the highest classification under either award, and with a large component flowing from the failure to pay penalty rates for weekends and public holidays and overtime, yet the Employees did not have the benefit of not working at those times either and only had immediately available the cash amount of $400 per month. 47 The money that was not paid as required was able to be kept by [NAME] and used for its benefit until it was paid in full after this proceeding was commenced. The Employees were left with the burden of pursuing the superannuation paid by [NAME] to the [NAME], rather than to a fund identified by each employee as required. 48 [NAME] was a sophisticated employer, operating multiple factories and [NAME] stores, and now being a [NAME] in relation to 14 [NAME] stores. It is part of a larger corporate group with companies in the group operating in Australia, Taiwan, Malaysia and the Cayman Islands, and as a result was able to source employees and managers from overseas. [NAME] had a significant net loss in the financial year ending 30 June 2021, it has a high turnover, relatively low cost of sales, and correspondingly less in the way of operating expenses. Most of the loss incurred in that year was due to rectification payments made to the Employees. [NAME] has substantial cash on hand, increasing by $600,000 since the June 2021. It is well able to meet the penalties to be imposed and there does not seem to be any reason for allowing additional time to pay in all the circumstances. I have no reason to have any concern that the penalties to be imposed will be oppressive in the sense identified in [NAME], noting that the gap between the top of the range sought by the [NAME], and the bottom of the range sought by [NAME] is not very substantial. 49 [NAME] largely does not cavil with the [NAME]'s characterisation of its conduct, nor dispute the range of penalties proposed while seeking a penalty at the lower end of that range, it advances a number of slightly contrary submissions. [NAME] submits that the arrangement with the [NAME] Employees was not intentionally and deliberately exploitative and that the Employees agreed to their terms of employment. That outsourcing decision can only be correct in the sense that it may have been done consistently with Taiwanese law as it applied in Taiwan, and therefore perhaps not thought to be exploitative by that standard. That submission does not take [NAME] very far. It is clear that the conduct was deliberate as opposed to inadvertent, and carried out in contravention of enforceable undertakings. Its most senior management must have been aware, or at least plainly should have been aware, that Australian law applied to the employment here. The end result was undoubtedly exploitative, and the contravening conduct itself was plainly deliberate. 50 The [NAME] submits, and I accept, that while there was cooperation, including ultimately full admissions, which should be recognised and given substantial weight, especially in the aftermath of [NAME], [NAME] initially denied being the employer and alleged it was rather the responsibility of its [COMPANY], [NAME], which prolonged both the investigation and this proceeding. The [NAME] therefore submits that a 20% discount off the maximum available penalty was appropriate, as reflected in the fourth column in the table above. [NAME] suggests that the discount should be greater, being instead 25%. I am unable to accept that is appropriate in all the circumstances. Indeed, my preference would be for such a discount to be applied to the penalty to be imposed, not to the maximum penalty, especially given the limited role of the maximum penalty following [NAME], but as this approach was agreed except as to the size of the discount, I am content to proceed upon that basis as not being inappropriate, but not to go any higher than 20%. 51 In the [NAME]'s post-[NAME] submission, it is submitted that it is compatible with that case and with previous civil penalty cases, citing in particular [COMPANY] v Jordan [2008] FCAFC 70; 168 FCR 383 per [NAME] and [NAME] at [73]-[76], for cooperation to be taken into account on the basis of it being relevant to deterrence in at least three ways, each of which has application in this case: (a) specific deterrence as demonstrating contrition, remorse and acceptance of responsibility; (b) general deterrence by reinforcing the strength and integrity of the [NAME] and the regulatory process; and (c) the utilitarian value of the regulatory process and the justice system in the sense of facilitating the course of justice, which I would further note frees up the [NAME]'s resources to investigate and bring other proceedings, itself contributing to general deterrence. 52 The [NAME] also submits that [NAME] does not preclude taking into account the utilitarian value of cooperation independently of deterrence. While each of those submissions have some force, properly examined they are relevant because, whether directly or indirectly, they can be linked to, or be supportive of, deterrence objectives, especially when regard is had to cooperation which frees [NAME] resources to take deterrence action elsewhere, so as to remain squarely within [NAME]. Deterrence is, after all, directed to compliance. The particular features that the [NAME] identifies, and which I accept, are: (a) the utilitarian benefit already adverted to, which contributes both directly and indirectly to compliance activities; and (b) the analogy of a discount for cooperation with criminal law analogues, including guilty plea discounts, which may be seen to be a further feature of the utilitarian benefit, and such things as agreements as to facts and penalties, citing the approval of the Agreed Penalties Case in [NAME] at [14]. 53 Having regard to all of the foregoing, I accept the [NAME]'s submission that no further and final adjustment for totality is called for. There is nothing to suggest that even the top of the range proposed by the [NAME] will be oppressive in the relevant sense. To the contrary, as I have already indicated, I accept that the top of the range proposed by the [NAME], and not said by [NAME] to be wrong although it seeks less, is within the appropriate range in all the circumstances, albeit only just within that range.

In all the circumstances, no more is required to meet the objective of deterrence.

Conclusion 54 For the forgoing reasons, and as set out in more detail in the orders part of this judgment, I am satisfied that it is appropriate in all the circumstances to: (a) make the declarations of contravention sought by the [NAME] and agreed to by [NAME], noting that no separate argument was directed to the compensation sought for interpreter expenses, which I would additionally order if sought; (b) order that [NAME] pay to the Commonwealth within 28 days an aggregate pecuniary penalty of $475,200, being the top of the range proposed by the [NAME] and agreed to, rejecting the submission by [NAME] that a penalty at the bottom of that range of $416,880 was appropriate or sufficient, and noting that at a contested hearing it would have been difficult for it to resist a much greater penalty. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the [NAME].

Associate: Dated: 4 November 2022