by Dr Laura Sowden, Partner, Orietta Fitzsimmons, Paralegal and Jacob Gadiel, Paralegal

Cropper v Energy Action (Australia) Pty Ltd (No 4) [2025] FCA 1605

Background

In June 2025 the Federal Court found energy consultancy firm, Energy Action (Australia) Pty Ltd (Employer) had misclassified the employee Mr Cropper (Employee) as a contractor instead of an employee over 14 years.[1] The Court held the Employer contravened the Fair Work Act 2009 (Cth) (the FW Act) by failing to provide the Employee for his entitlements under the National Employment Standards. Cropper v EEAPL (No 4) followed this to determine the pecuniary penalties to be imposed on the contravention.

Determining the pecuniary penalties

The Court considered whether, (and if so, the extent to which) pecuniary penalties should be imposed in respect of the three instances of conduct by the Employer that were in contravention of s 44(1) of the FW Act. Deterrence is the objective of pecuniary penalties, and the court will consider factors relevant to the nature of the contravention and offender in determining the appropriate penalty (Trade Practices Commission v CSR Ltd).[2]

Finding

The Court held the Employer’s conduct was at “the lower end of the seriousness spectrum” because:

• The Employee was originally engaged as a contractor;
• Its actions in most respects treated and viewed him as a contractor;
• The court accepted the apology presented by the Employer to the employee was genuine; and
• It did not present as a business “indifferent or reckless” to its obligations.

The Court rejected the Employer’s assertion the contraventions were generated by a single course of conduct and should be treated as such – this was the Employer’s attempt to apply one penalty not multiple penalties. The Employee sought penalties 60% of the maximum, the Court disagreed saying this was excessive.

The Court imposed:

• A Pecuniary penalty of 17.5% of the maximum for the Employer’s failure to pay the employee his accrued but untaken annual leave and in respect of absences on public holidays.
• Pecuniary penalties of 12.5% of the maximum for the Employer’s failure to pay the employee for the two occasions on which he took personal/carer’s leave.

Decision

These three penalties totalled to $29,925. No orders for costs were made. This was in addition to the penalty from the first decision which amounted to $130,698.60.[3]

Key Takeaways

A contravention may be judged as less severe where the employer genuinely believed itself to comply with the law, and where it shows it is not reckless or indifferent to its legal obligations.

 

[1]Cropper v Energy Action (Australia) Pty Ltd (No 2) [2025] FCA 663.

[2]Cropper v Energy Action (Australia) Pty Ltd (No 4) [2025] FCA 1605, [9]; Trade Practices Commission v CSR Ltd [1990] FCA 521, [42].

[3]Cropper v Energy Action (Australia) Pty Ltd (No 3) [2025] FCA 950.