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Loch v JB Restaurants Pty Ltd [2018] FCCA 3951 (22 August 2018)

Last Updated: 31 January 2019

FEDERAL CIRCUIT COURT OF AUSTRALIA

LOCH v JB RESTAURANTS PTY LTD


Catchwords:
INDUSTRIAL LAW – Accrued annual leave paid out on termination to be paid at the employee’s rate of pay at termination.


Legislation:


Applicant:
ODIN AARON MASON PLOUMOND LOCH

Respondent:
JB RESTAURANTS PTY LTD

File Number:
SYG 204 of 2018

Judgment of:
Judge Cameron

Hearing date:
21 August 2018

Date of Last Submission:
21 August 2018

Delivered at:
Sydney

Delivered on:
22 August 2018

REPRESENTATION

The Applicant appeared in person

Counsel for the Respondent:
Mr C. Dibb

Solicitors for the Respondent:
Thuan Nguyen and Associates

ORDERS

(1) There be judgment for the applicant against the respondent in the sum of $2,343.20 plus interest.
(2) Within 14 days, the parties file a minute of order quantifying the applicant’s entitlement to interest in an agreed amount.
(3) The parties have liberty to apply within 15 days if agreement cannot be reached.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 204 of 2018

ODIN AARON MASON PLOUMOND LOCH

Applicant

And

JB RESTAURANTS PTY LTD

Respondent


REASONS FOR JUDGMENT

INTRODUCTION

  1. The applicant is a former employee of the respondent, which owns and operates a Vietnamese restaurant in Campbelltown. On 25 January 2018 he commenced proceedings in this Court alleging that in contravention of the Fair Work Act 2009 (“FW Act”) the respondent had underpaid his wages and had not provided him with pay slips. The applicant also alleged a contravention of the Annual Holidays Act 1944 (NSW) (“Annual Holidays Act”) on the basis that he had not been paid any annual holiday leave.
  2. The respondent conceded that the applicant was entitled to an amount in respect of accrued annual leave entitlements but otherwise opposed the application.

ALLEGATIONS

  1. The applicant alleged that he was employed by the respondent from 7 June 2013 to 28 December 2014. He alleged that his employment was covered by the Restaurant Industry Award 2010 (“Award”).
  2. The applicant alleged that he had been paid a flat hourly rate of $10 an hour during the entire course of his employment. In annexure A to his affidavit sworn or affirmed on 24 November 2018, the applicant alleged that his proper rate of pay had been $16.80 per hour from 7 June 2013 and $17.35 per hour from 1 July 2014. He alleged that the respondent therefore breached the Award and contravened ss.45 and 293 of the FW Act.
  3. The applicant also alleged that he had not been paid overtime, weekend loading or public holiday loading. No contraventions of the FW Act are alleged in this regard, although weekend loading and public holiday loading has been included in the applicant’s overall claim for compensation in respect to the underpayment of his wages.
  4. The applicant alleged that he had not been provided with pay slips either in a form, or containing information, prescribed by the Fair Work Regulations 2009 (“FW Regulations”). He alleged that the respondent contravened s.536 of the FW Act in this regard.
  5. The applicant also alleged that he had not been given annual holidays or paid any sum related to the taking of annual holidays in contravention of s.3 of the Annual Holidays Act.
  6. The applicant seeks orders for compensation in the following amounts:
    1. $37,923.63 in respect of his unpaid wages, including weekend and public holiday loading;
    2. $5,395.06 in respect of annual holiday leave; and
    1. $7,664.59 in interest.
  7. The applicant has not made out his claim for unpaid and underpaid wages. However, he has made out an entitlement for payment of accrued annual leave in an amount different from that calculated by the respondent, albeit not as great as he alleged. I quantify that entitlement to be $2,343.20.
  8. There will be an amount for interest on that sum.

LEGISLATION
Fair Work Act

National Employment Standards

  1. Part 2-2 of the FW Act contains the National Employment Standards (“NES”) which are minimum standards of employment which cannot be displaced. Sections 87 and 90 of the FW Act are provisions within pt.2-2 and relevantly provide:
  2. Section 44(1) of the FW Act provides that an employer must not contravene a provision of the NES.

Modern award

  1. Section 45 of the FW Act provides that a person must not contravene a term of a modern award. The applicant did not identify which provision(s) of the Award the respondent was alleged to have contravened nor did he identify his alleged classification under the Award.

Pay slips

  1. Section 536 of the FW Act provides:
  2. Pursuant to regs.3.45 and 3.46 of the FW Regulations, a pay slip must be in an electronic form or a hard copy and must contain the following information:
    1. the period to which the pay slip relates;
    2. the date on which the payment to which the pay slip relates was made;
    1. the employee’s rate of remuneration including the gross and net amounts paid and the deductions made from that remuneration;
    1. what, if any, loadings, penalty rates, monetary allowances or other separately identifiable entitlements the employee was entitled to; and
    2. details of superannuation contributions.

Annual Holidays Act (NSW)

  1. Section 3 of the Annual Holidays Act provides:
  2. Section 4 relevantly provides:

APPLICANT’S EVIDENCE
Odin Loch

  1. The applicant deposed that he was employed by the respondent from 7 June 2013 to 28 December 2014. He deposed that during that period, he was paid $10 an hour as his full rate of pay.
  2. The applicant deposed that he typically worked 44 hours per week and said that that would rise to 54 hours on weeks with public holidays, although on occasion he would work 70 hours in a week. He worked eight hour shifts on Wednesdays, Thursdays and Fridays and ten hour shifts on Saturdays and Sundays. He deposed that he also worked a ten hour shift every public holiday.
  3. The applicant deposed that he was paid in cash every Thursday. He was not paid overtime, weekend loading or public holiday loading.
  4. In support of his claim to have been underpaid, the applicant annexed to the first of his two affidavits an “annexure A” which he said detailed on a daily basis the hours which he had worked for the respondent, how much he was paid and how much he should have been paid. He said that the figures were an approximation because his hours could not be “totally recalled” and were “the least” of what he was owed by the respondent. He said that the respondent’s records would show that he had worked more hours than were recorded in the annexure. Even so, the applicant said, the annexure was an “extremely accurate” and precise record of his hours even though it did not record all the hours he had worked. He said that in the annexure he had averaged his hours.
  5. The applicant also deposed that he had never been given a correct pay slip or annual holidays by the respondent.
  6. The applicant said that in the two and a half years between the end of his employment and the complaint he made to the Fair Work Ombudsman (“Ombudsman”) he had not suggested to the respondent that anything was outstanding to him because he had had “other concerns on [his] mind”, which he identified as tertiary study in which he had been engaged.
  7. The applicant deposed that the respondent had not operated honestly either with him or with the Ombudsman. He deposed that the respondent had provided the Ombudsman with false information and had provided him with timesheets and pay slips which bore no resemblance to the hours he had worked. He deposed that the pay slips also indicated a “fraudulent” pay rate.
  8. The applicant deposed that the respondent’s external accountants had provided him with an excel document which set out payments made to him by the respondent. He deposed that he had checked the pay slips annexed to the affidavit of Jenny Hua, a director of the respondent, against the excel document and had noted various discrepancies and bookkeeping errors.

Thi Nguyen

  1. Ms Nguyen is the applicant’s spouse.
  2. Ms Nguyen deposed that she was paid in cash every week.
  3. Ms Nguyen deposed that she normally worked the night shift, which was 4-5 hours long, and all day on Saturday, Sunday and public holidays.

Documents

  1. Exhibit A1 was the excel document the applicant had received from the respondent’s accountants. I should note at this point that it was overlooked during the course of the hearing that this document was annexed to the applicant’s second affidavit. It stated that the applicant had been paid the following gross wages in respect of the following months:
July 2013
1,350.00
August 2013
2,130.60
September 2013
2,692.90
October 2013
2,561.20
November 2013
3,201.50
December 2013
3,201.50
January 2014
2,561.20
February 2014
2,561.20
March 2014
1,482.30
April 2014
340.00
May 2014
425.00
June 2014
340.00
July 2014
450.00
August 2014
340.00
September 2014
340.00
October 2014
85.00
November 2014
255.00
December 2014
85.00

RESPONDENT’S EVIDENCE
Jenny Hua

  1. As noted earlier, Ms Hua is a director of the respondent. She is also the restaurant’s manager and responsible for its day to day business. She said that all her staff were paid the minimum award wage.
  2. Annexed to Ms Hua’s affidavit sworn or affirmed on 8 March 2018 was a collection of documents which she said were copies of the applicant’s pay slips. They indicated, amongst other things, that although the applicant had worked 76 hour fortnights in 2013, in the second half of 2014 with one exception of 6.3 hours, he had worked only 4.9 hours per week in the weeks recorded.

Employment

  1. Ms Hua deposed that she employed the applicant in early June 2013 for part-time training. He was paid the minimum award wage at that time.
  2. Ms Hua deposed that in or about early August 2013 she was contacted by Karen Phan, a rehabilitation consultant in the Department of Human Services CRS Australia (“CRS”), who asked her if she would be willing to take the applicant on as a worker. Ms Phan advised her that she would have to pay the applicant according to the award suggested by CRS but that she would receive a subsidy from the Commonwealth. Ms Hua subsequently entered into an agreement with CRS which required her to employ the applicant as a kitchen hand trainee for at least 30 hours per week for a gross wage of $505.50. The agreement stipulated a maximum period of six months from 28 August 2013 to 25 February 2014.
  3. Ms Hua deposed that she put the applicant in the position of kitchen hand trainee in accordance with the agreement, working 30 hours per week. He was rostered Monday to Friday, from 9:30am to 4:30pm, with a one hour lunch break. Ms Hua deposed that because of the applicant’s inexperience she rostered him on week days when the business was least busy. Further, the majority of the kitchen staff were Vietnamese and they preferred, or were only able, to speak in Vietnamese. As the applicant could not speak Vietnamese, she thought that it would be best to roster him during the quieter week days as this would reduce the potential business loss caused by miscommunication.
  4. Ms Hua deposed that the respondent was paid a subsidy of $232.60 per week during the six month period of its agreement with CRS.
  5. Ms Hua deposed that after his initial six month period the applicant’s role was changed from kitchen hand to part-time waiter. She deposed that he had not been suitable for the kitchen hand role because of communication problems with the Vietnamese kitchen staff. Ms Hua deposed that the applicant remained employed as a waiter from 26 February 2014 to 14 December 2014. She continued to pay him $505.50 per week and would provide him with pay slips when he requested them and denied the proposition that the applicant had asked to be paid by bank transfer rather than in cash. She said that if the applicant had had any issues, he should have raised them when he was handed his pay slips on his pay day at the end of every week or every fortnight, whichever it was. Ms Hua denied having paid the applicant in cash in order to conceal underpayment and said that the wages details were recorded on paper in daily reconciliations and were given to the external accountants for uploading into their “Zero” program. The details were then accessible by the respondent. Most pay slips were in the “Zero” program, Ms Hua said, and she printed them out at home.
  6. Ms Hua said that the accountants calculated the wages which were to be paid. Ms Hua would supply them monthly with “a daily reconciliation” of all of the respondent’s outgoings, including wages paid.
  7. Ms Hua deposed that the restaurant was closed from 1 to 3 July 2013 due to defects and on 25 and 26 December 2014 for Christmas, days on which the applicant claimed he had been rostered. She also deposed that the applicant was claiming that he had worked an eight hour shift on 24 December 2014 when the restaurant had only been open from 10:30am to 3pm because of a Christmas party.

Termination

  1. Ms Hua deposed that the applicant decided to leave in December 2014 and that when he sought work in February 2017 she told him that he was not required.
  2. Ms Hua deposed that since the applicant’s departure in December 2014 until his complaint to the Ombudsman on 15 June 2017, despite multiple instances of contact with him, the applicant never complained that he had been underpaid.

Complaints

  1. On 15 June 2017 Ms Hua was contacted by the Ombudsman who advised her that the applicant had sought mediation of a claim that he had been underpaid his wages. Ms Hua and the applicant subsequently exchanged the following text messages:
  2. In addition, on 23 June 2017 Ms Hua was advised by the Australian Taxation Office (“ATO”) that the business would be audited as it had received a complaint from an anonymous employee claiming that superannuation had not been paid. Ms Hua deposed that the ATO performed a full audit and found no wrongdoing by the respondent in respect of the applicant.
  3. Ms Hua deposed that the Ombudsman set up a mediation date on 29 June 2017 which the applicant failed to attend.
  4. On 5 July 2017 Ms Hua advised the Ombudsman that she had agreed to pay the applicant holiday pay owing which totalled $1,938.65. She deposed that the applicant refused this amount.

Shihchi Chan

  1. Ms Chan has worked at the restaurant since August 2013. She worked part-time in the kitchen as both a chef and kitchen hand and usually worked on Tuesdays and Saturdays.
  2. Ms Chan deposed that she and the applicant initially worked together in the kitchen for a few months before he switched to waiting on tables. When she worked with the applicant, she had to translate for him as most of the kitchen staff spoke Vietnamese and the applicant could only speak English. She deposed that she did not recall him working on weekends because weekends were normally too busy to spend time translating for him.
  3. Ms Chan deposed that she recalled that the restaurant was closed during both Christmas and New Year’s Day (presumably Christmas 2014).
  4. Ms Chan was not required for cross-examination.

Yvonne Yin

  1. Ms Yin is an accountant at Moore Stephens, which has been contracted by the respondent since August 2012.
  2. Ms Yin deposed that she had worked with Ms Hua on behalf of the respondent for four years. During that time, Ms Hua would routinely ask her to issue pay slips, which Ms Yin provided. She deposed that the pay slips were matched to the payments made to the employees and could not be falsified at the restaurant end. She said that wages would be earned in one week but paid in the following week and booked in the journal according to when paid, not when earned. Ms Yin said that the business’s cash takings and its cash expenditures would produce the net cash flow for a particular period, and that that would have to match the reconciliation for that period otherwise a question would be asked about the discrepancy.
  3. Ms Yin said that her firm did monthly cash flow and banking reconciliations for the respondent based on information provided by Ms Hua. In relation to cash transactions, the cash flow would be reconciled against the cash in the till and cash at the bank.
  4. On 23 June 2017 the ATO conducted an audit of the respondent’s business after the applicant lodged a complaint about not being paid his superannuation. She deposed that the ATO audited the respondent’s superannuation obligations to all its employees and concluded that it had complied with all regulations.
  5. Ms Yin deposed that as the respondent’s accountant, she believed that the applicant had been paid his correct wages to date, other than the holiday pay which remained owing to him.

Documents

  1. Exhibit R5 was a collection of copy pay slips relating to the applicant for the period November 2013 to January 2014 which Ms Yin produced from her firm’s records maintained in the “Zero” cloud accounting system. They recorded the applicant working 38 hour weeks in those months.

CONSIDERATION

  1. It is to be noted that Ms Nguyen, who said that she worked at the restaurant on weekends, did not give evidence of the applicant having also worked there on those days. This is a significant omission given that a substantial part of the applicant’s claim was that he had worked 10 hour days on weekends.
  2. I also note that Ms Chan was not cross-examined on her recollection.
  3. Because exhibit A1 was really no more than an approximation of the hours the applicant worked over a period of time, and was not a record of the particular hours worked on any given day, it can be of no assistance in determining the applicant’s entitlements. Further, as the applicant did not produce any records of when he actually did work and his evidence did not go further than his general statements to have worked 8 hours per day on weekdays and 10 hours on weekends and public holidays, his account stands to be tested against the documentary evidence available.
  4. In relation to the accuracy of those documents, although the applicant contended that there were discrepancies between the excel document in exhibit A1 and the pay slips available to him, Ms Yin’s evidence explained those as timing differences in accounting for the particular pays in question. Even so, the system which the respondent had in place for the provision of pay slips, basically that they were provided on request, has facilitated the dispute in this case. I accept Ms Hua and Ms Yin’s evidence to the effect that pay slips were prepared contemporaneously with the calculation and payment of wages. However, I am not persuaded that they were necessarily provided contemporaneously with pays. Although Ms Hua said in her oral evidence that the applicant was provided pay slips with every pay, her affidavit evidence, which I take to have been more considered, was that he was provided pay slips on request. I prefer Ms Hua’s affidavit evidence. The applicant’s evidence was that he had never received pay slips during the entirety of his employment with the respondent, but I am not persuaded that was likely to have been the case given that they were being created, undoubtedly at some expense, by Ms Yin and her firm. Nevertheless, to provide them only upon request amounted to non-compliance with an important statutory obligation.
  5. For the purpose of argument, I will accept the applicant’s contention that he never received pay slips. Based on that assumption, and given that he claimed to have been paid a $10 per hour flat rate of pay, I think that the applicant would have known if he had not been paid for every hour worked. Additionally, I was given no reason to think that he would not have pursued any underpayment of hours worked. I do not accept that the applicant worked hours for which he was not paid. If, alternatively, the applicant had been paid a flat ordinary time rate with no penalties, the same reasoning applies and the same conclusion results.
  6. However, whether the applicant was paid at the proper rate is a harder question. When cross-examining Ms Yin, the applicant posited the possibility that Ms Hua had calculated his pays correctly for the purposes of the respondent’s records but had been stealing the difference between what the records showed he should have been paid and the flat rate which he alleged he was paid. No evidence was adduced to support that proposition and it was not put to Ms Hua. There is therefore no basis to consider it further other than to make the following observations.
  7. The respondent’s records did not always show the applicant was working full weeks: see the table set out earlier. This fact presents for consideration a situation quite opposite from the one postulated by the applicant in his questions of Ms Yin, in that in periods when the applicant says he was working long hours, and presumably was receiving pay which arithmetically reflected those hours, he is recorded as having worked only a few hours a week.
  8. I consider it unlikely that the respondent would have paid the applicant for the hours he worked but at a flat rate, only then to go to the trouble of having what would have been the applicant’s notional wages fully worked out and then made the subject of superannuation contributions and PAYG tax payments to the Commonwealth. On that version of events, with the applicant working the hours he claimed and being paid at a flat rate for them and the respondent recording the small wages payments which appeared in exhibit A1 from April 2014, the question arises as to where the money came from to pay the applicant the large total sums, such as $700 gross per week (ie 70 hours at $10/hr), which he would have been paid above the recorded wages. One answer might be that the respondent was paying the applicant undeclared amounts of cash in hand but Ms Yin’s evidence excluded that possibility. No other answer was suggested and no logical answer is apparent. In the circumstances, I find that the applicant was paid the sums recorded in the respondent’s books.
  9. I therefore find that the allegations of underpayment of wages have not been made out.
  10. In reaching that conclusion I do not seek to imply as a necessary corollary that I found the applicant to be an untruthful witness. He appeared to believe his case. However, his belief that five years ago he worked as much 70 hours per week on occasion seems likely to have been caused by lack of recall arising out of the passage of time and the information in the 2013 pay slips, to which reference has been made, that he worked 76 hours per fortnight. Similarly, I think it quite possible that the applicant has forgotten that he received pay slips. If he had been unable to find them in his records and had no independent recollection of them, it would have been easy enough to believe that they had never been supplied.

Annual leave

  1. The applicant alleged that he had not been paid his full accrued annual leave entitlement and the respondent agreed. No attention was given to the issue at the hearing so I will do the best with what I have.
  2. The applicant relied on the Annual Holidays Act but that does not apply because the FW Act covers the relevant field. However, it does so in a way which has no material effect on the applicant’s entitlements.
  3. In the document which was exhibit A1, the respondent calculated that the applicant had, at the time of termination, accrued 114.94 hours of annual leave. The applicant did not seek to dispute this at the hearing although annexure B to his first affidavit contended a different calculation. The bases for that calculation were not explained and are not apparent. I accept the respondent’s calculation on the basis that it was generated by its accountants based on its records kept over time.
  4. The respondent contended, based on the calculation in exhibit A1, that it owed the applicant approximately $1,900 in respect of that entitlement. However, that calculation was erroneous because it calculated the monetary value of the entitlement according to the wage rates applicable at the time the leave was accrued, not at the time of separation, as is required by s.90(2). Admittedly, s.90(2) is elliptical in that it does not state explicitly the rate of pay to be applied to accrued leave paid out on termination. However, it should be understood to require payment at the employee’s rate of pay applicable at the time of termination. Section 90(1) provides that when an employee takes annual leave, he or she is to be paid “at the employee’s base rate of pay for the employee’s ordinary hours of work in the period”. That is to say, holiday pay is paid at the ordinary pay rate applicable at the time the leave is taken. Section 90(2) provides that if, on termination, an employee has accrued an entitlement to leave which he or she has not taken, he or she is to be paid what they would have been entitled to if they had taken the leave. The sub-section does not prescribe when the leave is deemed to have been taken but as the monetary entitlement only crystallises upon termination of employment, the period referred to in s.90(1), which also applies to this consideration, should be understood to be the moment when termination occurs.
  5. In this case, I quantify the applicant’s annual leave entitlement to be $1,994.21. To that, the Award adds 17.5% leave loading which produces a total of $2,343.20. To that should be added an amount for interest.

CONCLUSION

  1. Consequently, there will be judgment for the applicant against the respondent in the sum of $2,343.20, plus interest.
  2. There will be judgment as described, and there will be a further order that within 14 days the parties file a minute of order quantifying the applicant's entitlement to interest in an agreed amount.
  3. The parties have liberty to apply within 15 days if agreement cannot be reached.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Date: 31 January 2019

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