Australian Municipal, Administrative, Clerical and Services Union v Australian Rail Track Corporation (ARTC)

[2013] FWC 6861

[2013] FWC 6861

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Rail, Tram and Bus Industry Union; Australian Municipal, Administrative, Clerical and Services Union
v
Australian Rail Track Corporation (ARTC)
(C2013/4220)

Rail industry
DEPUTY PRESIDENT BARTEL	ADELAIDE, 11 SEPTEMBER 2013

Australian Rail Track Corporation Enterprise Agreement 2010.

Introduction

[1] The Australian Rail, Tram and Bus Industry Union (the RTBU) and the Australian Services Union, SA/NT Branch (the ASU) have jointly applied to the Fair Work Commission (the FWC) seeking assistance with a dispute that exists with the Australian Rail Track Corporation Ltd (ARTC). The enterprise agreement that applies to the parties is the Australian Rail Track Corporation Enterprise Agreement 2010 (the 2010 Agreement), approved on 23 September 2010 and having a nominal expiry date of 30 September 2013. 1

[2] Conferences were convened by the FWC on 17 May and 29 May 2013 and the matter was referred for arbitration when it became apparent that further conciliation was unlikely to resolve the dispute. The dispute settling provisions of the 2010 Agreement relate to “… disputes arising from this Agreement or in relation to the National Employment Standards.” I am satisfied that the dispute brings into question the National Employment Standards (the NES) and the terms of the 2010 Agreement relating to hours of work and annual leave.

[3] The arbitration of the dispute is by consent of the parties. The terms of the Dispute Settlement Procedure require internal discussions to take place and if the matter remains unresolved in can be referred to Fair Work Australia, as the Tribunal was known at the time. The procedure states that “Where the parties agree or where required by law, dispute resolution by Fair Work Australia … will be binding.” I infer from this provision that subject to the agreement of the parties, there is no barrier to the FWC exercising arbitral powers.

[4] ARTC manages over 10,000 kilometres of railway tracks in South Australia and other mainland States. It owns and leases various rail corridors and its responsibilities include selling access to railway operators, providing railway operators with access routes and providing network management, including train control. ARTC took over the train control function from the Australian National Railways Commission (ANRC) in 1998. Employees classified as Network Controllers coordinate the safe passage of trains through the ARTC’s network. The current dispute relates to the Network Controllers employed at ARTC’s Network Control Centre West (NCCW) located at Mile End.

[5] There are three issues in dispute between the parties - the treatment of public holidays falling within a period of annual leave; the treatment of Accrued Days Off (ADO’s) falling within a period of annual leave; and the rate at which each day of annual leave is deducted from annual leave accruals.

[6] The Network Controllers are 7 day a week shift workers, regularly working on public holidays and on weekends. They are entitled to 5 weeks annual leave, which equates to 190 hours. Specific terms and conditions of employment of Network Controllers are set out in section 9 of the 2010 Agreement. Certain terms and conditions in the ‘general’ sections of the 2010 Agreement 2 have direct application and/or build on the provisions set out in section 9, and annual leave is a case in point. This issue is discussed further later in the decision.

[7] Network Controllers are paid an annualised salary known as the Total Remuneration Package (TRP). It is common ground that the genesis of this arrangement is contained in the Australian National Train Controllers (Mainland) Certified Agreement 1995 (the 1995 Agreement) 3 which applied to ANRC and to the classification equivalent of Network Controllers. The parties agree that the TRP currently reflects the types of components included in the 1995 Agreement.4 Section 9.2.2 of the 2010 Agreement is in the following terms:

“ 9.2.2. What is included in my Total Remuneration Package?

Your TRP is an annualised salary that includes Superannuation and any other entitlements referred to in this Agreement, including any shift, weekend and public holiday penalties, on call and overtime, and the first five shifts, additional to ordinary hours, worked in a year required to cover absences except as provided below.”

[8] The ordinary hours of work for Network Controllers are prescribed to “…not exceed 152 hours over 28 days.” 5 It is agreed that over a roster cycle of 28 shifts, a Network Controller will generally work 19 shifts, have 8 days identified as “days off” and 1 day off identified as an ADO. The Network Controllers receive a fortnightly periodic payment based on the annualized TRP and which identifies that the payment is for 76 hours, regardless of the ordinary hours that are worked in that fortnight. The parties are in dispute as to whether the ADO is a paid day off or an unpaid day off. In practice this has only become an issue recently and where an ADO falls within a period of annual leave.

[9] In May 2012 ARTC made modifications to the payroll system and this resulted in changes to the way annual leave was deducted from accruals and changes in the treatment of ADO’s and public holidays falling within a period of annual leave. The RTBU and ASU (collectively referred to as “the Unions”) complain that this has diminished the entitlements of Network Controllers and that ARTC’s practice with respect to public holidays falling within a period of annual leave is in breach of the NES.

[10] The Unions seek an order from the FWC that:

● All Network Controllers will accrue and receive 25 days of annual leave per annum with each day of annual leave being deducted at 7.6 hours;

● Where a public holiday falls within a period of annual leave such public holiday will be paid without deduction from annual leave accruals; and

● Current annual leave accruals of Network Controllers will be re-credited with hours that equate to any deductions from annual leave that have been made for public holidays and any hours deducted in excess of 7.6 hours per day of annual leave.

[11] ARTC contends that the payroll adjustments have brought the processing of annual leave and other payments into line with the 2010 Agreement and further, that it remedies defects in the previous payroll system which resulted in employees working less than the required number of hours per annum and exceeding their annual leave entitlement.

[12] It seeks an order from the FWC that, “On the proper application of the [Agreement] annual leave should be deducted from Network Controllers’ annual leave accrual at the rate of 8 hours per day for days on which Network Controllers would have been rostered to work had it not been for the annual leave, regardless of the day of the week or whether it is a public holiday.”

[13] The Unions and ARTC provided written submissions, supplemented by oral submissions at the conclusion of their respective cases. The Unions led evidence from Mervin Hill, Network Controller and RTBU delegate. 6 Mr Hill commenced employment as an electrician in 1976 and moved into a Train Controller position with ANRC in 1996. He transferred into employment with ARTC when it took over that part of the business in 1998.

[14] ARTC called evidence from Angelo Demertzis, General Manager East West, 7 who has responsibility for NCCW and Justin Fanning, Payroll Services Manager,8 who has responsibility for the integrity and timeliness of payroll transactions. This includes ensuring that entries into the payroll system can be reconciled with annual leave entitlements and working hours requirements.

The Unions’ evidence and submissions

[15] Mr Hill stated that the practice that existed in ANRC, and the practice recognized by ARTC from the time it took over in 1998 to mid-2012 when the payroll system was changed, is a standard 19 day month arrangement. That is, Network Controllers work 8 hours on 19 working days and accumulate .4 hour on each such day, which is carried over to a paid ADO of 7.6 hours.

[16] He stated that each working day and ADO have been recognised as 7.6 ordinary hours and this is reflected in the fact that the Network Controllers are paid 76 hours per fortnight regardless of the whether they take an ADO or not. Until the payroll system changed, Mr Hill stated that payment for annual leave was based on the TRP periodic payment, regardless of whether an ADO fell within the period of annual leave and public holidays and ADO’s were not deducted from annual leave accruals. Each annual leave day was deducted at the rate of 7.6 hours from the annual leave accrual.

[17] Ms Kaye Brown for the RTBU and Mr Andrew Dennard for the ASU, argue that the fact that the rosters distinguish between ADO’s and days off indicates that they are separate concepts. It was submitted that the 12 ADO’s in the annual roster correlates with the fact that ADO’s do not accrue during a period of annual leave and if an ADO is just a day off, as argued by ARTC, then there would be 13 such days, not 12. The Unions contend that the payment of 76 hours per fortnight regardless of whether 80 hours or 72 hours are worked is further proof that a 19 day month accumulation system is in operation.

[18] The Unions noted that the accumulation of an ADO is consistent with the prescribed hours arrangement in the 2010 Agreement, which specifies that ordinary hours of employment will not exceed 152 hours over 28 days.

[19] It was submitted that the recent practice of ARTC to deduct a day of annual leave for each public holidays falling within a period of annual leave constitutes a breach of the NES for annual leave, in particular s. 89(1) of the Act which provides:

“89 Employee not taken to be on paid annual leave at certain times

Public holidays

(1) If the period during which an employee takes paid annual leave includes a day or part-day that is a public holiday in the place where the employee is based for work purposes, the employee is taken not to be on paid annual leave on that public holiday.

Other periods of leave

(2) ...”

[20] The Unions contend that ARTC’s recent practice of not paying wages for a day marked as an ADO in the period of annual leave is a failure to pay for hours worked.

[21] It was submitted that ARTC’s new approach to annual leave deductions, which is based on the hours that would have otherwise been worked, stands in contrast to the concept of the TRP where a periodic payment is based on average ordinary hours over the roster cycle and equal fortnightly payments. ARTC’s approach to the deduction of annual leave hours, together with its refusal to recognise the ADO as a paid day off has resulted in a reduction in benefits for Network Controllers.

[22] Finally, the Unions submitted that the onus lies on ARTC to demonstrate that the practice that existed to May 2012 was inconsistent with the terms of the 2010 Agreement.

ARTC submissions and evidence

[23] Before turning to the evidence led by ARTC, it is convenient to summarise the terms of a memorandum it issued to Network Controllers in November 2012 9 setting out its view on the hours deducted from annual leave accruals for each day of annual leave taken. The memorandum indicates that:

● As seven day a week continuous shift workers, Network Controllers are entitled to 5 weeks annual leave or 190 hours (5 x 38) of annual leave per annum, but this should not be interpreted as an entitlement to 25 days of annual leave.

● Employees work differing total ordinary hours in different fortnightly pay cycles because of the pattern of 19 working days over a 4 week period. The pay averaging system ensures that employees receive a standard 76 hours per fortnight.

● When annual leave is taken, the rostered shift length needs to be deducted from the employee’s balance in line with the shifts otherwise scheduled to be worked as per the roster. This ensures that the deductions from annual leave accruals matches the time absent from work.

● Until recently, payroll was unable to delineate between 8 hour workers (Network Controllers) and those who work a standard 7.6 hour day, Monday to Friday. The system previously defaulted to a 7.6 hour day for all employees and this has resulted in leave for Network Controllers being processed incorrectly. Network Controllers are being debited 7.6 hours rather than 8 hours for each shift that would have otherwise been worked.

● While fortnightly pays will always equate to 76 hours of salary, leave balances can be deducted by more than this depending on the roster.

[24] Mr Demertzis enlarged on the above points, stating that:

● A day that would not normally be rostered for work cannot be debited from annual leave;

● The number of hours of annual leave required to be taken to obtain a given period of annual leave will vary depending on the roster of the particular Network Controller and;

● If each annual leave day is debited 7.6 hours, as the Unions advocate, then over a 4 week period of annual leave covering 19 working days the Network Controller would not be debited the hours they would have otherwise worked.

[25] In relation to public holidays, Mr Demertzis stated that if it is a day off for an Network Controller then it is not a work day and if such a day falls within a period of annual leave it is not paid. I understand that there is no dispute on this issue in relation to days identified as “days off” in the roster. However, Mr Demertzis stated that if the employee would have been required to work the public holiday then it is no different to a normal work day. If such a day falls within the period of annual leave it is therefore debited from the annual leave accruals as any other work day.

[26] Mr Demertzis also referred to an analysis of the roster cycle of 4 Network Controllers over the 2012-13 financial year, attached as Annexure AD-2 to his witness statement. I am unable to reconcile the data in Annexure AD-2 against the source data in Annexure AD-1 as to days worked and taken as annual leave in the particular roster cycles of the respective employees. 10 For this reason I have not taken this document into account.

[27] Mr Fanning stated that Network Controllers receive the same fortnightly instalment of the TRP regardless of the days worked, paid leave taken or whether an ADO or public holiday falls within the pay period or not. Mr Fanning identified errors in the payroll system prior to May 2012, essentially that the hours taken as annual leave did not equate to the hours that would have been worked over the relevant roster period. He noted that where a public holiday fell within a period of annual leave, many Network Controllers previously received payment for this day but there was no deduction from annual leave. Mr Fanning regarded this as the unwarranted provision of extra annual leave because the Network Controllers received the benefit of public holidays in the TRP.

[28] Mr Fanning referred to the TRP provisions in the 1995 Agreement and specifically to Appendix A, which showed that there was a component in the TRP to compensate for all public holidays whether work was required to be performed on those days or not.

[29] Mr Farr, for ARTC, submitted that the Unions’ argument that .4 hour is accrued on each working day of 8 hours is incorrect and that no entitlement to an accrued day off exists under the 2010 Agreement. It was submitted that while an ADO may be recorded in the rosters prepared by the Roster Committee, there is no requirement to work beyond the 19th day in a standard roster (excluding overtime and cover days).

[30] It was submitted that ARTC’s approach to annual leave deductions is consistent with the approach adopted by the FWC in AMWU v George Weston Foods Limited (George Weston). 11 Mr Farr also referred to The Australian Workers’ Union v BP Refinery (Bulwer Island) Pty Ltd12 (BP Refinery) in support of ARTC’s position. These decisions are discussed shortly.

[31] Mr Farr addressed the various provisions of the NES relevant to this issue. He acknowledged the provisions of s.89(1) of the Act, but submitted that this provision did not prohibit ARTC’s current practice of deducting payment for public holidays from annual leave accruals. It was submitted that s.89(1) was intended to protect Monday to Friday workers who, but for the annual leave, would have had the public holiday as a paid day off and as such is to be read in conjunction with s.116 of the Act. Section 116 states that:

“116 Payment for absence on public holiday

If, in accordance with this Division, an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay forthe employee’s ordinary hours of work on the day or part-day.

Note: If the employee does not have ordinary hours of work on the public holiday, the employee is not entitled to payment under this section. For example, the employee is not entitled to payment if the employee is a casual employee who is not rostered on for the public holiday, or is a part-time employee whose part-time hours do not include the day of the week on which the public holiday occurs.”

[32] It was submitted that Network Controllers are in a different category because the payment for public holidays has been factored into the TRP, thus ensuring that Network Controllers receive the full pay for public holidays whether they are rostered to work on the public holiday or not.

[33] Mr Farr indicated that if annual leave is not deducted for public holidays, there is an inability to meet the annual hours requirement of 1982.779 hours (an average of 13.0446 cycles of 152 ordinary hours). Secondly, he submitted that the system was inequitable since some Network Controllers receive additional annual leave because their leave coincides with public holidays, while others do not get this benefit. It was submitted that such an outcome would not have been contemplated by s.89(1) of the Act.

[34] Mr Farr also referred to s.55 of the Act dealing with the interaction between the NES and an enterprise agreement. He referred to ss.55(4) - (6) dealing with ancillary and supplementary terms and submitted that the nature of the annualised salary for Network Controllers is such that the annual leave system now operating at ARTC has the same or substantially the same effect as the NES. Mr Farr argued that if the public holiday would have otherwise been a working day and if it is not regarded as an annual leave day, then the employee should attend for work.

Consideration

The arrangement of ordinary hours

[35] Section 2.5 of the 2010 Agreement concerns hours of work and relevantly provides as follows:

“2.5.1. What are my ordinary hours of work?

If you are a full-time employee, your ordinary hours of work will be 38 hours per week.

If you are entitled to a Rostered Day Off under clause 2.5.2 of this Agreement your ordinary hours of work are 38 hours per week, averaged over four weeks duration.

The span of ordinary hours is from 0600 to 1800 Monday to Friday.

Your hours of work will be continuous on anyone day, excluding your meal breaks.

2.5.2. Am I entitled to rostered days off?

If your total remuneration package is less than $68,214 (as adjusted by CPI for each year of the agreement) you may work your ordinary hours so that you get one rostered day off (RDO) every four weeks, on a day subject to agreement with your manager.

...”

[36] It is agreed that the TRP of Network Controllers exceeds the amount specified in 2.5.2 of the 2010 Agreement, thereby excluding them from the entitlement to an RDO. An “RDO” is defined as “a non-working day derived through sufficient accumulation of ordinary work time …”. 13

[37] However, I consider that the entirety of section 2.5 has no application to Network Controllers, since this section is limited in its scope to employees whose span of ordinary hours is 0600 to 1800 Monday to Friday. As such, the hours of work provision for Network Controllers, as set out in section 9.3.1 of the 2010 Agreement, stands alone. This provision states only that total ordinary hours of employment will not exceed 152 hours over 28 days. There is no restriction or guidance as to how such hours will be arranged within the 28 days and the position of the Unions and of ARTC as to the existing hours arrangement can both be accommodated within this provision.

[38] I have found the evidence of Mr Hill to be persuasive that the ADO is a paid day off. His evidence as to the genesis of the arrangement and the custom and practice that has operated for many years at ARTC is supported by other documentary evidence or, in the case of the treatment of ADO’s falling within a period of annual leave, is not challenged. I note that the 1995 Agreement provided that the ADO was a paid day off. 14

[39] Both Mr Fanning and Mr Demertzis acknowledged that they were not in a position to comment on the custom and practice that had developed at ARTC prior to their employment. Mr Demertzis’ evidence that ‘ADO’ was an historical term used to describe the 20th day in a roster cycle is not supported by any other evidence and is somewhat at odds with the operation of a 28 day roster cycle. There is no evidence to suggest that the hours arrangement under the 1995 Agreement was at any stage modified by ARTC through enterprise bargaining agreements, negotiations or policy pronouncement.

[40] I conclude that the ADO is a paid day off to the value of 7.6 hours, which is accrued by the Network Controllers working an 8 hour shift on 19 shifts in the 28 day cycle, and being paid 7.6 hours for each shift worked (excluding overtime). Having so determined, there is no basis on which an ADO falling within a period of annual leave should be debited from annual leave accruals. To do so is to deprive the employees of payment for time already worked.

[41] The fact that the periodic payment of the TRP is made for a nominal period of 76 hours per fortnight is a separate issue and has not assumed any weight in my conclusion regarding the nature of the ADO. It stands to reason that the periodic payment would be based on the average ordinary hours of 76 per fortnight.

The treatment of public holidays falling within a period of annual leave

[42] The terms of the 2010 Agreement do not address the treatment of public holidays falling in a period of annual leave. The evidence of all witnesses as to the custom and practice in this regard is that public holidays, which but for the annual leave would have been worked, were not debited against annual leave accruals. 15 ARTC submitted that this was the result of the manner in which Network Controllers applied for annual leave, coupled with inadequacies in the payroll system.

[43] An analysis of the public holiday component of the TRP under the 1995 Agreement indicates that it includes (i) a component for public holidays worked that reflected the remuneration that otherwise would have been earned for working on those public holidays and (ii) a component for public holidays not worked, which reflected the ordinary rate of pay on those days. 16 The number of days identified as public holidays worked or not worked was calculated by reference to the standard roster that was in operation at the time, as was the calculation of the penalty payments, overtime and other components that fed into the TRP. The total cost for all Network Controllers was divided by the number of such employees to calculate the rate of the TRP.

[44] However, I do not consider that an analysis of the TRP calculation under either the 1995 or 2010 Agreements sheds any light on the proper treatment of public holidays falling within a period of annual leave. Both Agreements are silent on the issue. In addition, the legislative context has changed since 1995 and the minimum standards in respect to a range of conditions including annual leave and public holidays are now regulated by the NES.

[45] A public holiday is a leisure day for which the employee does not suffer a reduction in pay if they are not required to work (on a day that would have otherwise been a working day for the employee). 17 If an employee is required to work on a public holiday, it is common for a penalty rate to apply in recognition of the fact that the employee has foregone the social amenity of a paid day off.

The interaction between the NES and the 2010 Agreement

[46] The relevant sections of the Act dealing with the interaction between the NES and an enterprise agreement are set out in ss.55 and 56 of the Act in the following terms:

“55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).

56 Terms of a modern award or enterprise agreement contravening section 55 have no effect

A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.”

[47] ARTC argue that the public holidays’ component of the TRP provides a benefit to the Network Controllers that has the same or substantially the same effect as the provisions of the NES and its approach is therefore sanctioned in accordance with s.55(5) of the Act. In my view, this submission misconceives the effect of this subsection. The terms of the NES are not to be regarded as a minimum against which a global comparison of the relevant benefits of the 2010 Agreement are measured. Section 55(4) of the Act is clear that the terms of an enterprise agreement can include terms which are “… ancillary or incidental to the operation of an entitlement of an employee under the [NES]” or which supplement the NES “… but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the [NES]”.

[48] My view is reinforced by s.61(1) of the Act, which provides that the minimum standards cannot be displaced, even if the terms of an enterprise agreement include terms that have the same or substantially the same effect as the NES.

[49] Division 6 of Part 2-2 of the Act sets out the minimum standards for annual leave and addresses the quantum of entitlement (s.87); when annual leave can be taken (s.88); when an employee is not taken to be on annual leave (s.89); payment for annual leave (s.90), transfer of annual leave between employers (s.91) and cashing out of annual leave (ss.92, 93 and 94).

[50] Section.89(1) of the Act prohibits an employer from deducting a public holiday from the employee’s annual leave entitlement. Regardless of the component that is included in the TRP for public holidays or the roster that would have otherwise been worked but for the annual leave, s.89(1) is a specific minimum entitlement which cannot be offset against other benefits. These other benefits must be measured against the relevant provision of the NES and for example, payment of the TRP rather than the base rate of pay for annual leave is a benefit of the 2010 Agreement that supplements s.90 of the Act.

[51] There is no basis on which to read s.89(1) as not applying to 7 day shift workers. To attribute this meaning to the subsection would require adding a restriction that the words of the provision do not bear. There is no connection between s.89(1) and s.116 of the Act in the way that ARTC contends: the latter appearing in a different division of Part 2-2 of the Act from the former and concerning a different subsection. Section 116 is concerned with payment for a public holiday which does not fall within a period of annual leave, while s.89 of the Act concerns days which cannot be deducted from an employee’s annual leave entitlement. Public holidays which would not otherwise be worked in the relevant roster period are not days for which annual leave should be sought.

[52] The recognition of penalty payments in the TRP for public holidays worked and the fact that Network Controllers receive the same rate of pay for working on a public holiday as for any other working day, does not render the public holiday the same as a working day. Section 114 of the Act provides that an employee is entitled to be absent from employment on a day or part-day that is a public holiday. Section 114(2) of the Act enables an employer to request that an employee work on a public holiday if the request is reasonable, and the categorization of a reasonable request or otherwise is to take into account a range of factors as set out in s.114(4) of the Act. Having regard to those factors it is highly unlikely that the working of a public holiday would be an unreasonable request in the circumstances considered here. Nonetheless, s.114 of the Act underlines that there is a distinction in the treatment of a public holiday and an ordinary working day.

The rate at which annual leave days are deducted

[53] Both parties agree that the entitlement or accrual of annual leave per annum must equate to 190 hours (5 weeks at 38 hours per week) but are in conflict on whether the deduction should be based on the hours otherwise worked (ARTC) or on the average ordinary hours per day (Unions). In both cases the employees will receive the same payment for annual leave per annum but the period of annual leave will not generally equate to 5 calendar weeks under ARTC’s approach.

[54] The relevant provisions of the 2010 Agreement dealing with annual leave are to be found in clauses 4.1 and 9.4.1 of the 2010 Agreement, with the latter clause applying specifically to Network Controllers.

“4.1.1. How much annual leave am I entitled to?

If you are a full-time Employee, for each 12 months continuous qualifying service, you are entitled to 152 hours (four weeks) annual leave per year.

4.1.2. If I work weekends, do I get additional annual leave?

If you are rostered to work an average of two weekends (Saturday and Sunday) out of four over a three month period you will receive an additional 1.25 days paid annual leave to a maximum of one additional week per 12 month period.

4.1.3. What will I be paid when I am on annual leave?

You will be paid your Total Remuneration Package while on annual leave.

...

9.4.1. Do I receive additional annual leave?

If you are engaged as a shift worker rostered to work regularly on Sundays and/or public holidays, you are entitled to an additional one week’s annual leave.

If you are engaged to work such shift work for a portion of a year, you will receive additional proportionate to the time worked.”

[55] The absence of any entitlement in section 9 to payment for, or the quantum of annual leave for Network Controllers (other than the additional weeks leave) indicates that it is to be read in conjunction with the relevant provisions of clause 4.1. Network Controllers receive the TRP for a period of annual leave and I infer that this flows from the provisions in clause 4.1.3. The 2010 Agreement is silent on the rate at which a day of annual leave is to be deducted.

[56] As noted earlier, ARTC referred to the decisions in George Weston and BP Refinery in support of its position that annual leave deductions should equate to the ordinary hours that would have otherwise been worked. Some caution needs to be exercised in the extent to which these decisions can be regarded as relevant to the present case.

[57] The focus of BP Refinery was on the argument of the Australian Workers Union (AWU) that (i) the NES required 10 days personal leave to be granted and (ii) as the employees worked 12 hour shifts this meant that employees could access up to 120 hours of personal leave. The relevant enterprise agreement, the BP Refinery (Bulwer Island) Pty Ltd Operations Employees Agreement 2008, provided that the employees were entitled to 96 hours of personal leave and prescribed that the accrued entitlement to personal leave would be “… reduced by an amount equivalent to the ordinary hours the employee would have worked had they not been on sick leave”. 18 As such, the issue in BP Refinery was the total entitlement to personal leave rather than the rate of deduction.

[58] George Weston is more on point in my view. The relevant employees are continuous shift workers and the dispute concerned the rate at which annual leave is deducted from the accrued annual leave balance. It was agreed that the employees are entitled to 190 hours of annual leave per annum. The relevant employees work ordinary hours of 10.857 per shift. The employer deducts annual leave at the rate of 10.857 hours per shift taken, although the relevant agreement, the Tip Top Bakeries (NSW) Maintenance Agreement 2012 19 (“the Tip Top Agreement”) is silent on this point.

[59] The Tip Top Agreement provides that where an employee takes a period of annual leave, payment will equate to the amount the employee would have received if they had worked. As Commissioner Cargill noted, the parties were in dispute as to the impact of this provision on the rate of deduction of annual leave.

[60] The AMWU argued that the relevant employees are entitled to 5 weeks of annual leave at 38 hours per week. It relied upon the change in the quantum of the entitlement of annual leave from 190 hours under the Workplace Relations Act 1996, to 5 weeks under the NES. The employer argued that the rate of deduction for each day of annual leave should equate to the hours that would have been worked but for the absence on leave.

[61] Commissioner Cargill accepted the employer’s position and held that while annual leave accrues on the basis of ordinary hours it is deducted based on the actual hours that would have been worked over the relevant period. The AMWU position was rejected on the basis that it would result in an increased cost burden on the employer, because employees would receive payment for 10.857 hours per shift of annual leave under the terms of the enterprise agreement but only have 7.6 hours deducted from annual leave accruals.

[62] The present case can be distinguished from George Weston by the custom and practice that has operated over a number of years and through successive enterprise agreements at ARTC, where annual leave has been deducted at the rate of 7.6 hours per day. In addition, and unlike the circumstances in George Weston, the periodic fortnightly payment of Network Controllers is based on 76 hours which does not necessarily reflect the hours actually worked over the fortnight. As such, the cost implications for the employer, which were persuasive in George Weston, do not apply.

[63] I am satisfied that the system supported by the Unions and which operated at ARTC before the modifications to the payroll system, does not contravene the NES. In accordance with the decisions cited above, the method of deduction from annual leave accruals as advanced by ARTC may also be consistent with the NES, although as discussed earlier, ARTC’s approach requires a common understanding in relation to ADO’s.

Conclusion

[64] The dispute has arisen in the context of modifications to the payroll system at ARTC and the parameters introduced into the system concerning the treatment of public holidays, ADO’s and the quantum of annual leave deductions.

[65] I accept that ARTC had legitimate concerns with the operation of the previous payroll system. However, it was attuned to the roster and to the custom and practice in the workplace. The modifications made to the payroll system failed to have regard to the disconnect that would be created between the payroll system and roster and between the payroll system and the practices that had operated for many years. There are undoubtedly issues with the roster, such as the fact that annual leave days and ADO’s are always recorded as falling on Monday to Friday which is at odds with the working roster for 7 day shift workers. I also accept that there have been inconsistencies in the way that Network Controllers have applied for a given period of leave, and I have previously identified an apparent conflict with a system of ADO’s based on 12 working cycles of 28 days in a system in which the annual leave is of 5 weeks duration.

[66] ARTC placed significant reliance on the proposition that the Unions’ interpretation of the operation of the disputed issues resulted in workers not meeting the required ordinary hours per annum and potentially exceeding the 190 hours of annual leave. I am not satisfied that this is the case if the ADO is recognized as 7.6 ordinary working hours, but the calculation of ADO’s in the context of workers receiving 5 weeks annual leave may be an issue in this regard. The renegotiation of the 2010 Agreement provides an opportunity for discussions around this and other related issues.

[67] The custom and practice that has operated at ARTC and its predecessor is of substantial weight in this case because of the length of time that it has been in operation and the legitimate expectation of employees as to how the system would continue to operate over the life of the Agreement. At the least, a proposed reduction in entitlements as has occurred in this case is a significant matter that should have been the subject of discussion in accordance with the Consultation provisions in sections 7.1 and 7.2 of the Agreement.

[68] In accordance with the reasoning set out in this decision, I decline to make the order sought by ARTC. The orders sought by the Union are issued with this decision. The treatment of ADO’s falling within a period of annual leave and the amount of deduction from annual leave accruals for each day of annual leave are based on the circumstances as presented in the case and/or the terms of the 2010 Agreement. The decision and orders in this respect are not intended to present a barrier to the negotiation of alternative arrangements.

DEPUTY PRESIDENT

Appearances:

Ms K Brown appeared on behalf of Australian Rail, Tram and Bus Industry Union

Mr A Dennard appeared on behalf of Australian Services Union SA & NT Branch

Mr N Farr with Ms J McAuliffe appeared on behalf of Australian Rail Track Corporation Ltd

 1   PR502021, SDP Hamberger, 23 September 2010

 2   Sections 1 - 8

 3   M3564, approved 13 July 1995

 4   At pn 374

 5   Section 9.3.1 of the 2010 Agreement

 6   Ex RTBU 1

 7   Ex ARTC 1

 8   Ex ARTC 2

 9   Ex RTBU 1, Attachment MH-4

 10   For example, it appears from AD-1 that Mr Meegan worked 20 shifts in cycle 2, where AD-2 identifies 19 shifts; that he worked 16 shifts and took 4 days annual leave in cycle 4, where AD-2 identifies a combined total of 18 shifts. Similarly AD-1 indicates that Mr Artho worked 17 shifts plus took 4 shifts of annual leave where AD-2 identifies a combined total of 20 shifts.

 11  Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v George Weston Foods Limited T/As Tip Top Bakeries[2013] FWC 1240

 12   [2012] FWA 1197

 13   Clause 1.1.3 of the 2010 Agreement

 14   Clause 12 of the 1995 Agreement; Hill at pn 48

 15   Ex ARTC 1 annexure AD-2

 16   Appendix A of the 1995 Agreement

 17   Section 116 of the Act.

 18   Sub-clauses 30.1 and 30.3.

 19   [2012] FWAA 4488

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