“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v UGL Operations and Maintenance (Services) Pty Limited
[2023] FWC 3045
•20 NOVEMBER 2023
| [2023] FWC 3045 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
UGL Operations And Maintenance (Services) Pty Limited
(C2023/3178)
| DEPUTY PRESIDENT DOBSON | BRISBANE, 20 NOVEMBER 2023 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]
This Decision concerns an application made on 5 June 2023 by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) pursuant to s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute under the dispute resolution procedure in the AGL APLNG Enterprise Agreement 2020 (the Agreement). The application is made by the AMWU on behalf of its member, Mr Andrew Skinner. The Respondent is UGL Operations and Maintenance (Services) Pty Limited (the Respondent or UGL), Mr Skinner’s employer.
Agreed Questions for Arbitration
The AMWU and UGL initially agreed that the question for determination is as follows:
“Pursuant to the UGL APLNG Enterprise Agreement 2020, for an annualised salary employee, employed as a Level 7 Maintenance Technician on Curtis Island, working on a Sportsman’s Roster which is 12.25 hours shift length, 14 shifts and 14 rostered days off:
(a) What amount should an employee be paid for each hour of accrued but untaken annual leave on termination of employment?
(b) More precisely, should it be paid at separation at a rate of $74.63 per accrued hour or $37.313 per accrued hour? “If the Enterprise agreement is silent in respect to Question 1 or Question 2, does Clause 4 of The Agreement “Relationship to Parent Award” apply?”
However, following a mention held on 10 November 2023, the parties wrote to my Chambers on 14 November 2023 and agreed the revised question for arbitration is:
“Pursuant to the UGL APLNG Enterprise Agreement 2020, for an annualised salary shift worker entitled to five weeks annual leave per year, working on a Sportsman’s roster which is 12.25 hours shift length, 14 shifts and 14 rostered days off (an “annualised salaried shift worker’), how should the amount of annual leave:
a.be accrued during the course of employment?
b.be paid when taken during the course of employment? And
c.that is accrued but untaken be paid on termination of employment?”
Legislation
The Act provides for the Commission to deal with disputes in relation to disputes under enterprise agreement dispute settlement terms. Section 739 of the Act states:
“739 Disputes dealt with by the FWC
(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.
(2) The FWC 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 the FWC dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.
Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).
(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.
(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.
Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).
(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.
(6) The FWC may deal with a dispute only on application by a party to the dispute.”
The matter was allocated to another Member on 6 June 2023. The Commissioner listed the matter for a conference on 9 June 2023. On 22 August 2023, the matter was allocated to me. I issued directions for the filing of material on 25 August 2023. The Directions included a requirement that the parties advise whether there were contested facts and the need for a hearing.
Noting that there is no dispute that the pre-requisites to the Commission’s involvement have been followed, I am satisfied that the Commission is empowered to resolve the dispute by determination of the agreed questions in accordance with the dispute settling procedures at clause 18 of the Agreement and s 739 of the Act.
On 12 October 2023, the Applicant contacted my chambers, provided a statement of agreed facts and confirmed that the parties had agreed that there were no contested facts and that they were in agreement that the matter could be determined on the papers.
Background
The relevant Agreement is set out in the first paragraph of this decision. It is noted that this Agreement has since been superseded by the UGL APLNG Enterprise Agreement 2023 (Replacement Agreement) which was approved on 7 August 2023. The provisions that are relevant to the dispute are substantially unchanged.
Relevant Provisions of the Agreement and the Award
Clause 18 of the Agreement states:
“18. Dispute Resolution Procedure
(a)If a dispute relates to a matter arising under this Agreement, the FW Act or the NES, the following Issues Resolution Procedure will be followed:
Step 1 - The Employee/s concerned will raise the matter with the appropriate Supervisor for resolution.
Step 2 - The Employee/s concerned will raise the matter with the appropriate Superintendent for resolution.
Step 3 - If not resolved, the Employee/swill raise the matter with the Contract Co-ordinator.
Step 4 - If not resolved, the Employee/swill raise the matter with the Business Manager.
Step 5 - If not resolved, either party may refer the dispute to FWC for resolution by conciliation.
Step 6 - If not resolved, then the matter may be referred to FWC for arbitration, provided that any arbitrated outcome is consistent with current legislation.
(b)An Employee who is a party to the dispute may appoint a representative for the purposes of the steps in this procedure.
(c)While the parties are attempting to resolve the matter, the Employees will continue to work in accordance with the status quo. If the Employee has a reasonable concern about an imminent risk to his or her health or safety, the Employee must comply with a direction by UGL to perform other available work that is safe and appropriate for the Employee to perform.
(d)Any outcome reached by the parties or recommendation arising from FWC proceedings cannot be inconsistent with Legislative provisions including but not limited to the Code for the Tendering and Performance of Building Work 2016. Additionally, any recommendation arising from FWC must not change the intent and/or the benefits contained within the Agreement.”
Clause 9 of the Agreement states:
Remuneration
9.1 Salary and Allowances
(a)Employees will be paid the applicable salary or hourly rate in accordance with clause 9.l (b) and 9.1 (c) and the relevant Appendices, as is applicable.
(b)Annualised Employees
(i)Where a permanent employee works in accordance with Appendix 4 (Day/Night Continuous Sportsmans Roster), the applicable all-inclusive salary at Appendix 3 as is applicable, includes compensation for:
• any location and/or disability allowances payable; and
•conditions on the site and skills associated with or likely to be associated with work on the site (including but not limited to special payments to compensate for overtime, shift allowances, on call, travel, delays associated with travel, meal allowance, stand by, Saturday Work, Sunday Work, public holiday work, annual leave loading); and
•climate conditions, areas of work and the wearing of any safety equipment
……
(d)Payment will be on a weekly basis by electronic funds transfer into the Employee’s bank, building society or credit union account. (Emphasis Added).
Clause 12 of the Agreement states:
Hours of Work and Rosters
12.1 Annualised Employees
(a)The ordinary hours of work are 38 hours per week averaged over a 12-month period.
(b)Unless otherwise agreed between UGL and an employee, the spread of ordinary hours of work for rostered employees shall be between the hours of 6:00am and 6:00pm for dayshift and 6:00pm and 6:00am for nightshift inclusive.
(c)Employees are required to work such hours, including shift work, rostered overtime applicable to a 12.25-hour working day, weekend and public holiday work, as required for the effective performance of their role. Any overtime outside rostered hours will be approved and directed by UGL. Overtime work will be allocated in consideration of operational requirements, fatigue management, workplace health and safety and an employee’s personal circumstances.
(d)Work shall be arranged in accordance with rosters. Without limiting UGL’s right to determine its rosters consistent with notice provisions and the provisions of consultation at clause 20, sample rosters for the purposes of this Agreement are in Appendix 4.
(e)UGL has the right to introduce new rosters. UGL shall consult with employees and provide a minimum of four (4) weeks’ notice before introducing a new roster or one (1) weeks’ notice to change between rosters. The Company will undertake its best endeavours to facilitate roster changes at the end of a complete roster cycle. When this occurs, the new roster may impact on the annualised salary remuneration. Where this occurs, UGL shall ensure that employees are provided with this information in the consultation period and that the new remuneration will be no less than the employee would have received under the existing annualised salary remuneration on a pro-rata basis for the new hours worked. Shorter periods of notice may operate by agreement with any affected employee concerned, or in the event of an emergency.
(f)An employee shall work during meal breaks at ordinary rates of pay whenever instructed to do so for the purpose of making good breakdown of plant or upon routine maintenance of plant which can only be done when such plant is idle. At the completion of work in accordance with this clause, the employee will have their required break. (Emphasis added).
Clause 15 of the Agreement states:
Leave
15.1 Annual Leave
(a)All Employees (other than casual Employees) will be entitled to 4 weeks annual leave per annum.
(b)All Employees engaged in working shifts that are continuously rostered 24 hours a day for 7 days a week and who are regularly rostered to work those shifts and regularly work on Sundays and public holidays are ‘shift workers’ for the purpose of the NES. For the avoidance of doubt, work on the day roster is not shift work. These Employees will be entitled to 5 weeks annual leave.
(c)Employees are encouraged to take their full entitlement of annual leave each year.
(d)Where an alternate annualised roster is introduced in accordance with clause 12.l(e), where the alternate roster meets the definition of shift workers at clause 15.l(b), the employee will continue to receive 5 weeks of annual leave at the average weekly hours of the alternate roster.
(e) Unless UGL and an Employee agree otherwise, annual leave shall be taken in periods which coincide with complete roster cycle arrangements. (Emphasis added)
Appendix 3 of the Agreement states:
Permanent Employees - Day/Night Continuous Sportsmans Roster (12.25 hours per shift)
| Classification | ANNUALISED SALARY EFFECTIVE FROM THE 2/12/19 | Annualised Salary effective from first full pay period on or after 1/1/2021 | Annualised Salary effective from the first full pay period on or after 1/1/2022 |
| Level 6 | $ 157,315.41 | $160,461.72 | $163,670.95 |
| Level 7 | $159,920.58 | $163,118.99 | $166,381.37 |
| Level 8 | $166,834.89 | $170,171.58 | $173,575.02 |
Appendix 4 of the Agreement sets out the sample rosters.
Relevant Provisions of the National Employment Standards
The National Employment Standards at s.87 provide for either 4 or 5 weeks of paid annual leave dependent upon whether an employee is described as a shiftworker for the purposes of the National Employment Standards where the employee is covered by an enterprise agreement.[1]
Further, the National Employment Standards at s.87 provide that:
“Accrual of leave
(2) An employee’s entitlement to paid annual leave accrues progressively during a year of service (other than periods of employment as a casual employee of the employer) according to the employee’s ordinary hours of work and accumulates from year to year.”
The National Employment Standards at s.90 provide:
“(1) [Payment is at base rate for ordinary hours of work] If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period. (Emphasis added)
(2) [Employer must pay untaken annual leave when employment ceases] If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.” (Emphasis added)
Applicant’s Submissions
The Applicant’s contentions are detailed in its submissions and evidence which I don’t intend to repeat, however the substantive procedural history is outlined in this decision and the parties are in agreement as to that history.
The Applicant contends that the language of s 90(2) of the Act describes an entitlement to receive the amount of annual leave that would have been payable had the employee taken that period of leave and that it is markedly different from s 90(1), which provides that when annual leave is taken, it must be paid at the base rate for ordinary hours worked in the period and on termination.
The Applicant draws attention to the Full Court of the Federal Court’s decision in Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and energy Union and Another[2], which highlights the distinction between what was required to be paid when annual leave was taken in accordance with s 90(1) and what the employer must pay when the employment of an employee ends in accordance with s 90(2). The Full Court stated that:
“39. The context in which s 90(2) must be construed includes the existing state of the law, that is to say, the state of the law at the time of the enactment: CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408.
40. The precursor to s 90 of the FW Act was s 235 of the Workplace Relations Act 1996 (Cth) (“WR Act”), which was part of the Australian Fair Pay and Conditions Standard in Pt 7 of the Act. It reads as follows:
235 Annual leave – payment rules
(1) If an employee takes annual leave during a period, the employee must be paid a rate for each hour (pro-rated for part hours) of annual leave taken that is no less than the rate that, immediately before the period begins, is the employee’s basic periodic rate of pay (expressed as an hourly rate).
(2) If the employment of an employee who has not taken an amount of accrued annual leave ends at a particular time, the employee must be paid a rate for each hour (pro-rated for part hours) of the employee’s untaken accrued annual leave that is no less than the rate that, immediately before the time is the employee’s basic periodic rate of pay (expressed as an hourly rate).
41. Centennial argued that there is nothing in the FW Act or the extrinsic materials to suggest that the Parliament intended to change the payment rules as laid down in the WR Act. This argument must be rejected. One cannot ignore the fact that the references to “basic periodic rate of pay” appearing in both subsections of s 235 of the WR Act have re-emerged as “base rate of pay” only in s 90(1) of the FW Act. That manifests a legislative intention not to confine “the amount that would have been payable…” to the base rate of pay. If the intention were otherwise, one would expect to see “base rate of pay” in both subsections of s 90 or, at least a reference in s 90(2) to the rate prescribed by s 90(1).”
The Applicant submits that the above distinction is important in the present case as the drafting of s 90(2) was intended to capture more than payment for a base rate of pay as explained in Centennial, where it was held to be an amount that included a component for rostered overtime, shift allowances, weekend penalty rates or leave loadings, as that was what the governing enterprise agreement in that case provided for when annual leave was taken during employment.
The Applicant contends that correct amount of annual leave should be the amount employees would receive for their rostered days, and their non-rostered R&R days, as that is
what they receive when they take annual leave during the course of their employment.
The Applicant cites the primary judge’s approach in Centennial to support their argument that the construction of s 90(2) protects the whole entitlement to annual leave which was affirmed by the Full Court. His Honour at first instance held that:[3]
“…an employee should not suffer reduction in the value of unpaid annual leave if employment comes to an end while paid annual leave remains untaken.”
The Applicant states that for an employee working on a Sportsman’s Roster, the value of two weeks of accrued leave had the employee taken the leave, is four weeks of their weekly annualised salary. It is two weeks salary for the time off during rostered shifts, for which annual leave accruals would be deducted, and two weeks salary for the 14 R&R days, during which the employee is entitled to be absent from work while still receiving pay.[4]
The Applicant submits that the Respondent’s calculation of $37.313 per hour for accrued annual leave cannot be reconciled with the requirements of s 90(2) of the Act and the practical realities of taking annual leave.
In order to comply with s 90(2) of the Act, the Applicant submits that the Respondent’s calculation would be paying the employee the amount they would have received had they taken that period of leave, the employee would have to have been taking (and being deducted) the leave at a rate of “28 12.25 hour days per 28-day work cycle”.[5] The Applicant submits that such a suggestion is divorced from the practical and industrial reality.
The Applicant states that no employee can be required to access annual leave on (or be deducted accruals to cover) days they are not rostered to work.
The Applicant contends that the most annual leave that could be taken by an employee in a 28-day work cycle is 14 shifts of 12.25 hours, totalling 171.5 hours annual leave, in a work cycle where the employee receives four weeks salary totalling 12,798.36 gross.
The Applicant contends that the correct amount of pay per hour of accrued leave on termination is 12,798.35, which is a rate of $74.63 per hour.
The Applicant seeks a determination that where the employment of an annualised salary employee under the Agreement ends, and that employee has a period of accrued but untaken annual leave, the amount payable for annual leave to the employee includes both the salary the employee would have received for the rostered days that they would have had annual leave deducted to cover, and also the equivalent amount of salary to cover the non-rostered days when they would have been entitled to be absent from work, while still receiving their salary.[6]
Respondent’s Submissions
The Respondent’s contentions are detailed in its submissions and evidence which I don’t intend to repeat, however briefly, the Respondent agrees with the Applicant’s substantive procedural history set out in this decision.
The Respondent submits that it has paid the correct leave entitlements to employees on termination at all times. It submits that Mr Skinner was engaged on an annualised salary arrangement in accordance with the Agreement (Annualised Employee).
Clause 2 of the Agreement provides for a definition of an Annualised Employee:
“… an employee engaged to work the Day/Night Continuous Sportsman’s Roster at Appendix 4 and who is paid the annualised salary rate at Appendix 3.”
Appendix 3 of the Agreement sets out the annualised salary for a Level 7 employee as being $166.381.37 (as at application time)
Appendix 4 of the Agreement sets out sample rosters. These include the Sportsman’s Rosters which is one of 14 shifts on and 14 shifts rostered off and contains shifts of 12.25 hours in length.[7] The Agreement does not define the Sportsman’s Roster in any other way nor is it defined further in the Replacement Agreement. The Respondent states that the base hourly rate of pay is calculated by dividing the annualised salary by 52 and then by 85.75. The amount of 85.75 is calculated by multiplying the daily hours of work (12.25)[8] x 7 days in a week.
The Respondent agrees with the Applicant’s Submissions[9] that the Agreement is silent as to how accrued but untaken annual leave is paid on termination. The Respondent sets out that non-casual employees are entitled to 4 weeks of annual leave per annum[10] and that shift workers are entitled to 5 weeks of annual leave per annum.[11] The Respondent further submits that the Agreement provides that, “unless UGL and an employee agree otherwise, annual leave shall be taken in periods which coincide with complete roster cycle arrangements.”[12] The Respondent submits that this makes sense logistically with respect to its rostering but also submits that it implicitly confirms that annual leave and R&R work alongside each other.[13]
The Respondent submits that the payments made to Annualised employees during periods of R&R is done so for the purpose of evening out the earnings of those employees over the course of the year and that this is neither controversial nor novel.[14]
Section 90 of the Act deals with payment of annua leave. Section 90 states:
“(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”
Section 16(1) of the Act pertains to the rate of pay payable to the employee for his or her ordinary hours of work.
The Respondent contends that the base rate of pay for Annualised Employees is $37.313 per hour and that this is demonstrated by Annexures AS-2 and AS-3 to the Witness Statement of Andrew Skinner where the base rate of pay is shown as “normal time”, or in the parlance of s 90(1) of the Act, “ordinary hours of work”.
The Respondent submits that the Applicant’s application does not contend that the base rate calculation is incorrect. The Respondent draws attention to its response regarding annual leave I the Act provided to the Applicant by email dated 24 May 2023.[15] It provided that:[16]
“The effect of s90(2) is that if that is the rate at which the employee is paid when he or she takes annual leave, then that is the minimum amount that must be paid for any accrued untaken leave. If, on the other hand, there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then s90(2) stipulates that that is the rate which is payable where annual leave has accrued but has not been taken. This is the natural way to read the section and there is nothing in the legislative context which would require a different interpretation: Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100 [38].”
The Respondent submits that the base rate is determined by the following formula: “$166,381.67/ 52/ 85.75 = $37.31.”[17]
The Respondent maintains that the amount of 37.31 is the base rate and the rate at which the annual leave is accrued and paid when taken and paid out on termination.
The Respondent submits that the analysis of the Applicant is “plainly wrong”.[18] The Respondent contends that the Applicant’s analysis has the effect of doubling the amount of annual leave that is payable on termination. The Respondent states that R&R is not to be contemplated in the payment of annual leave either when an Annualised Employee is at work or on termination.
The Respondent submits that s 90 of the Act is not concerned with the R&R payments which are a deliberate and beneficial device to ensure continuity and constancy of payment.
The Respondent submits that the Applicant has assumed that an employee will only ever be taken in conjunction with R&R. However, the Respondent contends that practically, most employees would seek to optimise the amount of paid time away from work and utilise as little amount of leave accruals as practicable. The Respondent provides a hypothetical example of an Annualised Employee working the Sportsman’s Roster, the employee would have utilised two weeks paid annual leave being abutted by two periods of R&R. This approach is consistent with cl 15.1(e) of the Agreement. The Respondent contends that as the period of annual leave is taken is two weeks, what occur on either side of the period of annual leave is not itself annual leave nor is it inherently, “the amount that would have been payable to the employee has the employee taken that period of leave.”[19]
The Respondent states that the above hypothetical scenario, cannot mean that on termination an employee who had the equivalent of two weeks’ worth annual leave accruals will be paid six weeks’ pay. The Respondent submits that this is a “ludicrous proposition and inconsistent with the statutory intendment and all common sense.”[20]
The Respondent provided a second example of an employee who did not take leave in accordance with cl 15.1(e) but only took one week of paid annual leave rather than two weeks of paid annual leave which is consistent with the Sportsman’s Roster. The employee would only be paid for that one week of paid annual leave in the usual way. The R&R period that abuts the paid annual leave period would not be taken into consideration. They would be paid for the hours of accrued annual leave at $37.313 per hour.
The Respondent contends that R&R is a distinct and separate payment to annual leave, it is not intrinsically linked to annual leave which is taken as leave during the course of employment or paid out on the termination of employment.
The Respondent submits that the correct amount of for each hour of accrued but untaken annual leave on termination of employment is $37.313.
Agreed Facts for the purposes of these proceedings
Andrew Skinner and the Sportsman’s Roster
At all times material to the dispute the subject of this proceeding Mr Andrew Skinner was employed under the UGL APLNG Enterprise Agreement 2020 (Agreement) as a Level 7 Maintenance Technician on an annualised salary arrangement.
At all material times Mr Skinner was employed on what the Agreement describes as the Sportsman’s Roster.
The details of Mr Skinner’s employment and the operation of the Sportsman’s Roster are detailed in paragraphs 1 to 14 of the Witness Statement of Andrew Skinner filed on 8 September 2023.
Paragraphs 1 to 14 of that Witness Statement, including annexures, are agreed facts.
Procedural history and Dispute Resolution Process
The parties agreed that the dispute the substance of this proceeding would be most properly heard by the Fair Work Commission (FWC) given it involves a consideration of a provision of the Fair Work Act 2009 (the Act).
Mr Skinner, an affected employee, commenced the dispute resolution procedure contained in the Agreement.
The procedural history of this matter and the steps taken to resolve the dispute, and relevantly to comply with the requirements of the Dispute Resolution Process in the Agreement, are detailed in paragraphs 6 to 21 of the Applicant Outline of Submissions filed on 8 September 2023.
Paragraphs 6 to 21 of those Submissions are agreed facts. They are:
Substantive procedural history
“6. It may assist to explain that the broader issue of the correct amount of payment for annual leave on termination for annualised salary employees under the Agreement has existed between the parties for some time prior to the current dispute.
7. By way of brief procedural history, the issue arose when an AMWU member engaged under the Agreement on an annualised salary with some 580 hours of accrued but untaken annual leave resigned in August 2022. That member and his AMWU representatives considered that he had only been paid out on termination half the amount he was entitled to be paid for those accruals per s 90(2) of the Act.
8. Discussions between the affected AMWU member and local management, and then further correspondence between AMWU officials and UGL Industrial Relations managers failed to reach a satisfactory resolution.
9. Following that correspondence, on 19 January 2023 the AMWU filed a Fair Work Claim in the Queensland Industrial Magistrates Court which was initially conciliated by an Industrial Commissioner of the Queensland Industrial Relations Commission. During the course of those proceedings and subsequent correspondence the parties developed a clear understanding of the difference in their positions.
10. Rather than proceeding to list the Fair Work Claim for hearing before an Industrial Magistrate or other another Court the parties agreed that the relevant industrial expertise of the Fair Work Commission (FWC) may be a more appropriate jurisdiction to determine this matter, which will turn on the correct interpretation of s 90(2) of the Act, being a provision of the National Employment Standards (NES).
11. Accordingly, the parties agreed to invoke the arbitral powers of the FWC to hear and determine the matter as a s 739 dispute arising under the Agreement as a dispute about the application of the NES.
12. To invoke those arbitral powers AMWU member and UGL employee Mr Andrew Skinner, who is engaged on an annualised salary arrangement under the Agreement made a request for a quote from UGL for the amount that he would be paid for his accrued but untaken annual leave balance were he to resign at that point in time.
13. On 26 April 2023, Mr Michael Hempseed, Maintenance Superintendent for the Respondent indicated to Mr Skinner that his annual leave accruals would be paid out at the rate of $37.313 per hour.
14. On 9 May 2023 Mr Skinner notified his immediate supervisor, Mr Hempseed, that he disagreed with the proposed calculation of the hourly rate and nominated Mr Daniel Peatey of the AMWU as his representative for the purposes of the dispute resolution procedure in clause 18 of the Agreement.
15. On 19 May 2023 Mr Hempseed responded in writing confirming UGL believed the $37.313 hourly rate was the correct rate.
16. On 19 May 2023, in accordance with Step 3 of the dispute resolution procedure in the Agreement, Mr Peatey raised the matter in writing with Mr Mark Davies, Contract Manager for UGL at the APLNG site.
17. On 22 May 2023 Mr Davies reaffirmed in writing UGL’s position that the $37.313 figure was the appropriate rate.
18. On 22 May 2023, in accordance with Step 4 of the dispute resolution procedure in the Agreement, Mr Peatey escalated the matter in writing to Mr Shaun Petersen, Gladstone Area Manager of UGL.
19. On 24 May 2023 Mr Petersen reaffirmed in writing UGL’s position that the $37.313 figure was the appropriate rate. Mr Petersen further indicated the matter would not resolve by further discussion between the parties.
20. Annexure AS-4 to the Statement of Mr Skinner contains a true copy of the correspondence described in paragraph 13 to 19.
21. On 5 June 2023 the AMWU, on behalf of Mr Skinner, made this application for the FWC to deal with a dispute in accordance with the Agreement’s dispute settlement procedure.”
The dispute settlement procedure contained in the Agreement has been complied with and I am satisfied that the FWC has the jurisdiction to hear and arbitrate the dispute that is the substance of this proceeding.
Principles Relevant to the Interpretation of an Enterprise Agreement
The principles were conveniently summarised in the Full Bench decision of Berri[21] which I will set out here for completeness:
“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.
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.
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.
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.
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.
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.
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.
Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
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 aid 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 and 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.”[22]
Consideration
I first turn my mind to the meaning of s.90(2) of the Act in the National Employment Standards and specifically the interpretation of that provision by the Federal Court in Centennial, upheld on appeal to the full Court. In Centennial, his honour found at first instance, that an employee should not suffer a reduction in the value of unpaid annual leave if employment comes to an end while paid annual leave remains untaken.[23] The purpose of this was to ensure that an employee who would ordinarily have been rostered to work shiftwork, or overtime or to have been rostered for work that incurred allowances, should continue to receive the additional payments or entitlements as if they had taken them.
In the circumstances of this case, the Respondent has included payment for shift penalties, overtime and other allowances in the form of an annualised salary.[24] The Agreement sets this out,[25] and such payment is consistent with the 12.25 hour day worked by employees on the sportsman’s roster. On that basis, this proceeding is distinguished from Centennial to the extent that the allowances and penalties that Centennial finds ought be included, are already included in the Respondent’s “Annualised Salary”.[26]
I next turn my mind to the plain meaning of the Agreement. The Agreement provides that Employees are paid either a salary or an hourly rate in accordance with Clause 9.1(b) and Clause 9.1(c).[27] The plain meaning of this clause given that clause 9.1(b) sets out the arrangements for an annualised employee to be paid an all-inclusive salary (at Appendix 3 which is the annualised salary of the employee),[28] is that these employees are paid a salary not by the hour.
The Agreement provides that the ordinary hours of work for an Annualised Employee are 38 hours per week averaged over a 12-month period.[29] Further, the Agreement provides that employees are paid weekly.[30] Employees are therefore paid the same amount every week that they work over the course of the year. Employees are not paid for the actual hours worked or not worked each week. Such an arrangement would see them receiving a large payment some weeks and no payment on other weeks, and would defeat the purpose of having an annualised salary to smooth out the highs and lows of any rostering pattern, instead they are paid the same amount each week.
When I turn my mind to the amount of annual leave accrued by Mr Skinner, I find that the plain meaning of the words provides a clear answer. Employees are entitled to 4 weeks of annual leave[31] per annum or 5 weeks of annual leave per annum for continuous shift workers as defined.[32] This is consistent with the interpretation of the amount payable being the weekly amount of the annualised salary which is evenly paid throughout the year.
In light of this, if I turn my mind back to the NES at s.90(2), the Respondent is required to pay the employee on termination the same amount that would have been payable that the employee taken the period of leave rather than had it paid out on termination. Having regard for my findings at [57] I find that the Respondent would have continued to pay Mr Skinner the same pay he would have always gotten. That is the annual salary divided by 52 weeks for each week. This is the same weekly salary he would be paid whether he is on rostered days off, whether he is working 7 x 12.25 hour shifts or whether he is on annual leave.
In the scenarios posed by both the Applicant and the Respondent, the employee would not receive the annual salary of $166,381.37 for the periods set out. On the plain meaning of the Agreement, the employees who are subject to an annualised salary are always paid the same amount of salary each week regardless of what hours they worked. I am satisfied that the accrued 5 weeks of annual leave are paid on this same basis. There is no double dipping. The employee must be paid an annual salary of $166, 381.37 each year. The hours of work are an average of 38 hours per week. What they actually work each week is not relevant because the annualised salary is intended to smooth out the roster swings such that the employee receives the same salary in each weekly pay period.
To provide some context and examples: when an employee takes their 14 rostered days off on each cycle, they would continue to receive their normal pay for the days off just as they do on the weeks for which the 14 days of work at 12.25 hours per day are performed. Similarly, if an employee were on paid leave at a time they would have been on rostered days off, they would still continue to receive their normal pay each week. This further supports the intention that an annualised salary is evened out to make even weekly payments throughout the course of the year, and it must follow that this is the same rate at which an employee would expect to be paid whilst on leave.
Conclusion
For these reasons, the answer to the questions for arbitration in the case of an annualised salaried shift worker are as follows:
Pursuant to the UGL APLNG Enterprise Agreement 2020, for an annualised salary shift worker entitled to five weeks annual leave per year, working on a Sportsman’s roster which is 12.25 hours shift length, 14 shifts and 14 rostered days off, (an “annualised salaried shift worker’), how should the amount of annual leave:
a.be accrued during the course of employment?
Annual leave is accrued at 5 weeks per annum for such annualised salaried shift workers. Based on 52 weeks in a year and 38 hours in a week, the annualised salaried shift worker would accrue a pro-rata of this amount for each hour worked. The calculation would be:
5 weeks @ 38 hours per week or 190 hours per annum accrued over the course of 52 weeks in a year @ 38 hours per week – therefore accruing an entitlement of 0.09615 hours for each hour worked or on paid leave.
b.be paid when taken during the course of employment? And
At the time of the dispute, Mr Skinner was employed on an annual salary of $166,381.31 per annum. Therefore, as an annualised salaried shift worker, Mr Skinner is paid an amount of $3,199.64 per week or $84.20 per hour (only for the purposes of breaking down the payments to be made where the amount of leave is less than a full week).
The answer is therefore that when an annualised salaried shift worker takes paid leave during the course of their employment, they should continue to get the annualised salary divided by 52 for every full week and that rate divided by 38 for every hour of paid leave. Therefore, where the annualised salaried shift worker is on an annualised salary of $166,381.31 per annum, they will be paid $3199.64 per week of paid leave and $84.20 per hour of paid leave subject to them receiving a maximum of 38 hours at this rate per week and a maximum of 7.6 hours per day which is consistent with the annualised salary achieving a regular rate of pay that is distributed evenly over the year, regardless of the actual hours worked or not worked.
c.that is accrued but untaken be paid on termination of employment?
The answer is that the annualised salaried shift worker would be paid their accrued but untaken leave at the same rate as if they took it. That is, where the annualised salaried shift worker is on an annualised salary of $166,381.31 per annum, they will be paid $3199.64 per week of paid leave and $84.20 per hour of paid leave subject to them receiving a maximum of 38 hours at this rate per week and a maximum of 7.6 hours per day which is again consistent with the annualised salary achieving a regular rate of pay that is distributed evenly over the year, regardless of the actual hours worked or not worked.
Therefore, in this scenario, if Mr Skinner has 6 hours of leave accrued but untaken, he will be paid $505.21 gross, for that leave. If Mr Skinner has 1 week of leave accrued but untaken, he will be paid $3.199.64 gross for that leave.
It is not relevant where in the roster cycle an annualised salaried shift worker falls when they are terminated or when they take leave, because by virtue of the annualised salaried arrangements, they are paid the same rate every week regardless of what hours they worked or did not work.
DEPUTY PRESIDENT
[1] Fair Work Act 2009 (Cth) s.87(1).
[2] 231 FCR 298 (‘Centennial’).
[3] Ibid [14].
[4] Applicant’s Outline of Submissions [44].
[5] Ibid [46].
[6] Ibid [49].
[7] Agreement cl.12.1(c).
[8] Ibid.
[9] Applicants Outline of Submissions [2].
[10] Agreement cl.15.1(a).
[11] Ibid cl.15.1(b).
[12] Ibid cl. 15.1(e).
[13] Respondents Outline of Submissions [22].
[14] Ibid [23].
[15] Annexure AS-2 to the Applicant’s Form F10.
[16] Respondent’s Outline of Submission [29].
[17] Ibid [30].
[18] Ibid [31].
[19] The Act, s 90(2).
[20] Respondent’s Outline of Submission [39].
[21] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005 (Berri).
[22] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005, [114] (Berri).
[23] Centennial [2015] 231 FCR 298 [15].
[24] UGL APLNG Enterprise Agreement 2020, cl.9.1(b)(i).
[25] Ibid.
[26] Ibid.
[27] Ibid Cl.9.1(a).
[28] Ibid Cl.9.1(b)(i).
[29] Ibid, Cl.12.1(a).
[30] Ibid Cl.9.1(d).
[31] Ibid Cl.15.1(a).
[32] Ibid Cl.15.1(b).
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