Australian Rail, Tram and Bus Industry Union v Rail Commissioner

[2019] FWC 5705

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739 - Application to deal with a dispute

Australian Rail, Tram and Bus Industry Union

Rail Commissioner

(C2019/3394)

RAIL COMMISSIONER RAIL OPERATIONS ENTERPRISE AGREEMENT 2016
COMMISSIONER HAMPTON	ADELAIDE, 5 November 2019

Dispute about matters arising under the enterprise agreement – payment when public holiday falls during period of annual leave – previously annual leave loading paid when public holiday falls during period of annual leave – changes in practice – proper application of leave, public holiday and related provisions to be determined – predecessor agreements and context considered – previous practice not supported by terms of present agreement – significant change made to the relevant terms of the present enterprise agreement and change to entitlements objectively intended – views and import of negotiators’ positions not determinative – ordinary and natural meaning of the provisions in the context of the agreement applied – determination made – observations made about potential non-compliance with NES under previous agreement.

The dispute and its context

This decision concerns the determination of a dispute about the proper application of the Rail Commissioner Rail Operations Enterprise Agreement 2016 (the 2016 EA) in terms of its application to public holidays falling during a period of annual leave. This matter is being determined by the Commission as a result of an application lodged under s.739 of the Fair Work Act 2009 (the FW Act) by the Australian Rail, Tram and Bus Industry Union (ARTBIU).

The respondent, the Rail Commissioner, is a statutory body corporate established under the Rail Commissioner Act 2009 (SA) (the RC Act) and its functions include the operation of public transport services by train or tram in metropolitan Adelaide. The Rail Commissioner is administratively part of the South Australian Department of Planning, Transport and Infrastructure (DPTI).

The dispute was referred to the Commission under clause 23 of the 2016 EA; being the relevant dispute resolution term, and it is common ground that the process required by that provision has been followed. This has included the Commission as presently constituted conducting a conciliation conference. Both parties have expressly confirmed their concurrence with the Commission continuing to deal with the application and to now determine the matter.

It is also common ground that the Commission is empowered by s.739 of the FW Act, and clause 23 of the 2016 EA, to determine the dispute.

The background to the dispute is that in February 2019, the ARTBIU became aware that the Rail Commissioner had changed the way Rail Operations Support Employees were paid for a public holiday when it fell during the time period they were away from work on annual leave. I observe that this occurred in a rather unfortunate manner when an employee queried how the provisions would operate and was subsequently informed that the practice had been reviewed based upon advice and was thanked for raising the matter. I suspect that this has added impetus to the extensive efforts made by the ARTBIU to contest this change.

Prior to February 2019, when a public holiday fell on or between the start or end date of an annual leave block, the employees would be paid their ordinary rate for the public holiday and an annual leave loading either in the form of a stated additional percentage or the amount they would have earned had they been rostered on, whichever was greater. I add that other parts of the former practice are in dispute and are uncertain to a degree. The latest change, to cease payment of the annual leave loading for the public holiday, was challenged by the Union and subsequently confirmed by the Rail Commissioner and the matter was escalated through the required dispute resolution procedure without resolution.

Accordingly, the principal matter in dispute concerns the proper application of the annual leave, public holiday and related provisions of the 2016 EA to Rail Operations Support Employees when a public holiday falls during a period of annual leave. Other provisions of the 2016 EA are also relevant to the determination and I set all of these out later in this decision.

The ARTBIU posited the matter in dispute in the following manner:

a.If a public holiday falls on or between the start or end date of a single block of annual leave (for example, two continuous weeks of annual leave) for a Rail Operations Support Employee, is the public holiday itself part of the ‘period of Annual Leave’ referred to in clause 22.3.4 and 22.3.5?

b.If yes, in addition to the ordinary rate, is the Rail Commissioner required to pay Rail Operations Support Employees for a public holiday which falls during a period of annual leave at:
i. the annual leave percentage loading (17.5% for dayworkers, 20% for shiftworkers) or
ii.allowances and penalties payable had the employee not been on leave during the relevant period

whichever is greater?

In general terms, the ARTBIU contends that where a public holiday falls during a period of leave, the annual leave loading that is due for the period of that leave (be that the specified percentage loading or the leave loading stated as being allowances and penalties payable had the employee not been on leave during the relevant period) is also payable on the public holiday. That is, each proposition is to be answered in the affirmative.

The Rail Commissioner contends, in effect, that the relevant provisions expressly provide that the public holiday is not an annual leave day and does not attract a leave loading, and that ordinary time payments and other specified arrangements are to apply to such days in these circumstances.

Given the terms of the terms of the 2016 EA and the propositions of the parties, this determination includes consideration as to whether the operative terms of the instrument are clear on their face or are ambiguous and what they objectively intend having regard to all of the provisions of the agreement and the context in which it was made and operates.

The terms of the 2016 Enterprise Agreement and related provisions

The main provisions relied upon by the parties are as follows:

“6 RELATIONSHIP TO OTHER AGREEMENTS AND AWARDS

6.1 The provisions of this Agreement replace the Award, as it relates to employees appointed to positions classified in accordance with this Agreement. Insofar as there is any inconsistency between a provision of this Agreement and the Award, the provisions of this Agreement will prevail to the extent of that inconsistency.
6.2 This Agreement, the Rail Commissioner’s policies and procedures and provisions of the Public Sector Act 2009 (SA) relevant to public sector employees (as varied from time to time) apply to the employment of employees under the terms of this Agreement. The Rail Commissioner’s policies and other contractual conditions do not form part of this Agreement nor the specific employment contract of employees.
6.3 The parties acknowledge that in developing this Agreement it was not intended to diminish or extinguish any existing terms, conditions, or employment benefits. In the event of any ambiguity or uncertainty arising from the implementation of this Agreement, reference may be made to the Rail Industry Award 2010 and to the policies and procedures in place at the time of implementation of this Agreement, and as varied during the life of this Agreement, in order that such ambiguity or uncertainty may be resolved.”

The immediately relevant leave provisions of the 2016 EA include the following:

“22.1 Relationship Between this Agreement and the National Employment Standards (NES)
• The provisions of this Agreement relating to various forms of leave are to be read in conjunction with the Act.
• The purpose of the following clauses is to provide a simple summary of the provisions of the Act as they apply to employees covered by this Agreement.
• It is not the intention that any provision of this Agreement is to operate in a way that is less favourable to employees than the NES. If any provision of this clause operates in a way that is less favourable to employees than the NES, then the NES shall prevail.

22.2 Annual Leave
22.2.1 A full-time or part time employee is entitled to four weeks paid annual leave per year. Annual leave will accrue on a pro rata basis each fortnight period at the rate of 1/13 of ordinary hours worked.
22.2.2 Where an employee is regularly working on a seven day shift work roster (including Sundays and Public Holidays), they will be entitled to five weeks paid annual leave per year. In this case the additional annual leave will accrue at the rate of 1/52 of ordinary hours worked.
22.2.3 An employee who is regularly rostered to work on Saturdays and/or Sundays and Public Holidays but does not work on identified other days of the week shall be entitled to five weeks annual leave for each year of service. In this case, the additional leave will accrue at the rate of 1/52 of ordinary hours worked.
22.2.4 Normally annual leave must be taken in the year in which it accrues unless written approval has been provided by the Rail Commissioner to defer the taking of such leave.
22.2.5 Annual leave will be taken at times agreed between Rail Commissioner and the employee, or, failing this, at the discretion of Rail Commissioner with four weeks’ notice.
22.2.6 An employee with an annual leave credit of greater than ten weeks may be directed to take such leave prior to the next entitlement of annual leave becoming due.
22.2.7 Rail Commissioner must not unreasonably direct an employee to take annual leave or unreasonably refuse a request by the employee to take paid annual leave. An employee directed to take leave will have recourse to the Rail Commissioner’s Human Resource Fair Treatment Policy in respect of scheduling of such leave.
22.2.8 Annual leave is payable at an employee’s Ordinary Time Rate of Pay (being the applicable ordinary rates described in Schedule 1 or Schedule 3 whichever applies) for the number of ordinary hours the employee would have worked during the period of annual leave. Annual leave hours paid will be deducted from the employee’s accrued entitlement.

22.3 Loading on Annual Leave
Rail Operations Employees
22.3.1 During a period of annual leave an employee will receive a loading calculated on the ordinary base rate of pay. The loading will be as follows:
22.3.1(a) Day workers – employees who would have worked on day work only had they not been on leave – a loading of 17.5 percent.
22.3.1(b) Shift workers – employees who would have worked on shift work had they not been on leave – a loading of 20 percent. Where an employee qualifies for additional leave in terms of clause 22.2.2, the 20 percent loading will apply for the proportion of the year worked as a shift worker.

Rail Operations Support Employees
22.3.2 Shiftworkers - employees who would have worked on shift work had they not been on leave - a loading of 20 percent;
22.3.3 Leave loading will be paid on completed months of service;
22.3.4 Annual Leave loading will be paid in respect of each period of Annual Leave taken by an employee, subject to the conditions outlined in the Public Service (Recreation Leave Loading) Award, as varied, amended or substituted from time to time.
22.3.5 The Parties agree to be bound in respect of allowing continuous shift workers the right to be paid leave loading or to be paid at the rate applicable to the work they would have been rostered to perform during the period of annual leave, whichever is the greater.
22.3.6 Any annual leave accrued but not taken will be paid out on termination of employment based on the amount that would have been payable to the employee had they taken that period of leave.
22.3.7 The loading prescribed by this clause on termination will only apply to completed months of pro rata annual leave accruals in addition to any entitlements accrued under clause 22.3.1.”

The public holiday provisions of the 2016 EA are as follows:

“22.6 Public Holidays
22.6.1 Public holidays will be recognised on those days prescribed by the Holidays Act 1910 (SA).
22.6.2 An employee will not lose ordinary pay as a result of a public holiday falling on a day that they would normally be rostered to work and, in such cases, an employee will be paid at their ordinary rate for that day.
22.6.3 Rail Commissioner may require an employee to work on a public holiday. If an employee is required to work on a public holiday, they will be paid at the relevant rate of pay prescribed in this Agreement (either as a shift worker or as overtime).
22.6.4 An employee may refuse the request to work a public holiday shift if the request is not reasonable or if the refusal is reasonable. However, the parties recognise that there is generally a need for public holiday shifts to be included on the roster and agree that any roster which includes such shifts is considered reasonable.
22.6.5 Where special leave without pay or unpaid parental leave is granted for periods of up to four weeks, any public holidays that fall within such a period are to be granted with pay. Where the special leave without pay or parental leave exceeds four weeks, no payment for any public holidays, irrespective of where they may fall, is to be made.
22.6.6 Where a public holiday other than a part-day public holiday falls during the period of an employee’s annual leave or personal leave the employee will be taken not to be on annual or personal leave and:
i. will be paid for their ordinary rate of pay for such hours; and
ii. The employee will be required to elect at that time whether they wish to be given credit for additional day(s) leave (equal to the number of Public Holidays falling within the rostered period) at some other time.

22.6.7 Where a part-day public holiday falls during the period of an employee’s annual leave or personal leave, the employee will be taken not to be on annual leave between the hours of 7pm and midnight that they would have otherwise been rostered to work and will be paid for their ordinary rate of pay for such hours.
22.6.8 Public holidays falling on a weekend will be substituted in accordance with the Holidays Act 1910 (SA). Notwithstanding the Holidays Act 1910 (SA), an employee who works on a Christmas Day which falls on a Saturday will be paid a loading of 50 percent for that shift.
22.6.9 An employee who is not required to work on a public holiday that would have otherwise been an ordinary working day will be paid as for eight hours at the ordinary rate, irrespective of any under time, ordinary time or overtime credited in the fortnightly pay period in which that public holiday occurs.

22.7 Payment for Public Holidays
22.7.1 An employee required to work on a public holiday will receive payment for the hours worked at the rate of time and one half and in addition, one day’s pay in lieu, unless on application by the employee, they will receive a credit of one day’s leave in lieu of the holiday.
22.7.2 For work on a public holiday occurring on a day on which they would not normally be booked on duty, an employee will be paid at the rate of double time and a half.
22.7.3 For work on a public holiday on which they would normally be booked on duty which is in excess of, or outside, the hours they would normally work on that day, an employee will be paid at the rate of double time and a half.
22.7.4 Non-driving Operations employees will be paid at the rate of double time and a half for all work in excess of eight hours in a shift.
22.7.5 A seven day or continuous shift worker whose rostered day off falls on a public holiday will be paid for that day at the ordinary rate
22.7.6 An employee not rostered to work between 7pm and midnight (other than an employee who has exercised their right not to work on a part-day public holiday if the request to work is not unreasonable or the refusal is reasonable as provided for in the NES) will not be entitled to another day off, another day’s pay or another day of annual leave as a result of the part-day public holiday.
22.7.7 An employee who works any hours between 7pm and midnight on a part-day public holiday will be entitled to the applicable public holiday penalty rate for those hours worked.
22.7.8 Where an employee is usually rostered to work ordinary hours between 7pm and midnight on a part-day public holiday, but as a result of having a rostered day off does not work, the employee will be taken to be on a public holiday for those hours and paid their ordinary rate of pay for those hours. These hours cannot be counted towards the calculation of overtime within a roster period.”

Clause 22.1 provides that the 2016 EA is to be read in conjunction with the NES. The NES relevantly provides:

“87 Entitlement to annual leave

Amount of leave

(1)For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
(i)a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(ii)an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(iii)the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).

Accrual of leave

(2) An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

Award/agreement free employees who qualify for the shiftworker entitlement

(3)An award/agreement free employee qualifies for the shiftworker annual leave entitlement if:
(a) the employee:
(i)is employed in an enterprise in which shifts are continuously rostered 24 hours a day for 7 days a week; and

(ii) is regularly rostered to work those shifts; and
(iii) regularly works on Sundays and public holidays; or
(b)the employee is in a class of employees prescribed by the regulations as shiftworkers for the purposes of the National Employment Standards.

(4)However, an employee referred to in subsection (3) does not qualify for the shiftworker annual leave entitlement if the employee is in a class of employees prescribed by the regulations as not being qualified for that entitlement.

(5)Without limiting the way in which a class may be described for the purposes of paragraph (3)(b) or subsection (4), the class may be described by reference to one or more of the following:
(a)       a particular industry or part of an industry;
(b)       a particular kind of work;
(c)       a particular type of employment.

88 Taking paid annual leave

(1)Paid annual leave may be taken for a period agreed between an employee and his or her employer.

(2)The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.

(…)

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)If the period during which an employee takes paid annual leave includes a period of any other leave (other than unpaid parental leave) under this Part, or a period of absence from employment under Division 8 (which deals with community service leave), the employee is taken not to be on paid annual leave for the period of that other leave or absence.

(…)

114 Entitlement to be absent from employment on public holiday

Employee entitled to be absent on public holiday

(1) An employee is entitled to be absent from his or her employment on a day or part‑day that is a public holiday in the place where the employee is based for work purposes.

Reasonable requests to work on public holidays

(2) However, an employer may request an employee to work on a public holiday if the request is reasonable.

(3) If an employer requests an employee to work on a public holiday, the employee may refuse the request if:
(a) the request is not reasonable; or
(b) the refusal is reasonable.

(4) In determining whether a request, or a refusal of a request, to work on a public holiday is reasonable,the following must be taken into account:
(a)the nature of the employer’s workplace or enterprise (including its operational requirements), and the nature of the work performed by the employee;
(b) the employee’s personal circumstances, including family responsibilities;
(c) whether the employee could reasonably expect that the employer might request work on the public holiday;
(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, work on the public holiday;
(e) the type of employment of the employee (for example, whether full‑time, part‑time, casual or shiftwork);
(f) the amount of notice in advance of the public holiday given by the employer when making the request;
(g) in relation to the refusal of a request—the amount of notice in advance of the public holiday given by the employee when refusing the request;

(h) any other relevant matter.

(…)

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.” (notes omitted)

The relationship between the NES and enterprise agreements (and modern awards) is established in part by s.55 and s.56 of the FW Act, which provide:

“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.”

It is evident that the terms of an enterprise agreement (or a modern award) may duplicate the terms of the NES that will then operate in parallel, and deal with matters that are expressly delegated to enterprise agreements by the NES. In addition, enterprise agreements may also include terms that are ancillary or incidental to the operation of an entitlement of an employee under the NES or which supplement the NES provided that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES. A term of the enterprise agreement that contravenes s.55 of the FW Act is of no effect.[1]

The Public Service (Recreation Leave Loading) Award (the Leave Loading Award) is an award of the South Australian Employment Tribunal[2] and is referenced in, and made relevant by, clause 22.3.4 of the 2016 EA. It relevantly provides as follows:

“1.5.1 During a period of recreation leave or pro rata leave an employee is to be paid a loading computed upon the normal salary attaching to the office concerned at the time the employee commences leave.

1.5.2 The loading is to be applied as follows:

1.5.2.1 If employed other than a shift worker or as a seven-day week worker,
either;
a loading of 17½ percent of the salary up to a maximum of $912.97 for any one full entitlement of annual leave,
or
the allowances and penalties payable had the employee not been on leave during the relevant period, whichever is the greater.

1.5.2.2If employed as a shift worker or a seven-day week worker (i.e. an employee who is working rotating shifts on seven days a week, or who is rostered to work regularly on active duties on Saturdays, Sundays and public holidays),
either;
a loading of 20 percent of salary up to a maximum of $912.97 for any one full entitlement of annual leave,
or
the allowances and penalties payable had the employee not been on leave during the relevant period,
whichever is the greater.

1.5.2.3 An employee who is employed for part of a year as a shift worker or a seven day week worker is to be paid a loading as prescribed in 1.5.2.2 on a pro rata basis for completed months worked as a shift worker or a seven day week worker and for the balance to be paid a loading as prescribed in 1.5.2.1.”

I observe that the Leave Loading Award is stated to apply to employees in the public service engaged under the Public Sector Management Act 1995 (SA),[3] but it may potentially be relevant elsewhere where it is adopted by other instruments such as in the case of the 2016 EA. The Leave Loading Award also appears to have its origins in the Fair Work Act 1994 (SA) (the State Act) and its predecessors and I note that the State Act contains minimum standards[4] that do not expressly differentiate between public holidays and annual leave in the manner set out in s.89 of the FW Act. There is also nothing in the Holidays Act 1910 (SA) that would have that impact.

The positions of the parties

3.1 The Australian Rail, Tram and Bus Industry Union

The ARTBIU contends that the starting point for consideration of the provisions is determining what a ‘period of annual leave’ means. It further contends that ‘period of annual leave’ is a reference to the whole block of annual leave, including any public holiday(s) falling during that period. It does so on the following basis:

· The terms ‘period’ and ‘period of annual leave’ are not defined in the Agreement or the Act but is defined[5] more generally as being ‘a length or portion of time’. Importantly, it is a single length.
· Pursuant to s 88 of the Act it is clear that the ‘period’ is that which is agreed between the employer and the employee.
· Section 89(1) clearly deals with the situation where a ‘period’ of annual leave ‘includes’ a public holiday. It does not treat the public holiday being excluded from the period but rather ‘includes’ it and only carves it out for the purposes of the annual leave payment.
· The same logic prevails in s 89(2) when a ‘period’ of annual leave ‘includes’ another leave type ‘period’. The period of annual leave itself is not somehow condensed or broken up but the other leave period is simply treated differently for the purposes of the annual leave payment.

The ARTBIU further contends that clause 22.3.4 provides that the (relevant) annual leave loading will be paid during a period of annual leave and clause 22.6.6 confirms that the public holiday concerned falls during the period of leave.

The ARTBIU relies upon the fact that the Leave Loading Award operates in the context of the Fair Work Act 1994 (SA) (the State Act) and deliberately provides for additional payments beyond the minimum required by the relevant schedule of the State Act.[6]

In relation to the import of clause 22.6.6 of the 2016 EA more generally, the ARTBIU contends that the only discussion that occurred between the parties when this provision was introduced as part of the 2016 EA was that this clause was intended to bring the Agreement in line with the NES. There was no discussion about how the clause would impact pay on public holidays when they fell during a period when an employee was on annual leave and no explanation was given to the employees about any change as part of the employee approval process. Further, the simple alignment to the NES is reinforced by the fact that, for the purposes of payment, a public holiday would not be deducted from an employee’s annual leave balance when it fell during a period of annual leave. Therefore, the insertion of clause 22.6.6 had no impact on the functioning of clauses 22.3.4 and 22.3.5 of the 2016 EA.

Further and in any event, the ARTBIU contends that any attempt to extinguish the existing entitlement was prohibited by clause 6 of the 2016 EA and that as the payment of the additional amounts on public holidays during an annual leave period was the standard policy and procedure and had occurred for years, it is reasonable to presume that the parties expected that it would remain an entitlement under the Agreement. In addition, although custom and practice, in the normal course, would not carry as much weight, in this instance, the Commission is compelled, pursuant to clause 6.3, to be guided by it when interpreting the Agreement. In that context, the ARTBIU contends that there is no difference between a procedure (to make additional payments during the public holiday falling during a period of leave) and written policies and procedures.

In relation to a number of issues arising during the course of the hearing of this matter, the ARTBIU contends that:

· The matter in dispute in not a NES issue and payments beyond the minimum requirements are permissible under the FW Act. Further, under the NES, Annual Leave is distinguishable from paid annual leave as leave is defined by reference to 4 weeks of annual leave and this includes days such as weekends that are still part of the annual leave. That is, the block or period of leave may include days that are not paid as annual leave and the public holiday should be treated in the same manner;

· In relation to the custom and practice for Rail Operations Support Employees, these employees were paid double time and a half for public holidays falling during a period of leave (when the employee would have been otherwise rostered to work) and the change has been made by the Rail Commissioner wrongly changing its leave form to ensure compliance with the FW Act’s approach in the NES rather than to be compliant with the 2016 EA; and

· As to the Rail Operations Employees, it was accepted that those employees who were not on an aggregate salary (where the issue does not arise in the same way) have not been paid annual leave loading on a public holiday falling during a period of annual leave. However, this arose from the different (former) instruments and if the Commission accepts its view about the proper application of clause 22.3.4 in relation to the Rail Support Employees, the (non-aggregate) Rail Operations Employees should also receive the relevant annual leave loading for the public holiday falling during a period of annual leave under clause 22.3.1.

Using a hypothetical example of an employee taking a two week period of annual leave, comprising 10 (otherwise) working days with a single public holiday falling on one of those days, the ARTBIU contends that the proper application of the 2016 EA is that there would be nine annual leave days deducted from the accrued leave balance, one public holiday – for which there is no deduction from the annual leave balance, with the relevant leave loading paid on each of those days including the public holiday. That is, for a public holiday that falls during a period of annual leave, the relevant employees receive the greater of the two payment options; being the amount that they would have earnt had they actually worked on the public holiday (with the total payment being double time and a half). That is, the time and a half annual leave loading plus the public holiday paid at ordinary rates. If the public holiday concerned was not a day that the employee would otherwise have worked, the employee would be paid for the public holiday at ordinary rates.[7]

The ARTBIU relied upon the evidence of Mr Darren Philips, Branch Secretary of the Union’s SA/NT branch.

In final written reply submissions, the ARTBIU contended that the confusion as to the proper application of the 2016 EA arose from changes to the leave application form implemented by the Rail Commissioner, which in turn, was based upon an incorrect understanding of the impact of the NES and the election to be made by the employees under clause 26.6.6 of the agreement.

The ARTBIU further contends that the election in clause 22.6.6 is not, in realty, an election at all and that the absence on the “election” in clause 22.6.7 for part-day public holidays is not relevant as in each case the public holiday would not be deducted from annual leave accruals.

The ARTBIU also submitted that to the extent that there was any confusion about the previous practice applied by the Rail Commissioner, the consistent practice until February 2019 was to pay the annual leave loading to Rail Support Employees on a public holiday falling during a period of annual leave.

3.2 The Rail Commissioner

The Rail Commissioner accepted that the Commission has jurisdiction to deal with the dispute. It also accepts that the public holiday falling in the period between the start and end of a period of leave does fall within a period of annual leave as contended by the ARTBIU but submits that this does not have the result contended by the Union.

The Rail Commissioner contends that the express provisions of clause 22.6.6 of the 2016 EA are directed to the exact circumstances being raised here and unambiguously state what is to occur when a public holiday falls during a period of annual leave. That is, the day(s) concerned are not taken to be annual leave days and the employee is paid the ordinary rate for such hours and the employee elects whether to be given credit for the additional day(s) leave at some other time.

The Rail Commissioner further contends that:

· Employees who are eligible for the additional payments on annual leave are due so by virtue of the Leave Loading Award and that entitlement is not broadened by clauses 22.3.4 or 22.3.5 of the 2016 EA.
· The Leave Loading Award does not deal with the incidence of public holidays and this is left to the 2016 EA.
· Use of the phrase 'period of leave' by itself does not provide an entitlement.
· The terms of the Rail Award are not relevant given the history of the provisions.
· No policies or procedures exist that can help inform this dispute and a distinction should be drawn between written policies and procedures and the custom of paying additional payments on the relevant public holidays.
· Clause 6.3 and its reference to the extinction of entitlements is aspirational as there were significant changes between the previous 2011 EA and the 2016 EA.

In relation to custom and practice, the Rail Commissioner contends that:

· The Rail Commissioner (and its predecessor TransAdelaide) had been paying Rail Operations Support Employees additional payments when a public holiday falls during a period of annual leave, despite the provisions of the 2016 EA. Between 2011 and the commencement of the 2016 EA, where these employees elected to receive the annual leave loading, they were paid for the public holiday, an annual leave day and the annual leave loading. In that period, employees electing to receive the penalties they would otherwise have received had they been at work, were paid for the public holiday, the annual leave day and the penalties they would otherwise have received had they been at work. After the commencement of the 2016 EA, until the change in February 2019, the employees were paid the public holiday and depending upon the election they have made, either annual leave loading or the penalties they would otherwise have received had they been at work.[8] That is, the employees were not also paid for the day of annual leave under the 2016 EA;

· It is unclear why, considering the wording of these agreements, the Rail Commissioner has been paying Rail Operations Support employees as such as there was never an entitlement to these payments. However, regardless of these pay practices having existed for a long period of time, this would not constitute breaking with custom and practice, rather, it would constitute beginning to pay employees consistently with the current Agreement; and
· Although the ARTBU claim clause 6.3 of the 2016 EA "requires custom to be considered”, there is nothing in this clause which refers to custom and practice and so it should not be provided more weight than normal.

As to the impact of the coverage of the FW Act, the Rail Commissioner contends that:

· As the apparent ability to be paid (both) annual leave and public holiday was still an option under the 2011 Agreement, the Rail Commissioner sought in the 2016 EA to substitute this provision with one which was consistent with the FW Act;
· The move from allowing an employee to be on both annual leave and public holiday to one where they are just on a public holiday was a necessary change to ensure the current Agreement was consistent with the FW Act; and
· Further, considering employees under the previous agreements were paid their base rate of pay for the annual leave and their base rate of pay for the public holiday, rather than the double time and a half the Applicant is now seeking, the changes between the 2011 and current Agreements was not one enacted by the Rail Commissioner, but rather through the FW Act.

In relation to a number of issues that arose during the hearing of this matter, the Rail Commissioner contends:

· A period of Annual Leave and a period of paid Annual Leave are synonymous;[9] and

· Rail Operations employees have been taken to be only on the public holiday that fell during a period of annual leave and not been paid beyond their base rate of pay. Given that both clause 22.3.1 and clause 22.6.3 refer to a ‘period of leave’ the same interpretation (set out below) should apply in each case.

Using that same hypothetical example of an employee taking a two week period of annual leave, comprising 10 (otherwise) working days with a single public holiday falling on one of those days, the Rail Commissioner contends that the proper application of the 2016 EA is that there would be nine annual leave days, one public holiday, with the relevant leave loading paid only on each of the annual leave days, with ordinary pay due on the public holiday. This would apply to any public holiday occurring during the period of annual leave, including one that was on a day that would otherwise have been a rostered day off.

The Rail Commissioner relied upon the evidence of Mr Austin, Acting Director, People and Performance with DPTI.

During final written reply submissions, the Rail Commissioner questioned why the 2011 Agreement was approved by the Commission without undertakings when it permitted an employee to be on both annual leave and a public holiday at the same time. I observe that this is not a matter addressed in the approval decision[10] and in any event, would not necessarily inform the proper construction of the instrument. I also note that clause 22 of the 2011 Agreement provided that the leave provisions were to be read in conjunction with the NES and that it was not intended to operate in a manner that is less favourable to employees than the “Standard”. It is feasible that the Deputy President concerned took the view that these provisions meant that it was not inconsistent with the NES, and as a result, no undertaking was required for its approval.

Observations on the evidence

The witnesses were not required for cross-examination and I have treated their evidence on face value. To the extent that any of the witnesses expressed views about the proper application of the 2016 EA to the dispute, this is a matter for the Commission itself to determine.

In relation to the dispute about how the 2011 Agreement and the 2016 EA operated prior to the February 2019 change, the parties elected not to lead additional evidence or cross-examine the witness for the other party. This has left me with having to recognise that there is some uncertainty about the practices and when they have changed. However, there is objective written evidence, in the form of payslips at various times that enable me to draw conclusions about how the 2011 Agreement and the 2016 EA were applied for present purposes.

To the extent that the evidence referenced the bargaining discussions leading to the approval of the 2016 EA or earlier instruments, I have considered that evidence subject to the observations made in the leading authorities about the potential use to which that material may be put in the present context.[11]

The approach to be applied to determining the proper application of an enterprise agreement

A number of Full Benches of the Commission have outlined the approach that should be adopted in considering the construction and meaning of an enterprise agreement. The most recent statement of the principles was set out in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited[12] (AMWU v Berri) in the following terms:

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1.The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii)the disputed provision’s place and arrangement in the agreement;

(iii)the legislative context under which the agreement was made and in which it operates.

2.The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3.The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4.The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5.The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6.Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7.In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8.Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9.If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10.If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

11.The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i)evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and
(iii)evidence of matters in common contemplation and constituting a common assumption.

13.The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14.Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15.In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

This is a non-exhaustive statement of the principles to be adopted[13] and I have applied this approach in determining this dispute.

In Geo A Bond & Co Ltd (In Liq) v McKenzie,[14] (Geo A Bond) Street J said:

“...it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award.”

In Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005 Lacy SDP observed that:

“It is a widely accepted principle of statutory interpretation that the rules of construction are rules of common sense. Where the choice is between an interpretation that will result in inconvenience, injustice or absurdity and another which avoids such a result, then the latter ought to be adopted.”[15]

The importance of context was emphasised by Burchett J in Short v Hercus Pty Ltd[16] in the following terms:

“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia [1913] HCA 41; (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.

(… … )

That much is fairly clear. Where there is seen to be a difficulty, the court can often go to the history of the matter. A number of illustrations will be found in Nurses (South Australia) Award (Interpretation) Case (ubi supra). But an ambiguity or obscurity may not be immediately seen on the face of a document. Both the problem and its solution may appear only when the wider context from which an expression first sprang is brought to notice. Is the court then forbidden to look past the document itself that is before it? The respondent says the instant award is clear, and we must shut our eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent's contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently. (Cf. Pickard v. John Heine and Son Limited [1924] HCA 38; (1924) 35 CLR 1 at 9, per Isaacs A.C.J.) That is certainly sufficient to justify a reference to its source. Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R [1991] HCA 21; (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.”[17]

The nature of the present task has also been emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia[18] in the following terms:

“[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:

‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’”

More recently, the Full Court of the Federal Court in WorkPac Pty Ltd v Skene[19] (WorkPac) also provided the following convenient summary of the required approach:

“[197] The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context. The interpretation “… turns on the language of the particular agreement, understood in the light of its industrial context and purpose …”. The words are not to be interpreted in a vacuum divorced from industrial realities; rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament. To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced.”[20] (citations omitted)

The above observations are consistent with the approach taken in AMWU v Berri. In the end, my present task is to ascertain the objective intention of the 2016 EA based upon the language and terms of the agreement, when read as a whole, and considered having regard to its context and purpose.

For completeness, I observe that the Commission is not empowered to grant some form of declaratory relief.[21] Rather, the Commission is determining the proper application of the EA in order to determine the dispute between the parties about that instrument under the terms of the agreed dispute resolution procedure.[22]

The broad factual context

6.1 The employer

The Office of the Rail Commissioner was established under the terms of the RC Act in 2009 and its functions include the operation of the metropolitan train system that falls under the coverage of the 2016 EA. The Rail Commissioner also operates the metropolitan tram service; however, this is covered by another enterprise agreement.[23]

Prior to the Rail Commissioner, public transport within South Australia was operated through TransAdelaide, a South Australian Government owned provider of metropolitan public transport involving bus, train and tram services. In 1999, the South Australian Government put out to tender all the metropolitan bus services.

The operation of the train network requires that many of its employees, including those who are subject to this matter, work across the 7 days of the week and undertake shiftwork as required.

6.2 The history of the Agreement provisions

It is also appropriate to consider the history of relevant enterprise agreements and certain provisions in question. Prior to making enterprise agreements under the FW Act, Rail Operations Support Employees and Rail Operations Employees were covered by separate instruments: Rail Operations Support Employees by the TransAdelaide Salaried, Professional and Technical Employees Collective Workplace Agreement 2008 (the 2008 Salaried Agreement) and the Salaried, Professional and Technical (TransAdelaide) Award 2001 (the Salaried Award) and Rail Operations Employees by the TransAdelaide Train Operations Workplace Agreement 2007.[24] All of these instruments were made or approved under the Workplace Relations Act 1996 (Cth).

In 2011, the parties entered into the Rail Commissioner Rail Operations Enterprise Agreement 2011 (the 2011 Agreement). This was approved under the FW Act. The 2011 Agreement covered both Rail Operations Employees and Rail Operations Support Employees, although each stream retained certain unique entitlements and provisions.

The current Agreement was approved in 2016, operated from 27 January 2017, and remains in force. The 2016 EA maintains certain distinctions between the Rail Operations and Rail Operations Support streams.

I now turn to the history of the central provisions currently in contention.

The 2008 Salaried Agreement applied to the Rail Operations Support Employees and saw the introduction of a ‘no diminishment’ clause. The purpose of this clause appears to be to express the parties’ intention that the agreement would not diminish any existing terms, conditions, privileges or customs. The text of this clause is also consistent with the earlier TransAdelaide Train Operations Workplace Agreement 2007. The ‘no diminishment’ clause introduced in the 2008 Salaried Agreement remains at cl 6.3 of the 2016 EA.

The 2008 Salaried Agreement also introduced redrafted annual leave provisions for continuous shift workers. Under the previous TransAdelaide Salaried, Professional and Technical Employees Certified Agreement 2005, a single clause[25] dealt with the annual leave loading applicable to both (non-shift) employees and continuous shift workers in the following terms:

“16. 7. Leave loading will be subject to the Public Service (Recreation Leave Loading) Award as varied, amended or substituted from time to time. The Parties agree to be bound in respect of allowing continuous shift workers the right to take leave loading or be paid for the work that they would have been rostered whilst on Annual Leave, whichever is the greater.”

Under the 2008 Salaried Agreement the provisions were split, with cl 21.13.4 applicable to non-shift employees while cl 21.13.5 applied to continuous shift workers. These clauses are reproduced below:

“21.13.4 Annual Leave loading will be paid in respect of each period of Annual Leave taken by an Employee, subject to the conditions outlined in the Public Service (Recreation Leave Loading) Award, as varied, amended or substituted from time to time.

21.13.5The Parties agree to be bound in respect of allowing continuous shift workers the right to be paid leave loading or to be paid at the rate applicable to the work they would have been rostered to perform during the period of Annual Leave, whichever is the greater.”[26]

It is unclear why the clause was split and it was put to me by the Rail Commissioner that the parties did not intend that continuous shift workers would have a separate entitlement outside the Leave Loading Award.[27] The Rail Commissioner suggested this was a typographical error; an error common throughout various Rail Commissioner agreements. Despite this, the clauses remain separated in the Current Agreement, at clauses 22.3.4 and 22.3.5 respectively, and, notwithstanding the subjective views about their genesis, they are to be applied as written. When read in context however, clause 22.3.5 of the 2016 EA does not add anything of relevance to this matter beyond the import of clause 22.3.4.

The 2011 Agreement provided the following provision dealing with the interaction between public holidays and annual leave:

“22.3.6 Public Holiday falling during a period of leave
Where a public holiday falls within a period of proposed rostered annual leave and block book off, employees are required to elect at that time whether:
• They wish to receive an additional day's pay in lieu;
• They wish to be given credit for additional day(s) leave (equal to the number of public holidays falling within the rostered period) at some other time.”

I note that the equivalent provision in the 2008 Salaried Agreement contained the same provision as clause 22.3.6 of the 2011 Agreement with an additional subclause in the following terms:

“28.4.2 Where a shift worker’s ordinary hours of work are structured to include a day off and that day off falls on a public holiday, the Employee will be paid for that day at the ordinary rate. This will not apply where the rostered day off falls on a Saturday or a Sunday.”

The full terms of the leave and related provisions of the 2016 EA have been set out earlier in this Decision. Of note, this enterprise agreement included some changes to the leave provisions including clause 22.1, defining the relationship between the agreement and the NES, and the following new provision:

“22.6.6 Where a public holiday other than a part-day public holiday falls during the period of an employee’s annual leave or personal leave the employee will be taken not to be on annual or personal leave and:
i. will be paid for their ordinary rate of pay for such hours; and
ii. The employee will be required to elect at that time whether they wish to be given credit for additional day(s) leave (equal to the number of Public Holidays falling within the rostered period) at some other time.

22.6.7 Where a part-day public holiday falls during the period of an employee’s annual leave or personal leave, the employee will be taken not to be on annual leave between the hours of 7pm and midnight that they would have otherwise been rostered to work and will be paid for their ordinary rate of pay for such hours.”

The explanation of the changes provided to the employees as part of the employee approval process required for an enterprise agreement under the FW Act included the following:

“22. LEAVE PROVISIONS
This clause is largely the same as the 2011 Agreement, however the proposed Agreement has been corrected to reflect the ‘National Employment Standards’, replacing an incorrect reference to ‘the standard’.
This clause endeavours to highlight that this Agreement cannot provide for entitlements less than the Act or its National Employment Standards.
Clauses relating to leave provisions were separated into Rail Operations and Rail Operations Support employees within the 2011 Agreement and have been amalgamated within the proposed Agreement. Where a clause is in relation to only Rail Operations or Rail Operations Support employees the relevant clause will specify that difference.

Annual Leave
This clause is largely the same as the 2011 Agreement, however some modifications have been made to provide clearer alignment with the National Employment Standards, including a provision that states that the Rail Commissioner must not unreasonably refuse a request for annual leave.
This clause provides day worker employees four weeks annual leave with 17.5% annual leave loading. It also grants seven day shift workers with five weeks annual leave and 20% annual leave loading and states that normally annual leave is to be taken in the year that it is accrued.

(… …)

Public Holidays
This clause has been modified from the 2011 Agreement to provide employees with extra pay for working on Christmas Day if it falls on a Saturday. This was not provided in the 2011 Agreement where, if you worked on a Christmas Day that falls on a Saturday, you would not have been paid extra for that day as it is not deemed a public holiday in the Holidays Act 1910 (SA).
Otherwise, this clause provides for employees to be entitled to all South Australian public holidays and to be paid for those shifts if they would have been rostered to work them but are stood down. Rather than specifying which days are substitutions if a public holiday falls on a weekend, public holidays are now in line with the National Employment Standards. The proposed Agreement also now makes reference to the part-day public holidays that were introduced within the life of the 2011 Agreement and clarifies that an employee can be required to work a public holiday shift if the request is reasonable.
If an employee is on annual or personal leave on a day that is a full-day or part-day public holiday, the employee is taken not be on annual or personal leave for that day/part-day but rather a public holiday or part public holiday. If an employee is on special leave without pay, they are still eligible to be paid for the public holiday but only if the special leave without pay has been granted for up to four weeks.
An Employee working after midnight on New Year's Eve in regards to providing 'special' New Year's Eve services will be paid at the rate of double time and a half until relieved from such work.”[28]

6.3 The historical use of the disputed provisions

I deal firstly with the arrangements applying to the employees who form the focus of this dispute; namely the Rail Operations Support Employees.

In terms of the approach to public holidays falling during a period of annual leave, the practice before the 2011 Agreement is not entirely clear. It is probable that at least under the relevant instrument applying in 2008, employees on a public holiday falling during a period of leave were paid the equivalent of double time and a half (being the public holiday plus the leave loading).[29] Under the 2011 Agreement, the provision (clause 22.3.6) contemplated the employees making an election as to whether they would receive an additional day’s pay in lieu or be given credit for the additional days leave equal to the number of public holidays falling within the rostered leave period. As set out in written submissions, the practice adopted by the Rail Commissioner appeared to assume that the employees involved were making an election as to whether they would be paid the relevant nominated leave loading or the penalties and allowances they would have received had they been at work. Under the Leave Loading Award (and the 2011 Agreement), this is not an election but rather an obligation to pay the greater entitlement.[30] It does not appear that the actual election set out in the 2011 Agreement operated in practice and the public holiday was paid in each scenario in addition to the annual leave day, with a deduction from annual leave accruals being made for the day in question.

I add that under the 2016 EA, the election contemplated by clause 22.6.6 also appears to be problematic and I will return to this aspect shortly.

Subject to above reservations as to whether the correct concepts have been applied, where a public holiday that the employee was otherwise rostered to work,[31] fell between the starting and end date of a period of annual leave, the previous practice was to pay:

· Under the 2011 Agreement - for the public holiday, the annual leave day (with a deduction from the annual leave accrual) and the penalties they would have received had they been at work – being the annual leave loading;[32]
· Under the 2016 EA until February 2019 – for the public holiday and the penalties they would have received had they been at work – being the annual leave loading; and
· Under the 2016 EA after February 2019 – for the public holiday at ordinary rates.[33]

Under the 2016 EA, it appears that the employees concerned have had an additional day’s annual leave (for any public holiday falling during the period of leave) added to that period or accrued (not deducted) to be taken at a different time. This aspect would be consistent with the NES.

Both the 2011 Agreement and the 2016 EA were made under the FW Act and the Rail Commissioner was a national system party and subject to the NES. I observe that to the extent that the Rail Commissioner deducted annual leave days for employees on the public holidays falling during the period of leave, this may not have been consistent with the minimum obligations of the NES. This is beyond the scope of this matter but should be further considered and addressed by the Rail Commissioner.

This practice changed with 2016 EA to reflect that annual leave days and public holidays were mutually exclusive, but until February 2019, annual leave loading (in the form of the penalties the employees would have received had they been at work) continued to be paid.

The other class of employees covered by the 2011 Agreement and the 2016 EA, Rail Operations Employees,[34] in the above scenarios have been taken to be only on the public holiday that fell during a period of annual leave and have not been paid beyond their base rate of pay for the public holiday.

All of these findings are relevant to an assessment of the context within which negotiations for the 2016 EA and the subsequent events took place, and potentially more broadly. I will return to the significance of these matters in light of the authorities.[35]

The meaning and import of the provisions

The initial question is whether the provisions of the Agreement are ambiguous or capable of more than one meaning. This question arises from the approach summarised in AMWU v Berri. In this respect, regard may be had to evidence of surrounding circumstances provided that those circumstances are not relied upon to contradict the plain language of the agreement.[36] The starting point for this assessment is the consideration of the ordinary meaning of the relevant words when read having regard to their context and purpose.

The leave provisions of the 2016 EA are expressly stated to be read in conjunction with the NES and the agreement provisions are described as being “a simple summary of the provisions of the Act and they apply to employees covered by this Agreement”.[37] The import of the NES is relevantly that minimum periods of paid annual leave, based upon service and whether the employee is a shiftworker, are provided and are to be paid at base rates. Where a public holiday falls during a period of annual leave, the day is treated as a public holiday with the requirement that the employee is not to lose ordinary pay for that day; that day is not an annual leave day and the employee would be paid for their ordinary time. The enterprise agreement may supplement these provisions, as it clearly seeks to do so by providing for an annual leave loading, but cannot operate below the minimum (i.e. it cannot be less beneficial).

Clause 22.6.6 is clear on its face, with one exception. Where a public holiday (other than a part-day public holiday that is dealt with in clause 22.6.7) falls during a period of annual leave, the employee concerned will be taken not to be on annual leave and will be paid their ordinary rate of pay for the hours of the public holiday. This was a new and revised provision introduced as part of the 2016 EA and when read alongside the 2011 Agreement equivalent, a change to the entitlement was objectively intended. The new provision precisely and expressly deals with the scenario underpinning this dispute. However, the election to be made by the employee under clause 22.6.6 ii is problematic for two reasons. Firstly, there is no alternative option contemplated in the “election” and secondly, the NES would mean that the public holiday day could not involve a deduction from the annual leave balance in any event. That is, under both the terms of clause 22.6.6 and the NES, the day concerned is not an annual leave day and the election is otiose. I also observe that the absence of this “election” in respect of the part-day public holiday potentially adds to the problematic nature of the provision and reinforces that it has, in effect, no extra work to do. In practice, because of the NES and the other provisions of the 2016 EA, the employee may elect, in effect, to extend the period of annual leave (by the number of public holidays occurring during the period of leave) or to take the annual leave day(s) at some other time. In each case, there is no deduction of annual leave accruals for the public holidays. I add that the problematic nature of the election does not impact upon the proper application of clauses 22.6, 22.3 and 22.4 when these provisions are all read together in context.

Under clause 22.7.5, where the public holiday falls on a day that is a rostered day off, the public holiday is paid at the ordinary rate of pay. It is common ground that the Rail Support Employees concerned are either 7 day shift workers or continuous shift workers so as to fall within the scope of clause 22.7.5.

Clause 22.3 of the 2016 EA is also clear when considered in context. The various forms of annual leave loading are paid to the relevant employees during periods of annual leave. That is, the loading is paid when the employee is on annual leave. This approach accords with the natural meaning of the provisions and the history and purpose of leave loading.[38] As the employee is not on annual leave on the public holiday, the annual leave loading is not applicable. This demarcation between annual leave and public holidays is also consistent with the approach evident in the NES, noting for reasons set out earlier, that under clause 22.1 of the 2016 EA, the leave (and other) provision are expressly stated to be read in conjunction with FW Act, including the NES.

There is nothing in clauses 22.3 or 22.4, or the Leave Loading Award, that would suggest a contrary intention. Indeed, where the Leave Loading Award has been applied in the South Australian public sector, supplementary provisions[39] have operated to provide for additional payment such as those that would apply under the ARTBIU’s preferred approach. To suggest that the reference in the 2016 EA to ‘period of annual leave’ means that all (otherwise working) days falling between the first and last date of a block of annual leave are annual leave for the purposes of payment alone, would not be consistent with logic, substance or the natural meaning of the provision when read in context. The fact that there are instruments within the South Australian Public Sector that do expressly provide for the payment of the leave loading on the public holiday does perhaps provide some insight into how the practice as earlier applied to the Rail Operations Support Employees arose. I would also accept that there is some industrial merit in the proposition that employees should not lose earnings as a result of the public holiday falling during the relevant period; however this must be considered in the context of the actual express provisions of the 2016 EA and the present role of the Commission.[40]

The other context and factors that are suggested by the ARTBIU as indicating a contrary intention to the express terms of clause 22.6.6 arise from clause 6 of the 2016 EA and include the prior custom and practice, including the genesis of the particular leave loading provisions, and the role given to such arrangements, and the stated intention of the 2016 EA not to diminish or extinguish terms, conditions or employment benefits. Further, it is posited that there was no intention to change the entitlements given the explanation of the changes to introduce clause 22.6.6 as provided to the employees as part of the approval process for the 2016 EA.

Prior custom and practice is not always a reliable guide and caution should be taken when considering such custom and practice to inform the application of an Agreement’s terms. This is particularly apposite where such custom would be contrary to the express terms of an Agreement. Even where those customs are not contrary to express terms they may still be an unreliable guide. Custom and practice can easily arise from mere inadvertence to an Agreement’s proper application, as discussed in Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd t/as Yarra Trams:[41]

“21The Court acknowledges the evidence that, on many occasions in the decade prior to the negotiations for the 2009 agreement, Yarra Trams’ predecessors convened panels consisting of an independent chairperson to hear “inquiries” from decisions by management to discipline employees. Counsel for the applicants tendered evidence of 25 “inquiries” where a consistent process was followed in purported compliance with cl 4.6 of the disciplinary document. Given this historical background, it is understandable that the RTBU and its members expected such a practice to continue after 2009. However, custom and practice in the industry under different industrial instruments cannot prevail over the plain meaning of the words in cl 23 of the enterprise agreement; see City of Wanneroo v Holmes [1989] 30 IR 362 at 378-9 per French J. Evidence as to that custom and practice is presently of no assistance in interpreting cl 23 of the enterprise agreement. As Gray J observed in Shop Distributive and Allied Employees’ Association v Woolworths Ltd (2006) 151 FCR 513 at 520:

It is necessary to take great care…to avoid infringing the general principle that the conduct of parties to an agreement cannot be taken into account in construing the agreement. For the limited principle to operate, there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons, such as common inadvertence as to its true meaning.

22Assuming that the parties to predecessor instruments acted upon a common understanding, such understanding was based on inadvertence as to the true meaning of the disciplinary document. Such inadvertence might be explained by the fact that the same people were generally involved in the disciplinary appeals process throughout the period. The procedure adopted may have been the preferred approach of those persons, but this does not mean that the parties were legally obliged to adopt it.”

Clause 6.3 provides that in the event of ambiguity and uncertainty reference may be made to policies and procedures and the Rail Industry Award 2010. Policies and procedures are more naturally a reference to the conventional understanding of those concepts rather than to custom and practice in applying the agreement. This is consistent with the approach taken to clause 6.2. There are no relevant policies and procedures that provide for the entitlement as contended by the ARTBIU or which shed any light on the issue. To the extent that custom and practice is relevant, there is no clear basis upon which that custom operated and it does not appear to fully accord with the various provisions of the instruments that have operated. Further, there is no common objective intention that would allow the Commission to interpret clause 22.3.4 as supplementing the NES in the manner as now sought by the ARTBIU, and some of this prior practice is perhaps little more than common inadvertence.

The Rail Award does not provide for annual leave loading to be payable on a public holiday falling during a period of annual leave. While cl 6.3 allows reference to the Rail Award in the event of an ambiguity or uncertainty, the complete absence of any such payment or detailed interaction between public holidays and annual leave does not inform the resolution of this matter.

The Rail Commissioner contends, in effect, that the statement in clause 6.3 that “The parties acknowledge that in developing this Agreement it was not intended to diminish or extinguish any existing terms, conditions, or employment benefits” was merely aspirational. There is a useful discussion of the difference between binding (contractual) terms and those that are aspirational in the context of enterprise agreements in National Tertiary Education Union v University of New England.[42] Without detracting from that comprehensive discussion, the test is objective and involves a consideration of whether the language used, when considered in context and having regard to their apparent purpose, would lead a reasonable person to conclude that a commitment was being made. Further, the starting inference is that the parties intend to establish binding obligations.[43]

The ARTBIU, in effect, accepts that clause 6.3 is not an absolute statement but should be understood such that any intended express change in the 2016 EA would not be impacted by that “commitment”. There were some significant changes between the 2011 and 2016 Enterprise Agreements including a major change to the redundancy arrangements[44] and these were also clearly intended notwithstanding clause 6.3. In that light, the ARTBIU’s position that this part of clause 6.3 was not an absolute statement must be correct. Further and in any event, the change to what is now clause 22.6.6 is not simply a rewording of the existing provisions and objectively a change in entitlements was specifically provided by the new provisions. As a result, I do not consider that the statement in clause 6.3, whatever its status, can be applied to construct the provision so as to deny its apparent objective intention.

The ARTBIU also relies upon the explanation provided to the employees as part of the employee approval process for the 2016 EA. The explanation does not clearly state the import of the new provision but does observe that as one of the changes from the 2011 EA, the annual leave provisions have been varied to provide a clearer alignment with the NES and the public holiday provisions have been varied to clarify that an employee who is on annual leave on a day that is also a public holiday, is to be taken as being on the public holiday, not annual leave. Although this explanation could have been clearer and more explicit, there is nothing in this explanation that should mean that the ordinary and natural application of the provisions expressly placed in the 2016 EA should not be applied.

I consider that the practice applicable to the Rail Operations employees (not to be paid the annual leave loading on the public holiday) accords with the natural and ordinary meaning of the relevant provisions and does not assist the ARTBIU. That is, despite the absence of the reference to the Leave Loading Award, which I have found does not of itself require the payment of the loading on the public holidays in question, the operational terminology (during a period of leave) relied upon by the ARTBIU is effectively the same. To suggest that the clear and unambiguous terms of the provisions for the Rail Operations Employees should now be applied differently to reflect what was a practice for the Support Employees, which in turn was not supported by the provisions of the 2016 EA applicable to them, would be a perverse outcome.

Conclusions and determination

For reasons set out above, the proper application of the provisions of the 2016 EA to the circumstances of the dispute are as follows:

For a Rail Operations Support Employee, where a (full-day) public holiday falls in the period between the starting and end date of a period of annual leave:

· The public holiday will not be treated as an annual leave day, there will be no deduction from the annual leave balance, and no annual leave loading is applicable to that day;
· The public holiday, including one that falls on what would have been a rostered day off, will be payable at the employee’s ordinary rate of pay; and
· In practice, the employee concerned may elect whether they wish to take the (replaced) annual leave day at another time or have the day’s annual leave added to the scheduled period of leave.

In the case of a part-day public holiday, for the relevant period covered by that public holiday (between 7.00 pm and midnight) where the employee would otherwise have been rostered to work and does not do so, that period will not be treated as annual leave and will be paid at ordinary time rates.

I determine accordingly.

COMMISSIONER

Appearances:

M Diamond for the Australian Rail, Tram and Bus Industry Union.

D Nikoloski for the Rail Commissioner.

Hearing details:

2019
Adelaide
20 August and 23 October.

Final Written submissions:

Australian Rail, Tram and Bus Industry Union - 16 September 2019.

Rail Commissioner – 18 September 2019.

[1] See also 4 yearly review of modern awards—Annual leave [2015] FWCFB 3406.

[2] Previously the Industrial Relations Commission of SA.

[3] Replaced by the Public Sector Act 2009 (SA).

[4] Schedule 3 of the State Act.

[5] Oxford Dictionary of English, Third edition.

[6] Schedule 4 of the State Act.

[7] Clause 22.7.5 of the 2016 EA.

[8] Supplementary written submissions, 30 August 2019.

[9] Relying upon Canavan Building Pty Ltd [2014] FWCFB 3202.

[10] [2011] FWAA 8834.

[11] Summarised in AMWU v Berri at [114] – paras 12 to 14.

[12] [2017] FWCFB 3005.

[13] See also Paper Australia Pty Ltd t/a Australian Paper v Australian Manufacturing Workers’ Union [2017] FWCFB 1621 at [21].

[14] [1929] AR (NSW) 498 at 503; See also City of Wanneroo v Holmes (1989) 30 IR 362 (at 378-379) and Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2].

[15] Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005, [2008] AIRC 1074, at para 17; See also National Union of Workers v Plexicor Australia [2008] AIRC 1134.

[16] (1993) 40 FCR 511, 517-8.

[17] This decision must be applied having regard to the fact that the instrument in that matter was an award of the Commission rather than an enterprise agreement made between the employer and a majority of the employees at the time of approval. See also AWU v Pasminco (2003) 131 IR 1 for the caution required in this regard.

[18] [2013] FWCFB 8557.

[19] [2018] FCAFC 131.

[20] Ibid at [197].

[21] AB v Tabcorp Holdings Limited[2015] FWCFB 523 at [11].

[22] See Construction Forestry Mining and Energy Union v The Australian Industrial Relations Commission and Another [2001] HCA 16; (2001) 203 CLR 645, Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FWCFB 2019 and Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82.

[23] Currently the Rail Commissioner Tram Operations Enterprise Agreement 2018.

[24] Exhibit RC1.

[25] Clause 16.7 - Annexure 7 of Exhibit RC1.

[26] Annexure 8 of Exhibit RC1.

[27] Exhibit RC1 at [16].

[28] Annexure E of Exhibit RTBU1.

[29] The material provided by Mr Phillips – attached to exhibit RTBU1.

[30] Clause 1.5.2 of the Leave Loading Award.

[31] Where a public holiday falls during a period of leave and the employee was not otherwise rostered to work, it appears that the public holiday was still paid to the employees concerned by virtue of what is now clause 22.7.5 of the 2016 EA.

[32] Based upon pay slips provided by the Rail Commissioner pertaining to this period.

[33] This is the change that has prompted this application.

[34] Noting that some Rail Operations employees are on an aggregate salary, where the issue under consideration here does not arise in the same way.

[35] AMWU v Berri at [114].

[36] AMWU v Berri at [114] 7 – 9.

[37] Clause 22.1 of the 2016 EA.

[38] See the brief discussion of the purpose of annual leave loading in the Background Paper issued by the FWC in 4 Yearly Review of modern awards—Annual leave common issue, dated 30 May 2014 at [80].

[39] For example clause 13.7.8 of the S.A. Public Sector Salaried Employees Interim Award (SA) and clause 4.4.1 of the South Australian Government Civil Construction and Maintenance Award.

[40] AMWU v Berri at [114] 2.

[41] [2013] FCA 330.

[42] [2014] FWC 325 at [8] to [12].

[43] AMWU v Berri at [114] 4.

[44] The 2011 Agreement contained a no forced redundancy provision in clause 16, whereas the 2016 EA contained a more conventional redundancy provision in clause 17 that contemplates employer initiated redundancies.

Printed by authority of the Commonwealth Government Printer

[2019] FWC 5705

5 November 2019