Australian Federation of Air Pilots v National Jet Express Pty Ltd
[2022] FWC 2788
•24 OCTOBER 2022
| [2022] FWC 2788 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Federation of Air Pilots
v
National Jet Express Pty Ltd
(C2022/3836)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 24 OCTOBER 2022 |
Dispute arising under an enterprise agreement – payments for part-hours worked – whether payments to be made in the hourly amount or in proportion to time worked
This decision concerns an application made by the Australian Federation of Air Pilots (AFAP) under s 739 of the Fair Work Act 2009 (FW Act) and the dispute resolution procedure in the National Jet Express Pty. Ltd. Pilot Enterprise Agreement 2016 – 2020 (2016 Agreement). The application refers to the Commission for arbitration a dispute between the AFAP and National Jet Express Pty Ltd (NJE) relating to the meaning of clauses in the 2016 Agreement that prescribe payments for pilots in relation to overtime, excess duty hours above 135 per month (excess monthly hours), and callouts for more than four hours (long callouts). The parties disagree about the payment that these provisions require NJE to make to pilots in circumstances where pilots work for part of an hour. The AFAP contends that the payment must reflect one hour’s pay. NJE contends that the payment is a portion of the hourly amount that is proportionate to the time worked.
The application was listed for conciliation but the dispute remained unresolved. The AFAP requested that the Commission arbitrate the dispute. It was common ground, and I am satisfied, that the Commission is authorised by the dispute resolution procedure in clause 8 of the 2016 Agreement to arbitrate the dispute. The parties filed written submissions in accordance with directions issued by the Commission. The AFAP submitted witness statements from Mr Aaron Lindsay, a captain, and Mr Scott Britten, a first officer. NJE submitted two statements from Ms Kate Cilento, its employee relations manager. The essential facts are not in contest. The dispute relates to the proper construction of the relevant provisions.
The terms of the 2016 Agreement relating to overtime and long callouts have a long history at NJE. They were terms of the enterprise agreement that preceded the 2016 Agreement, the National Jet Express Pty. Ltd. Pilot Enterprise Agreement 2012 – 2016 (2012 Agreement). They were also found in Australian Workplace Agreements (AWAs) made between NJE and pilots under the Workplace Relations Act 1996 (WR Act). The excess monthly hours provision in the 2016 Agreement was a new provision with no counterparts in previous agreements.
NJE’s practice in applying the disputed provisions has been to pay pilots for part-hours worked in amounts that are proportionate to the time worked. Prior to this year, that practice had not been the subject of a dispute. Mr Lindsay explained in his statement that until recently, it had been rare that pilots would work overtime, long callouts or excess monthly hours, but that this had changed as a result of pilots flying new aircraft and new routes to more remote destinations, and because of the higher incidence of illness and absence associated with COVID-19, which led to increased overtime and callouts. The greater frequency with which the overtime, long callout and excess monthly hours clauses are now engaged has brought the proper interpretation of the part-hour payment provisions into focus.
In early 2022, a number of pilots raised queries with the human resources department of NJE as to why, in respect of part-hours worked of overtime, excess monthly hours and long callouts, they had not been paid the full hourly amount. They were advised that, under the 2016 Agreement, part-hours worked were paid proportionate to the time worked. The pilots and the AFAP considered that the company’s interpretation of the relevant provisions was incorrect and placed the matter in dispute. The parties took the dispute through the relevant steps in the dispute resolution procedure in clause 8 of the 2016 Agreement, which culminated in the union making its application under s 739 of the FW Act.
Terms of the 2016 Agreement and question for determination
Clause 29.8 of the 2016 Agreement concerns overtime payments. It states:
“In any roster period a Pilot shall be entitled to an overtime payment in accordance with clause 3 of Schedule 1 for every flight hour or part thereof flown in excess of a Pilot’s maximum ordinary hours.”
Overtime is dealt with in clause 3 of Schedule 1, which provides as follows:
“(a) Captain
The overtime rate effective from 1 July 2016 for Captains will be:
Aircraft Amount Per Hour RJ / 146 $295.77 Embraer EJET $295.77 Dash 8 Q400 (1 July 2018) $230.09
(b) First Officer
The overtime rate effective from 1 July 2016 for First Officers will be as follows:
Level Years of Service Amount Per Hour RJ / 146 and Embraer EJET 1 0-1 years $162.68 2 1-4 years $177.46 3 4 years plus $192.25 Dash 8 Q400 (1 July 2018)
1 0-1 years $126.71 2 1-4 years $138.07 3 4 years plus $149.56”
Clause 29.14 concerns payments for excess monthly hours. It provides as follows:
“Where a Pilot exceeds 135 Duty Time hours in any one monthly roster period they will receive $15 per hour for a Captain and $10 per hour for an FO for every hour or part thereof worked above 135 hours for that roster period …”
Callouts are regulated by clause 29.9. The chapeau to the provision states that ‘the call out allowance is not payable unless the pilot performs the call out duty’. Sub-clauses 29.9.1 to 29.9.5 then stipulate various conditions that attach to callout arrangements. Payment for callouts is governed by clause 5 of Schedule 2, which reads as follows:
“Callout allowance for all Pilots shall be paid at a minimum rate of four hours at the overtime rate of pay applicable to the Pilot prescribed at clause 3 of Schedule 1. Should the flight time of the callout exceed four hours the Pilot shall be paid at the overtime rate for each hour or part thereof.”
The parties have submitted the following question for determination:
“Where under clause 29.8, 29.14 or clause 5 of Schedule 2 an employee is entitled to a payment for part of an hour worked, must that payment be equal to the relevant hourly rate, or to a portion of the hourly rate that is proportionate to the time worked?”
The AFAP contends that the answer to the question is that payments must be equal to the relevant hourly rate. NJE contends that payments are to be made in amounts that are proportionate to the time worked.
Summary of the parties’ submissions
The AFAP contended that the words of each of the three provisions had a plain meaning, which was that employees are to be paid an hour’s pay for working any hour or part of an hour. Clause 29.8 states that pilots shall be entitled to an overtime payment in accordance with Schedule 1 for every flight hour ‘or part thereof’ in excess of the maximum hours, and the table in the schedule sets out a dollar sum described as an ‘amount per hour’. This dollar amount was a fixed payment that applied both to full hours and to part-hours worked. The callout allowance prescribed by clause 29.9 and clause 5 of Schedule 2 interacted with the overtime rate in clause 3 of Schedule 1 in the same way as clause 29.8. And the excess monthly hours provision in clause 29.14 was equally clear that for each hour ‘or part thereof’ worked in excess of 135 duty time hours, pilots are to receive a fixed lump sum of $15 for captains and $10 for first officers.
The AFAP contended that its interpretation was supported by the fact that elsewhere in the 2016 Agreement, but not in the disputed provisions, the parties had chosen to use the expression ‘pro rata’. Provisions in which these words are used included clause 18.2.6 (overpayment for loss of licence cover), clauses 26.5 and 26.6 (part-time entitlements), clause 33.3 (payment of annual leave on termination), as well as clause 44.3.4 and Schedule 3 (return of training bond). The absence of the expression ‘pro rata’ in clauses 29.8, 29.14, clause 3 of Schedule 1 and clause 5 of Schedule 2 indicated that the parties did not intend this concept to be applicable to payments for part-hours worked. The AFAP contended that throughout the 2016 Agreement, two different expressions were used to refer to different concepts: ‘or part thereof’ and ‘pro rata’. These expressions performed different work. The latter formed no part of the clauses in dispute.
The AFAP submitted that the company’s interpretation required a rewriting of the clauses in question so as effectively to insert the concept of pro rata payment. Such an approach was inconsistent with the principles of interpretation laid down by the Full Bench in AMWU v Berri Pty Ltd[2017] FWCFB 3005 (Berri) and also Paull v Linfox Australia Pty Ltd[2020] FWCFB 1553, which require that one give effect to the ordinary meaning of the relevant words, understood in the context of the enterprise agreement as a whole. In the present case, that meaning was clear and unambiguous: when pilots work overtime, excess monthly hours or long callouts for a part of an hour, they are to receive a whole hour’s pay.
The AFAP contended that the fact that the company may have a long history of interpreting and applying these clauses and their equivalents in predecessor agreements in a manner consistent with its position in these proceedings did not mean that there was any accepted custom and practice in relation to those provisions, let alone any common intention of the parties that the clauses were to be understood in this way, and that past practice did not affect the objective meaning of the words used in the disputed clauses. The meaning of the relevant provisions was clear and there was no basis for the Commission to have regard to extrinsic matters to resolve any ambiguity.
NJE contended that the three provisions each required payment in respect of part of an hour to be made in amounts proportionate to the applicable hourly amount, because each clause set payment by reference to a rate of pay, not a fixed amount. The tables in clause 3 of Schedule 1 to the 2016 Agreement referred to an ‘overtime rate’ and an ‘amount per hour’, which connoted proportionality between time worked and payment. Clause 29.14 also provided for a rate of pay, not a flat rate, because it stated that pilots are to receive payment of a dollar amount ‘per hour’.
In its written submissions, NJE contended that the disputed clauses were ambiguous because although the phrase ‘every hour or part thereof’ would ordinarily suggest that each part-hour of overtime should be treated as another whole hour, the payment in each of the provisions was a rate of pay where the hourly rate applied to a whole hour’s work. At the hearing, NJE submitted that in the alternative, the relevant provisions were in fact clear and unambiguous and bore out the meaning for which it contended. The company further submitted that, on the AFAP’s interpretation, the words ‘per hour’ in clause 3 of Schedule 1 and in clause 29.14 would have no work to do.
NJE contended that it had a long-established practice of applying the provisions in dispute and that no contrary interpretation had previously been raised. In the case of the overtime and long callout provisions, this consistent practice had spanned many years, as the clauses currently in dispute had also been found in the 2012 Agreement. Clause 29.8 and clause 3 of Schedule 1 of the 2016 Agreement were in the same terms as clause 30.9 and clause 3 of Schedule 1 of the 2012 Agreement, save that the header of the righthand column in the table in Schedule 1 of the 2012 Agreement had read simply ‘Amount’; the table in the 2016 Agreement had been amended to state ‘Amount per hour’. Clause 5 of Schedule 2 of the 2016 Agreement was in the same terms as clause 5 of Schedule 2 of the 2012 Agreement.
The evidence of Ms Cilento was that she had requested the company’s payroll department to generate reports showing payments for overtime, excess monthly hours and long callouts. The reports were attached to Ms Cilento’s statements and showed a large number of payments for part-hours worked, paid in proportion to the hourly rate. NJE contended that this consistent past practice reflected a common intention as to the correct meaning of these provisions, which was that pilots are to be paid a proportionate amount for part-hours worked. The AFAP objected to the evidence of Ms Cilento on the basis that it was hearsay, because Ms Cilento had not personally gathered the relevant data. I do not accept this contention. Ms Cilento requested a payroll officer to generate the reports from the company’s pay records. In my view the reports constitute business records for the purposes of s 48 of the Evidence Act 1995 and the exception to the hearsay rule in s 69. In any event, the Commission is not bound by the rules of evidence (s 591 of the FW Act), and I would accept the reports because there is no suggestion that the information in the reports was confected, and no serious challenge was made to the accuracy of the information contained in them. But as we will see, little turns on the evidence of past practice.
NJE further submitted that there was no apparent practical reason or rationale why the AFAP’s interpretation would be favoured other than to provide pilots with a ‘windfall’, and that its own interpretation produced a more sensible and equitable outcome and was therefore more likely to have been intended by the parties.
Consideration
The principles that apply to the interpretation of an enterprise agreement are well-known and need not be restated here. I agree with the AFAP’s summary of those principles, which derive from the decision of the Full Bench in Berri. In my opinion however, it is NJE’s interpretation of the provisions that is the correct one. Each provision contains a trigger that creates an entitlement to a payment, and a clause that defines the amount of that payment. The words ‘for every flight hour or part thereof’, ‘every hour or part thereof’, and ‘each hour or part thereof’ are clear. They create an entitlement to payment for part-hours worked of overtime, excess monthly hours and long callouts. They are part of the trigger for payment. They do not define the quantum of payment. Without these words, pilots would not be entitled to any payments for part-hours worked. A pilot who worked, say, three hours and fifty minutes of overtime would only be paid for three hours’ work. The amount that a pilot is to be paid for working part-hours is defined by the payment clauses in each of the three provisions. These clauses do not fix set or minimum amounts payable irrespective of time worked. They prescribe a rate of pay, which connotes proportionality with the time worked.
When a pilot works a flight hour or a part thereof that is in excess of their maximum ordinary hours, the pilot is entitled to ‘an overtime payment in accordance with clause 3 of Schedule 1’ (clause 29.8). This is the trigger that entitles a pilot to an overtime payment. The amount of the payment to which the pilot is entitled is prescribed by clause 3 of Schedule 1. The clause is headed ‘Overtime Rates’. For captains and first officers respectively, the clause states that the ‘overtime rate’ effective from the relevant date ‘will be’ what is then set out in a table. The table identifies an aircraft type and an ‘amount per hour’. It is inherent in the meaning of a ‘rate’ of pay that there is a ratio of payment to work. The ordinary meaning of an overtime rate of pay is that a worker receives an amount of pay for one hour of overtime, and a proportionate amount of pay for a lesser amount of overtime. An amount per hour has the same ordinary meaning.
The AFAP contended that a rate of pay per hour or part of an hour simply means a fixed amount for each hour or part of an hour. I do not accept this. If employees are told that they will receive ‘a rate of pay of $100 per hour’, and that they will receive this rate ‘for every hour or part of an hour worked’, the clear and ordinary meaning is that employees will receive $100 for one hour’s work, and $50 for half an hour’s work. It does not make sense to say that employees would expect to be paid $100 for half an hour’s work, because this would mean that they would be paid at a rate of $200 per hour. The word ‘rate’ does not mean ‘amount’. The AFAP treats the example above as being synonymous with a situation where employees are told that they will receive ‘$100 for any hour or part of an hour worked’. But this second situation is very different. Here, a fixed amount has been set for an hour’s work or any part of an hour’s work. Nothing in Schedule 1 suggests that payment for part of an hour’s work is fixed at a minimum amount. Clause 29.8 states that pilots are entitled to an overtime payment for every flight hour or part thereof, but this relates to their eligibility for payment, not the amount of the payment.
The long callout provision works in the same way. The entitlement to the callout payment is subject to various conditions contained in clause 29.9. Clause 5 of Schedule 2 then specifies the payments that apply. The first sentence of the clause states that a pilot will receive a minimum of four hours at the overtime rate of pay prescribed by clause 3 of Schedule 1, referred to above. The second sentence of the clause then sets a trigger for a further entitlement, namely where the flight time of the callout exceeds four hours. In that case, ‘for each hour or part thereof’, the pilot is to be paid at the overtime rate in clause 3 of Schedule 1.
The first sentence of clause 5 of Schedule 2 is not in dispute, but it usefully illustrates how industrial instruments can set minimum payments that must be made irrespective of the time worked. Clearly, pilots who are called out to work must receive at least four hours of overtime pay, even if they work for less than four hours. But it is only the first sentence of clause 5 of Schedule 2 that is concerned with a minimum payment; the second sentence, by conspicuous contrast, refers to the overtime rate in clause 3 of Schedule 1. For a part of an hour’s work, the rate produces an amount that reflects the ratio of one hour’s work to one hour’s pay.
The excess monthly hours provision in clause 29.14 differs from the clauses above in that it does not explicitly refer to a rate of pay. It states that where pilots exceed 135 duty time hours in a monthly roster period, they will receive ‘$15 per hour’ (for captains) or ‘$10 per hour’ (for first officers) for every hour or part thereof worked above 135 hours. The AFAP contended that this clause sets a flat rate of a dollar amount for each hour or part thereof. The words ‘per hour’ simply meant ‘for each hour’; in effect the clause provided that pilots are to receive $15 or $10 for each hour or part of an hour worked above 135 hours. The problem with this interpretation is that it makes the words ‘per hour’ entirely redundant. It reads the clause as though it simply stated that pilots are to be paid ‘$15 (or $10) for every hour or part thereof’. In my opinion, the better view is that the words ‘per hour’ establish a rate of pay that is $15 or $10 for one hour, and a proportionate amount for a part thereof. This gives sensible meaning to the words ‘per hour’, a meaning that is consistent with the arrangements that are provided for in respect of part-hours worked on overtime and long callouts. It would be curious if, uniquely for excess monthly hours above 135, pilots would receive payment in the full hourly amount in respect of a part-hour worked.
I consider that the meaning of the text of clause 29.14, read in context, is clear. This meaning is also supported by an explanatory document provided to employees by NJE prior to the vote on the proposed 2016 Agreement, in connection with the requirement in s 180(5) of the FW Act that the employer take all reasonable steps to ensure that the terms of an enterprise agreement, and the effect of those terms, are explained to employees. It will be recalled that clause 29.14 did not have an analogue or equivalent in the 2012 Agreement. It was a new provision in the 2016 Agreement. In respect of clause 29, the explanatory document told employees:
“An hourly Duty Time Allowance has been added for all duty time hours worked in excess of 135 in any one monthly roster period.” (Emphasis added)
The reference to ‘all duty time hours worked’ indicates that the allowance is paid for time actually worked. There is no suggestion of a minimum payment for part of an hour worked. The explanatory document does not make reference to any other relevant changes to clause 29. Presumably then employees were to understand that overtime and callout would continue to be paid in the same manner as previously. In my view, an employee who read the explanatory document would reasonably understand that the new payments for excess monthly hours would be paid for excess time worked, not for excess time that was not worked.
I do not accept the AFAP’s contention that NJE’s construction requires words to be read into the relevant provisions. Although the provisions do not use the expression ‘pro rata’, the payment provisions in clause 3 of Schedule 1 convey the same meaning, because they refer expressly to a rate of pay. ‘Pro rata’ is a Latin phrase that has been received into English and simply means ‘according to the rate’. Clause 29.14 does not refer to a ‘rate’ but establishes one by its reference to dollars per hour. Each of the clauses in question prescribes payment by reference to a rate of pay, that is, a ratio of pay to time worked. The ordinary meaning of the words, read in their context, is that an employee who works for part of an hour is to be paid at the specified rate of pay. The rate of pay is an amount for a whole hour, and a proportionate amount for a portion of an hour.
The AFAP referred to the decisions in NUW v Veyance Belting Pty Ltd[2015] FWC 5557 (Ryan C) and National Union of Workers v NCI Holdings Pty Ltd [2017] FWC 329 (Gostencnik DP), in which the Commission considered redundancy provisions in enterprise agreements that conferred on employees a right to a severance payment of ‘3.5 weeks’ pay for each year of continuous service or part thereof’. In both cases the Commission confirmed that an employee was entitled to 3.5 weeks’ pay for each year of service or part thereof. But in these cases, that is what the clauses clearly stated. They prescribed a set amount of severance pay for any year or part of a year of service. Unlike the provisions in the present matter, the clauses in those cases did not prescribe a rate of pay for each part of a year worked. These cases do not assist the AFAP.
The AFAP submitted to the Commission an ‘aggregated’ provision in respect of clause 29.8 with the overtime rate from Schedule 1 built into it. For a RJ/146 captain, the AFAP’s clause read as follows: ‘In any roster period a Pilot shall be entitled to a payment of $295.77 for every flight hour or part thereof flown in excess of a Pilot’s maximum ordinary hours.’ The AFAP said that it was clear from the aggregated clause that the amount of $295.77 was the prescribed amount that applies for a full flight hour or a part of a flight hour in excess of the ordinary hours. But that is because the aggregated clause is a reconstruction of the actual words used in the 2016 Agreement. Critically, it omits the reference to the overtime rate that is found in clause 3 of Schedule 1. The same is true of the ‘aggregated’ clause prepared by the AFAP in respect of the callout provision in clause 5 of Schedule 2. These reconstructed clauses serve only to illustrate what the provisions could have said but do not say: they do not specify a total amount that is payable for any hour or part thereof. Rather, they require a payment for every relevant hour or part-hour; the amount of that payment is in accordance with a rate of pay.
Both parties made submissions about the outcomes that their interpretations produced. An interpretation that produced a plainly unreasonable result might be one unlikely to have been intended, but neither of the constructions advanced in this case could be characterised in that way. Although the AFAP’s interpretation would result in pilots obtaining payments in respect of periods that they have not worked, there is nothing unreasonable or even unusual about this. As noted earlier, the primary callout provision (not the long callout provision) requires employees to receive a minimum of four hours pay at the overtime rate. Minimum payment provisions are common in industrial instruments. There is also nothing unreasonable about NJE’s construction. Ordinarily one might expect that payments would reflect time actually worked unless some provision is made to the contrary. There is no such provision in this case. Instead, there are trigger provisions that make clear that pilots are entitled to overtime, callout and excess monthly hours payments in respect of part-hours worked – it is not necessary that they work an entire hour in order to qualify for an entitlement to payment.
I agree with the AFAP that one cannot infer from the company’s past practice in applying the disputed clauses that the ‘parties’ to the 2016 Agreement or its predecessor had a common intention as to the meaning of those provisions. As I have said in other decisions, unlike the WR Act, the FW Act does not recognise the concept of parties to non-greenfields enterprise agreements. An enterprise agreement is made when a majority of employees vote to approve it (see s 182). Submissions directed to the common intention of the ‘parties’ to enterprise agreements are better understood as references to the common intentions of the framers of the instrument, which include the employees. In this regard, any explanations provided to employees in connection with s 180(5) may be of interpretative significance. To the extent that one might speak generally of ‘parties’ to an enterprise agreement, the practice of one party does not say anything about the intention of another, nor does the absence of an objection to the practice from that other party. More generally, the fact that there has been a longstanding practice in relation to a disputed provision does not necessarily have any bearing on the objective meaning of that provision. However, where there has been a longstanding practice with little or no dispute, it is often because the words in question are ultimately clear and have a practical effect that is reasonable. That is the case here.
It is very common in s 739 applications concerning disputed interpretations of enterprise agreements for submissions to be made about ‘common intention’ and ‘custom and practice’, but the answer to the disputed question is invariably to be found in the text of the relevant provision, read in the context of the agreement as a whole. Due regard is to be paid to any objectively manifested common purpose or intention, but in the present case, as in very many other cases, none is apparent. One is left with the words of the enterprise agreement, the sacred text approved by vote of the workers following the rigorous process prescribed by the FW Act. The objective meaning of those words must be given full effect.
Conclusion
I agree with the AFAP that the clauses in question have a plain meaning, but it is not the meaning contended for by the union. The disputed clauses distinguish between trigger and payment. Performing work for part of an hour triggers an entitlement to payment. The payment in question is a rate of pay per hour, not a fixed amount regardless of the time worked.
The answer to the question submitted for determination is as follows: where under clause 29.8, 29.14 or clause 5 of Schedule 2 an employee is entitled to a payment for part of an hour worked, that payment must be equal to a portion of the hourly rate that is proportionate to the time worked.
DEPUTY PRESIDENT
Appearances:
D. Stephens for the AFAP
S. Bakewell for NJE
Hearing details:
2022
Melbourne
17 October
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