Industrial law and regulatory law

Civil penalties – whether penalty manifestly inadequate – whether 50% penalty reduction for the totality principle erroneous

In Australian Education Union v Yooralla Society of Victoria [2021] FCA 954 (13 August 2021), the court dismissed an appeal from a decision of the Federal Circuit Court of Australia imposing penalties for contraventions of the Fair Work Act 2009 (Cth) (FW Act).

The trial judge ordered the respondent to pay pecuniary penalties to the appellant (AEU) in the total sum of $14,850 pursuant to s546(1) of the FW Act.

The primary judge imposed penalties as follows:

• $4,050 for the contravention of s305 of the FW Act for failing to pay minimum hourly rates for ordinary hours worked
• $4,050 for the contravention of s44 of the FW Act as a result of failing to pay minimum hourly rates for annual leave taken
• $2,700 for the contravention of s45 of the FW Act for failing to pay the minimum hourly rates for annual leave loading
• $4,050 for the contravention of s44 of the FW Act for failing to pay the minimum hourly rates of personal leave taken.

These penalties included a reduction of 50% by application of the totality principle.

The AEU appealed, arguing that the penalties imposed were manifestly inadequate, the trial judge misunderstood or misapplied the totality principle and in particular the 50% reduction by reason of the totality principle was manifestly excessive.

The court (Wheelahan J) dismissed the AEU’s appeal. While the penalties were low, they were not so low as to be manifestly inadequate (at [22]-[24]).

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The court made observations on the totality principle as a criminal law sentencing consideration and as a factor in determining an appropriate pecuniary civil penalty (at [28]-[34]).

Finally, the court rejected AEU’s submissions that the reduction by 50% of penalties that were otherwise payable was manifestly excessive such as to amount to appealable error (at [36]).

Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 9225 8757 or email danstar@vicbar.com.au. The full version of these judgments can be found at www.austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.