Boeing Aerostructures Australia Pty Ltd v Michael Gualano
[2018] FWC 7490
•11 DECEMBER 2018
| [2018] FWC 7490 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Boeing Aerostructures Australia Pty Ltd
v
Michael Gualano; Nathan Tuddenham; Glenn Rowlands
(C2018/3008)
DEPUTY PRESIDENT COLMAN | MELBOURNE, 11 DECEMBER 2018 |
Application to deal with a dispute – interpretation – ‘waiting time’ payment – whether payment applies to disputed claims
[1] This decision concerns an application made by Boeing Aerostructures Australia Pty Ltd (Boeing) under s 739 of the Fair Work Act 2009 (Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure in Part 2 of the Boeing Aerostructures Australia Pty Ltd (Port Melbourne) Enterprise Agreement 2014 (Agreement). 1
[2] Mr Michael Gualano, Mr Nathan Tuddenham and Mr Glenn Rowlands (Respondents) are employees of Boeing whose employment is covered by the Agreement. They are represented by the Australian Manufacturing Workers Union (AMWU).
[3] The dispute concerns whether the Respondents are entitled to ‘waiting time’ pay in respect of a single overtime payment claimed by each Respondent, but which the company does not recognise. Clause 5.11.4 of the Agreement provides that certain arrangements will apply to ‘payroll delays, omissions and corrections.’ In particular, it states that ‘where corrections of delays, errors and omissions’ are not made within specified parameters, employees will be paid waiting time at time and a half from the time the correction payment was due until such time as payment is made.
[4] Boeing contends that ‘waiting time’ payments under clause 5.11.4 apply where the delay in payment is due to a payroll or other administrative or systems error, but not where there is a genuine dispute about whether an employee is entitled to the relevant payment. The Respondents disagree, and submit that, if they are entitled to the overtime payments, the delay in payment triggers the ‘waiting time’ pay under clause 5.11.4.
[5] The Commission is not asked to determine the substantive dispute as to whether the Respondents are entitled to the overtime payments. The reason for this is evidently that the total value of the claimed overtime payments for the three employees is $868.74, 2 whereas the total value of the waiting time payments they claim is some $150,000.3 The waiting time payments are said to relate to the period 30 April 2018 to 4 June 2018, this period having been agreed between the parties for the purposes of the present dispute. However, the clause itself does not place any cap on waiting time payments.
[6] The application was initially listed for conference. The matter remained unresolved, and the parties agreed that the application should proceed to arbitration. Directions were issued for the filing and service of submissions and any evidentiary material, as well as an agreed statement of facts. The parties complied with these directions. The matter was then listed for hearing before me on Tuesday, 4 December 2018. Tendered in evidence were witness statements made by each of the Respondents, as well as by Mr Clyde Wright and Mr Matthew Storer, senior manufacturing managers, and Ms Kelly Knowles, senior human resources manager. Mr Graeme Sluggett, payroll analyst, gave evidence for Boeing and was cross-examined.
[7] It was common ground that the Commission is authorised by the dispute settlement provision in Part 2 of the Agreement to deal with the dispute by arbitration, and that the dispute can be resolved by my determining the question that the parties have submitted for arbitration. That question is:
‘If the non-payment of overtime to the Delegates for work performed on 19 April 2018 constituted an underpayment in breach of the BAA Agreement (which BAA expressly denies), would that non-payment have constituted a ‘payroll delay, omission or correction’ for the purposes of clause 5.11.4 of the BAA Agreement?’
[8] The company contends that the answer to the question is ‘no’. The Respondents submit that the answer is ‘yes’.
[9] I note that, since the application was filed, the Agreement has been superseded by the Boeing Aerostructures Australia Pty Ltd (Port Melbourne) Enterprise Agreement 2018 (2018 Agreement). The coverage of the two agreements is the same and the earlier agreement is no longer in operation. 4 Although the parties agreed that the Commission has jurisdiction to determine the dispute, I must satisfy myself of this matter. In my view the disputes procedure in the Agreement is no longer a source of authority for the Commission to deal with the present matter, because the Agreement is no longer in operation.5
[10] Nevertheless, the dispute resolution clauses in the 2014 and 2018 Agreements are identical. So too is the text of clause 5.11.4 in both agreements, save for one minor difference that is not relevant, as well as the overtime provisions. In my view, the scope of the dispute procedure in Part 2 of the 2018 Agreement, which applies to ‘the resolution of problems’, is broad enough to encompass a dispute that arose under the predecessor agreement but concerns identical provisions in the 2018 Agreement and an ongoing factual dispute about their application. 6 I can therefore determine the application under the 2018 Agreement. I raised these matters with the parties during the hearing and they concurred that the Commission can determine the dispute under the 2018 Agreement.
Factual background
[11] The background to the dispute can be briefly stated and is not contentious. On Wednesday, 18 April 2018, the Respondents attended a hearing in the Commission in Melbourne before Deputy President Masson, in which Boeing sought orders to stop industrial action under s 418 of the Act. It was not in dispute that the Respondents’ attendance at the Commission constituted working time for the purposes of the Agreement. The proceedings commenced at 4.00pm and concluded at approximately 8.10pm. After the hearing, the Respondents returned to Boeing’s Port Melbourne factory and clocked off using the company’s timekeeping system. Mr Gualano clocked off at 8.36pm, Mr Tuddenham at 8.36pm and Mr Rowlands at 8.43pm.
[12] The following morning, the Respondents presented for work at 6.00am, which is their normal rostered start time. They had not had a 10 hour break since finishing work the previous evening. Mr Tuddenham and Mr Gualano were advised of this fact by their supervisor during the morning. Mr Gualano’s supervisor, Mr Wright, said that at approximately 6.00am he spoke to Mr Gualano and told him that he had not had a ten hour break, and that he was not required to start work until later. 7 Mr Gualano claims that he had already started work by this time. In any event, all of the Respondents continued to work and completed their shift at 2.30pm.
[13] Clause 6.4.3.3 of the Agreement provides that where an employee is instructed to resume or continue work without having had ten consecutive hours off duty, the employee is to be paid double time rates until released from duty. Boeing did not pay the Respondents double time (overtime) for the shift they worked on 19 April 2018. It considered that they had not been instructed to resume or continue work without their ten hour break, and were therefore not entitled to the overtime payment.
[14] On 26 April 2018, the Respondents received their payslips and saw that they had not been paid double time for the shift that they had worked on 19 April 2018. On 27 April 2018, Mr Rowlands, on behalf of himself and the other Respondents, notified Boeing of a dispute, claiming overtime payments for work performed on 19 April 2018. He referred to clause 6.4.3.3 of the Agreement and stated that none of the Respondents had been told not to attend for work until they had had a ten hour break. 8
[15] On 30 April 2018, the Respondents each made an entry in the company’s ‘red book’ claiming payment of overtime for day shift on 19 April 2018. The red book is a register maintained by the payroll department which, among other things, enables employees to notify the company of ‘payroll delays, errors and omissions’ as contemplated by clause 5.11. Mr Sluggett described the red book as a register of payroll complaints that is kept in the payroll office. 9 Mr Tuddenham described it as part of a system for dealing with payroll errors.10
[16] On 1 May 2018, Ms Knowles replied to the Respondents’ dispute notification and to their ‘red book entries’. She stated that the company had not directed the Respondents to attend for work without a ten hour break, and therefore rejected their interpretation of the overtime provision. She also stated that the company did not consider their concern to constitute a payroll delay, and that it did not warrant a red book entry. 11
The parties’ positions on the overtime claims
[17] Although I am not asked to determine the overtime dispute, it is important to understand the parties’ positions, as this is relevant to the question of what is the reason for the alleged ‘delay’ in the company making those payments to the Respondents, and whether ‘waiting time’ payments must be made under clause 5.11.4.
[18] Clause 6.4.3.1 provides that when overtime is necessary it must, wherever reasonably practicable, be arranged so as to give employees at least 10 consecutive hours off duty between the work of consecutive days.
[19] Clause 6.4.3.2 states that employees who work so much overtime that they have not had 10 consecutive hours off duty before commencement of ordinary hours the following day must, subject to clause 6.4.3, ‘be released after completion of the overtime until the employee has had 10 consecutive hours off duty’, without loss of pay for ordinary hours occurring during this absence.
[20] Clause 6.4.3.3 then relevantly provides that if, ‘on the instructions of the employer an employee resumes or continues work without having had 10 consecutive hours off duty, the employee must be paid at double rates until he or she is released from duty.’
[21] The company contends that the Respondents are not entitled to overtime payments in respect of the shift worked on 19 April 2018 because they were not instructed to attend work prior to the conclusion of the 10 hour break. Boeing says that the expectation of management, and the practice at the site, is that employees will take a 10 hour break following overtime before commencing work the following day, unless they are specifically directed to start work before the expiry of 10 hours. 12 The company says that the Respondents were, in effect, released for a ten hour period unless otherwise directed. It says that in any event, the Respondents were not instructed to commence work before the ten hour rest period had elapsed, and that the overtime payments in clause 6.4.3.3 were not triggered.
[22] The Respondents’ position is that their usual starting time on 19 April 2018 was 6.00am, and that they commenced work as normal that morning. They dispute that there was an expectation or understanding that they would simply take the ten hour break unless directed otherwise. They contend that they were never instructed not to commence work at the normal time, or to commence work at a different time.
Factual findings in relation to the overtime dispute
[23] In my view, it is quite clear that there was and remains a genuine disagreement between the parties in relation to the question of whether the Respondents are entitled to overtime payments in respect of the shift worked on 19 April 2018. The evidence establishes that the Respondents claimed an entitlement to overtime, and that the company, through Ms Knowles, formally rejected this claim. 13 The Respondents raised the matter at ‘stage 3’ of the dispute procedure, and it has progressed through that process to the Commission for arbitration.
[24] Furthermore, there is no suggestion that the dispute has been manufactured to avoid liability for waiting time pay under clause 5.11.4. The Respondents genuinely claim to be entitled to overtime payments in respect of the day shift they worked on 19 April 2018, and the company genuinely contests the claim. While I have not heard full argument on the competing interpretations of clause 6.4.3, it is clear that the company’s position is not without merit. There is at least a respectable argument that, because the Respondents were not specifically directed to commence work before the expiry of the ten hour rest period, clause 6.4.3.3 was not enlivened: the double time payment referred to in that clause arose ‘if, on the instructions of the employer,’ an employee resumes work without a ten hour break. I make these observations in order to underscore the genuineness of the dispute between the parties about whether the Respondents are entitled to the overtime payments. If the company had raised a fragile objection to the overtime claim, this might have cast doubt on the genuineness of the dispute. But this is not the case.
[25] Having established that there is a genuine dispute about the Respondents’ entitlement to the overtime payments, the question which is the crux of the present matter must now be addressed: do waiting time payments in clause 5.11.4 apply to delays in payments in respect of entitlements that are genuinely disputed? The question posed by the parties assumes that the Respondents do indeed have an entitlement to the overtime payments, and that this is later affirmed by the Commission.
Submissions of the parties on clause 5.11.4
[26] The full text of clause 5.11.4 is set out in the Attachment to this decision. It should be noted that its various sub-provisions are not numbered. The clause is headed ‘payroll corrections’, and commences as follows: ‘It is agreed between the parties that the following procedures will apply to payroll delays, omissions and corrections.’ It then states that payslips will be delivered to each manufacturing lead or supervisor by certain times. Next the provision tells us that ‘payroll delays, errors and omissions do not include adjustments caused by’ employees not submitting records, or by changes to rates of pay or conditions (unless there is an agreed implementation date). It then states that ‘payroll delays, errors and omissions do include adjustments caused by’ five things: supervisor failure to forward required notifications; supervisor failure to authorise or forward notification of special payments such as overtime or allowances; failure of timekeeping devices; changed rates of pay where there is an agreed implementation and payment date; and errors in calculations and rates of pay.
[27] The clause then defines the ‘notification time’, which is a marker by reference to which payments under the clause are made. The clause goes on to provide that ‘minor errors and omissions’ (those amounting to a value of less than $25) will be held over to the next pay period. However, ‘where the payroll error or omission’ is greater than $25 but less than 25% of the ‘corrected gross pay’, a cash payment will be made within 2 working days of the notification time. And ‘where the payroll error or omission is greater than 25% of the correct gross pay’ and the notification is received before 1.00pm, a cash payment is to be made before the end of the next shift for day workers, and before the start of the next shift for afternoon and night shift workers. Of central importance is the provision referred to by the Respondents as the ‘key provision’, which states:
‘Where corrections of delays, errors and omissions are not made in accordance with the above, the employees will be paid waiting time at time and a half from the time the correction payment was due until payment is made. Any waiting time payments will be made in the following pay period.’
[28] The company contends that waiting time is payable in respect of delays that are due to ‘payroll delays, omissions and corrections’, which are all manifestations of payroll error, and in particular process error. It says that the purpose of the clause is to provide for the speedy rectification of such errors. If the company does not resolve errors in accordance with the stipulated timeframes, it must pay a ‘waiting time’ penalty from the time the ‘correction payment’ was due until payment is made.
[29] Boeing submits that, although the Agreement does not define what is meant by the words ‘payroll delays, omissions and corrections’, the inclusive list of circumstances that fall within them suggests that the clause contemplates some culpability or responsibility on the part of the employer for the relevant error. The clause’s concern with payroll error is further reflected in the references to ‘payroll problems’ that appear towards the end of clause 5.11.4.
[30] The company contends that a genuine dispute about whether an employee has an entitlement to a particular payment is not a payroll error, but of an entirely different nature. There is no element of employer fault, nor any process or other error to be corrected.
[31] In support of its construction, Boeing points to the explanation in clause 5.11.4 of the entries that are required to be kept in the ‘red book’ register, which include ‘agreed resolution of problem’ and the ‘date and time of corrective action’, both of which proceed on the basis of an underlying entitlement which is not contentious. It notes that the requirement in clause 5.11.4 to make any ‘waiting time’ payment in ‘the following pay period’ also tells against a conclusion that it applies to a genuine dispute, which is unlikely to be resolved within such a timeframe.
[32] Finally, in an argument developed at the hearing, the company contended that, if the interpretation of clause 5.11.4 advanced by the Respondents were accepted, the Commission should decline to give effect to the provision, as it would constitute or operate as a penalty. The company recognised that an enterprise agreement is not a contract, but relied on the decision of the High Court in Andrews v ANZ Banking Group Ltd 14 in support of a contention that the general law would not give effect to a penalty irrespective of whether it was contained in a contract, and that a penalty in an enterprise agreement should not be recognised.
[33] The Respondents acknowledge that there is a dispute between the parties over the entitlement to the overtime payments they claim. However, they contend that clause 5.11.4 applies to payments that have not been made because of a dispute about the claimed entitlement. They say that the company’s decision not to make the overtime payments is a payroll delay.
[34] The Respondents contend that the key provision quoted above applies on its terms to any delay, error and omission. They submit that clause 5.11.4 does not exclude from its scope disputes over entitlements to payment. These are simply another form of delay or error (albeit subject to the employee’s claim to the entitlement ultimately being confirmed). The Respondents contrast the wording of clause 5.11.4 with that of the relevant provision of the Navigation Act1912 considered by the Federal Court in the case of Visscher 15 where the late payment penalties did not apply in cases where there was ‘a reasonable dispute as to liability’.
[35] As to Boeing’s contention that the references in clause 5.11.4 to an ‘agreed resolution of problem’ and ‘date and time of corrective action’ point to genuine disputes being excluded from the scope of the provision, the Respondents say that these are merely directions on how the ‘red book’ is drawn up and administered, and that they do not amount to a ‘defence’.
[36] For the Respondents, there has in the present case been a ‘payroll delay or omission:’ there is a delay, because the respondents are still waiting for payment; there is an omission, because the company has omitted to do what the Agreement requires; and there is a ‘correction’, because in the Respondents’ submission this expression includes a ‘failure to correct’. 16
[37] The Respondents also contend that the relevant error or omission can be described as a ‘supervisor failure to authorise or forward notification of special payments including crib times, meal breaks overtime or allowances’ - that is, the second of the five listed examples of circumstances where clause 5.11.4 is engaged. 17 In this regard, the Respondents submit that their evidence attests to their supervisors’ failing to authorise the disputed payment.18
[38] It was submitted by the Respondents that the apparently harsh consequences that flow from their interpretation of the clause could have been avoided by the company. They contend that, if Mr Sluggett had not signed the red book entries, the waiting time payments would not have commenced to accumulate. However Mr Sluggett did sign the entry, the notification of the delay was ‘perfected’, as the Respondents put it, and the waiting time payments commenced to run. Further, they submit that the company could simply have made the overtime payments and sought to recoup them later in the event that the Commission or a court determined that the Respondents had no entitlement to them.
[39] The Respondents concede that the $50,000 claimed by each of them as waiting time payment in respect of an overtime claim for a single day is an ‘inordinate amount’. 19 However, if that is what the agreement provides for, they say the Commission should give effect to it. As noted in Berri, the task of the Commission is not to rewrite the agreement to provide for a notionally fair outcome. Further, they contend that although a contractual provision in the terms of clause 5.11.4 would likely be struck down in equity as a penalty, there is nothing in the Act that deprives such a provision in an enterprise agreement of effect. In particular, it is not an objectionable or unlawful term.20
Consideration
[40] The principles that apply to the task of construing an enterprise agreement were summarised by a Full Bench of the Commission in AMWU v Berri Pty Ltd.21The interpretation of an enterprise agreement begins with a consideration of the ordinary meaning of the relevant words. The resolution of a dispute over the interpretation of an enterprise agreement will turn on the language of the agreement, having regard to its context and purpose. Context might appear from the text of the agreement as a whole, the disputed provision’s place and arrangement in the agreement, and the legislative framework under which the agreement was made.22 The task of interpreting an enterprise agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome.
[41] The company genuinely disputes the Respondents’ entitlement to the overtime payments and for this reason has not made those payments. The central question that must be determined in this matter is whether under clause 5.11.4 ‘waiting time’ must be paid in these circumstances. In my view, the answer to this question is ‘no’.
[42] It is evident from the first sentence of clause 5.11.4 that the procedures that follow ‘will apply to payroll delays, omissions and corrections’. It will be noted that the subsequent formulation that appears in the clause is ‘payroll delays, errors and omissions’, and, in the case of the ‘key provision’, ‘corrections of delays, errors and omissions’. Although the ‘key provision’ does not contain the word ‘payroll’ it is quite clear from the context of the clause that it is referrable to ‘payroll delays, errors and omissions’. 23 The Respondents focused little attention on the word ‘payroll’. They recognise little if any difference between a payroll delay and a payment delay. However in my view there is a distinction of significance. ‘Payment’ is the act of paying, or that which is paid. ‘Payroll’ is the list of persons to be paid, typically employees, together with the amounts due to be paid.24 The ordinary meaning of the word ‘payroll’ in my view extends to a payroll function or area within a business. An employee might be described as ‘working in payroll’. Indeed Mr Sluggett said in his statement that he is a payroll analyst. The definition of ‘time of notification’ in clause 5.11.4 employs ‘payroll’ in this sense, where it refers to the time when both ‘payroll and the employee’ are aware of the potential error etc. In my opinion, a payroll delay is one associated with an employer’s payroll function. It is not the same as a ‘payment delay’. While the present case might conceivably be said to involve a delayed payment (assuming an entitlement to the overtime payment were later recognised), it does not in my view involve a payroll delay, error or omission.
[43] Secondly, the five non-exclusive circumstances listed in clause 5.11.4 as constituting ‘payroll delays, errors and omissions’ are matters that are associated with a shortcoming in the employer’s procedures for payment, which have had the result that an ‘adjustment’ is required: a supervisor failing to forward notifications, or authorise or forward special payments; a failure of the employer’s timekeeping devices; errors in calculations. The fourth item listed is ‘changed rates of pay or conditions where there is an agreed implementation and payment date’. The apparent assumption here is that the agreed implementation date has not been adhered to by the company.In my view the five items in the second list constitute a genus of circumstances characterised by mistake for which the employer can reasonably be held accountable, and that the inclusive list of circumstances that constitute a payroll delay etc. is to be read by reference to that genus (ejusdem generis). The present circumstances do not fall within it. Further, it is significant that the last of the five items refers to ‘errors in calculations and rates of pay’, not errors as to employees’ actual entitlements, or simply ‘payment errors’.
[44] Thirdly, the references to ‘delays, omissions and corrections’ (introductory provision), and ‘delays, errors and omissions’ (other provisions, including the key provision), read in the context of the clause as a whole, concern situations where something has gone wrong. In my view, the clause presupposes a problem that requires rectification and provides for employee compensation if this is not attended to expeditiously. This is reflected in the references to ‘payroll problems’ later in the clause, and the various references in the clause to ‘errors’. If there is a genuine dispute over whether an employee is entitled to a payment, there is no problem that must be fixed. There is instead a disputed entitlement to payment that must be confirmed or negated.
[45] Fourthly, if an employee’s entitlement to a particular payment is genuinely disputed, it is not meaningful to speak of a delay. A delay is a period of time by which something is late or postponed. In the present case, the overtime payment has not been delayed. It has been rejected. There is also no ‘omission’; the company has determined not to pay the amounts because it does not consider them to be payable. And there is presently no ‘error’ to speak of. If a court or this Commission determined that the claim to the overtime payment is good, there would (subject to appeal) be a recognised entitlement and an expectation of payment. Any tardiness in payment thereafter might be characterised as delay or might involve a payroll error attracting waiting time payments, as against the date of recognition of the entitlement and the relevant pay cycle. But it would still not be correct to describe the prior non-payment as a ‘payroll delay, error or omission’ for the purposes of the key provision. The non-payment would rather reflect a legal error. Had it been intended that genuine legal errors should attract waiting time payment, one would expect this to have been expressly provided for. Instead, there is a strong inference to the contrary arising from the requirement that payment be made in the next pay period after the relevant deadlines.
[46] Fifthly, it is clear that clause 5.11.4 has established a detailed framework for addressing payroll delays, errors and omissions. If it had simply been intended to impose a penalty on any late payment of entitlements, the provision could simply have said as much, without describing the circumstances that fall within and without it.
[47] Finally, clause 5.11.4 must be read in the context of the enterprise agreement as a whole. One important and relevant provision is Part 2 (it has no clause number), which deals with the ‘disputes avoidance procedure’. Step 4 of the procedure provides that, ‘where the matters (in dispute) are complex and may take time to resolve, a timetable for further discussions shall be agreed’. Stage 5 then allows a dispute in relation to a matter arising under the Agreement to be referred to the Commission for mediation, conciliation, and where the matter remains unresolved, arbitration. The parties will be bound by the Commission’s decision, subject to any party exercising a right of appeal to a Full Bench. In short, the resolution of a dispute under the procedure may be protracted. Plainly, a dispute in relation to a matter arising under the Agreement may include a disagreement about interpretation and employee entitlements, including a dispute about whether employees have a right to certain payments. It is implausible that, while such a dispute is making its way through the dispute procedure, ‘waiting time’ monies were intended to accrue to the employees concerned, contingent on their claim being upheld.
[48] The arrangements in clause 5.11.4 in effect resolve what might otherwise be disputes over a very particular category of matters – payroll delays, errors and omissions. Were it not for clause 5.11.4, all disputes over payroll delays etc. would be progressed through Part 2 of the Agreement. Instead, the parties have agreed how they will resolve such problems in advance. The present matter concerns a very different, but also very common, species of dispute, namely one of interpretation and disputed entitlement. It does not fall within clause 5.11.4.
[49] The Respondents contended that, if non-payment of a disputed entitlement did not fall within the scope of clause 5.11.4, the company could simply challenge the entitlement underlying any payroll delay, error or omission, and avoid the waiting time payments prescribed by the clause. They said that the employer could ‘stonewall and obfuscate’ and the waiting payment provision would be emasculated. The answer to this is that such a situation would not amount to a genuine dispute. The proper operation of the clause could not be avoided in this way. Clearly, the company could not simply put a payment in dispute without good cause and seek then to re-characterise any delay as not being a ‘payroll delay’. But that is not what has occurred in this case.
[50] It was also contended that if the Respondents’ interpretation of the provisions and their application to the present dispute were rejected, it would be unfair to the employees. I do not agree. They are not at this time waiting for a payment of an entitlement; they are waiting for their claim to an entitlement to be confirmed or rejected.
[51] Further, I do not accept the Respondents’ submission that the company’s decision not to pay the overtime payments can be described as a ‘supervisor failure to authorise or forward notification of special payments including crib times, meal breaks overtime or allowances,’ one of the five circumstances listed as constituting a payroll delay etc. In my view, ‘failure’ in this context connotes ‘failing’, not inaction. The sub-provision is concerned with a supervisor who has not done something that should have been done. In the present case, the Respondents’ entitlement to the overtime payment is disputed by the company. There was no basis for the supervisor to authorise payment.
[52] These reasons are sufficient to determine the application. A genuine dispute about whether an employee is entitled to a particular payment is not a ‘payroll delay, omission or correction’, nor is it a ‘delay, error or omission’ for the purposes of the key provision. However, I wish briefly to address several of the other contentions advanced by the parties.
[53] It was common ground that the Commission’s role is not to rewrite the enterprise agreement or strive to achieve a particular outcome. Nevertheless, the Respondents appeared to recognise that an interpretation that produced a wholly unreasonable outcome is unlikely to have been intended. They recognised that their interpretation produced an onerous outcome for the company in this case, but submitted that it was the actions of the company that had caused or contributed to it. The Respondents said that their interpretation did not lock the company in to making waiting time payments in respect of contested entitlements, because, if Mr Sluggett had not signed the red book entries, the waiting time payments would not have commenced to accumulate. However, I cannot find any basis in clause 5.11.4 for this proposition. The Respondents pointed to the clause’s requirement that the payroll office maintain a register of notified problems with various specified details, including ‘signature of Payroll Officer’. I do not accept that this, or any other provision in the clause, suggests that waiting time payments do not apply if a payroll officer does not sign the entry. The clause just says that the ‘notification time’ will be the time when both payroll and the employee are aware of the potential error, delay and omission. Further, if the Respondents were correct about the various ‘red book’ details being prerequisites for the commencement of the ‘waiting time clock’, then another of these has not been satisfied in this case: there is no ‘agreed resolution of problem’. Contrary to the Respondents’ arguments, the presence of a ‘resolution’ column in the red book does not meet the description of an agreed resolution. 25 Further, Mr Gualano and Mr Rowlands’ entries here, in their own handwriting, say ‘dispute raised’. This is the antithesis of an agreed resolution.
[54] Moreover, I find unpersuasive the Respondents’ contention that the onerous implications of their interpretation of clause 5.11.4 could have been avoided by the company simply paying the overtime, and then claiming it back from the employees in the event the Commission found in Boeing’s favour. Rather, this is another reason why their interpretation should be rejected. It creates a framework that would be illogical. The company would need to settle any claimed entitlement in order to avoid the accumulation of ‘waiting time’ penalties, even before the basis of the entitlement had been established. In my view, it is implausible that clause 5.11.4 was intended to operate in this way. However, these considerations simply underscore what is in my view already clear from the text of clause 5.11.4. Non-payment of a claimed entitlement that is genuinely disputed is not a ‘payroll delay, omission or correction’ for the purposes of the introductory provision, or a ‘payroll delay, error or omission’ for the purposes of the key provision.
[55] I will make some brief observations on the company’s contention that the penalty doctrine under the general law would allow or require the Commission not to give effect to a provision in an enterprise agreement that operated as a penalty. First, I can see nothing in the Act that would warrant this course. The framework of the Act tells against it. Part 2-4 of the Act deals with the content of enterprise agreements. The terms of an enterprise agreement must pertain to the matters identified in s 172. A term will have no effect to the extent that it is not about permitted matters or is an ‘unlawful term’, which includes a discriminatory or an objectionable term (s 253). Further, before approving an enterprise agreement, the Commission must be satisfied that the terms of the agreement do not contravene the National Employment Standards or include any unlawful terms (sections 186(2)(c) and 186(4)). In addition, the Commission may refuse to approve an agreement if it considers that compliance with the terms of the agreement may result in a person committing an offence against a law of the Commonwealth or a person being liable to pay a pecuniary penalty in relation to a contravention of a law of the Commonwealth. The Parliament has considered the limitations on the content that may be included in enterprise agreements and has made no reference to penalties, forfeitures or other similar doctrines or concepts. I would also point out that s 739(5) provides that the Commission must not make a decision that is inconsistent with a fair work instrument that applies to the parties. If, on a proper construction of an enterprise agreement, a particular payment is required, the Commission should in my view recognise it.
[56] As part of the 4 yearly review of modern awards, a Full Bench of the Commission noted that the High Court decision in Andrews stands for the proposition that the penalty doctrine is not limited to a situation where there has been a breach of contract, and that the doctrine of penalties in equity has not been subsumed into the common law. The Full Bench also noted that the decision does not stand for any other proposition. 26 Following Andrews, it is clear that equity may intervene to provide relief against a contractual penalty imposed on one party to a contract by another where the penalty is extravagant and unconscionable, irrespective of whether the contract has been breached.27 But I do not consider this to support a contention that the penalty doctrine has application to enterprise agreements. I would note finally that, to the extent that a particular interpretation of a provision would see it operate as a penalty and produce an extreme result, the Commission might reject the interpretation on the basis that it could not have been in the reasonable contemplation of the framers of the agreement for it to operate in that way.28
Conclusion
[57] I consider that clause 5.11.4 of the enterprise agreement has a plain meaning. Taking into account the ordinary meaning of the text of the provision in the context of the Agreement as a whole, it is clear that the provision does not require waiting time to be paid to employees in cases such as the present where there is a genuine dispute as to an employee’s entitlement to the relevant payment.
[58] For the above reasons, the answer to the question posed by the parties for determination by the Commission is that, if the non-payment of overtime to the Respondents for work performed on 19 April 2018 constitutes an underpayment in breach of the enterprise agreement, the non-payment does not constitute a ‘payroll delay, omission and correction’ for the purposes of clause 5.11.4. The dispute is determined accordingly.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
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Appearances:
R Preston of counsel for Boeing Aerostructures Australia Pty Ltd
B Terzic for Mr Gualano, Mr Tuddenham and Mr Rowlands
Hearing details:
2018
Melbourne
4 December
Attachment
5.11.4 Payroll corrections
It is agreed between the parties that the following procedures will apply to payroll delays, omissions and corrections
Payslips will be delivered to each manufacturing lead or supervisor
• before the end of shift on the day prior to payday for all day shift employees
• before the start of afternoon and night shift on the day prior to payday
Payroll delays, errors and omissions do not include adjustments caused by
• employees not submitting or submitting incorrect time and attendance and leave records to their supervisor / manufacturing lead e.g. workcare claims, applications for annual, long service, special or personal/carer's leave, attendance records, including clock cards, time sheets and electronic records
• changes to rates of pay or conditions unless there is an agreed implementation and payment date, between HR and the employee
Payroll delays, errors and omissions do include adjustments caused by
• supervisor failure to forward required notifications (as per 5.11.4 above)
• supervisor failure to authorise or forward notification of special payments including crib times, meal breaks overtime or allowances
• failure of timekeeping devices
• changed rates of pay or conditions where there is an agreed implementation and payment date
• errors in calculations and rates of pay
The “time of notification” will be the time when both payroll and employee are aware of the potential error delay or omission (letter, email, red book). The Payroll Office will maintain a register of all notified problems. This register will include:-
• employee name
• description of problem, date and time
• signature of Payroll Officer and of employee or manufacturing lead making notification
• potential amount, i.e. <$25, <25%, >25%
• agreed resolution of problem
• signature of employee for acceptance of problem resolution
• date and time of corrective action
Minor errors and omissions (being those which result in a net payment adjustment of less than $25 will be held over till the next pay period)
Where the payroll error or omission is greater than $25 net but less than 25% of the corrected gross pay, a cash payment will be made within 2 working days of notification time
Where the payroll error or omission is greater that 25% of the correct gross pay and notification is received before 1.00 p.m., a cash payment will be made
• before the end of the next shift for day shift employees
• before the start of the next shift for afternoon and night shift employees
Where corrections of delays, errors and omissions are not made in accordance with the above, the employees will be paid waiting time at time and a half from the time the correction payment was due until payment is made. Any waiting time payments will be made in the following pay period.
If an employee is kept waiting for their wages on pay day, after the usual time for ceasing work, they shall be paid at overtime rates for the period they are kept waiting.
It is further agreed that effective resolution of payroll problems requires;
• proper identification of the problem
• supporting evidence - bank statements
• agreed resolution, which may involve parties other than the employee and the pay office, e.g. manufacturing leads, supervisors, Human Resources and Union Delegates
• an agreed payment date
and all parties should work together to improve their role in the above process
1 AE408925
2 Michael Gualano and Glenn Rowlands claim to be owed $280.24. Nathan Tuddenham claims $308.26
3 Statement of agreed facts, [9]
4 See sections 54(2) and 58(2) of the Act
5 See Johnson v Finance Sector Union of Australia[2018] FWC 1035 at [15] - [18]; and BlueScope Steel (AIS) Port Kembla v AWU, AMWU and another [2017] FWCFB 856
6 Contrast the circumstances of this case with those in Johnson v FSU at [19] and [20]
7 Witness statement of Clyde Wright, [17] – [23]
8 Witness statement of Michael Gualano, attachment MG1
9 Witness statement of Graeme Keith Sluggett, [5]
10 Witness statement of Nathan Tuddenham, [10]
11 Witness statement of Kelly Knowles, attachment KK2
12 Witness statement of Clyde Wright, [8] – [10], [20], [21]
13 Witness statement of Kelly Knowles, [14] – [15]
14 (2012) 247 CLR 205
15 [2012] FCA 1247
16 Respondents’ submissions, [42] – [44]
17 Respondents’ submissions, [45]
18 Witness statement of Michael Gualano, [13]; Nathan Tuddenham, [8]; Glenn Rowlands, [13]
19 Respondents’ submissions, [22]
20 Respondents’ submissions, [22] – [24]
21 [2017] FWCFB 3005
22 See point 1 in [114] of Berri; and point 8 of [41] of AMIEU v Golden Cockerel Pty Ltd [2014] FWCFB 7447
23 In particular, the key provision applies where corrections of delays, errors and omissions are not made ‘in accordance with the above’, and the preceding provisions refer to ‘payroll error or omission.’
24 See Macquarie Concise Dictionary, fifth edition
25 Witness statement of Clyde Wright, attachment CW2
26 [2015] FWCFB 1549 at [23]
27 Ibid at [25]
28 See Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [11]
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