Benjamin Dilger v National Australia Bank T/A National Australia Bank Limited

[2023] FWC 1783

[2023] FWC 1783

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739 - Application to deal with a dispute

Benjamin Dilger
v

National Australia Bank T/A National Australia Bank Limited

(C2023/2464)

DEPUTY PRESIDENT MILLHOUSE MELBOURNE, 20 JULY 2023

Application to deal with a dispute arising under an enterprise agreement.

1. Mr Benjamin Dilger has made an application under s 739 of the Fair Work Act 2009 (Cth) (Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure at clause 64.1 of the NAB Enterprise Agreement 2016[1] (Agreement).

1. Mr Dilger commenced employment with the respondent on 4 July 2017 and was retrenched on 8 June 2022, representing a total period of four years and 11 months service. The dispute concerns whether Mr Dilger was entitled to be paid for long service leave upon his retrenchment. The agreed question for determination is as follows:

1.   Upon termination of his employment with National Australia Bank on 8 June 2022, was Mr Dilger entitled to be paid for any long service leave in accordance with clause 43.7(a) of the NAB Enterprise Agreement 2016.

1. In correspondence with my Chambers, the parties confirmed that the dispute resolution clause was first engaged in relation to this dispute prior to the cessation of Mr Dilger’s employment on 8 June 2023. I am satisfied that the parties have complied with clause 64.1 of the Agreement and the Commission is seized of jurisdiction to arbitrate the dispute.

The Agreement

1. Clause 43 of the Agreement concerns long service leave. Clause 43.2 establishes an employee’s entitlement to long service leave and provides, in full, as follows:

“An employee is entitled to the following amount of long service leave:

(a)       eight and two thirds weeks on completion of 10 years’ service with NAB; and
(b)      .0.866 weeks for each subsequent year of service.”

1. The agreed question concerns the application of clause 43.7(a), which states as follows:

“Where the employment of an employee is terminated otherwise than by their death, and any long service leave, to which the employee was entitled has not been taken or accrues to the employee upon such termination, NAB shall pay to the employee in full the amount in respect of such leave calculated as at the date of the termination, less any amount for leave already taken and paid to the employee.”

1. Clause 56 of the Agreement is titled “Retrenchment.” Clause 56.6(a)(ii) concerns an entitlement to long service leave where an employee is “retrenched” within the meaning of the Agreement and provides as follows:

“(a) In addition to all statutory entitlements on termination (other than severance payments which might otherwise be payable under the NES), a retrenched employee shall:

…

(ii) be paid any untaken long service on a pro rata basis for employees who have at least 5 years continuous service;…”

Contentions

1. Mr Dilger contends that clauses 43.7(a) and 56.6(a)(ii) of the Agreement each concern the payment of long service leave upon termination, but are in conflict. Mr Dilger submits that clause 43.7(a) relates to payments upon termination (other than death), and thereby covers the entitlement provided by clause 56.6(a)(ii) which deals specifically with termination by reason of retrenchment. Mr Dilger submits that in circumstances where the former clause contradicts the latter, the Agreement should be read in a manner that is beneficial to employees.

1. Mr Dilger emphasises the position of the comma in clause 43.7(a) and submits that the clause requires payment to an employee of (a) what that person is entitled to, or (b) what that person has accrued. Mr Dilger submits that, if the mitigating factor was the existence of an “entitlement,” then the comma in clause 43.7(a) is in the wrong position. Mr Dilger places reliance upon the use of the word “accrues” in clause 43.7(a) in support of his position that he is entitled to be paid accrued long service leave upon termination under that provision.

1. With respect to the accrual of long service leave, Mr Dilger relies upon a screenshot of the respondent’s payroll system, SAP, which specifies under the heading “Accrual” that Mr Dilger accrued 169.97 hours towards a long service leave entitlement during his employment. Mr Dilger’s submissions do not address the corresponding references to “0.00” long service leave hours in that screenshot under the heading “Available,” or “0.00” under the heading “Entitlement.” Despite this, Mr Dilger submits that the SAP system is the appropriate basis upon which to identify whether a long service leave entitlement has accrued, and rejects the contention that “special milestones” must first be met for the entitlement to accrue.

1. The respondent rejects that clause 43.7(a) and clause 56.6(a)(ii) are in conflict. It submits that clause 43.7(a) provides two grounds by which an employee may become entitled to payment for long service leave upon termination, neither of which apply to Mr Dilger:

(a)   where the employee already had an entitlement to long service leave at the time of the termination of employment; or

(b)   where an entitlement to long service leave accrued to the employee on termination.

1. With respect to (a), it is submitted that Mr Dilger does not have a long service leave entitlement because he has not completed 10 years’ continuous service (clause 43.2(a)). With respect to (b), the respondent contends that Mr Dilger was not entitled to payment for long service leave upon retrenchment because he did not have at least 5 years’ continuous service (clause 56.6(a)(ii)).

1. The respondent submits that this construction is consistent with the underpinning National Australia Bank Group Award 2002, which functions in a materially identical manner to the Agreement and contains less favourable triggering conditions. Further, the respondent submits that, on Mr Dilger’s construction, clause 56.6(a)(ii) would have no work to do, which tells against the interpretation Mr Dilger advances.

1. The respondent contends that Mr Dilger’s reliance upon the “Accrual” reference in the SAP system does not alter its position. It submits that long service leave under the Agreement does not accrue progressively in the manner that annual leave does. Rather, the long service leave entitlement is contingent upon the employee reaching the relevant service milestone (or another prescribed event dealt with by the Agreement occurs, such as the retrenchment of an employee with five years continuous service).

Principles of interpretation

1. The Full Court in James Cook University v Ridd[2] set out the proper approach to the interpretation of an enterprise agreement:

(i) The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes [1989] FCA 553; 30 IR 362 at 378 (City of Wanneroo v Holmes); City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 at [53] (City of Wanneroo v AMACSU); WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [197] (WorkPac v Skene)).

(ii) A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” (Kucks v CSR Limited [1996] 66 IR 182 at 184 (Kucks v CSR); Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16]; WorkPac v Skene at [197]). The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose” (Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 at [2]).

(iii) Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v AMACSU at [53]). It may extend to “ … the entire document of which it is a part, or to other documents with which there is an association” (Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511 at 518 (Short v FW Hercus); Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth of Australia [1998] FCA 249; 82 FCR 175 at 178).

(iv) Context may include “ … ideas that gave rise to an expression in a document from which it has been taken” (Short v FW Hercus at 518).

(v) Recourse may be had to the history of a particular clause “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 … ” (Short v FW Hercus at 518).

(vi) A generous construction is preferred over a strictly literal approach (Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-504; City of Wanneroo v AMACSU at [57]), but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties” (City of Wanneroo v Holmes at 380).

(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes at 378-379; WorkPac v Skene at [197]).

1. The respondent also relies upon the principles of construction set out by the Full Bench of the Commission in AMWU v Berri Pty Ltd,[3] which are applied without being re-stated here.

Consideration

1. For the reasons that follow, Mr Dilger’s argument fails. Mr Dilger has not established that (a) he accrued an entitlement to long service leave during his employment with the respondent, or (b) an entitlement to long service leave accrued upon the termination of his employment by retrenchment.

1. Clause 43.2(a) of the Agreement provides an entitlement to long service leave upon completion of 10 years’ continuous service. The entitlement is expressed to accrue on completion of 10 years’ of continuous service, and there is no express clause which provides that it is to accrue progressively. On this basis, I am satisfied that the entitlement accrues at the point in time an employee completes 10 years’ continuous service within the meaning of the term “continuous service” in clause 5 of the Agreement. Long service leave does not accrue progressively.

1. Clause 56.6(a)(ii) of the Agreement provides an entitlement for retrenched employees to “be paid any untaken long service on a pro rata basis” if the employee has at least 5 years continuous service. Consistent with the need to interpret the clauses of the Agreement as a whole and in context, I consider that clause 56.6(a)(ii) must be read with clause 43.2(a) in order for it to be meaningfully understood and applied. This is because clause 56.6(a)(ii) does not itself provide an entitlement to “long service” in the sense that it provides an amount of leave. Rather, the amount of leave is provided for in clause 43 of the Agreement. When understood in this way, it is apparent that clause 56.6(a)(ii) reduces the triggering condition in clause 43.2(a) from 10 years to 5 years continuous service in circumstances where an employee with at least 5 years’ service is terminated by reason of retrenchment.

1. The conditions to the entitlement in clause 56.6(a)(ii) are the completion of at least 5 years’ continuous service and the termination of employment by retrenchment. As with clause 43.2(a), there is no express term in clause 56.6(a)(ii) which provides that long service leave is to accrue progressively. It follows that, even if characterised as an accruing entitlement, any such accrual does not crystallise until these conditions are satisfied. Prior to the completion of at least 5 years’ continuous service and termination by retrenchment, there is no entitlement, nor has any entitlement “accrued.”

1. There is no dispute between the parties that Mr Dilger commenced employment on 4 July 2017 and was retrenched on 8 June 2022, representing a total period of four years and 11 months service. It is not contended that Mr Dilger’s period of service was not continuous within the meaning of the Agreement. On the basis of Mr Dilger’s period of continuous service, Mr Dilger has not accrued any long service leave pursuant to clause 43.2(a). Nor is there an entitlement to be paid any untaken long service leave on a pro rata basis pursuant to clause 56.6(a)(ii) because Mr Dilger did not have at least 5 years’ continuous service at the time of his retrenchment.

1. Mr Dilger relies on the screenshot for the respondent’s SAP system in support of his contention that an entitlement to long service leave has accrued to him. While I appreciate that the reference to “Accrual” in the SAP system may have given rise to some confusion on the part of Mr Dilger, the issue before the Commission concerns the ascertainment of the correct construction of the Agreement. The language of the Agreement does not take meaning from the labels used in a payroll system. The evidence is simply not relevant to the task before me.

1. In any event, I observe that Mr Dilger places selective reliance upon the information available in SAP. While the payroll system records the amount of long service leave to which an employee may become entitled when the triggering conditions are met, SAP simultaneously identifies with precision the value of that entitlement to an employee by reference to the “Entitlement” column and the “Available” column. In Mr Dilger’s case, that available entitlement is clearly expressed as “0.00” having regard to Mr Dilger’s period of continuous service.

1. On Mr Dilger’s view, clause 43.7(a) is engaged because he has “accrued” an entitlement to long service leave in SAP. Mr Dilger’s construction does not find support in the terms of the Agreement and is rejected. For the reasons given at [20], no entitlement to long service leave has been accrued under the Agreement on any view, whether the entitlement accrued upon Mr Dilger’s termination or otherwise. The arguments advanced by Mr Dilger with respect to the position of the comma in clause 43.7 do not alter this conclusion.

1. Further, I do not accept Mr Dilger’s contention that clause 43.7(a) of the Agreement is in direct conflict with and contradicts clause 56.6(a)(ii). I concur with the position advanced by the respondent that clause 56.6(a)(ii) constitutes one of the circumstances provided for in clause 43.7(a) – that is, an entitlement that arises on termination of employment, where the termination is the result of retrenchment and concerns an employee with a least five years continuous service.

Conclusion and order

1. The agreed question for determination is as follows:

1.   Upon termination of his employment with National Australia Bank on 8 June 2022, was Mr Dilger entitled to be paid for any long service leave in accordance with clause 43.7(a) of the NAB Enterprise Agreement 2016.

1. For the reasons given, the answer to the question for determination is “no.”

DEPUTY PRESIDENT

Appearances:

Mr B. Dilger on his own behalf
Ms S. Aloi on behalf of the respondent

Hearing details:

2023.
Melbourne (by video using Microsoft Teams)
19 June

[1] AE421335; [2016] FWCA 6921

[2] [2020] FCAFC 123 at [65]

[3] [2017] FWCFB 3005; 268 IR 285 at [114]

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