Fair Work Ombudsman v Mai Pty Ltd & Anor [2016] FCCA 1481 (17 June 2016)

Fair Work Ombudsman v Mai Pty Ltd & Anor [2016] FCCA 1481 (17 June 2016)

Last Updated: 21 June 2016

FEDERAL CIRCUIT COURT OF AUSTRALIA

REPRESENTATION

ORDERS

WITH THE CONSENT OF EACH OF THE PARTIES THE COURT DECLARES THAT:

(1) the First Respondent contravened:

• (a) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.17 of the General Retail Industry Award 2010 by failing to pay 12 of its employees the minimum hourly wage prescribed by that Award;
• (b) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.13.2 of the General Retail Industry Award 2010 and cl.A.5.4 of Schedule A of the General Retail Industry Award 2010 by failing to pay 12 of its employees the casual loading prescribed by that Award;
• (c) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.29.4(b) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 9 of its employees the Saturday loading prescribed by that Award;
• (d) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.29.4(c) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 11 of its employees the Sunday loading prescribed by that Award;
• (e) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.29.4(d)(i) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 9 of its employees the public holiday loading prescribed by that Award;
• (f) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.30.3(a) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 6 of its employees the weekday shiftwork rates prescribed by that Award;
• (g) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.30.3(b) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 4 of its employees the Saturday shiftwork rates prescribed by that Award;
• (h) s.45 of the Fair Work Act 2009 (Cth) by virtue of a contravention of cl.30.3(c) of the General Retail Industry Award 2010 and cl.A.7.3 of Schedule A of the General Retail Industry Award 2010 by failing to pay 3 of its employees the Sunday shiftwork rates prescribed by that Award;
• (i) s.535(1) of the Fair Work Act 2009 (Cth) by failing to make employee records specifying the rate of remuneration paid to 12 of its employees as prescribed by reg.3.33(1)(a) of the Fair Work Regulations 2009 (Cth);
• (j) s.535(1) of the Fair Work Act 2009 (Cth) by failing to make employee records of the hours worked by 12 of its employees as prescribed by reg.3.33(2) of the Fair Work Regulations 2009 (Cth);
• (k) s.535(1) of the Fair Work Act 2009 (Cth) by failing to make employee records specifying the casual loading to which 12 of its employees were entitled to be paid as prescribed by reg.3.33(3) of the Fair Work Regulations 2009 (Cth);
• (l) s.535(1) of the Fair Work Act 2009 (Cth) by failing to make employee records of the shiftwork rates to which 12 of its employees were entitled to be paid for shiftwork performed as prescribed by reg.3.33(3) of the Fair Work Regulations 2009 (Cth);
• (m) s.535(1) of the Fair Work Act 2009 (Cth) by failing to make employee records of the loadings to which 12 of its employees were entitled to be paid for work performed on Saturdays, Sundays and/or public holidays as prescribed by reg.3.33(3) of the Fair Work Regulations 2009 (Cth);
• (n) reg.3.44(1) of the Fair Work Regulations 2009 (Cth) by failing to ensure that records recording the breaks taken by employees were not knowingly false or misleading;
• (o) reg.3.44(1) of the Fair Work Regulations 2009 (Cth) by failing to ensure that records recording the rates of pay paid to its employees were not knowingly false or misleading;
• (p) reg.3.44(1) of the Fair Work Regulations 2009 (Cth) by failing to ensure that records recording the hours worked by its employees were not knowingly false or misleading;
• (q) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of records wrongly recording the rates of pay paid to its employees through the 7-Eleven Payroll System despite knowing them to be false or misleading;
• (r) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of records wrongly recording the hours of work of its employees through the 7-Eleven Payroll System despite knowing them to be false or misleading;
• (s) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in inaccurate and false records for the period 17 August, 2014 to 14 September, 2014 despite knowing them to be false or misleading;
• (t) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in inaccurate and false records for the period 17 August, 2014 to 14 September, 2014 by producing them in response to a Notice to Produce despite knowing them to be false or misleading;
• (u) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in records recording the breaks taken by employees for the period 17 August, 2014 to 14 September, 2014 by producing them in response to a Notice to Produce despite knowing them to be false or misleading;
• (v) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in inaccurate and false records for the period 1 September, 2013 to 31 August, 2014 by producing them in response to a Notice to Produce despite knowing it to be false or misleading;
• (w) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in records recording the breaks taken by employees by relying on them in an interview with the Applicant in February, 2015 despite knowing them to be false or misleading;
• (x) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in records recording the rates of pay paid to its employees by relying on them in an interview with the Applicant in February, 2015 despite knowing them to be false or misleading;
• (y) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of entries in records wrongly recording the hours of work of its employees by relying on them in in an interview with the Applicant in February, 2015 despite knowing them to be false or misleading;
• (z) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by, in July, 2015 making use of entries in certain of the First Respondent’s banking records despite knowing them to be false or misleading as to payments made to 12 of its employees;
• (aa) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by, in August, 2015 making use of entries in the First Respondent’s banking records despite knowing them to be false or misleading as to payments made to 12 of its employees;
• (bb) reg.3.44(6) of the Fair Work Regulations 2009 (Cth) by, in August, 2015 making use of entries in the First Respondent’s banking records despite knowing them to be false or misleading as to the payments made to 12 of its employees;
• (cc) s.536(2) of the Fair Work Act 2009 (Cth) by failing to provide pay slips to 12 of its employees that included the information prescribed by reg. 3.46 of the Fair Work Regulations 2009 (Cth).

(2) A declaration that the Second Respondent was involved, within the meaning of s.550(1) of the Fair Work Act 2009 (Cth), in each of the contraventions committed by the First Respondent as set out in declaration 1 above.

BY CONSENT THE COURT ORDERS THAT:

(3) Pursuant to s.545(2) of the Fair Work Act 2009 (Cth) the First Respondent pay the following amounts to the following people, or such amounts as may remain outstanding, within 28 days of the date of these orders:

(4) Pursuant to s.547(2) of the Fair Work Act 2009 (Cth) the First Respondent pay interest to each of the people identified in order (3) hereof at the applicable pre-judgment rate on the amounts payable under order (3) above.

(5) Pursuant to s.559(2) of the Fair Work Act 2009 (Cth) in the event that any of the people identified in order (3) hereof cannot be located within 28 days of the date of these orders, no later than a further seven days thereafter, the First Respondent pay the respective amounts due to that person to the Commonwealth.

(6) Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) and/or s.545(2)(a) of the Fair Work Act 2009 (Cth), for a period of 3 years from the date of this order, the Second Respondent be restrained and an injunction hereby issues restraining the Second Respondent from:

• (a) aiding, abetting, counselling, procuring or being in any way directly or indirectly knowingly concerned in, conduct in respect of employees employed in the general retail industry that contravenes the General Retail Industry Award 2010 and the National Employment Standards contained in Part 2-2 of the Fair Work Act 2009 (Cth); and
• (b) from directly or indirectly seeking or accepting back payment of wages by any current or former employee, except as required by law.

(7) Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) that the First Respondent will, at its own expense, engage a third party, or third parties, with qualifications in accounting and workplace relations to undertake an audit of the First Respondent’s compliance with the Fair Work Act 2009 (Cth) and the General Retail Industry Award 2010 on the following terms:

• (a) the audit period will be from 1 July, 2016 to 30 September, 2016;
• (b) the audit is to be completed within 30 days of the end of the audit period;
• (c) the audit will apply to all employees employed at any time during the audit period in a classification of work under the General Retail Industry Award 2010;
• (d) the audit will assess the First Respondent’s compliance with the following obligations according to each employee’s classification of work, category of employment and hours worked during the audit period:
  • (i) wages and work-related entitlements under the General Retail Industry Award 2010;
  • (ii) accrual and payment of entitlements under the National Employment Standards in Part 2-2 of the Fair Work Act 2009 (Cth); and
  • (iii) record keeping and pay slip obligations in Division 3 of Part 3-6 of the Fair Work Act 2009 (Cth).

(8) Within 30 days of the audit being completed, the First Respondent will provide to the Applicant:

• (a) a copy of the audit report which will include a statement of the methodology used in the audit;
• (b) a copy of the source materials used to audit the times worked by employees, including but not limited to rosters, time books and CCTV footage; and
• (c) written details of any contraventions identified in the audit and the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.

(9) Pursuant to s.545(1) of the Fair Work Act 2009 (Cth) the First Respondent will, within 30 days of the date of this order, display a notice in a prominent position in the West End 7-Eleven operated by it that can be easily viewed by all employees that contains:

• (a) information on the minimum rates of pay, casual loading and penalty rates under the General Retail Industry Award 2010;
• (b) information to the effect that it is unlawful for an employer to require an employee to repay their wages to the employer or a third party; and
• (c) information on how to contact the Applicant.

(10) The notice required by order (9) hereof must be in a form approved by the Applicant.

(11) The First Respondent must provide proof of the display of the notice required by order (9) hereof to the Applicant no later than 44 days from the date of this order.

THE COURT FURTHER ORDERS THAT:

(12) Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the First Respondent pay pecuniary penalties in respect of the contraventions set out at declaration (1) fixed in the sum of $340,290.

(13) Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the Second Respondent pay pecuniary penalties in respect of the contraventions set out at declaration (1) fixed in the sum of $68,058.

(14) Pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth), within 28 days of the date of these orders the pecuniary penalties ordered to be paid by the First Respondent and the Second Respondent be paid to the Commonwealth.

BRG 1173of 2015

Applicant

And

First Respondent

Second Respondent

REASONS FOR JUDGMENT

1. The first respondent operated a 7-Eleven convenience store from premises at 6/94 Boundary Road, West End, Queensland. Mr Lo, the second respondent is and was at all relevant times the sole director and shareholder of the first respondent.
2. The first respondent conducted the West End 7-Eleven pursuant to a franchise agreement with 7-Eleven Stores Pty Ltd. For the purposes of carrying out the company’s business, the first respondent engaged a number of employees. There is no dispute that Mr Lo was solely responsible for the first respondent’s management of the store and its employees.
3. On the night of 13 September, 2014 Fair Work Inspectors visited the West End 7-Eleven as part of an ‘audit campaign’ by the Office of the Fair Work Ombudsman into the employment practices at 7-Eleven stores generally. As a result of information gathered at the visit which indicated that underpayments of wages and other entitlements may be occurring, the Fair Work Ombudsman commenced an investigation of the first respondent. The investigation covered the period from 13 September, 2013 to 12 August, 2014.
4. The investigations revealed that the first respondent, under Mr Lo’s control, systematically exploited its employees by refusing to pay them according to the industrial award that governed their employment - the General Retail Industry Award 2010. The investigation discovered a sophisticated system of data manipulation and false record keeping designed to deceive the payroll processes that were part of the franchise arrangements with 7-Eleven Stores Pty Ltd. The first respondents’ systems were also designed to deceive anyone investigating the employment practices of the first respondent.
5. And for a time they worked. But persistence on the part of the Fair Work Ombudsman and the relevant Fair Work Inspectors eventually revealed the extent of the first and second respondent’s deception.
6. These proceedings are the culmination of those investigations. In them, the Fair Work Ombudsman seeks the imposition of pecuniary penalties on the first respondent for breaches of the Fair Work Act 1999 (Cth) relating to the underpayment of wages and other entitlements, and for non-compliant record keeping. The Fair Work Ombudsman seeks the imposition of pecuniary penalties on Mr Lo because he was involved in the first respondent’s contraventions within the meaning of that term as used in s.550 of the Fair Work Act.
7. The respondents admit their liability for the contraventions alleged against the first respondent. Mr Lo admits that he was involved in the contraventions as alleged by the Fair Work Ombudsman. These reasons relate to the penalties that ought to be imposed upon the respondents for the admitted contraventions.
8. As I have attempted to explain in the following reasons, this case concerns serious and systematic contraventions of the most basic of the employees’ workplace rights. The facts reveal that the first respondent established a business model that relied upon a deliberate disregard of the employees’ workplace entitlements. The facts reveal a contemptuous disregard of Australian workplace laws. Mr Lo’s contempt is demonstrated by his persistent attempts to deceive the Fair Work Inspectors investigating the relevant complaints and his insistence, undertaken in a secretive way, that any amounts he paid to the relevant employees to make good the first respondent’s defaults, should be immediately paid back to him.
9. The Fair Work Ombudsman submits that this is a case deserving of penalties that are at the upper limits of the maximums that might be imposed. I agree.
10. For the reasons that follow, I have determined that penalties that are 75% of the maximum available to be imposed are appropriate. After appropriate discounts and taking into account the totality of the aggregate penalties that result, the penalty to be imposed on the first respondent is $340,290 and the penalty to be imposed on the second respondent is $68,058.

Background

11. The contraventions alleged in the application are admitted by Mai and Mr Lo. The relevant facts are the subject of a Statement of Agreed Facts filed by the parties on 7 April, 2016. What follows is drawn from that statement, as well as the Fair Work Ombudsman’s submissions. Mr Lo did not file any written submissions but appeared at the penalty hearing to make some oral submissions designed to persuade the Court that he was truly sorry and remorseful for the contraventions. He asked for penalties lower than those suggested by the Fair Work Ombudsman.
12. Between 13 January, 2013 to 14 September, 2014 Mai employed the following people as casual employees for the following periods:

13. The parties agree that Mai’s employees identified above were covered by the General Retail Industry Award 2010 and they were entitled to be paid in accordance with the terms of that Award. The employees’ pay and entitlement rates for the relevant period were to be derived from the preserved Australian Pay and Classification Scale which in turn was derived from the Retail Industry Award – State 2004, the operation of which was preserved by the transitional provisions contained within Schedule A to the Award.
14. Mai was required to comply with the Fair Work Act and the Award in respect of the employment of the employees identified above. However, at the commencement of the employment of each employee Mr Lo agreed with the employee that Mai would pay them a flat rate of $13 per hour for day work and $15 per hour for night shift. These rates of pay were later increased to $15 per hour for day work and $20 per hour for night shift.
15. For some of the employees, the agreed rates were increased for working night shift or to recognise high performance. The parties agree that the rates paid to each of the employees were within the following ranges over the course of each employee’s employment:

16. During their rostered hours, as and when required, each employee served customers, stocked perishable and non-perishable grocery and food items, put up advertisements and promotional materials, cleaned and received stock deliveries. By reason of the work undertaken by them, the employees were each classified as a Retail Employee Level 1 for the purposes of the Award. They worked a variety of days and shifts including Saturdays, Sundays and public holidays. They worked shifts which covered the following hours:
    1. from 7 am to 12 midday Monday to Friday;
    2. from either 2.30 pm or 3 pm to 10 pm Monday to Friday;
    100. from 7 am to 2 pm Saturday and Sunday;
    4. from 2 pm to 10 pm Saturday and Sunday;
    5. 10 pm to 7 am Sunday to Saturday (Night Shift).
17. Despite the agreement that they had reached with Mr Lo when they commenced their employment, each employee was entitled to be paid according to the pay rates derived from the Award for a Retail Employee Level 1. They were also entitled to be paid any entitlements or allowances derived from the Award by reason of the hours worked by them or when those hours were worked.
18. Mai conducted its 7-Eleven store pursuant to a franchise agreement with 7-Eleven Stores Pty Ltd. Payment of wages and entitlements for employees was processed using computer software maintained and operated by 7-Eleven Stores Pty Ltd. Each pay cycle, Mai was required to input the relevant data to the 7-Eleven Stores Pty Ltd payroll system to enable the employees’ entitlements to be processed and paid. The software and computer system was such that the Award rates of pay were already fixed in the ‘system’ so that employees were, seemingly, paid at or above the correct Award rate. Thus, to pay employees at a rate less than that to which they were entitled under the Award, the ‘system’ maintained by 7-Eleven Stores Pty Ltd needed to be deceived.
19. Mai and Mr Lo were able to achieve the necessary deception by the following process:
    1. Mr Lo would calculate an employee’s weekly wage by multiplying the employee’s agreed rate of pay by the number of hours worked by the employee in the relevant week;
    2. the resulting wage amount would be divided by $25.00 per hour;
    100. Mr Lo would enter the product into the payroll system maintained by 7-Eleven Stores Pty Ltd as the ordinary hours worked by the employee for the relevant period;
    4. Mr Lo would then enter the rate of $25.00 per hour in the payroll system as the rate of pay to be paid to each employee. This resulted in the employee being paid an amount approximately equal to the result achieved by the first step of the process;
    5. 7-Eleven Stores Pty Ltd processed the transfer of funds to the employees’ bank accounts on the basis of the data entered into the payroll system by Mr Lo; and
    6. the payroll system produced:
       1. pay slips which were provided to Mai to give to the employees;
       2. weekly timesheet reports, which recorded the hours of work and rate of remuneration of the employees as entered by the Mr Lo into the payroll system; and
       3. payroll reports containing information including hours worked by the employees, gross and net amounts paid to the employees and superannuation contribution amounts, year to date totals of payments to the employees and electronic funds transfer transactions to employees.
20. Thus, while the employees received an amount which was in accordance with the rate agreed with Mr Lo, all of the supporting documents, including pay slips, produced by the 7-Eleven payroll system recorded deliberately false information about the employee’s hourly rate and hours worked.
21. The process I have just outlined was followed in respect of each employee except Wang Wei. Wang Wei’s pay was processed outside of the 7-Eleven payroll system and whilst the above method was used to calculate the relevant payments, Mr Lo prepared Wang Wei’s pay in an alternative payroll system and processed the transfer of funds to the bank accounts of either the Second Respondent’s wife or mother-in-law on Wang Wei’s behalf.

The remuneration contraventions

22. Annexure A to these reasons is a table of the underpayments in respect of each of the employees. The actual hours worked by the employees set out in Annexure A were derived from a weekly hand written record of hours worked each day maintained by Mai and Mr Lo. That written record also served as a roster for the employees.

Failure to pay minimum rates of pay

23. Pursuant to cl.17 of the Award, Mai was required to pay the employees the following hourly rates for each ordinary hour worked during the investigation period:
    1. $17.98, from 26 August 2013 to 6 July 2014; and
    2. $18.52, from 7 July 2014 to 14 September 2014,
24. During the same periods:
    1. the employees worked the number of ordinary hours set out in Annexure A; and
    2. Mai failed to pay the employees’ entitlement to minimum hourly wages, except for the following particular employees and periods:
       1. Kuan-Chih Huang: weeks ending 1 June 2014, 8 June 2014 and 22 June, 2014;
       2. Manoah Malluri: weeks ending 3 November 2013, 10 November 2013, 25 May 2014 and 29 June, 2014; and
       3. Zhigao Pan: weeks ending 25 May, 2014 and 20 July, 2014.
25. Each time Mai failed to pay the employees the minimum hourly rates required by the Award it contravened s.45 of the Fair Work Act. There are numerous breaches of cl.17 of the Award and consequently s.45 of the Act. By reason of those breaches, Mai underpaid the employees a total of $14,349.37 in minimum hourly wages.
26. However, s.557(1) of the Act requires the Court to treat multiple contraventions of the same civil penalty provision of the Act (if that section is mentioned in s.557(2) of the Act) as one contravention if the contraventions were committed by the same person and were part of a course of conduct engaged in by the party contravening the Act.
27. As the decision in Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153 directs, s.557(1) operates on contraventions which occur when a term of a modern award is contravened through the operation of s.45 of the Act. The effect of subsection 557(1) is that two or more contraventions of a term of a modern award are taken to constitute a single contravention provided the contraventions are committed by the same person and the contraventions occurred within a course of conduct by the contravenor.
28. The declarations agreed upon by the parties treat the multiple contraventions of cl.17 of the Award as a single contravention. That approach is consistent with Rocky Holdings (above).

Failure to pay casual loading

29. Pursuant to cll.13.2 and 29.4(c) of the Award and cl.A.5.4 of Schedule A of the Award, Mai was required to pay the employees the following casual loading for all hours worked during the investigation period, except for ordinary hours worked on a Sunday:
    1. $4.43 from 26 August, 2013 to 6 July, 2014; and
    2. $4.63 from 7 July, 2014 to 14 September, 2014.
30. For those periods:
    1. each of the employees worked the number of hours attracting casual loading as set out in Annexure A; and
    2. Mai did not pay the employees amounts sufficient to meet their entitlements to casual loading.
31. Accordingly, Mai:
    1. contravened s.45 of the Fair Work Act as a result of contravening cl.A.5.4 of Schedule A of the Award and cl.13.2 of the Award; and
    2. underpaid the employees a total of $27,509.41 by way of casual loading.
32. For the same reasons I have set out above, the multiple contraventions of the casual loading provisions must be treated as one contravention of the Fair Work Act.

Failure to pay Saturday loading

33. Pursuant to cl.29.4(b) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay the employees the following Saturday loading, in addition to the minimum hourly wage and any casual loading, for ordinary hours worked between 7:00 am and 6:00 pm on a Saturday:
    1. $1.44 from 26 August, 2013 to 6 July, 2014; and
    2. $1.85 from 7 July, 2014 to 14 September, 2014.
34. During those periods:
    1. nine of the first respondent’s employees worked ordinary hours on a Saturday, between 7:00 am and 6:00 pm; and
    2. Mai did not pay them any amount in respect of Saturday loading.
35. Accordingly, Mai:
    1. contravened s.45 of the Fair Work Act as a result of contravening cl.A.7.3 of Schedule A of the Award and cl.29.4(b) of the Award; and
    2. underpaid those employees a total of $669.78 in respect of Saturday loading.
36. These multiple contraventions must also be treated as single contravention for the reasons I have set out above.

Failure to pay Sunday loading

37. Pursuant to cl.29.4(c) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay employees the following amounts, in addition to the minimum hourly wage, for all ordinary hours worked on a Sunday:
    1. $14.38 from 26 August, 2013 to 6 July, 2014; and
    2. $18.52 from 7 July, 2014 to 14 September, 2014.
38. During those periods:
    1. eleven of Mai’s employees worked ordinary hours on a Sunday; and
    2. Mai did not pay them any amount in respect of Sunday loading.
39. Accordingly, Mai:
    1. contravened s.45 of the Fair Work Act as a result of contravening cl.A.7.3 of Schedule A of the Award and cl.29.4(c) of the Award; and
    2. underpaid those employees a total of $7,722.43 in respect of Sunday loading.
40. These multiple contraventions must also be treated as single contravention for the reasons I have set out above.

Failure to pay shift work rates

41. Shiftwork is defined by cl.30.2 of the Award to mean a shift starting at or after 6:00 pm on one day and before 5:00 am on the following day.
42. Pursuant to cl.30.3(a) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay all the employees employed as shiftworkers the following hourly rates of pay for performing shiftwork from Monday to Friday:
    1. $22.30 from 26 August, 2013 to 6 July, 2014; and
    2. $24.08 from 7 July, 2014 to 14 September, 2014.
43. By cl.30.3(b) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay employees who were shiftworkers the following rates of pay for performing shiftwork on a Saturday:
    1. $25.17 from 26 August, 2013 to 6 July, 2014; and
    2. $27.78 from 7 July, 2014 to 14 September, 2014.
44. Pursuant to cl.30.3(c) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay employees who were shiftworkers the following rates of pay for performing shiftwork on a Sunday:
    1. $32.37 from 26 August, 2013 to 6 July, 2014; and
    2. $37.04 from 7 July, 2014 to 14 September, 2014.
45. During those periods:
    1. six of Mai’s employees were employed as shiftworkers for at least part of their employment period;
    2. those employees worked shiftwork from Monday to Friday and on Saturdays and Sundays; and
    100. the actual hourly rates Mai paid to those employees were insufficient to meet their entitlement to shiftwork rates.
46. Accordingly, Mai:
    1. contravened s.45 of the Fair Work Act as a result of contravening cl.A.7.3 of Schedule A of the Award and cll.30.3(a), 30.3(b) and 30.3(c) of the Award; and
    2. underpaid those employees a total of:
       1. $15,885.57 in respect of weekday shiftwork rates.
       2. $4,227.71 in respect of Saturday shiftwork rates.
       3. $8,229.27 in respect of Sunday shiftwork rates.
47. The applicant submits that these matters should be dealt with as three contraventions because each emanates from a separate and distinct obligation in the Award. I agree.

Failure to pay public holiday loading

48. Pursuant to cl.29.4(d)(i) of the Award and cl.A.7.3 of Schedule A of the Award, Mai was required to pay the employees the following amounts, in addition to the minimum hourly wage and casual loading, for all ordinary hours worked on a public holiday:
    1. $21.58 from 26 August, 2013 to 6 July, 2014; and
    2. $27.78 from 7 July, 2014 to 14 September, 2014.
49. During those periods:
    1. ten of Mai’s employees worked ordinary hours on a public holiday; and
    2. Mai did not pay them any amount in respect of public holiday loading.
50. By reason of those matters, Mai:
    1. contravened s. 45 of the Fair Work Act as a result of contravening cl.A.7.3 of Schedule A of the Award and cl.29.4(d) of the Award; and
    2. underpaid those employees a total of $4,068.31 in respect of public holiday loading.
51. Again, for the reasons discussed above, these matters must be dealt with as one contravention.

The Investigation

52. In the course of running its West End Store, Mai made the following records:
    1. ‘new employee’ forms which recorded the employees’ details, including name and contact details, bank details, casual status and purported hourly rate of pay, which in each case was stated to be $25 per hour; and
    2. the rosters I have referred to earlier that recorded the actual hours worked by each employee.
53. By entering the data into the 7-Eleven payroll system in the way that I have explained earlier, Mai made employee records which:
    1. inaccurately specified the hours worked by the employees, by reducing the total hours worked by each relevant employee;
    2. inaccurately specified that the employees were paid $25 per hour for each hour worked, when they were actually paid lower amounts as set out in Annexure A to these reasons;
    100. inaccurately specified all hours worked by the employees as ordinary hours; and
    4. by specifying all hours as ordinary hours, omitted to record the employees’ entitlements to penalty rates or loadings payable to them for casual work, weekend work, public holiday work and/or shiftwork.
54. By entering inaccurate data into the payroll system Mai caused the records produced by the 7-Eleven payroll system (maintained by the 7-Eleven franchisor) in respect of Mai’s West End store to contain inaccurate information as to the employees’ hours of work, rates of remuneration and/or entitlements. Consequently, the weekly time sheet reports, the employees’ pay slips and the detail payroll reports that I have earlier indicated were produced by the 7-Eleven payroll system were all inaccurate and falsely reported the employees’ hours of work and remuneration.
55. On 13 September, 2014 Fair Work Inspector Burton issued a Notice to Produce pursuant to s.712 of the Fair Work Act to Mai. That Notice to Produce requested, among other things:
    1. employment records for the period 13 August, 2014 to 13 September, 2014; and
    2. records and documents provided by 7-Eleven Head Office to Mai relating to minimum rates of pay as at 1 July, 2014.
56. On 3 October, 2014 in response to the Notice to Produce, Mai produced the following documents to the FWO:
    1. time books for the weeks ending 17 August, 2014 to 14 September, 2014 where periods of time worked had been deducted under the heading ‘total time off’;
    2. weekly time sheet reports for the weeks ending 17 August, 2014 to 14 September, 2014;
    100. payroll detail reports for the weeks ending 17 August, 2014 to 14 September, 2014; and
    4. new employee forms for six of Mai’s emplyees.
57. On 20 November, 2014 Fair Work Inspector Allen issued another Notice to Produce to Mai. That Notice to Produce requested, among other things:
    1. employment records for the period 13 September, 2013 to 12 August, 2014;
    2. records and documents provided to Mai by 7-Eleven Head Office relating to minimum rates of pay as applicable at 1 July, 2013 and 1 July, 2014.
58. On 11 December, 2014 in response to that Notice to Produce, Mai produced the following documents to the Fair Work Ombudsman:
    1. weekly time sheet reports for the weeks ending 1 September, 2013 to 31 August, 2014; and
    2. new employee forms for four of Mai’s employees.
59. The time books produced pursuant to the first Notice to Produce set out periods of time which had been deducted from the specified hours worked by an employee during that shift under the heading ‘total time off’ and resulted in a reduced total hours worked. There would be nothing remarkable about that if he employee concerned had not worked for the relevant period. However, time books inaccurately specified the hours worked by the employees set out in the books.
60. The weekly time sheet reports also inaccurately specified the hours of work and rates of remuneration paid to Mai’s employees.
61. Further, the new employee forms inaccurately specified that the employee’s rate of pay was $25 per hour, except for one employee who was paid up to $25 per hour for part of the time that he was employed to work for Mai.

The record keeping contraventions

Remuneration rates, hours worked, casual loading, shiftwork rates of pay, weekend and public holiday loadings

62. Mai was required by s.535(1) of the Fair Work Act and reg.3.33(1)(a) of the Fair Work Regulations 2009 (Cth) to make a record that specified the rate of remuneration paid to each of its employees.
63. Section 535(1) of the Fair Work Act and reg.3.33(2) of the Fair Work Regulations required Mai to make records that set out the hours worked by its employees.
64. Mai was also required by s.535(1) of the Fair Work Act and reg.3.33(3) of the Fair Work Regulations to make records that set out the:
    1. casual loading its employees were entitled to be paid;
    2. the rates the Shiftworkers were entitled to be paid for shiftwork;
    100. the loadings its employees were entitled to be paid for hours worked on weekends and public holidays.
65. The records created within the 7-Eleven payroll system of the employees’ rates of remuneration were records within the meaning of the Acts Interpretation Act 1901 (Cth), the Fair Work Act and the Fair Work Regulations. By providing inaccurate data to the 7-Eleven payroll system, Mai created records that inaccurately specified:
    1. the rates of remuneration paid to its employees, except for Wei;
    2. the hours worked by its employees.
66. The time books to which I have referred were also records for the purposes of the Fair Work Act and the Fair Work Regulations. They were inaccurate.
67. Mai did not make any records nor entries into the 7-Eleven Payroll System specifying Wei’s rate of remuneration, or at all.
68. Accordingly, Mai did not make records:
    1. specifying the rate of remuneration paid to the employees the subject of these proceedings as required by reg.3.33(1)(a) of the Fair Work Regulations and therefore contravened s.535(1) of the Fair Work Act;
    2. of the hours worked by the employees the subject of these proceedings as required by reg.3.33(2) of the Fair Work Regulations and therefore contravened s.535(1) of the Fair Work Act;
    100. of the casual loading the employees were entitled to be paid, as required by reg.3.33(3) of the Fair Work Regulations, and therefore contravened s.535(1) of the Fair Work Act;
    4. of the shiftwork rates its employees who worked shiftwork were entitled to be paid, as required by reg.3.33(3) of the Fair Work Regulations, and thereby contravened s.535(1) of the Fair Work Act;
    5. of the loadings its employees were entitled to be paid for work performed on Saturdays, Sundays and/or Public Holidays, as required by reg.3.33(3) of the Regulations, and thereby contravened s.535(1) of the Fair Work Act.

Failure to ensure records are not false or misleading

69. Mai was required by reg.3.44(1) of the Fair Work Regulations to ensure that a record it was required to keep under the Fair Work Act or the Fair Work Regulations was not false or misleading to its knowledge.
70. The time books to which I have referred earlier are records that Mai was required to keep pursuant to s.535(1) of the Fair Work Act and reg.3.33(2) of the Fair Work Regulations because they set out its employees’ purported hours of work. The time books were false or misleading because they inaccurately recorded the hours of the employees whose work was recorded in it. Mai and Mr Lo knew the time books were false. Accordingly, Mai contravened reg.3.44(1) of the Fair Work Regulations.
71. Similarly, each of the reports produced by 7-Eleven payroll system were false or misleading because they inaccurately recorded the employees’ rates of remuneration, did not include penalty and other loadings to which the employees were entitled and inaccurately recorded the hours worked by the employees. Mai and Mr Lo admit that they knew that those records were false or misleading. Accordingly, Mai contravened reg.3.44(1) of the Fair Work Regulations in respect of each of the false records that it caused to be created.

Use of false or misleading records

72. Mai was required by reg.3.44(6) of the Fair Work Regulations not to make use of an entry in an employee record made and kept for the purposes of Subdivision 1 of Division 3 of Part 3-6 of the Fair Work Regulations, if it does so knowing that the entry is false or misleading.
73. However, Mai made use of the false records dealing with its employees rates of pay and hours worked by:
    1. submitting them to the 7-Eleven payroll system;
    2. not advising 7-Eleven Head Office that they were inaccurate; and
    100. allowing them to be used in accordance with the 7-Eleven payroll system to process payment to its employees and generate the payslips, detail payroll reports and weekly time sheet reports.
74. Mai and Mr Lo knew at all relevant times when making use of the false records that they were false and misleading. Accordingly, Mai contravened reg.3.44(6) of the Fair Work Regulations in respect of its use of those records.
75. However, it was not just the 7-Eleven payroll system that was deceived by the false records. As I have set out above, the first Notice to Produce:
    1. requested the production of hours worked and wage records for Mai’s employees; and
    2. was issued for the stated purpose of determining compliance with the Fair Work Act and the Award.
76. Mai knew that the weekly time sheet reports and detail payroll reports replicated the information that it, through Mr Lo, had supplied to the 7-Eleven payroll system. In response to the first Notice to Produce Mai produced the weekly time sheet reports, the detail payroll reports and the time books to the Fair Work Ombudsman knowing that they were false and misleading. Notwithstanding that Mai did not advise the Fair Work Ombudsman that the entries in those records were inaccurate. It was not until Mr Lo was questioned by an Inspector in a recorded interview on 14 May, 2015 that Mr Lo admitted that the records were inaccurate.
77. By using those false records, Mai contravened reg.3.44(6) of the Fair Work Regulations.
78. The second Notice to Produce:
    1. requested the production of hours worked and wage records for Mai’s employees for a period larger than that covered by the first Notice to Produce; and
    2. was issued for the stated purpose of determining compliance with the Fair Work Act and the Award.
79. Again, Mai and Mr Lo knew that the Weekly time sheet reports produced in response to that Notice to Produce replicated the inaccurate data in the 7-Eleven payroll system. Nonetheless, Mai made use of the weekly time sheet reports for the period 1 September, 2013 to 31 August, 2014 when it produced them to the Fair Work Ombudsman in response to the second Notice to Produce. Mai and Mr Lo knew that they were false and misleading. Neither Mr Lo nor Mai advised the Fair Work Ombudsman that the entries in those weekly time sheet reports were inaccurate, until questioned by a Fair Work Inspector in May, 2015.
80. Accordingly, Mai contravened reg.3.44(6) of the Fair Work Regulations in respect of its use of entries in the weekly time sheets for the period 1 September, 2013 to 31 August, 2014.
81. On 5 February 2015, Mr Lo, on behalf of Mai, participated in a recorded interview with a Fair Work Inspector. During that interview, Mr Lo made statements to the effect that entries in the time books I have referred to earlier, and the details provided to the 7-Eleven payroll system were true records of the hours worked and rates paid to Mai’s employees. Mai made use of the relevant entries in the time books and the other records including the weekly time sheet reports when Mr Lo participated, on Mai’s behalf, in the interview. At that time, Mr Lo knew that the records were false. However, he did not disclose that fact until he was questioned again in a second record of interview in the May, 2015.
82. By using the false records in that way, Mai contravened reg.3.44(6) of the Fair Work Regulations.
83. On 21 July, 2015 Fair Work Inspector Allen requested that Mai provide evidence of any payments made to the employees to rectify underpayments which the Fair Work Ombudsman alleged were owed to them. On 24 July, 2015 Mr Lo, on behalf of Mai, provided to Fair Work Inspector Allen, an extract of his Bank of Queensland online bank transaction record containing transactions for the period from 25 June, 2015 to 24 July, 2015, which demonstrated the following transfers to:
    1. Aparna Devi Adduri on 19 July, 2015 of $1,673.68;
    2. Ashwin Sonale on 15 July, 2015 of $6,265.01;
    100. Annie Chang on behalf of Wang-Ting Chang on 15 July, 2015 of $4,764.70;
    4. Husan Chih Chiu on behalf of Ying-Chang Chiu on 15 July, 2015 of $4,977.16;
    5. Kuan-Chih Huang on 8 July and 12 July, 2015 totalling $8,499.74;
    6. Wei Xu on 8 July, 2015 of $2,704.40;
    7. Yiwen Li on 7 July, 2015 of $4,561.06;
    8. Wang Wei on 7 July, 2015 of $4,192.39; and
    9. Zheping Chen on 7 July, 2015 of $3,770.14.
84. Mr Lo advised Fair Work Inspector Allen on 1 September, 2015 that he had not received any money back from any of the employees, stating, “no, that would be wrong.” To that end, on 1 September, 2015 Mr Lo, on behalf of Mai, provided to Fair Work Inspector Allen, an extract of his Bank of Queensland online bank transaction record containing transactions for the period from 20 August, 2015 to 27 August, 2015 including:
    1. a transfer to Manoah Malluri on 27 August, 2015 of $21,979.25;
    2. a withdrawal, described as for Zhigao Pan on 21 August, 2015 of $12,145.33; and
    100. a withdrawal, described as for Wan-Chi Sun on 21 August, 2015 of $5,583.88.
85. On 8 October, 2015 Mr Lo, on behalf of Mai, provided to Fair Work Inspector Allen, an extract of his Bank of Queensland online bank transaction record containing transactions for the period from 1 July, 2015 to 31 July, 2015.
86. The banking records provided by Mr Lo to the Fair Work Ombudsman set out above showing the payments to the various employees were, Mai and Mr Lo admit, required to made and kept by Mai for the purposes of Subdivision 1 of Division 3 of Part 3-6 of the Fair Work Regulations because they specified the amounts paid to Mai’s employees
87. However, the entry in the bank statements showing payment to Manoah Malluri was false or misleading because:
    1. it purported to show that Mai had rectified the amounts alleged by the Fair Work Ombudsman to be owing to Manoah Malluri on 27 August, 2015; but
    2. the amount paid to Manoah Malluri on 27 August, 2015 was returned to the same account on 28 August, 2015 and before Mr Lo provided the bank statements to Fair Work Inspector Allen; and
    100. the relevant bank statements given to the Fair Work Ombudsman were confined to transactions occurring between 20 and 27 August, 2015.
88. On 29 September, 2015 Fair Work Inspector Allen informed Mr Lo that allegations had been made that some of the employees had not received back-pay. On 1 October, 2015 Mr Lo provided to Fair Work Inspector Allen a Bank of Queensland transfer request to transfer $21,979.25 to Manoah Malluri.
89. Further, the assertion conveyed by the entries in the bank statements showing payments to Aparna Devi Adduri, Ashwin Sonale, Wang-Ting Chang, Ying-Chang Chiu, Kuan-Chih Huang, Wang Wei and Zheping Chen were also false or misleading because:
    1. they purported to show Mai had rectified the amounts identified in the Fair Work Ombudsman’s Findings of Contravention Letter dated 3 July, 2015 as owing to Aparna Devi Adduri, Ashwin Sonale, Wang-Ting Chang, Ying-Chang Chiu, Kuan-Chih Huang, Wang Wei and Zheping Chen; but
    2. an amount totalling $1,673.68 was deposited in cash by Mohammed Azhar, on behalf of Aparna Devi Adduri, into Mr Lo’s National Australia Bank bank account on 23 July, 2015;
    100. Zheping Chen and Wang Wei transferred their respective payments ($3,770.14 and $4,192.39 respectively) to a bank account held by Jie Zhao, the wife of the Mr Lo on 7 July, 2015;
    4. Ashwin Sonale transferred his payment of $6,265.01 to Mr Lo on 16 July, 2015;
    5. Ms Chang, on behalf of Wang-Ting Chang, transferred Wang-Ting Chang’s payment by way of five instalments of $1,000, and one of $764.70 to Mr Lo on 20, 21, 23 and 27 July, 2015;
    6. Mr Chiu, on behalf of Ying-Chang Chiu, transferred Ying-Chang Chiu’s payment of $4,977.16 to Mr Lo on 17 July, 2015; and
    7. Kuan-Chih Huang transferred his payment by way of two instalments of $4,000 and $4,499.74 respectively to Zhao’s bank account and Mr Lo on 7 July, 2015 and 14 July, 2015 respectively.
90. Mr Lo knew that each of the employees specified above had returned their payments to him or his wife when he gave the relevant records to the Fair Work Inspectors. Mai contravened reg.3.44(6) of the Fair Work Regulations by making use of the entries in the banking records by providing them to the Fair Work Ombudsman on 24 July, 2015 1 September, 2015 and 8 October, 2015 knowing that the entries were misleading.
91. Mai was required by s.536(2) of the Fair Work Act and reg.3.46 of the Fair Work Regulations to provide pay slips to its employees that included the following information:
    1. the rate of pay for the employee’s ordinary hours; and
    2. the number of ordinary hours for which the employee was employed in the pay period.
92. During the investigation period, Mai provided pay slips to the employees that:
    1. inaccurately stated the rate paid to the employees; and
    2. inaccurately stated the number of hours worked by the employees.
93. Accordingly, Mai contravened s.536(2) of the Fair Work Act by giving pay slips to the employees that did not include the information required by reg.3.46 of the Fair Work Regulations.

The Contraventions

94. The Fair Work Ombudsman accepts that Mai and Mr Lo are entitled to the benefit of the course of conduct provisions in s.557(2) of the Fair Work Act in relation to repeated contraventions of each separate obligation under the Award and also the multiple contraventions of ss.535 and 536(2) of the Fair Work Act and regs.3.44(1) and 3.44(6) of the Fair Work Regulations. This results in:
    1. eight separate contraventions of s.45 of the Fair Work Act for breaches of the Award;
    2. five separate contraventions of s.535 of the Fair Work Act;
    100. three separate contraventions of reg.3.44(1) of the Regulations;
    4. twelve separate contraventions of reg.3.44(6) of the Regulations; and
    5. one contravention of s.536 of the Fair Work Act.
95. The Fair Work Ombudsman submits that the course of conduct provisions therefore reduce the total number of contraventions to 29 for each of Mai and Mr Lo.
96. In addition to the statutory course of conduct provision, it is open to the Court to group or aggregate separate contraventions where the contraventions contain common elements or can be said to overlap with each other. It is generally seen as appropriate for the Court to aggregate separate contraventions where, if they were treated separately, a respondent would be punished more than once for the same or substantially similar conduct.
97. The Fair Work Ombudsman submits that it is appropriate for the Court to aggregate the contraventions as set out in Annexure B to these reasons. I accept that submission.
98. It is appropriate to group the seven separate contraventions that resulted from Mai’s failure to make accurate employee records (five contraventions of s.535(1) of the Fair Work Act and two contraventions of reg.3.44(1) of the Regulations) because the contravening conduct was largely the same for both sets of contraventions. That is, the failure to make employee records (specifying, among others, the rate of remuneration and hours worked) was in all but two instances the result of the records that were made being inaccurate. This conduct gave rise to both the contravention of not making an accurate record but also the contravention of knowingly creating false records. This group of contraventions contains contraventions that attract different maximum penalties. Section 535(1) of the Fair Work Act attracts a maximum of 30 penalty units (for an individual) whereas reg.3.44(1) of the Fair Work Regulations attracts a maximum penalty of 20 penalty units (for an individual). Notwithstanding that, I might properly treat the group as attracting the maximum penalty of 30 penalty units. The Court may take into account the fact that the some of the included contraventions attract the lower penalty. The falsity of the records as an aggravating factor in respect of the group as a whole.
99. It is also appropriate to aggregate the two separate contraventions of reg.3.44(6) of the Fair Work Regulations because the use of the rates records and the hours records on each occasion through submitting them to the 7-Eleven Payroll System involved substantially similar conduct and decision making.
100. The three separate contraventions of reg.3.44(6) of the Fair Work Regulations relating to the provision of false or misleading records in response to the first Notice to Produce should be aggregated because they each resulted from the same conduct by Mai.
101. It is appropriate to group the three separate contraventions of reg.3.44(6) of the Fair Work Regulations because they each resulted from Mai’s reliance on false or misleading records in the February interview. I accept the Fair Work Ombudsman’s submissions that this group should properly stand alone from the provision of the records under Notice to Produce because it involved a further decision by Mai to represent the documents as accurate, in circumstances where they knew them to be false, Mr Lo was under caution to tell the truth, and where he provided additional false information to explain them in a way which was designed to mislead.
102. The Fair Work Ombudsman submits that each of the remaining contraventions should properly remain separate, as the conduct does not overlap and arises from each of the distinct terms and obligations alleged. I accept the applicant’s submission.

Consideration of Penalty

103. Due to the hours of operation of the West End 7-Eleven, six of the employees worked shiftwork between the hours of 6.00 pm and 5.00 am. Further, many of the employees worked on weekends or public holidays. Although Mai paid higher rates to some of the employees for working at night, none of the employees were paid the correct penalties for working what can be considered unsociable hours and the rates were at all times below the casual minimum hourly rate.
104. During the investigation period Mai employed the employees on a casual basis, as Retail Level 1 employees under the Award. On the ‘New Employee’ forms, Mai purported to offer the employees Award rates of $25 per hour. In reality, the employees were paid rates of pay that were significantly below their entitled minimum rates.
105. Mai’s culpability is exacerbated by the fact that Mr Lo had knowledge of the Award and resources at his disposal to be capable of paying the correct minimum wages. The evidence is clear that Mr Lo received training from 7-Eleven head office when he initially took ownership of the West End store, during which he was trained in employment legislation, awards, staff entitlements, award conditions, how to fill out timesheets, and payroll activities including rostering and how to use a time book.
106. The training and resources Mr Lo received also continued throughout the period during which Mai operated the West End 7-Eleven. He was provided with annual updates of the Award rate of pay, including penalty rates and shiftwork rates and he completed additional online training in September, 2010 regarding basic employment conditions. The respondents received advisory updates in relation to wage and payroll matters on a regular basis which outlined the consequences of non-compliance.
107. To overcome paying the employees their correct entitlements, Mr Lo used the method I have described above to deliberately manipulate the data which he entered into the 7-Eleven payroll records to give the appearance of paying the correct minimum entitlements and thereby obscuring the underpayments from 7-Eleven Head Office or, indeed, anyone seeking to review the pay records.
108. Mr Lo told the applicant’s investigators that he relied upon any errors in the data he inputted into the payroll system being identified by the 7-Eleven Head Office. But that reliance is disingenuous and fails to acknowledge the highly deceptive nature of the method by which he sought to record the payroll information in the 7-Eleven system.
109. The contravening conduct continued at least for the duration of the investigation period and may have extended beyond that. Had the Fair Work Ombudsman not intervened in this matter, it is likely that the conduct would have continued. Indeed, there is currently no evidence before the Court other than a mere assertion by Mr Lo that Mai is now Award-compliant. Furthermore, the underpayments owed to the majority of employees remain outstanding and Mai and Mr Lo have failed to take responsibility for rectification of those amounts.
110. Not only did Mai fail to keep the records it was obliged to keep, it knowingly produced false or misleading records to the Fair Work Ombudsman and sought to rely on those records on multiple occasions over an extended period.
111. Mai’s conduct in making and keeping false records and then providing them to the Fair Work Ombudsman without disclosing their inaccuracy had the following serious consequences:
     1. it frustrated the ability for employees to know and hold their employer to account for their minimum entitlements;
     2. it frustrated the ability of the Fair Work Ombudsman to investigate the employees’ entitlements, requiring significant public monies to be expended on Fair Work Inspectors undertaking extensive investigations, including in this case:
        1. analysing several sets of records (provided by Mai and 7-Eleven Head Office) and only arriving at the underlying truth after analysing CCTV footage and comparing it against the records;
        2. questioning Mr Lo at length in two separate interviews, during which Mr Lo only admitted to the false record keeping after Fair Work Inspector Allen informed him of the Fair Work Ombudsman’s findings of inaccuracies in the records when compared with CCTV footage; and
        3. seeking production of bank statements from the banks and cross-checking amounts paid to the employees by Mai with amounts received by Mr Lo and his wife.
112. Mai deliberately and deceitfully concealed the employees’ repayment of the underpayment amounts by providing the Fair Work Ombudsman with records designed to deceive. Mr Lo initially denied receipt of those amounts but later sought to justify his initial denial by suggesting that he was only asked if ‘he’ had received any money back when it was his wife who had received the payments. The Fair Work Ombudsman only inadvertently discovered the employees had repaid their underpayment amounts. The Fair Work Ombudsman was required to invest further time and resources in order to discover what had occurred. It was only after the Fair Work Ombudsman had independently uncovered the truth that Mr Lo admitted to receiving money back from the employees.
113. The total underpayment of $82,661.85 is significant, particularly as it accrued over a 12 month period and constituted substantial amounts for low income earners who were reliant on the minimum Award wage.
114. During the investigation period, the employees were required to work a variety of shifts including Saturdays, Sundays, public holidays and shift work. However, the employees did not receive the minimum penalty rates or loadings for performing this work. Further, over that period, the employees were entitled to hourly rates of pay of at least $22.41 (with respect to minimum hourly rates inclusive of casual loading). For the eleven employees who worked on Sundays, they were entitled to hourly rates of pay of up to $41.67. Those employees were instead paid rates that were generally between $13 and $20 an hour. Such disparity in rates can only be described as gross underpayment.
115. To put the underpayment amounts into context, most of the employees received just over half of their total entitlement during the investigation period. For example, Yiwen Li, who received the highest percentage of his total entitlements, was paid only 65% of the amount he was entitled to be paid. Ashwin Sonale was paid only 48% of his entitlements.
116. The respondents continue to have the benefit of these substantial underpayment amounts, as, to date, there has been no rectification of $35,734.00 of the $82,661.85 underpaid. Indeed, Mr Lo appears to be seeking to absolve he and Mai of any responsibility for the remaining underpayments given that they have purportedly referred the employees to the ‘7-Eleven unpaid wages panel’ for recovery of their wages. But the primary responsibility for payment of these amounts to the employees rests with Mai.
117. I accept the Fair Work Ombudsman’s argument that if the respondents had a genuine commitment to paying the amounts owed promptly, they would have proposed a form of orders or undertaking which recognised this, rather than relying on the ‘7-Eleven unpaid wages panel’. Alternatively, they could have commenced making payment of the outstanding amounts by way of instalment. Neither has occurred. Their failure to take any such meaningful steps to reduce the loss is an aggravating factor in this case, particularly when seen in the context of their use of records to mislead the Fair Work Ombudsman that payment had in fact occurred.
118. I accept the Fair Work Ombudsman’s submission that the amount of the underpayment is significant both objectively, and in the context of each of the employee’s individual circumstances and overall entitlements.
119. The Fair Work Ombudsman acknowledges that the West End 7-Eleven made a limited profit during the investigation period. However, it is significant that Mr Lo admits that he obtained the benefit of that profit in addition to receiving wages from Mai. He did this at the expense of the employees. That Mr Lo says he could not have afforded to pay himself wages or receive a profit had he complied with his obligations should be viewed as demonstrating that Mr Lo continues to perceive his earning capacity as having greater importance than paying employee entitlements.
120. Mai and Mr Lo made the decision to treat employee entitlements as optional. Mr Lo even made representations that the West End 7-Eleven could not operate profitably without underpaying its staff. Notwithstanding these representations, Mr Lo admits to having access to significant funds to finance the rectification of the underpayment amounts. No explanation is given as to whether this finance was refunded following the employees repaying the amounts back to Mr Lo and his wife or whether the respondents maintained access to it in addition to the amounts repaid by the employees.
121. In any case, to the extent that the respondents seek to rely on their financial position, in particular a lack of income or profits, at the time of the contraventions to justify the underpayments, the observations of Judge Riethmuller in Fair Work Ombudsman v Foure Mile Pty Ltd & Anor [2013] FCCA 682 at [22] are apposite:
     • ...Significantly, when a person is not a joint venturer or partner, but working simply as an employee, they have no prospects of sharing in the wealth of the business venture in the future (if this comes to pass). It is for those operating a new or marginal business to make an election as to whether or not to seek partners or joint venturers who may be prepared to work for less than the award in a business operation in the hope of making a significant gain in the future. Alternatively, if workers are to be employed, regardless of the state of the business, the minimum terms and conditions must be remunerated on at least the minimum terms and conditions provided for in the legislation and the awards. For the law to be otherwise would simply create a category of underpaid workers who were being exploited to subsidise inefficient or otherwise unprofitable business operations, or business start-up periods.
122. The failure to comply with the Fair Work Act cannot be excused by a claim that a business is experiencing financial difficulties. Employers must not be left with the impression that in times of financial difficulty they can breach an Award or the Fair Work Act. Mr Lo claims that he and Mai are in poor financial circumstances. But, there is no evidence before me about his financial circumstances or those of Mai.
123. If it is not already clear from these reasons, I am satisfied that the contraventions of the Award, the Fair Work Act and Fair Work Regulations were deliberate. There can be no doubt that the respondents knew of their obligations under the law. Mr Lo had considerable knowledge of the Award including the minimum rates of pay, applicable casual loading, applicable weekend loading, public holiday loading and applicable shiftwork rates. His franchisor provided him with training about those matters.
124. Further, Mr Lo had completed a university degree in business in 2001. That is, at the time of the contravening conduct, Mr Lo held tertiary qualifications in business. It was in the context of this extensive knowledge of Mai’s obligations and his tertiary qualifications in business that Mr Lo deliberately falsified a number of records, both before and during the Fair Work Ombudsman’s investigation. In particular:
     1. he caused Mai to enter into the 7-Eleven payroll system the false rates of pay, knowing that false pay slips, weekly timesheet reports and detail payroll records would be produced;
     2. he caused Mai to enter incorrect data relating to hours worked into the 7-Eleven payroll system, so that the resulting hourly rates paid to the employees was significantly lower than that to which the employees were entitled, while attempting to give the impression that Mai was compliant with its Award obligations; and
     100. he caused Mai to attempt to conceal these inaccuracies by creating the time books, based on fabricated employee breaks, and providing them to the Fair Work Ombudsman as purported evidence of hours worked by the employees despite knowing that time had been falsely ‘deducted’ in those records.
125. As the submission for the Fair Work Ombudsman point out, the 7-Eleven payroll system utilised by the respondents required franchisees to process pay using award or above award rates of pay. As a result, each time Mr Lo processed the employees’ weekly pays he was reminded of the obligation to pay these rates and, each week, made the decision to both ignore their obligations and disguise the actual rates of pay being paid.
126. It is difficult to resist the conclusion that the business model implemented by Mai under Mr Lo’s direction for the operation the West End 7-Eleven was deliberately designed around underpaying Mai’s employees and was designed to conceal that practice. The deception continued when Mr Lo attempted to deceive the Fair Work Ombudsman by providing bank statements evidencing payment of underpayments to the employees and initially denied that these amounts had been subsequently returned to his, or his wife’s, accounts.
127. Whilst the Fair Work Ombudsman acknowledges that the respondents have made full admissions in relation to the contraventions by way of a Statement of Agreed Facts, I do not accept that by doing so the respondents have indicated some acceptance of wrongdoing. At best it is no more than the facilitation of justice.
128. Consistently with that view:
     1. despite having many previous opportunities to make admissions, the admissions of the contraventions were only communicated to the Fair Work Ombudsman at a very late stage of the investigation and even then, full admissions were not forthcoming until after these proceedings were commenced;
     2. the respondents knowingly made repeated misrepresentations to the Fair Work Ombudsman throughout the investigation; and
     100. the respondents knowingly relied on, and made use of, false records without initially admitting the false nature of the records, despite having the opportunity to do so.
129. There has been no suitable credible expression of regret. Mr Lo continues to seek to justify his actions without accepting responsibility for them. His apologies are more consistent with ameliorating penalty rather than to genuinely demonstrate remorse. In the circumstances only a small discount for the cooperation that the respondents have shown in these proceedings is appropriate. I will limit the discount to 5% of the maximum penalty that might be imposed.
130. The Fair Work Ombudsman submits that one of the most aggravating factors relevant to the respondents’ lack of cooperation, contrition or corrective action, is the circumstances surrounding the payment of the underpayments and the subsequent repayment of those amounts by most of the employees concerned. Most notably:
     1. it took the Fair Work Ombudsman’s time and resources to discover that the underpayments had been repaid to Mai through Mr Lo’s and his wife’s bank accounts;
     2. for three months, the respondents repeatedly denied that they had accepted repayment of the back payment amounts and, indeed, acknowledged that ‘[it] would be wrong’ to do so; and
     100. Mr Lo attempted to deceive Fair Work Inspectors by providing partial bank statements evidencing payment of underpayments to the employees when those amounts had already been repaid into his and his wife’s bank accounts.
131. By reason of the repayment by the employees of the purportedly rectified underpayment amounts and the continued failure of the respondents to pay those amounts, the only corrective action that has occurred is with respect to the employees Manoah Malluir, Wei Xu and Zhigao Pan. By Mr Lo’s own admission, that has only occurred because those employees refused Mr Lo’s request to repay the money to him.
132. Other than Mr Lo’s bare assertion that he has adjusted his practices to conform to the appropriate Award conditions, the respondents have provided no evidence to demonstrate their current compliance with workplace laws. I am reluctant to accept Mr Lo’s assertions about that at face value.
133. Ensuring compliance with minimum standards is an important consideration in the present case. One of the stated principal objects of the Fair Work Act is the maintenance of an effective safety net of employer obligations and effective enforcement mechanisms. Pay slips provide an important mechanism for employees to monitor their pay and entitlements.
134. It is also vital to recognise the importance of maintaining a level playing field for all employers in an industry, with respect to wage costs. Those employers who fail to comply with minimum obligations gain an unfair monetary advantage over those employers who do comply with their obligations. It is clear in this case that the respondents sought to reduce the costs of their business and were, as such, at an advantage. This is of particular importance in the context of a franchise business, where the failure of some franchisees to comply with minimum standards places them at direct commercial advantage to those franchisees paying appropriate minimum wages.
135. Specific deterrence is important in this case. Where the contravening conduct was deliberate and involved elements of deceit and where Mai continues to operate the West End 7-Eleven but has not provided evidence of current compliance, there is a significant need for specific deterrence. This is particularly so where the respondents sought to obscure their contraventions by the provision of false information. It appears in that context that the involvement of the Fair Work Ombudsman did not deter the respondents from their conduct.
136. The need for general deterrence in the present case is also of particular importance. Employers should be in no doubt that they have a positive duty to ensure that they comply with the obligations which they owe to their employees under the law. Compliance activities by the Fair Work Ombudsman suggest a particularly high need for general deterrence in the retail industry and, specifically, in relation to 7−Eleven franchises, given the number of complaints received against 7−Eleven franchisees since 2010.
137. There is evidence that suggests that the retail sector has a high number of vulnerable employees in weak bargaining positions. The evidence before the Court shows that this is particularly the case for the 7-Eleven franchise network. A report issued by the Fair Work Ombudsman in 2010, drawing on data gathered through an audit campaign conducted by the Fair Work Ombudsman, included a finding that that 7−Eleven franchises employ a large number of foreign students and other workers from disadvantaged and vulnerable groups. This data has also been supported in a subsequent report released by the Fair Work Ombudsman in 2014 which identified that:
     1. 95% of employees who responded to visa status questions were visa holders, and 84% of these were on student visas;
     2. all were aged between 21-30 years, with the majority in the 21-25 year age bracket; and
     100. 70% who gave information about their length of service had been employed for 12 months or less.
138. In that report, the Fair Work Ombudsman sought to identify what it believed were the ‘drivers’ of non-compliance in 7-Eleven stores. The evidence is that as part of that analysis, one of the limitations the Fair Work Ombudsman identified for auditing compliance among 7-Eleven stores was the inaccurate employer records that sought to disguise underpayment, with 19 out of the 20 stores audited presenting with record-keeping inconsistencies. Consistent with the behaviour of the respondents in this case, the evidence indicated that the practices revealed in this case are widespread in the 7-Eleven network.
139. The high number of complaints that the Fair Work Ombudsman has received in respect of 7-Eleven stores also supports an inference that there is significant risk of non-compliance in the network.
140. The prevalence of evidence of non-compliance within 7-Eleven businesses has been recognised by the Parliament of Australia. The Senate Education and Employment References Committee has specifically examined non-compliance with workplace laws within 7-Eleven franchises as part of its broader Inquiry into the impact of Australia’s temporary work visa programs: The Senate, Education and Employment References Committee, A National Disgrace: The Exploitation of Temporary Work Visa Holders, March 2016.
141. The Senate Inquiry raised a number of broad concerns in relation to 7-Eleven franchises, including evidence of the systemic nature of underpayments across the franchise network, fabrication of employment records and the uneven playing field created by underpayments within 7-Eleven stores. The Senate Inquiry also received evidence about, and emphasised the vulnerability of, employees on student visas to exploitation and coercion within the workplace.
142. The Fair Work Ombudsman does not suggest that all of the concerns raised by the Senate Inquiry necessarily reflect the conduct of the respondents in this case. In particular, I do not understand the Fair Work Ombudsman’s submissions to suggest that the respondents were involved in any of the ‘cash back’ allegations – that is, requiring employees to pay a portion of their wages back to employers during their employment – which was discussed in the Senate Inquiry. Rather, the Fair Work Ombudsman submits the need for the Senate to specifically consider underpayment of workers within 7-Eleven franchises, demonstrates the significant need for general deterrence in these proceedings. I accept that submission.
143. The Fair Work Ombudsman points out that the retail industry more broadly attracts unskilled labour and is therefore, more likely to attract young, casual and overseas workers who may be less aware of their entitlements or less likely to seek to enforce them. General deterrence is of fundamental importance to deter those employers who may be tempted to commit similar contraventions within a large industry with a vulnerable workforce.
144. It is appropriate that I pay regard to the message sent to employers and the community generally by the imposition of an appropriate penalty, to make it clear that employers must comply with minimum standards. The imposition of a penalty in this matter will assist in ensuring other employers in the retail sector, and particularly within 7-Eleven, are compliant with their obligations.

Conclusions

145. The Fair Work Ombudsman submits that the Court should be satisfied that significant penalties ought to be imposed to take account of the above matters, which might be summarised as follows:
     1. the objective seriousness of the contravening conduct, including the significant quantum of the underpayment over a confined period;
     2. the deliberate actions underpinning the admitted contraventions, whereby:
        1. Mai and Mr Lo applied rates of pay they knew were significantly below lawful minimums and sought to disguise the underpayments by entering inaccurate data into their payroll system;
        2. Mai and Mr Lo attempted to conceal the underpayments, including by knowingly providing false records to the Fair Work Ombudsman;
        3. Mai and Mr Lo knowingly requested and accepted back payment amounts that were intended as rectification for the contraventions;
        4. Mai and Mr Lo concealed the employees’ back payments by providing misleading records to the Fair Work Ombudsman and initially denying receipt of the back payments.
     100. the vulnerability of the employees to accepting the terms imposed by Mai and Mr Lo and the need to deter other employers from adopting such an approach;
     4. the lack of meaningful cooperation of Mai and Mr Lo during the Fair Work Ombudsman’s investigation, and in some instances, the deliberate provision of false information to mislead the Fair Work Ombudsman;
     5. Mai and Mr Lo’s admissions of liability in respect of each of the contraventions alleged in the Statement of Claim, through an Statement of Agreed Facts;
     6. Mai and Mr Lo’s lack of satisfactory or complete corrective action given that amounts owing to employees continue to remain outstanding;
     7. the need for specific deterrence in light on Mai and Mr Lo’s continued operation of the West End store and absence of evidence of current compliance; and
     8. the fundamental need for general deterrence within the retail industry, and more specifically the 7-Eleven franchise network.
146. I accept that submission. As I said at the commencement of these reasons, the contraventions in this case are serious. They call for significant penalties. I have determined to impose the penalties set out in Annexure B to these reasons. In each case, I have discounted the maximum penalty by 5% to take account of Mai and Mr Lo’s cooperation in these proceedings. Otherwise I have adopted a figure which is 75% of the maximum penalty available for each contravention or group of contraventions.
147. The resulting penalties are:
     1. for Mai: $425,363; and
     2. for Mr Lo: $85,073.
148. I need to consider whether penalties on the above amounts are an appropriate response to the conduct concerned. This was particularly serious conduct and the penalties as I have calculated them represent somewhere between two-thirds and three quarters of the maximum penalties available. However, whilst the penalty must bear relativity to the seriousness of the conduct, it is also relevant to consider the multifaceted nature of conduct concerned and the fact that it arose over time. This case involves a significant number of total contraventions, and therefore a very substantial maximum penalty. The Fair Work Ombudsman submits and I accept, that the very significant aggregate penalty is not necessarily an appropriate response to the conduct.
149. I also need to consider whether the penalties are likely to be oppressive or crushing. Whilst it is true that Mai and Mr Lo have not sought to place much evidence before the Court about their financial circumstances, it is apparent that despite Mr Lo and his wife owning their residence (estimated to be worth a little over $500,000) it seems that there are borrowings secured against that property for the purposes of purchasing the 7-Eleven franchise operated by Mai. Those borrowings presently stand at about $360,000. There is also evidence that suggests that the franchise generally was not particularly profitable.
150. In my view, it is appropriate to reduce the total penalties to take account of the matters to which I have just referred. A reduction of 20% is appropriate and would see the penalties imposed upon Mai as $340,290 and on Mr Lo of $68,058.
151. In my view, in all of the circumstances of the case, those penalties are appropriate I make the declarations and orders set out at the commencement of these reasons.

I certify that the preceding one hundred and fifty-one (151) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 20 June, 2016.



Date: 20 June 2016

Annexure A – Details of Underpayments

Kuan-Chih Huang

Wang Wei

Aparna Devi Adduri

Zheping Chen

Ashwin Sonale

Manoah Malluri

Zhigao Pan

Wan-Chi Sun

Wang-Ting Chang

Yiwen Li

Wei Xu

Ying-Chang Chiu

Annexure B - Penalties