Australian Rail, Tram and Bus Industry Union and Australian Federated Union of Locomotive Employees v QR Limited T/A QR National

[2012] FWA 3730

[2012] FWA 3730

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Rail, Tram and Bus Industry Union and Australian Federated Union of Locomotive Employees
v
QR Limited T/A QR National
(C2012/18, C2012/2174)

Rail industry
COMMISSIONER LEE	MELBOURNE, 11 MAY 2012

Alleged dispute concerning clauses 17.5 and 19.4 concerning deduction of annual and personal leave entitlements.

[1] On 9 January 2012, the Australian Rail, Tram and Bus Industry Union (ARTBIU) and the Australian Federated Union of Locomotive Employees (AFULE), (the Unions) made concurrent applications (C2012/18 and C2012/2174) for Fair Work Australia to deal with a dispute with QR Limited T/A QR National (QR National). The applications were lodged pursuant to s.739 of the Fair Work Act 2009 (the Act).

[2] The applications are related to a dispute about the operation of subclause 17.5 and subclause 19.4 of the QR National Traincrew Enterprise Agreement 2010 (the Agreement). Those subclauses deal with the manner in which the employer will deduct leave from an employee’s accrual for annual leave and carers leave respectively.

[3] The relevant clauses of the Agreement in dispute are reproduced as follows:

“17. ANNUAL LEAVE

...

Taking Annual leave

17.5 Hours of annual leave taken, cashed out or donated will be deducted from an

employee’s accrual.

…

19. PERSONAL/CARER’S LEAVE

…

Taking paid personal/carer’s leave

…

19.4 Hours of personal/carer’s leave taken by an employee will be deducted from the employee’s accruals.”

[4] On 23 November 2011, QR National notified Traincrew that it intended to implement changes to the manner in which it deducts annual and carers leave effective from 1 January 2012. The changes according to the notice circulated by QR are:

• “Subclause 17.5 of the Traincrew Agreement will apply for periods of annual leave that are greater than 40 hours but less than one pay period or three consecutive weeks (Mon-Sun). This means that when such periods of annual leave are taken the actual hours taken as leave will be deducted from accruals.



• Subclause 19.4 of the Traincrew Agreement will be applied to carer’s leave i.e. actual hours of the shifts taken as carer’s leave will be deducted from accruals.” 1

[5] The unions argue that the clauses cannot be interpreted in the way advocated by QR National and assert that QR National may not deduct leave in excess of 8 hours per day in any circumstance. 2

Conference and Hearing

[6] A conference was held in Brisbane before me on 1 February 2012 in order to try and resolve the dispute. As the dispute had not been resolved, at the conclusion of the conference the parties agreed that the dispute would be determined by private arbitration by Fair Work Australia in accordance with clause 31 of the Agreement.

[7] The relevant parts of Clause 31 of the Agreement state:

“31.15 Where the dispute pertains to the application or interpretation of this Agreement or an alleged breach of this Agreement and, where the dispute remains unresolved following conciliation FWA is authorised to resolve the dispute by private arbitration.

31.16 To the extent necessary the following powers are conferred upon FWA:

• Making procedural directions as to the time, place and conduct of the conciliation or arbitration



• Directing the parties as to the manner of receiving submissions, including requiring formal submissions



• Hearing oral submissions



• Taking written submissions



• Hearing evidence by oath or affirmation



• Conducting inspections.



• Determine the representation of the parties applying the same criteria as contained in S596 of the Fair Work Act 2009

…

31.18 Where the dispute is subject to private arbitration, the decision of FWA is binding.”

[8] It was agreed between the parties that the questions to be determined were:

• “What is the effect of clause 17.5 in respect of the deduction of annual leave;



• Is QR National entitled to deduct annual leave in accordance with clause 17.5 in circumstances where clause 17.8 and 17.9 do not apply;



• What is the effect of clause 19.4 in respect of the deduction of carer’s leave;



• Is QR National entitled to deduct carer’s leave in accordance with clause 19.4.”

[9] Both the agreement to arbitrate and the questions to be determined were reflected in the Statement and Directions I issued on 3 February 2012. The Statement and Directions outlined a process for written submissions and advised that the 20 and 21 March 2012 would be set aside by me for an attendance hearing at the conclusion of the written submissions process, if requested by any party.

[10] The Unions filed an outline of submissions, Affidavit of Mr Greg Smith (AFULE State Secretary), Affidavit of Mr Peter Allen (Principle Industrial Officer, ARTBIU) and supporting case law on 15 February 2012.

[11] QR National filed an outline of submissions, Affidavit of Mr M Bourke (Employee Relations Manager, Coal Markets and Rollingstock Maintenance) and supporting case law on 29 February 2012.

[12] The Unions filed submissions in reply, further Affidavit of Mr Greg Smith, Affidavit of Ms Melissa Brewer (Industrial Officer, AFULE) and supporting case law on 7 March 2012.

[13] On 12 March 2012, I received a letter from QR National, outside of the directions process contained in my Statement and Directions. I will refer to this letter in greater detail later in this decision.

[14] On 13 March 2012, the Unions, in accordance with the Statement and Directions, requested an attendance hearing. A notice of listing was sent to all parties, advising that a hearing would be held on 20 and 21 March 2012 in Brisbane.

[15] On 16 March 2012, my chambers was contacted by Maurice Blackburn, now acting for the Unions, who advised that the Unions now requested the matter be dealt with on the papers. QR National objected to the hearing being cancelled on the basis that legal representation had already been briefed for the matter. After further correspondence with both parties, I advised that a hearing would proceed before me in Brisbane on 21 March 2012.

[16] At the hearing on 21 March 2012, the Unions were represented by Ms Hartigan of Counsel. QR National was represented by Mr Williams of Minter Ellison Lawyers.

Jurisdiction

[17] QR National, in their outline of submissions, argued under the heading “The powers available to FWA in the arbitration”, that the discretion open to Fair Work Australia is constrained. This constraint was summarised by QR National as follows:

“Much of the union submission fails to address the point of establishing and correcting any lack of clarity arising from s17.5. It is not good enough that the unions submit that they think 17.5 is unclear. It is the Commissioner that must form that view before any powers under the Disputes Procedure can be exercised.” 3

[18] The constraint was referred to by QR National as a threshold test. QR National explained as follows;

“It is well settled that the rules of interpretation of an EA are such that before FWA can do anything in this matter FWA must be satisfied that the meaning of the text of subclause 17.5 is not clear or that the effect of the interaction between subclause 17.5 and subclause 17.8 and/or 17.9 is not clear. This is a threshold test which must be met.” 4

[19] At the hearing on 21 March 2012, Mr. Williams for QR National submitted that Fair Work Australia has jurisdiction to answer the questions that were outlined in the Statement and Directions. However QR National submitted that in doing so, Fair Work Australia was not given an unfettered discretion and that the task before me was to interpret the agreement, not to change it. 5

[20] The Unions views of the powers of Fair Work Australia to arbitrate in this matter were clearly set out in the Unions Reply Submissions set out below;

“Powers of the tribunal to arbitrate the matter

The combined unions state that Fair Work Australia is able to hear and determine this arbitration in accordance with clause 31.15 of the QR Limited Traincrew Enterprise Agreement 2010 (the ‘2010 Agreement’) and section 739 of the Fair Work Act 2009.

Clause 31.15 of the 2010 Agreement states:

31.15 Where the dispute pertains to the application or interpretation of this Agreement or an alleged breach of this Agreement and, where the dispute remains unresolved following conciliation FWA is authorised to resolve the dispute by private arbitration.

At a conciliation conference before Commissioner Lee of Fair Work Australia of 01 February 2012, the questions for arbitration arising out of the dispute were determined as follows:

a. What is the effect of clause 17.5 in respect of the deduction of annual leave?

b. Is QRN entitled to deduct annual leave in accordance with clause 17.5 in circumstances where clauses 17.8 and 17.9 do not apply?

c. What is the effect of clause 19.4 in respect of the deduction of annual leave?

d. Is QRN entitled to deduct carer’s leave in accordance with clause 19.4?

The agreed questions were then outlined in ‘Statement and Directions’ issued to the parties by Commissioner Lee of Fair Work Australia on 03 February 2012.

The combined unions refute the Respondent’s contention that a ‘threshold test’ must be met in order for Fair Work Australia to hear and determine an agreed set of questions in a private arbitration under a dispute settlement procedure in an enterprise agreement.

The power of Fair Work Australia to deal with a dispute is only fettered by 739 (2) of the Act:

739 (2) FWA must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to FWA dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises FWA to deal with the matter.

Moreover, section 739 (4) of the Fair Work Act 2009 expressly provides that Fair Work Australia has the power to deal with a dispute by private arbitration if the parties have agreed to allow it to do so:

739(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.

The combined unions submit that the parties have agreed to construe this arbitration as a private arbitration to determine the agreed questions;

In dealing with the dispute, the tribunal must not make a decision that is inconsistent with the Act, or the Agreement, as prescribed by s739 (5) of the Act.

It is for the Tribunal to determine the relevant weight of material provided to support the parties’ submissions as to the correct determination of the agreed questions.

The Respondent has not made out a sustainable objection to the jurisdiction of Fair Work Australia’s power to hear and determine this private arbitration.” 6

[21] I agree with Unions submissions regarding Fair Work Australia’s jurisdiction in this matter. After hearing the submissions of Mr. Williams, I am satisfied that the matters raised by QR National in their outline of submissions are a reference to the need to correctly apply the law when determining the matter. I of course agree that the law needs to be correctly applied.

[22] It is clear that Fair Work Australia has the power to determine the answers to the questions as posed through private arbitration in accordance with clause 31.15 of the Agreement. Further, the decision will be binding on the parties pursuant to clause 31.18 of the Agreement.

The law to be applied

[23] Counsel for both parties have referred me to a number of relevant authorities for the source of legal principles to apply in the construction of agreements.

[24] The principles that apply to the interpretation of industrial instruments have been well established.

[25] The Unions’ drew my attention to the decision of the High Court of Australia in Project Blue Sky Inc & Others v Australian Broadcasting Authority 7, in which it was stated that:

“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole.”” [Footnotes removed]. 8

[26] QR National drew my attention to the decision of the High Court of Australia in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue 9 in which it was stated that:

“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of the legislation us the surest guide to the legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.”[Footnotes removed]. 10

[27] The main principles governing the construction of industrial agreements are well set out and discussed in the 2008 decision of Vice President Lawler in Watson & Ors v ACT Department of Disability Housing and Community Services. 11

[28] The consideration of the relevant principles was summarised by His Honour as follows:

“In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”[Footnotes removed] 12

[29] I will apply these principles as relevant to my consideration and determination of this dispute.

The evidence.

[30] A great deal of the evidence in this matter, particularly so far as it relates to the history and context of the negotiations for the Agreement, is not contested. I have considered all of the evidence presented but will primarily deal in this decision with those aspects of the evidence that are relevant to my determination.

[31] I do need to make clear the approach I have taken to the letter sent by QR National on 12 March 2012. This letter was described in the forwarding email as a “response to the Unions outline in reply”. Ms. Hartigan, counsel for the Unions, submitted at the hearing of 21 March 2012 that I should not have regard to the substantive arguments raised in that letter and that I should instead rely on the submissions of QR National that were made at the hearing. I agree with Ms. Hartigan on this point. The letter of 12 March 2012 was not in accordance with the Directions that I issued on 3 February 2012 and should not have been sent. It is an attempt to have another bite of the cherry as it were. Accordingly I have disregarded the letter and its contents.

The Agreement negotiations.

[32] The Queensland Government made a decision in June 2009 to privatise a portion of Queensland Rail. This lead to a consideration by the unions representing employees affected by the privatisation to consider how to maintain terms and conditions of employment for those employees. Mr. Smith in his Affidavit stated that initially the Queensland Government’s view “...was that there was no time to renegotiate the agreements but that by the end of May 2010 an agreement had been made between the Queensland government and the Rail Unions to enter into a bargaining process to negotiate enterprise agreements”. 13 It was also the view of Mr. Smith that the “climate of those negotiations was one of “urgency”14.

[33] It is not contested that commitments were made by the Queensland Government that reduction in entitlements would not occur as a result of the making of the new enterprise agreements.

[34] Against that background, the Unions submit that the parties involved in the negotiations understood the purpose of the negotiations was to “roll over” existing GOC/Queensland Rail Agreements, and associated entitlements while “modernising” the agreements in accordance with the Act. 15

[35] On 29 July 2010, QR National circulated a copy of a document titled, “Core Conditions-summary of the provisions in proposed agreements”. 16 The document is set out as a table comparing various core conditions, including annual leave, with the entitlement in the then current agreements and the proposed enterprise agreements. There is a further heading that lists what the changes are from the current to the proposed agreement. In respect of annual leave and cashing out of annual leave it states, “No change to entitlements”. It also includes the words, “changes from expression of accrual from weeks to hours”. There is no reference to carer’s leave in the document.

[36] The carer’s leave provision is a new provision as the entitlement to carer’s leave as such did not exist in the previous agreement. Mr. Williams for QR National submitted it was a new benefit. 17 Therefore there is no basis to consider whether or not the entitlement represents a reduction from any previous entitlement.

[37] It is apparent that there was no intent by either party to reduce entitlements in the making of the Agreement. Mr. Peter Allen attached to his affidavit his notes of a meeting of the union, QR National and the Queensland Government held on 2 July 2010. These notes record, “Statement made that there is no intention to change conditions or arrangements as a result of the redrafting - Agreed by the parties (QR, Govt, Unions)”. 18

[38] A more explicit reference to the negotiation of the clauses in dispute was provided by Mr. Smith who stated in his affidavit the following;

“The discussion subsequently centred on changing the expression of annual leave from weeks to hours. AFULE Industrial Officer, Mel Brewer, asked for the change to instead be expressed in days. There was a brief discussion around that proposal and QR National ultimately did not agree,

I determined that we would not press that proposal as the 200 hours QR National was proposing represented 5 weeks of annual leave at 40 hours per week so there was no change to the entitlement in the 2009 Agreement.” 19

[39] This statement made by Mr. Smith is important as it evidences an understanding that provided employees could access 5 weeks leave, the entitlement would not be diminished.

[40] The position of QR National is that the resulting Agreement does not reflect any diminution in entitlement. Mr. Williams for QR National submitted that, in respect to annual leave, the entitlement was 200 hours and remains 200 hours. 20

[41] There is a great deal of evidence about the negotiations. My summary of the key and relevant evidence follows.

[42] Mr. Bourke in his affidavit indicates that he was involved in negotiations with the Unions about the Agreement. He refers in particular to a meeting on 8 July 2012 attended by various representatives. The other representatives at that particular meeting that have provided evidence in this matter are Mr. Peter Allen and Ms. Brewer.

[43] The relevant evidence of Mr. Bourke is as follows:

“The present sub clauses 17.8 and 17.9 were discussed in the context of the anomaly created by periods of leave falling outside the scope of the 2 clauses. We discussed the removal of 17.8 and 17.9 and the insertion of 17.5.

The union representatives argued strongly for clauses 17.8 and 17.9 to remain in any future enterprise agreement. They did not oppose clause 17.5 being included.” 21

[44] Ms. Brewer in her affidavit recalls attending two meetings at the State Law building, but makes no reference to that meeting in particular nor contradicts the assertions of Mr. Bourke on what was discussed.

[45] Mr. Allen in his affidavit does not make a particular reference to the meeting of 8 July 2010. He does state that he attended high level negotiation meetings with union, government and QR representatives regarding the sale of QR and the consequential treatment of employees. 22 He also states in his affidavit the following:

“I do not recall that during negotiations QRN put forward the intention that clause 17.5 would be used to deduct actual shift length hours from annual leave, or that clause 19.4 would be used to deduct actual shift length hours from carer’s leave.” 23

[46] Mr. Smith’s evidence is that he attended meetings with, among others, QR National Consultant Ken Bacon. He recalls Mr. Bacon suggesting changing wording in the agreement to make it clearer. Following this a discussion ensued about whether or not to make a change and if so in what manner. Mr. Smith states that ‘Following this the discussion on QR Nationals proposed clause 17.5 occurred”. 24

[47] Mr. Smith’s evidence is that at no time did QR National state their intention that the clause was meant to operate such that QR National would be able to deduct more than 8 hours annual leave a day. He further states that he understood what they were proposing related to donating leave. 25 Mr. Smith does not recall any issues relating to carer’s leave being raised at any time during these negotiations.26

[48] The evidence on the negotiations indicates that, at least so far as clause 17.5 was concerned, there was negotiation as to whether to include the provision at all, or perhaps some other variation of the provision. In any case, the form of words that was settled on in clause 17.5 was included in the Agreement after some discussion and consideration. The evidence is that the parties were aware that they were including new words in relation to the deduction for annual leave from that which existed in the previous agreement. On the issue of the wording of clause 19.4 there is no evidence of any particular intent arising from the negotiations.

[49] Overall, the evidence relating to the negotiations of the Agreement is of little assistance in determining what the specific mutual intentions of the parties were when they changed the wording in the manner that they did other than demonstrating a mutual intent to not reduce entitlements.

[50] Mr. Smith maintains that he understood the intent of QR National in inserting 17.5 related to the donation of annual leave. 27 I do not accept that proposition. The clause itself refers to leave “...taken, cashed out or donated”. It does not exclusively refer to donating leave. Further, clauses 17.15-17.18 deal exclusively with donating annual leave. This is inconsistent with the notion that clause 17.5 was meant to deal only with the donation of leave.

[51] As discussed above, Mr. Allen has no recollection during negotiations of QR National putting forward the intention that clause 17.5 would be used to deduct actual shift length hours from annual leave, or that clause 19.4 would be used to deduct actual shift length hours for carer’s leave. 28 Mr. Allen had recorded in meeting notes a shared intent to not change conditions or arrangements as a result of the redrafting. However, this does not evidence an intention to apply the words in the disputed clauses in a particular way.

[52] The evidence of Mr. Bourke is that the insertion of 17.5 was discussed in the context of the anomaly created by periods of leave falling outside the scope of clauses 17.8 and 17.9. However, his evidence does not provide any explicit indication as to how the clause would be applied.

[53] In short, the evidence of the negotiation process, so far as it is relevant to the clauses in dispute, does not provide a clear indication of a particular intent to apply the disputed clauses in a particular manner. The evidence of negotiations does not assist in resolving the ambiguity that the Unions ask me to find exists. Nor does it provide a basis to establish the existence of ambiguity in the clauses in dispute.

The application to vary the agreement

[54] In late 2011, QR National sought to vary the Agreement by proposing to insert a new Appendix to the Agreement to apply to Coal Traincrew employees only. The intent was that the Appendix would prevail over an inconsistent provision in the main agreement. The proposed variation dealt with a range of matters including hours of work, start and finish times, overtime and shift rosters. Relevantly, it also included provisions dealing with annual leave and carer’s leave.

[55] The changes sought in QR National’s variation are set out in an exhibit to the Affidavit of Peter Allen which is titled, “Coal Roster Appendix (Proposed) Explanatory Notes”. 29

[56] In relation to carers leave, the document includes the following:

“Personal / Carer’s leave will accrue, be taken and be deducted from accruals in hours (including part of an hour).” 30

[57] In relation to annual leave, the document includes the following:

“Annual Leave will accrue, be taken and be deducted from accruals in hours (including part of an hour).” 31

[58] QR National sought to make the variation in accordance with the provisions in the Act that allow for agreement terms to be varied. This included putting the proposed agreement to a vote of the employees. Exhibit PA11 to the Affidavit of Peter Allen shows that the proposed variation was comprehensively defeated with less than 8% voting in favour of the proposed variation. 32

[59] The Unions submit that it is because the Train Crew employees overwhelmingly rejected the proposed variation that QR National determined on a course of action relating to leave that punished workers for voting against the proposed variation. That punishment was to interpret clauses 17.5 and 19.4 in the manner submitted in this dispute. It is also suggested by the Unions that QR National did not consider that they had the right to deduct leave in the manner they now claim clauses 17.5 and 19.4 allow them to and that was a motivator for the proposed variation. 33

[60] Against this QR National submit that they were in fact trying to get all leave to be dealt with in the same manner as clause 17.5 and do away with clauses 17.8 and 17.9. According to QR National, it couldn’t be said against them that it had some understanding that it had to get a variation to the agreement to do what it’s trying to do now. Rather, it wanted to apply 17.5 across the board. 34

[61] It is also submitted by QR National that they have always maintained they had the right to deduct leave in the manner that they now seek to implement under 17.5 and 19.4 but that they had waited to attempt to gain the comprehensive variation outlined in the proposed Coal Roster Appendix. Having failed in that endeavour, they have sought to implement their interpretation on clause 17.5 as it stands. 35 This explanation for failing to attempt to implement their interpretation of the clauses until now is also a basis for the QR National rejecting the Unions argument that they had acquiesced to custom and practice.

[62] I accept the submissions of QR National on this point. The variation proposal dealt with far more than the interpretation of clause 17.5. If the proposed variation dealt with annual leave and carer’s leave exclusively, there may be more to the Unions argument on this point. There is no evidence that QR National were pursuing this course of action because they lacked certainty as to how clause 17.5 was applied. In so far as the variation dealt with the manner of deductions from leave accruals, it is consistent with the wording in the clauses in dispute.

[63] The proposed variation was opposed vigorously by the Unions and defeated. The fact that the variation was sought and defeated does not provide any basis for determining the appropriate construction of the clauses in dispute. There is no doubt that there was a custom and practice pertaining to the 2009 agreement, but the clauses in dispute were not in the previous agreement. The clauses in dispute are new in terms of the history of bargaining at QR National. The failed attempt to vary the agreement does not provide a basis for preferring the Unions view on construction of the clauses in dispute.

The Potential to reduce entitlements below the NES

[64] The Unions submit that QR National’s proposal to deduct shift length hours from accruals for leave taken in periods that fall outside the scope of clause 17.8 and 17.9 through clause 17.5 and 19.4 has the capacity to reduce employees leave entitlements to below the National Employment Standards (NES) as contained in the Act. QR National refute the claim that their construction of the clauses in dispute will have that effect.

[65] It is not disputed that the QR National train crew are deemed to be shift workers for the purposes of the NES. The NES provides at section 87 of the Act that shift workers are entitled to 5 weeks of paid annual leave for each year of service.

[66] The Agreement provides at clause 64.1 that the ordinary hours of work for a full time employee are 2080 per year (1 July to 30 June). This comprises 1786 hours based on an average 38 hour week concept, plus 94 additional reasonable hours and 200 hours of annual leave.

[67] Clause 64.5 of the Agreement states that all days will be equal for pay, leave and roster purposes, however 1 January, Labour Day (as gazetted), 25 December and nominated leisure periods will attract a penalty payment if worked.

[68] Clause 17.1 states that train crew accrue 200 hours annual leave per year of service. An employee’s entitlement to annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year. The 200 hours of leave equates to 5 weeks annual leave at 8 hours per day or 40 hours per week.

[69] The Unions argue that if QR National make deductions from leave accruals for annual leave periods based on the length of the shifts the employee was rostered to work during the relevant leave period, it has the potential to reduce employee’s entitlements to annual leave below the minimum legal standard as set out in the NES. The analogous argument applies in relation to carer’s leave and its potential to fall below the 10 day minimum if deductions are made in the way QR National seek to make them.

[70] QR National in their submissions refute the suggestion subclause 17.5 is in breach of the NES and submit that Commissioner Asbury was satisfied that the agreement was consistent with the NES when the agreement was approved. It was also submitted by QR National that any finding by Fair Work Australia that extended shift lengths and the arrangement of hours of work are not to be taken into account when applying the annual leave provisions of the NES would be “breaking new ground”. 36

[71] Considerable attention was paid to this matter at the hearing. In order to make clear my own understanding of the contentions on the impact on the NES, I put to both parties a theoretical example of an employee who had taken four weeks of leave during a one year period. In the example, the employee was rostered to work for 50 hours per week in each of those four week periods. If leave was deducted in the manner proposed by QR National, then the employees full yearly entitlement of annual leave, amounting to 200 hours would be deducted. Therefore the employee would not be able to access a fifth week of leave. Ms. Hartigan for the Unions agreed that this scenario correctly demonstrated the Unions concerns. Mr. Williams for QR National agreed that the scenario I outlined could occur but that would not be a breach of the NES. 37

[72] Whether the Unions or QR National are correct on this point is clearly significant in the context of the dispute. In considering this matter, it is necessary to examine the other components of the Agreement as they relate to the taking of leave and how they compare with the NES.

[73] In terms of the payment for annual leave, clause 17.6 of the Agreement provides that for each ordinary hour of annual leave taken, employees will be paid at the full flat rate received by the employee immediately before taking annual leave. The full flat rate is defined in the Agreement as the base rate plus the penalty allowance. In turn, the base rate is defined as the rate of pay payable to an employee for their ordinary hours of work. The NES at s.90 of the Act provides that payment for annual leave is at the base rate for the ordinary hours of work. Therefore, in terms of payment for annual leave taken, the Agreement is consistent with the NES.

[74] In terms of accrual of annual leave, clause 17.1 of the Agreement provides that full time traincrew employees accrue 200 hours annual leave per year of service. An employee’s entitlement to annual leave accrues progressively during a year of service according to the employees ordinary hours of work, and accumulates from year to year. This is virtually identical to the NES provision at s.87(2) of the Act. The significant exception is that the entitlement is expressed as 200 hours as opposed to the 5 weeks specified in the Act.

[75] With respect to carer’s leave the analysis is similar. In terms of payment for personal/carer’s leave, clause 19.20 of the Agreement provides that where an employee takes a period of paid personal/carer’s leave, QR National must pay the employee at the full flat rate received by the employee immediately before taking such leave (subject to the Higher Grade clause). This is consistent with the provisions in the Act.

[76] Clause 19.1 of the Agreement allows employees to accrue personal/carer’s leave at the rate of 80 hours per year. The NES allows for an entitlement of 10 days of paid personal/carer’s leave for each year of service. The NES also allows for an employee’s entitlement to paid personal/carer’s leave to accrue progressively during a year of service according to an employee’s ordinary hours of work and accumulates from year to year. Again, aside from the entitlement being expressed as 80 hours in the Agreement, the entitlement in the Agreement is consistent with the Act.

[77] It follows that if there were no other provisions relating to the payment of and accrual of leave in the Agreement, it would seem that the leave provisions as I have described them would be consistent with the NES. The difficulty arises with respect to the manner in which deductions from accruals are made. The NES themselves do not provide any indication as to how such deductions might be made.

[78] The manner then in which deductions are made is to some extent a matter for the parties to Agreements to determine. However, there is a problem if there is an agreement for deduction of accrued leave that would lead to an outcome where employees were afforded a lower entitlement to leave than that specified in the NES. Where they to do so, it would have no effect pursuant to s.56 of the Act. The question then is do clauses 17.5 and 19.4 of the Agreement have no effect?

[79] It is common between the parties that the scenario I outlined earlier could occur under the interpretation of the clauses favoured by QR National. That is an employee could exhaust their entitlement to annual leave after a period of four weeks leave for which they were rostered on for 50 hours of work in each of the four weeks.

[80] In essence, the position of QR National is that this is not inconsistent with the NES as the employee has enjoyed 200 hours of leave. The position of the Unions is that it is inconsistent with the NES as the employee will only be able to access 4 weeks, and not 5 weeks leave. The analogous argument applies to carer’s leave. Mr. Williams for QR National submitted that an outcome may be that the deductions under clause 19.4 could lead to an employee accessing, in an example he provided only 8 days leave. However, as they been absent from work for 80 hours that they were rostered on and paid for 80 hours, he submitted that this is consistent with the NES.

[81] Mr. Williams for QR National made the following submissions relevant to this point:

“...if somebody has an arrangement whereby they can cram their week, if you like, into three or four days, they get those days anyway. In conceiving the fairness or otherwise of this, you have to take into account the fact that the employees are getting much more time off in terms of days throughout the year than somebody who works a five day week.

So there’s no conflict we say, with any policy consideration and if you read the way that the NES actually deals with the accrual of annual leave and carer’s leave for that matter, and the way it’s paid for, with the guidance of the explanatory memorandum, you get to the position that you can actually have less weeks, in the way we would conceive them, away from work than five and still be fully compliant with the NES ...” 38

[82] I was referred to the Workplace Relations Act1996 (the WR Act) by QR National in support of the proposition they advance in interpreting what is meant by weeks and days in the NES. Mr Williams submitted that the WR Act contained guidance on relating weekly leave entitlements back to hours. Mr. Williams also argued that their interpretation finds support in the Fair Work Bill Explanatory Memorandum, at least so far as it deals with carers leave.

[83] The argument from the Unions was summarised in their reply submissions as follows;

“There is no dimunition from the 200 hours of leave an employee is permitted to accrue per year in the 2010 agreement.

Rather, the Respondent’s proposed deduction regime derogates from the NES’ prescription that an employee accrues 5 weeks of leave per year of service.” 39

[84] I do not agree with the Unions proposition that the deduction regime necessarily derogates from the NES. I do however agree that to conform with the NES, employees are entitled to 5 weeks annual leave and 10 days carer’s leave. I do not agree that to comply with the provisions one must “drive back to hours” as put by QR National.

[85] The approach taken to annual leave in the WR Act is of limited use in interpreting the NES in the current legislation. Paragraph r57 of the Fair Work Bill Explanatory Memorandum states:

“The NES will not change the coverage or quantum of the annual leave entitlement. However, the NES will replace complex formulae in the current Standard about the accrual and crediting of paid annual leave with a simplified system - paid annual leave simply accrues and is taken on the basis of an employee’s ‘ordinary hours of work’. The NES enables modern awards to make provision for additional leave for shift workers and for cashing out of annual leave with appropriate safeguards”.

[86] I do not think that this provision can be relied on define a week as the simple aggregation of ordinary hours which an employee would have otherwise been rostered to perform during a seven day period. In any case, it should be ignored as it is clearly inconsistent with the unambiguous, ordinary meaning of the word ‘week’ and ‘day’ in the Act. The NES refers to weeks and days and is based on accrual and payment for ordinary hours. Employees are entitled to be absent from the workplace on annual leave for a five week period if shiftworkers and be paid their ordinary hours and are entitled to be absent for 10 days on carer’s leave and be paid their ordinary hours. A day is a day and a week is a week and they should be given their ordinary meaning. An employee, even if they are a shift worker that “crams” their ordinary hours into less than five days in a week, is still entitled in accordance with the NES to be able to take a five week holiday or access 10 days of carer’s leave.

[87] As discussed, I was taken to the Fair Work Bill Explanatory Memorandum by Mr. Williams for QR National, at least in respect to carer’s leave. However, the Fair Work Bill Explanatory Memorandum does not deal with deductions from accruals, but rather, rates of accrual and payment. As described above, there is not a dispute about the rate of accrual and payment for leave and the rates of accrual and payment for leave in the agreement are consistent with the NES.

[88] The Fair Work Bill Explanatory Memorandum is of limited value in this dispute as an aid to construction as it only deals with accrual and payment. The Fair Work Bill Explanatory Memorandum does not deal with the method of deduction from leave accruals which are at the root of this particular dispute. In any case, if this is not correct and the Fair Work Bill Explanatory Memorandum provides a basis for “driving back to hours” as QR National asks me to find, its terms are in conflict with the clear words of the statute. As Justice Crennan said recently in a Statute Law Society Paper, “the High Court has found it necessary to say on numerous recent occasions that the search for meaning in a statute must always begin with the text of the relevant provisions”. 40 Her Honour refers to a recent case, Northern Territory v Collins41 which stated;

“Secondary material seeking to explain the words of a statute cannot displace the clear meaning of the text of a provision, not least because such material may confuse what was ‘intended...with the effect of the language which in fact has been employed’”.[footnotes omitted] 42

[89] This approach is consistent, by parity of reasoning, with the views of the AIRC Full Bench in Transport Workers’ Union of Australia v Airport Fuel Services Pty Ltd and others 43,which dealt with a similar issue, although with the 5 week leave provision as an award entitlement rather than a legislated entitlement. The Full Bench stated:

“We think that the 1970 Full Bench arbitrated that with respect to annual leave an employee on seven day shift work is entitled to an actual period of five weeks leave from the place of employment. On the basis of an average 35 hour week, we consider that for the purposes of the administration of the annual leave, that five weeks annual leave is the equivalent of 175 paid hours.

Under a system of varying shift lengths, however, there is no perfect solution to ensuring that employees receive an actual period of 5 weeks leave from their place of employment whilst also ensuring that the employees receive no more or less than 175 hours paid annual leave.” 44

[90] It is also consistent with the approach taken by Commissioner Ryan in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v BCS Infrastructure Support Pty Ltd. 45

[91] In respect of carer’s leave, this approach is consistent with the views of Commissioner Asbury in The Australian Workers’ Union v BP Refinery (Bulwer Island) Pty Ltd 46, where the Commissioner stated:

“There is certainly no express link in the language of the FW Act between the use of the word “day” and the number of hours in a rostered shift - there is no expression in any part of the FW Act which directly, clearly and unambiguously points to an intention by Parliament to equate “day” with the number of ordinary hours in a rostered day of work.” 47

[92] Considering the operation of clause 17.8 and 17.9 and 17.5 in combination and clause 19.4 in respect to carer’s leave, it is possible that the employees will take leave in periods that will lead to the number of hours that are deducted from accruals leading to an outcome of them being able to access less than 5 weeks annual leave or 10 days carers leave. It is also possible that they will take leave in configurations which will not lead to that outcome, depending on the number of hours they were rostered on in the weeks that they took the leave. However, it may also be possible as submitted by Mr. Williams for QR National that an employee could take up to 5 weeks leave but in utilising the provisions in 17.8 and 17.9, have less than 200 hours deducted from their leave accrual. A situation he described as an “overpayment”. 48

[93] If the method of deductions from accruals leads to an outcome where an employee is unable to access 5 weeks annual leave or 10 days carer’s leave for each year of service, this will be in breach of the NES.

Discrimination

[94] In relation to carer’s leave, the Unions submitted that the construction favoured by QR National would have a discriminatory effect on employees, an effect which is inconsistent with section 351 of the Act and sections 7(d), (o) and (p) of the Anti-Discrimination Act 1991 (Qld).

[95] This submission is made on the basis that “QRN acknowledge that paid personal (sick) leave, as allegedly distinct from paid carer’s leave, is deducted at the rate of 8 hours per occasion accessed.” 49 The Unions argue QR Nationals construction of clause 19.4, a “deduction of paid carer’s leave from accrued entitlements at the rate of actual hours which would have been worked in a shift for periods of which carer’s leave is accessed”50 actually “serves to treat employees with family responsibilities less favourably than employees without family responsibilities, if they access their paid personal/carer’s leave for the purposes of attending to family responsibilities...”.51

[96] The key QR National submission on the point was summarised by Mr Williams, who stated:

“If my client has agreed in the past to a more generous sick leave benefit, it can't be discriminative for it then to apply the Australian standard or the NES in relation to carer's leave.”

[97] I agree with the submissions of QR National that there is no basis for the claim that the QR National interpretation of clause 19.4 is discriminatory. Carer’s leave is a new provision within the history of bargaining at QR National and reflects the NES entitlements, subject to my significant reservations about the NES expressed earlier. It is not discriminatory. Moreover, if its effect is to breach the NES, it has no effect.

The construction of clause 17.5 and 19.4

[98] The extrinsic material already considered, to the extent it deals with the history of the negotiations, does not give rise to an ambiguity.

[99] Clause 17.5 and 19.4 are in analogous terms. Clause 17.5 provides that Hours of annual leave taken, cashed out or donated will be deducted from an employee’s accrual. Clause 17.5 has to be read in conjunction with 17.8 and 17.9 In summary, the Unions submit that in order for QR National to be successful in its argument, that the word ‘actual” must be imputed into clauses 17.8 and 17.9. They also submit that “hours” must be construed as 8 hours of leave.

[100] In their submissions, the Unions referred to a number of other clauses in the Agreement that they say give rise to the 8 hours construction. 52 I note in particular that Ms. Hartigan for the Unions submitted that “[i]n order to be compliant with [the NES], the [carer’s leave provision] must envisage that an eight-hour shift day is taken in relation to each of those 10 days.”53

[101] The Unions also say that it is an administrative clause, clause 17.5 “telling you how [annual leave] will be deducted”. 54 I agree that is what the clause is telling the reader, but do not agree that it assists in constructing its meaning beyond that self evident fact.

[102] QR National submit that including the word “actual”, implied or otherwise does not alter the meaning of the subclause. I agree that imputing the word actual does not make any change to what the clause means.

[103] There is no definition of the word “hours” in the glossary to the Agreement. There is however, a definition of “ordinary hours” at clause 64.1 and in the glossary of terms. Clause 17.1 allows the entitlement to annual leave to accrue according to ordinary hours. Clause 17.6 allows for payment at the full flat rate of “each ordinary hour of leave taken”. In the context of the Agreement as a whole, “hours” in clauses 17.5 and 19.4 must mean ordinary hours. Mr. Williams for QR National conceded that it is common ground that we are dealing with ordinary hours. 55

[104] The ordinary hours of work are averaged over the year. The ordinary hours of work in a week will vary according to the particular roster in place from time to time. One can only accrue leave based on ordinary hours. One is paid for each ordinary hour of leave. The deduction of accrual could only relate to ordinary hours and not include overtime hours. Mr Williams for QR National expressed this as follows;

“...what we’re doing is accruing on the basis of ordinary hours and we’re deducting on the basis of ordinary hours which would have been worked had the employee not taken the leave, exactly what the NES, as explained in the explanatory memorandum, drives us to do.” 56

[105] If “hours” in clauses 17.5 and 19.4 are to be read as ordinary hours, does it follow that the clauses are to be interpreted in the manner sought by the Unions? That is, that ordinary hours in fact means 8 hours?

[106] I agree with QR National’s view as to the relationship between the clauses. In their submissions, QR National stated;

“Subclause 17.5 applies to all periods of annual leave and is a general provision.

Subclause 17.8 is a specific provision. It conflicts with 17.5 but will, to the extent of its application, prevail over 17.5. The subclause only applies to annual leave that:

• Is for a period that is at least one complete QRN pay fortnight in duration; or



• Is for a period of at least three consecutive Monday to Sunday weeks in duration.

Subclause 17.9 is a specific provision. It conflicts with 17.5 but does not conflict with 17.8. It will, to the extent of its application, prevail over subclause 17.5. The subclause only applies to periods of annual leave where the absence of the employee is less than one week in duration. For the purposes of the subclause, a week is defined as 40 hours. The absence of the employee is the total of the rostered hours for which the employee is absent from work due to the taking of annual leave.” 57

[107] Clauses 17.8 and 17.9 are specific clauses. They are specific as to the types of leave situations that they cover. They are also specific as to quantity of leave that is to be deducted, 40 hours per week in the case of 17.8 and a maximum of 8 hours deducted for each rostered shift in the case of 17.9.

[108] Clause 17.5 is a general clause and operates when not being prevailed upon by either 17.8 or 17.9. Clause 17.5 conspicuously does not include anything like the limitations on deductions outlined in 17.8 and 17.9. If there was a mutual intent that “hours” in clause 17.5 meant 8 hours, it would have been expressly provided in the same manner as in clause 17.9.

[109] In respect to the carer’s leave provision, I agree with QR National’s construction. 58 As Clause 90 provides a maximum deduction of 8 hours, one would expect if that was the mutual intention that a maximum of 8 hours would be deducted, the same limitation would be found in the clause 19.4.

[110] However, the interaction of the clauses with the obligations of the NES gives rise to a concern. Ms. Hartigan for the Unions submitted that in the context of the operation with the NES, “hours” must mean 8 hours. 59 However, while I share the concern about the interaction of the clause and the NES, this does not overcome the need to apply the proper approach to the construction of the terms of the agreement.

[111] Overall, I do not believe that the word “hours” in clauses 17.5 and 19.4, even assuming it to mean ordinary hours, can be further implied to read as “8 ordinary hours”. I agree with Mr. Williams for QR National that in order to interpret the clause in the way preferred by the Unions, one has to add a lot of words, they are not there and can’t be implied. 60

Conclusion:

[112] Ordinary or well understood words are in general to be accorded their ordinary or usual meaning. 61 The clauses in dispute allow for hours for either annual leave or carers leave taken to be deducted from accruals. It seems clear that the ordinary or usual meaning of hours within the context of this agreement can only mean ordinary hours. However, this does not provide a path to interpreting the Agreement in the manner preferred by the Union. It is not admissible to contradict the language of a contract when it has a plain meaning.62

[113] I have not taken a narrow and pedantic approach to the interpretation and I have sought to establish what was in the minds of the framers of the document through a consideration of the extrinsic material that was submitted in this case. That material does not of itself give rise to an ambiguity in the provision. There is evidence of mutual intent to not reduce entitlements. The evidence, in particular the evidence provided by Mr Smith, supports the finding that provided employees are able to access five weeks annual leave or 10 days carers leave, the mutual intent will have been met.

[114] I agree with QR National that I would be straining the words to suggest that “hours” in the relevant clauses must mean 8 hours. I have considered, as the authorities demand, the context of the Agreement. Within the context of the Agreement, I find hours can only mean ordinary hours, not 8 hours.

[115] However, the interaction of clauses 17.5 and 19.4 with the NES remains a concern. There is a potential for the operation for clause 17.5 and 19.4 to lead to an outcome where employees will have deductions made from their accruals in a manner that will breach the NES entitlement. To the extent that clauses 17.5 and 19.4 lead to an outcome that employees will be able to access less than 5 weeks annual leave or 10 days carers leave then the clause can have no effect pursuant to NES. There is no doubt that were I to interpret the clauses in the manner preferred by the Unions, the problem of the interaction with the NES would not arise.

[116] However, I agree with the submissions of Mr. Williams for QR National that I must find what the Agreement means on its terms, even if that leads to a result which is inconsistent with the NES. As stated by Mr. Williams, the parties would then have to go away and work out what that meant. This may lead to some difficulty in applying the Agreement but I have no option given the construction I find is the correct one for the clauses in dispute.

[117] I find the following in relation to the questions I have been asked to determine:

• What is the effect of clause 17.5 in respect of the deduction of annual leave;

Clause 17.5 of the Agreement provides for the deduction of annual leave (other than in circumstances covered by clause 17.8 and 17.9) from annual leave accruals on the basis of the ordinary hours the employee would have been required to work if the employee had not taken leave.

• Is QR National entitled to deduct annual leave in accordance with clause 17.5 in circumstances where clause 17.8 and 17.9 do not apply;

Where clauses 17.8 and 17.9 do not apply, 17.5 applies.

• What is the effect of clause 19.4 in respect of the deduction of carer’s leave;

Clause 19.4 of the Agreement provides for the deduction of carer’s leave from employee accruals on the basis of the ordinary hours the employee would have been required to work if the employee had not taken leave.

• Is QR National entitled to deduct carer’s leave in accordance with clause 19.4.”

Yes

[118] In accordance with clause 31 of the Agreement I make this decision and note that pursuant to that clause, this decision is binding on the parties.

[119] As noted above, QR National notified train crew that it intended to implement changes to the manner in which it deducts annual and carers leave effective from 1 January 2012.

[120] As the Agreement was in operation prior to that date, I see no barrier to QR National implementing the changes from that date, subject to that implementation being in a manner that does not breach the NES requirements.

COMMISSIONER

Appearances:

K Hartigan of Counsel for the Australian Federated Union of Locomotive Employees and the Australian Rail, Tram and Bus Industry Union

D Williams for QR Limited T/A QR National

Hearing details:

2012
Brisbane
March 21

 1   Joint AFULE and RTBU submissions, filed 15 February 2012, [3]

 2   Ibid [134]

 3   QR National Outline of Submissions, filed 29 February 2012, [4]

 4   Ibid [2]

 5   PN327

 6   AFULE and RTBU Combined Reply to Response, filed 7 March 2012, [9]-[19]

 7 (1998) 194 CLR 355

 8   Project Blue Sky Inc & Others v Australian Broadcasting Authority (1998) 194 CLR 355, 381

 9 [2009] HCA 41

 10 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41, [47]

 11   [2008] AIRC 291, [7]-[15]

 12   Watson & Ors v ACT Department of Disability Housing and Community Services[2008] AIRC 291, [15]

 13   Affidavit of Gregory William Smith, sworn 14 February 2012, [5]

 14   Ibid [6]

 15   Joint AFULE and RTBU submissions, filed 15 February 2012, [57]

 16   Exhibit GS3 attached to Affidavit of Gregory William Smith, sworn 14 February 2012

 17   PN218

 18   Exhibit PA7 attached to Affidavit of Peter James Allen, sworn 15 February 2012

 19   Affidavit of Gregory William Smith, sworn 14 February 2012, [19]-[20]

 20   PN172

 21   Affidavit of Michael Bourke, sworn 29 February 2012, [6]-[7]

 22   Affidavit of Peter James Allen, sworn 15 February 2012, [10]

 23   Ibid [22]

 24   Affidavit of Gregory William Smith, sworn 14 February 2012, [21]

 25   Ibid [23]

 26   Ibid [26]

 27   Ibid [23]

 28   Ibid [22]

 29   Exhibit PA10 attached to Affidavit of Peter James Allen, sworn 15 February 2012,

 30   Ibid [28.2]

 31   Ibid [29.2]

 32   Exhibit PA11 attached to Affidavit of Peter James Allen, sworn 15 February 2012,

 33   Joint AFULE and RTBU submissions, filed 15 February 2012, [75]

 34   PN280

 35   QR National Outline of Submissions, filed 29 February 2012, [19]

 36   Ibid [43]

 37   PN291

 38   PN296 - PN297

 39   AFULE and RTBU Combined Reply to Response, filed 7 March 2012, [87] - [88]

 40   Crennan J, Statute Law Society Paper, “Statutes and the Contemporary Search for Meaning”, London, 1 February 2010, p13-14

 41 (2008) 235 CLR 619, 642 [99] per Crennan J

 42   Crennan J, Statute Law Society Paper, “Statutes and the Contemporary Search for Meaning”, London, 1 February 2010, p14

 43   Print M3222

 44   Transport Workers’ Union of Australia v Airport Fuel Services Pty Ltd and others PM3222, [8]

 45   [2011] FWA 7723

 46   [2012] FWA 1197

 47   The Australian Workers’ Union v BP Refinery (Bulwer Island) Pty Ltd, [2012] FWA 1197, [36]

 48   PN184

 49   Joint AFULE and RTBU submissions, filed 15 February 2012, [86]

 50   Ibid [84]

 51   Ibid [117]

 52   Ibid [30] - [32]

 53   PN81

 54   PN78

 55   PN238

 56   PN236

 57   QR National Outline of Submissions, filed 29 February 2012 [24]-[27]

 58   As set out in QR National Outline of Submissions, filed 29 February 2012, [55] - [60]

 59   PN81

 60   PN215

 61   Kucks v CSR Limited [1996] IR 184

 62   Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 352

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