DCMAUI

LAW 201: BUSINESS LAW

1. Introduction

For the past two years, Alan has been running a factory in Aberfeldie, Australia that manufactures a
phone called Aiophone. There are several legal issues that Alan faces, including pollution issues, labour
and employee treatment issues, employees sustaining injuries in his factory, using the Android system
without Google’s permission, issues regarding the location of the factory, and lastly tax evasion.

In this assignment, the legal issues that Alan faces will be discussed with regard to Australian law.
Breaches of the Australian law and the respective penalties will be examined.

2. Pollution Issues

Alan’s factory is constructed near the Maribyrnong River. Pollutants from the factory is discharged into
the river, poisoning the aquatic life in the area. As a result, local fishermen have lost their source of
income, and the drinking water of Aberfeldie’s residents has been contaminated.

According to Section 16 of the Clean Waters Act (1970), “A person shall not pollute any waters; a
person shall not cause any waters to be polluted, whether intentionally or not and; a person shall not
permit any waters to be polluted”. This Act states that any person who contravenes the aforementioned
provisions of Section 16 is guilty of an offence against the Environmental Offences and Penalties Act
(1989).

The Environmental Offences and Penalties Act 1989 outlines the penalties for breaching the laws
regarding pollution. In Section 2, it states that “A person who is guilty of an offence against this Act is
liable to a penalty not exceeding $1,000,000 in the case of a corporation or, in any other case, $150,000
or 7 years imprisonment, or both”.

By discharging pollutants through the factory pipe into the Maribyrnong River, Alan has clearly
violated the law by permitting the river waters to be polluted by his factory workers. Alan may be fined
up to $150,000 or face up to 7 years imprisonment.

Furthermore, the Environmental Offences and Penalties Act, under Section 4, also states that if a person
has suffered a loss due to the person convicted of polluting the environment, or incurred costs and
expenses in preventing or mitigating any such loss or damage, the person or public authority may
recover damages from the convicted person. With regards to this section, the local fishermen who have
lost their livelihood and Aberfeldie’s residents that had their drinking water polluted by the factory can
claim damages from Alan.

Page | 1
 DCMAUI
LAW 201: BUSINESS LAW

3. Labour Issues

Alan has hired 100 workers for his factory. These workers work from 8 until 6 p.m. everyday even
though the contract of employment stated that their working hours are from 9 until 4 p.m. The workers
on the production line are paid $15.00 per hour. Sometimes they also are required to work on Sunday.
The female staff are only allowed to take one-month maternity leave. All medical expenses must be
borne by the staff. They can only take annual leave of one week a year. Further the management has
stated in the contract of employment that they can dismiss any worker without giving any reason within
24 hours and that the company will not give any compensation. Some of the workers are from Vietnam
who do not have any proper documentation. These conditions have several issues with regards to the
labour law in Australia.

(i) Working Hours and Wages

According to the Fair Work Act (2009), under Section 62, an employer must not request or require an
employee to work more than 38 hours in a week unless the additional hours are reasonable. For the
additional hours, employees are entitled to overtime pay. The employee may refuse to work additional
hours if it is unreasonable.

In the contract of employment, the working hours of 9 to 4 p.m. for 5 days a week totals to 35 hours a
week. However, Alan forces his employees to work from 8 to 6 p.m., which is equal to 10 hours a day
or 50 hours a week, and this is excluding the days that the workers are made to work on weekends.
There is no mention of overtime pay for the additional hours or the Sunday shifts. Hence, this is a clear
breach of the Fair Work Act.

Moving on, the national minimum wage in Australia as of this writing is $18.93 per hour before tax
(Fair Work Ombudsman Australia, 2018). Alan only pays his workers $15.00 per hour, which violates
the Fair Work Act.

Page | 2
 DCMAUI
LAW 201: BUSINESS LAW

(ii) Parental Leave and Medical Expenses

Under Section 67 of the Fair Work Act, employees are entitled to 12 months of unpaid parental leave.
Parental leave can be taken when an employee gives birth; an employee's spouse gives birth or; an
employee adopts a child under 16 years of age. Employees are only entitled to parental leave if they
have worked for their employer for at least one year.

However, Alan only allows female staff to take a one month maternity leave. This violates two issues,
firstly the duration of the leave is only one month whereas the Fair Work Act allows parental leave up
to 12 months, and secondly, only female staff is allowed to take this leave, whereas in the Act, it is
stated that even the spouse of the employee who gave birth can take parental leave.

Regarding paid parental leave, it is not a requirement for the employer to allow paid parental leave or
bear the medical expenses of pregnancy unless it is stated in the contract of employment.

(iii) Annual Leave

Under Section 87 of the Fair Work Act, for each year of service with his or her employer, an employee
is entitled to a minimum of four weeks of paid annual leave, or five weeks if he or she is a shift worker.
The employer must not unreasonably refuse to agree to a request by the employee to take paid annual
leave. If an employee takes paid annual leave, then the employer must pay the employee at the
employee’s base rate of pay for the employee’s ordinary hours of work in the period.

Alan has breached this Section as he only allows his employees to take one week of paid annual leave
per year.

Page | 3
 DCMAUI
LAW 201: BUSINESS LAW

(iv) Unfair Dismissal

Under Section 387 of the Fair Work Act, a person is considered to be unfairly dismissed if there was
no valid reason for the dismissal related to the person’s capacity or conduct, or if there was no
notification of the reason for dismissal to the person.

When an employment relationship is terminated, employees should receive in their final pay any
outstanding wages or other remuneration still owing.

Furthermore, under Section 117 of the Fair Work Act, for a period of continuous service of 1 year or
less, the minimum notice of termination period is 1 week. The notice of termination period is 2, 3 and
4 weeks for continuous service periods of 1 – 3 years, 3 – 5 years and more than 5 years respectively.

Alan’s factory management stated in the contract of employment that they can dismiss any worker
without giving any reason within 24 hours and that the company will not give any compensation. This
part of the contract has violated the Fair Work Act as a valid reason has to be notified to the worker for
dismissal, and outstanding wages have to be paid to the worker. It has also violated Section 117 of the
same Act as the contract stated that workers are to be given only 24 hours notice of their termination,
rather than following the minimum periods stated in the Act.

(v) Vietnam Workers with No Documentation

According to the Migration Amendment (Employer Sanctions) Act (2007), a person commits an offence
if the person allows, or continues to allow an unlawful non‑citizen to work; and the person knows that,
or is reckless as to whether, the worker is an unlawful non‑citizen. This offence is punishable on
conviction by imprisonment for 2 years.

It was stated that some of Alan’s factory workers are from Vietnam and do not have any proper
documentation. This means that Alan has allowed unlawful non-citizens to work in his factory, and as
such breached the aforementioned Act. He and his factory’s management may face imprisonment of 2
years if convicted.

(vi) Penalties

For breaches under the Fair Work Act 2009, regarding the working hour, wages, parental leave, annual
leave and unfair dismissal issues, Alan can face penalties up to $12,600 per contravention (Workforce
Guardian, 2018). He may also face orders to pay his employees what they are owed (compensation of
wages in line with minimum wage) or orders to reinstate an employee who was previously unfairly
dismissed.

Page | 4
 DCMAUI
LAW 201: BUSINESS LAW

4. Employees Injured in Factory

Due to the machinery and equipment in Alan’s factory has not been properly maintained, a few
employees has sustained injuries. No warning signs are displayed in the plant. Also, the employees are
not trained properly to handle the manufacturing equipment. The workers are only allowed to have a
one-hour break when working. Some workers have complained of fatigue to the management but
nothing has been done. In order to save costs, there are only two fire extinguishers in the factory. The
long hours had caused some equipment to heat up quickly and some employees have suffered burns to
their arms. This situation has several legal issues with regards to laws about injuries in the workplace.

(i) Ensuring Safety of Machinery and Equipment

According to Section 21 of the Work Health and Safety Act (2011), the person with management or
control of fixtures, fittings or plant at a workplace must ensure, so far as is reasonably practicable, that
the fixtures, fittings and plant are without risks to the health and safety of any person.

By not properly maintaining the machinery and equipment in the factory, Alan and his factory’s
management has already breached Section 21 of the Work Health and Safety Act as they did not ensure
the safety of the fixtures and machinery in the factory, exposing his workers to safety risks and causing
them to be injured.

(ii) Safe Work Procedures

Also, in Section 19 of the same Act, it is stated that “A person conducting a business or undertaking
must ensure, so far as is reasonably practicable, the health and safety of the workers engaged while the
workers are at work in the business”, and “A person conducting a business or undertaking must ensure,
so far as is reasonably practicable, the provision and maintenance of a work environment without risks
to health and safety; and the provision and maintenance of safe plant and structures; and the provision
and maintenance of safe systems of work.”.

However, Alan and his factory’s management has not complied with this Section. By not displaying
warning signs, not properly training employees to handle manufacturing equipment, overworking their
employees, disregarding complains of fatigue and also only having two fire extinguishers in the factory
to save costs, Alan and the management has breached Section 19 of the Work Health and Safety Act
2011, as they did not ensure the safety of their workers in the business premises and had endangered
their safety by not having safe systems of work.

Page | 5
 DCMAUI
LAW 201: BUSINESS LAW

(iii) Fire Extinguisher Placement

The Australian Standard 2444 and the Building Code of Australia provides that as a general guide, the
requirement for fire extinguishers is one extinguisher for every 15 metres (Jim’s Fire Safety, 2018).
Although the factory layout is not provided, it is most likely that the two fire extinguishers that Alan’s
factory has is insufficient for a 10,000 square foot factory.

Also, Alan and the management deliberately have only two extinguishers in order to save costs,
disregarding the safety of their employees in the case that a fire occurs. As a result of this, some
employees have suffered burns to their arms. Once again the management has breached the law
regarding minimum fire extinguisher placements.

(iv) Penalties

Sections 31 to 33 define the penalties for breaching the Work Health and Safety Act into three categories.

Category 1 offence is committed if the person has a health and safety duty and, without reasonable
excuse, engages in conduct that exposes an individual to whom that duty is owed to a risk of death or
serious injury or illness; and the person is reckless as to the risk to an individual of death or serious
injury or illness. The penalty for a Category 1 offence is $600,000 or 5 years imprisonment or both.

A person commits a Category 2 offence if the person has a health and safety duty; and the person fails
to comply with that duty; and the failure exposes an individual to a risk of death or serious injury or
illness. The penalty for a Category 2 offence is $300,000.

A person commits a Category 3 offence if the person has a health and safety duty; and the person fails
to comply with that duty, but this failure to comply does not expose an individual to a risk of death or
serious injury or illness. The penalty for a Category 3 offence is $100,000.

Alan and the management will face either Category 1 or Category 2 penalties as their actions have
exposed their employees to a risk of death and serious injury.

A Category 1 offence occurs when the employer engages in conduct that exposes other individuals to a
risk of death and serious injury. By deliberately ignoring their employees’ complaints of fatigue and
still overworking them and also deliberately having lesser than the required amount of fire extinguishers
in the factory for the purpose of saving costs can both be considered as Category 1 offences.

On the other hand, not displaying warning signs and not properly training employees to handle
manufacturing equipment can be considered a Category 2 offence as these are failures to comply with
required duties.

Lastly, the management will need to pay compensation to their employees for their injuries at work.

Page | 6
 DCMAUI
LAW 201: BUSINESS LAW

5. Using Android System without Google’s Permission

The Aiophone that Alan’s factory manufactures uses the Android operating system. However, Alan has
not obtained the permission from Google to use their operating system.

Under Section 132 of the Copyright Amendment Act (2006), it is an offence to distribute infringing
copies. A person commits an offence if the person distributes an article, with the intention of trading;
or obtaining a commercial advantage or profit; and the article is an infringing copy of a work or other
subject‑matter; and copyright subsists in the work or other subject‑matter at the time of the distribution.

An offence under this Section is punishable on conviction by a fine of not more than 550 penalty units
or imprisonment for not more than 5 years, or both.

Alan has violated this Section of the Copyright Amendment Act 2006 as he clearly uses and distributes
the Android operating system that is copyrighted by Google LLC for profit, without getting Google’s
permission. As such, Alan may face a fine up to 550 penalty units or up to 5 years imprisonment, or
both.

Page | 7
 DCMAUI
LAW 201: BUSINESS LAW

6. Factory’s Location Issue

Alan’s factory has been constructed on a piece of land belonging to another person Mr. Gorka, without
his knowledge. There are generally three ways that the situation may proceed.

In the first situation, a best-case scenario for Alan, is if Mr Gorka does not care about his land and does
not display any interest in using his land, Alan can apply for adverse possession in order to have the
land transferred under his name. Adverse possession is defined as a doctrine under which a person in
physical possession of land owned by someone else may acquire valid title to it, so long as certain
common law requirements are met, and the adverse possessor is in possession for a sufficient period of
time, as defined by a statute of limitations (Cornell Law School, n.d.).

If Alan can prove in Court that he has been occupying the land for a sufficient continuous duration of
time and Mr Gorka has made no effort to have him evicted, then the Court may grant Alan the right to
the land. If this happens, Alan will be the rightful owner of the land that the factory is built on. The
process of adverse possession is detailed in Section 45D of the Real Property Act (1900).

The second situation is that if Mr Gorka finds out that Alan has built a factory on his land, he can go to
court to have Alan evicted from his land. If Mr Gorka succeeds, Alan will have to leave Mr Gorka’s
land immediately, and Mr Gorka can also claim compensation for the expenses incurred in having the
factory demolished and returning his land to its original state.

The third situation is that Mr Gorka finds out about the factory, and decides to make a profit by leasing
the land to Alan, and Alan pays Mr Gorka for the lease and continues to operate his factory on the land.

Moving on, there is the issue the factory not having approval by the local authorities. This issue is
covered under the Building Regulations (2006). After the authorities find out about the factory and issue
a notice of unauthorized works, Alan has two choices. Firstly, he can apply for the factory to get the
necessary approval. The authorities may or may not approve the factory, and may require some
structures to be corrected. The second choice would be to demolish the factory and notify the authorities
of the demolishment.

Page | 8
 DCMAUI
LAW 201: BUSINESS LAW

7.0 Tax Evasion

Alan’s factory has not paid taxes for the last two years even though they have made a profit of $30
million the first year and $50 million the second year. This can be defined as tax fraud, as Alan has
clearly not paid the taxes he should have in the last two years.

Important legislations outlining tax fraud include the Criminal Code, the Taxation Administration Act
1953, and the Excise Act 1901 (Commonwealth Director of Public Prosecutions, 2018). The maximum
sentence for breaching these Acts is 10 years imprisonment. Hence, Adam may face up to 10 years of
imprisonment if convicted for tax evasion.

8.0 Conclusion

In short, Alan and his factory is plagued with many legal issues, ranging from pollution, labour issues,
workplace injuries, copyright infringement of Android, location issues of the factory, and tax evasion.
The penalties for some offences he may be charged with not only include monetary fines but also
imprisonment. He should seek out professional legal advice to aid his situation.

(3066 words)

Page | 9
 DCMAUI
LAW 201: BUSINESS LAW

9.0 References

Building Regulations 2006. Available at:

http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/93eb987ebad
d283dca256e92000e4069/79D66077DE4827BCCA2571850013458E/$FILE/06-068sr.pdf
(Accessed: 26 October 2018)

Clean Waters Act 1970. Available at:

https://www.legislation.nsw.gov.au/#/view/act/1970/78/part4/sec16 (Accessed: 19 October
2018)

Commonwealth Director of Public Prosecutions, 2018. Tax Fraud. Available at:

https://www.cdpp.gov.au/crimes-we-prosecute/fraud/tax-fraud (Accessed: 28 October 2018)

Copyright Amendment Act 2006. Available at: https://www.legislation.gov.au/Details/C2006A00158

(Accessed: 25 October 2018)

Cornell Law School, n.d.. Adverse possession. Available at:

https://www.law.cornell.edu/wex/adverse_possession (Accessed: 25 October 2018)

Environmental Offences and Penalties Act 1989. Available at:

https://www.legislation.nsw.gov.au/acts/1989-150.pdf (Accessed: 19 October 2018)

Fair Work Act 2009. vailable at: https://www.legislation.gov.au/Details/C2017C00323 (Accessed: 22

October 2018)

Fair Work Ombudsman Australia, 2018. Minimum wages. Available at:

https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-
workplace-entitlements/minimum-wages (Accessed: 23 October 2018)

Jim’s Fire Safety, 2018. Fire Extinguishers and Equipment. Available at:
https://www.jimsfiresafety.com.au/frequently-asked-questions (Accessed: 23 October 2018)

Migration Amendment (Employer Sanctions) Act 2007.

https://www.legislation.gov.au/Details/C2007A00007 (Accessed: 19 October 2018)

Page | 10
 DCMAUI
LAW 201: BUSINESS LAW

Real Property Act 1900. Available at: https://www.legislation.nsw.gov.au/inforce/b5f4b91b-3278-

efc8-b1db-ad632e61b898/1900-25.pdf (Accessed: 25 October 2018)

Work Health and Safety Act 2011. Available at:

https://www.legislation.qld.gov.au/view/html/inforce/current/act-2011-018#sec.21 (Accessed:
23 October 2018)

Workforce Guardian, 2018. Fines and Penalties: Fair Work Act 2009. Available at:
https://www.workforceguardian.com.au/hr-solutions/fines-and-penalties-fair-work-act-2009/
(Accessed: 23 October 2018)

Page | 11