CEPU v BCS Infrastructure Support Pty Limited

[2013] FCCA 291

FEDERAL CIRCUIT COURT OF AUSTRALIA

CEPU v BCS INFRASTRUCTURE SUPPORT PTY LIMITED [2013] FCCA 291

Catchwords:
INDUSTRIAL LAW – Application for declarations – annual leave entitlements – shift worker – enterprise agreement – national employment standards.

Legislation:
Fair Work Act 2009 (Cth) ss.3, 12, 50, 87, 90, 548, 739

Cases cited:
The Australian Workers Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197
Transport Workers Union of Australia v Airport Fuel Services Pty Ltd and others, AIRC, 20 July 1995, Print M3222
Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257
Alcan (NT) Alumera Pty Ltd v Commissioner of Tertiary Revenue [2009] HCA 41
Project Blue Sky Inc & Ors v Australia Broadcasting Authority (1988) 194 CLR 355
Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth (1998) 82 FCR 175
Shop, Distributive and Allied Employees’ Association v Woolworths Ltd [2012] FCA 540
Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67
Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45
Construction, Forestry, Mining and Energy Union v Australia Industrial Relations Commission (2000) 203 CLR 645

Applicant: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION

Respondent: BCS INFRASTRUCTURE SUPPORT PTY LIMITED

File Number: MLG 1246 of 2012

Judgment of: Judge O’Sullivan

Hearing date: 24 April 2013

Date of Last Submission: 24 April 2013

Delivered at: Melbourne

Delivered on: 24 May 2013

REPRESENTATION

Counsel for the Applicant: Mr Reidy

Solicitors for the Applicant: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union

Counsel for the Respondent: Mr O’Grady

Solicitors for the Respondent: Thomson Lawyers

ORDERS

1. The application be dismissed.

FEDERAL CIRCUIT COURT OF AUSTRALIA
AT MELBOURNE

MLG 1246 of 2012

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION

Applicant

And

BCS INFRASTRUCTURE SUPPORT PTY LIMITED

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (“the applicant”) is an organisation registered under the Fair Work (Registered Organisations) Act 2009. BCS Infrastructure Support Pty Limited (“the respondent”) is a corporation within the meaning of the Corporations Act 2001 and operates a business installing, operating and maintaining airport baggage and material handling systems.

2. The respondent provides maintenance services at inter alia Tullamarine Airport in Victoria (“the Site”). The respondent employs

   
   

   20 electricians, who are eligible to be or are members of the applicant and work as shift workers for the respondent at the Site.

3. The applicant commenced these proceedings against the respondent by application filed on 5 October 2012 in the small claims list of the Court.

4. The applicant sought various declarations, orders and ancillary relief against the respondent under the Fair Work Act 2009 (“the Fair Work Act”).

5. This case concerns an enterprise agreement approved by the Fair Work Commission under the Fair Work Act and the entitlement in respect of annual leave for shift workers in Chapter 2, Part 2.2 of the Fair Work Act (the National Employment Standards).

Background

1. The following background, drawn from the material filed by the parties, appears uncontroversial.

2. The applicant, the employees and the respondent were bound by the BCS Infrastructure Support Pty Ltd Melbourne Airport Collective Agreement 2007 (“the 2007 Agreement”) which was operative from 20 June 2008 to 14 June 2011 and applied at the Site.

3. On 8 June 2011 Commissioner Blair of Fair Work Australia (now the Fair Work Commission) approved an enterprise agreement (as defined under the Fair Work Act) between the applicant, the respondent and its employees at the Site.[1]

   [1] See [2011] FWAA 3601

4. The applicant, the employees and the respondent are covered by the BCS Infrastructure Support Pty Ltd Melbourne Airport Enterprise Agreement 2010 (“the 2010 Agreement”) since 15 June 2011 which applies at the Site.

5. The respondent operates 4 shifts, each identified by a different colour: Blue Shift, Green Shift, Red Shift and Yellow Shift at the Site.

   
   

   The employees are allocated to a shift which has a roster. The Shift Rosters are based on an 8 week rotating Shift Cycle (“the Shift Cycle”). There are 7 Shift Cycles per year.

6. Each Shift Cycle is based on 12 hour shifts, which are worked in

   
   

   7 eight day shift blocks consisting of 4 shifts on followed by 4 shifts off (“a Shift Block”). Each Shift Block consists of 2 early shifts, starting at 6 am and ending at 6 pm and 2 night shifts, starting at 6 pm and ending at 6 am. The respondent’s normal working week is Thursday to Wednesday (“the Normal Working Week”).

7. During the Shift Cycle, each employee is rostered to work 4 Normal Working Weeks of 4 shifts (4 weeks x 4 shifts in which a total of 48 hours are worked per week) and 4 Normal Working Weeks of 3 shifts (4 weeks x 3 shifts in which a total of 36 hours are worked per week).

8. Over the course of the Shift Cycle employees work 28 shifts or 336 hours. This is an average of 42 hours per week. The respondent defines this as the Ordinary Hours of Work for the purposes of the 2010 Agreement.

9. The Shift Cycle contains a combination of weeks in which 4 shifts are worked and weeks where only 3 shifts are worked, the amount of hours that would ordinarily be worked over any 5 week period alters depending upon the combination of 4 shift weeks and 3 shift weeks in that period. This in turn, depends upon the point in the cycle in which the 5 week period commences.

10. Over the course of the 8-week Shift Cycle and the 7 shift cycles contained in a calendar year, the average hours worked by employees per week is 42. Under the Agreement every employee is paid for

    
    

    42 hours per Normal Working Week regardless of the number of hours actually worked in that week.

11. Since 1 January 2010, the employees have accrued paid annual leave at the rate of 4.038 hours per week. This figure reflects an entitlement of 5 weeks annual leave at 42 hours per week as 5 weeks x 42 Ordinary Hours of Work = 210 hours and 210 hours ÷ 52 weeks = 4.038 hours.

12. In September 2011, Commissioner Ryan of Fair Work Australia (now the Fair Work Commission) dealt with a dispute between the applicant and the respondent about the 2010 Agreement. On 8 November 2011 Commissioner Ryan issued a decision as a result of the hearing in September 2011.[2]

    [2] See [2011] FWA 7723

The proceedings

1. As noted earlier by an application filed on 5 October 2012 the applicant sought various declarations, orders and ancillary relief against the respondent under the Fair Work Act.

2. On the first return date of the application on 7 November 2012, and given the provisions of s.548 of the Fair Work Act, directions were made for inter alia the applicant to file and serve an amended application, the respondent file and serve a response, filing of material for trial (which was fixed for 28 February 2013) and the parties were referred to mediation.

3. In the statement of claim filed 15 November 2012 the following orders were sought:

   “1.A declaration that the Employees were from 1 January 2010 entitled to five weeks of paid annual leave per year of service.

   2.A declaration that the Respondent from 1 January 2010 to 14 January 2011 contravened section 44 of the Fair Work Act by not accruing and paying annual leave for the Employees at the rate of five weeks per year of service.

   3.A declaration that the Respondent contravened section 50 of the Fair Work Act by failing to comply with clause 1, f, ii, of the 2010 Agreement.

   4.An order that the Respondent credit into the annual leave accrual of all Employees an amount equal to their shortfall in annual leave accrual for the period from 1 January 2010 to the time of the order being made.

   5.An order that the Respondent adopt a method for the accrual of annual leave for the Employees which ensures they are paid for five weeks of annual leave per year of service.

   6.A declaration that from 9 November 2011 the Respondent contravened section 50 of the Fair Work Act 2009 by not adhering to the binding determination of Commissioner Ryan in the settlement of an industrial dispute.

   7.An order that the Respondent pay pecuniary penalties to the Applicant for its contraventions of sections 44 and 50 of the Fair Work Act 2009.”

4. The respondent subsequently filed an application in a case on

   
   

   22 November 2012. However on 27 November 2012 and by consent that was dismissed, time was extended for the respondent to file a response and otherwise the existing orders and directions remained in full force and effect.

5. The respondent filed a response and its defence on 6 December 2012. There was an amended defence filed by consent on 21 December 2012. The hearing was subsequently relisted to 24 April 2013.

6. In its amended defence filed 21 December 2012 the respondent made a number of admissions, but in the response filed the same day opposed all the orders sought by the applicant.

7. At the hearing the applicant was represented by Mr Reidy and the respondent by Mr O’Grady of Counsel.

Alleged Contraventions

1. In its statement of claim filed 15 November 2012 the applicant alleged in what was referred to as “Contravention One” (the first alleged contravention) that:

   “…

   Contravention of Enterprise Agreement

   Contravention One    

   16.The BCS Infrastructure Support Pty Ltd Melbourne Airport Enterprise Agreement 2010 (“the 2010 Agreement) was approved by Fair Work Australia (FWA) on the 8 June 2011 and came into operation on the 15 June 2011.

   17.At all material times from the 15 June 2012 the Applicant, the Employees and the Respondent have been covered by the 2010 Agreement.

   18.The Agreement at clause 1), f), ii) incorporates the NES and states that where the NES is more beneficial in a particular respect to an employee, then the NES shall prevail to the extent of the inconsistency.

   19.The Employees are shift workers as defined in the 2013 Agreement.

   Particulars

   The Employees are defined as shift workers in the Hours of Work clause, clause 13, of the 2010 Agreement.

   20.At all material times the operation of clause 1, f), ii) of the 2010 Agreement entitled the Employees to five weeks of paid annual leave per year of service for the hours each employee would have worked had they not been on annual leave.

   21.At all material times the Respondent has failed to accrue annual leave and pay annual leave as is required by clause 1, f), ii) of the 2010 Agreement by complying with sections 87 and 90 of the Act.

   Particulars

   Particulars of the incorrect accrual and payment of annual leave for each of the Employees will be provided after discovery has taken place.

   22.The Respondent has contravened clause 1), f), ii) of the 2010 Agreement which is prohibited by section 50 of the Act.

   …”

2. In its statement of claim filed 15 November 2012 the applicant also alleged in what was referred to as “Contravention Two” (the second alleged contravention) that:

   “Contravention Two

   23.The Applicant filed a dispute with FWA pursuant to the Procedure for Settlement of Disputes and Grievances at clause 33 of the 2010 Agreement.

   24.The subject matter of the dispute was the failure of the Respondent to accrue the annual leave entitlement of Robin Traveria (Robin) at the rate of five week per year of service.

   25.The dispute was arbitrated by Commissioner Ryan of Fair Work Australia who handed down his decision on 8 November 2011.

   Particulars

   The decision was arbitrated pursuant to section 739 of the Act and is cited as [2011] FWA 7723.

   26.The Commissioner found that Robin as an employee covered by the 2010 Agreement was entitled to be [paid for all the hours which he would have worked during the five weeks of his annual leave.

   27.Despite the decision being made by Fair Work Australia in accordance with the dispute resolution procedure in the Agreement the Respondent has failed to change its annual leave accrual annual leave at rate which does not allow an employee to be paid for five weeks annual leave per year.

   28.By its actions described in paragraph 27 above the Respondent has contravened a term of the 2010 Agreement by failing to comply with the decision of FWA. In so doing the Respondent has contravened section 50 of the Act.

   …”

3. In its amended defence filed 21 December 2012 the respondent made a number of admissions but in the response filed the same day opposed all the orders sought by the applicant.

4. In relation to the second alleged contravention the respondent’s position was the dispute concerned the proper entitlement of employees who are shift workers to annual leave. Specifically in relation to the second alleged contravention made by the applicant in the statement of claim the respondent’s position was:

   “

   23. It admits paragraph 23 [of the statement of claim].

   24. It denies paragraph 24 [of the statement of claim] and says that the dispute concerned the proper entitlement of employees who are shift workers to annual leave.

   25.It admits paragraph 25 [of the statement of claim].

   26.It denies paragraph 26 [of the statement of claim] and says that the Commissioner held that Robin was entitled to be paid his base rate of pay for his ordinary hours of work in the periods of annual leave taken by him.

   27.As to paragraph 27 [of the statement of claim] save that it admits that it has not changed its annual leave accrual method for Robin or any other of the employees it denies the allegations in paragraph 27 [of the statement of claim] and says further that neither the NES nor the decision of the Commissioner Ryan required it to change its annual leave accrual method.

   28.It denies paragraph 28 [of the statement of claim] and refers to and repeats paragraphs 23-27 of this defence.”

Material relied on

1. At the hearing on 24 April 2013 the applicant relied on:

   a)

   the amended application and statement of claim filed

   
   

   15 November 2012;

   b)the affidavits of R. Taveira, J. North, A. Urbanski, A. Burge, M. Bonacini, S. Mobayad, R. Abrigo, I. Zetko, B. Milkic, D. Freeman and G. Mallia all filed 11 January 2013; and

   c)the outline of submissions filed 22 February 2013.

2. At the hearing on 24 April 2013 the respondent relied on:

   a)the amended defence filed 21 December 2012;

   b)the points of defence filed 1 February 2013;

   c)the affidavit of A. Cachia filed 1 February 2013; and

   d)the outline of submissions filed 24 April 2013.

3. Each of the parties filed submissions upon which they relied.

4. It was agreed between Counsel for the parties that the affidavit material would be read. None of the witnesses were required for cross examination. Each of the parties then had an opportunity to supplement their written submissions by oral submissions before the Court. At the conclusion of those submissions the Court reserved its decision.

The evidence

1. As noted earlier the hearing proceeded by agreement of the parties on the basis of the affidavit material as filed and oral submissions supplementing the written submissions that had been filed.

2. The evidence relied on by the applicant, as referred to earlier, from each of the employees referred to above, was in broadly similar terms. In the affidavit filed 11 January 2013, Mr Burge deposed inter alia:

   “1.I was employed by BCS Infrastructure Support Pty Ltd on

   
   

   3 April 2006.

   2.I was employed to perform electrical maintenance work on the baggage conveyor belts at Melbourne Airport.

   3.From 1 January 2010 I have worked as a shift worker on the Green Shift with my hours of work for each year being set by BCS’ shift roster. Annexed and marked with the letter A (pages 1-3) is a copy of the shift roster for Green Shift for the years 2010, 2011 and 2012.

   4.The shift roster requires me to work on public holidays or weekends if my hours of work fall on those days.

   Annual Leave in 2010

   5.On the 1 January 2010 I had accrued 304.295 hours of annual leave.

   6.Between 1 January 2010 and 31 December 2010 I was absent from work due to annual leave on twenty days. The dates on which I took annual leave and the amount of annual leave which was deducted from my accrual for each day were:

   a.27 February (6 hours);

   b.28 February (6 hours);

   c.20 March (12 hours);

   d.21 March (12 hours);

   e27 August (12 hours);

   f28 August (12 hours);

   g7 October (12 hours);

   h.8 October (6 hours);

   i.9 October (12 hours);

   j.10 October (6 hours);

   k.14 October (12 hours);

   l.15 October (12 hour);

   m.16 October (6 hours);

   n.17 October (12 hours);

   o.18 October (6 hours);

   p.22 October (12 hours);

   q.23 October (12 hours);

   r.24 October (6 hours);

   s.25 October (12 hours);

   t.26 October (6 hours).

   7.On the dates I took annual leave in 2010 I was rostered to work one hundred and eighty hours.

   8.For the period from 1 January 2010 to 31 December 2010 BCS accrued my annual leave entitlement at the date of 4.038 hours per week or 209.976 hours per year.

   Annual Leave in 2011

   9.On the 1 January 2011 I had an annual leave accrual of 334.271 hours.

   10.Between 1 January 2011 and 31 December 2011 I was absent from work due to annual leave on days. The dates on which I took annual leave and the amount of annual leave which was deducted from my accrual for each day were:

   a.16 April (12 hours);

   b.17 April (12 hours);

   c.18 April (6 hours);

   d.19 April (12 hours);

   e.20 April (6 hours);

   f.11 June (12 hours);

   g.12 June (12 hours);

   h.13 June (6 hours);

   i.14 June (12 hours);

   j.15 June (6 hours);

   k.29 July (12 hours);

   l.30 July (12 hours);

   m.31 July (6 hours);

   n.1 August (12 hours);

   o.2 August (6 hours);

   p.6 August (12 hours);

   q.7 August (12 hours);

   r.8 August (6 hours);

   s.9 August (12 hours);

   t.10 August (6 hours);

   u.12 November (6 hours);

   v.13 November 12 hours);

   w.14 November (6 hours).

   11.I was rostered to work two hundred and sixteen hours on the dates I was absent on annual leave.

   12.For the period from 1 January 2011 to 31 December 2011 BCS accrued my annual leave entitlement at the rate of 4.038 hours per week or 209.976 hours per year.

   Annual Leave in 2012

   13.On the 1 January 2012 my annual leave accrual was 328.247 hours.

   14.Between 1 January 2012 and 31 December 2012 I was absent from work due to annual leave on twenty two days. The dates on which I took annual leave and the amount of annual leave which was deducted from my accrual for each day were:

   a.17 March (12 hours);

   b.18 March (12 hours);

   c.19 March (12 hours);

   d.20 March (12 hours);

   e.2 April (12 hours);

   f.3 April (12 hours);

   g.4 April (6 hours);

   h.5 April (12 hours);

   i.6 April (6 hours);

   j.25 August (12 hours);

   k.25 September (12 hours);

   l.26 September (12 hours);

   m.27 September (6 hours);

   n.28 September (12 hours);

   o.29 September (6 hours);

   p.3 October (12 hours);

   q.4 October (12 hours);

   r.5 October (6 hours);

   s.6 October (12 hours);

   t.7 October (6 hours);

   u.11 October (12 hours);

   v.12 October (12 hours);

   15.On the dates I took annual leave in 2012 I was rostered to work two hundred and twenty eight hours of annual leave.

   16.For the period from 1 January 2012 to 31 December 2012 BCS accrued my annual leave entitlement at the rate of 4.038 hours per week or 209.976 hours per year.

   17.On the 31 December 2012 my annual leave accrual was approximately 310.22 hours.

   Annual Leave Approval and Payment 2010 to 2012

   18.For the dates I was absent on annual leave from 1 January 2010 to 31 December 2012, I completed annual leave forms for approval prior to taking annual leave. Annexed and marked with the letter B (pages 4-16) are copies of my annual leave application forms for the period from

   
   

   1 January 2010 to 31 December 2012.

   19.For the dates I was absent on annual leave from 1 January 2010 to 31 December 2012 my payslip for the corresponding period state the number of hours of annual leave I have had deducted from my accrual. Annexed and marked with the letter C (pages 17-28) are copies of my  payslips for the weeks in which I was paid for annual leave for the period from 1 January 2010 to 31 December 2012.”

1. For the respondent Mr Cachia in his affidavit filed 1 February 2013 deposed that:

   “…

   BCS’s Shift Roster

   …

   3.BCS operates 4 shifts, each identified by a different colour: Blue Shift, Green Shift, Red Shift and Yellow Shift. The employees are allocated a Shift Roster on commencement of employment. They rarely change shifts. Annexed and marked with the letter “A” is a copy of the Shift Rosters for the years 2010, 2011, 2012 and 2013.

   4.The Shift Rosters are based on an 8 week rotating shift cycle (the Shift Cycle). There are 7 Shift Cycles per year.

   5.Each Shift Cycle is based on 12 hour shifts, which are worked in 7 eight day shift blocks consisting of 4 shifts on followed by 4 shifts off (a Shift Block).

   6.Each Shift Block consists of 2 early shifts, starting at 6 am and ending at 6 pm and 2 night shifts, starting at 6 pm and ending at 6 am. Annexed and marked with the letter “B” is a diagram illustrating a Shift Block.

   7.BCS’s working week is Thursday to Wednesday (the Normal Working Week), as defined in clause 13) a) vi) of the 2010 Agreement and the 2007 Agreement.

   8.During the Shift Cycle, each employee is rostered to work 4 Normal Working Weeks of 4 shifts (4 weeks x 4 shifts in which a total of 48 hours are worked per week) and 4 Normal Working Weeks of 3 shifts (4 weeks x 3 shifts in which a total of 36 hours are worked per week) (the Shift Pattern). Over the course of the Shift Cycle employees work 28 shifts or 336 hours. This is an average of 42 hours per week (the Ordinary Hours of Work). Annexed and marked with the letter “C” is an illustration of the Shift Pattern worked over the year i.e. 7 consecutive Shift Cycles.

   9.Because the Shift Cycle contains a combination of weeks in which 4 shifts are worked and weeks where only 3 shifts are worked, the amount of hours that would ordinarily be worked over any 5 week period alters depending upon the combination of 4 shift weeks and 3 shift weeks in that period. This in turn depends upon the point in the cycle in which the 5 week period commences.

   10.Annexed and marked with the letter “D” is an illustration of the rostered shifts per any five-week period of the Shift Cycle. As appears from the tables in attachment D, a 5 week period commencing at week 1 of the Shift Cycle (or week 8) involves 4 x 48 hour weeks and 1x 36 hour week giving a total of 228 hours (or 45.6 hour/week). A 5 week period commencing at week 4 (or week 5) of the Shift Cycle involves 4 x 36 hour weeks and 1 x 48 hour week giving a total of 192 hours (or 38.4 hour/week). The combination of 48 hour weeks and 36 hour weeks in the 5 week period falling between these 2 extremes.

   11.As noted above, over the course of the 8-week Shift Cycle and the 7 shift cycles contained in a calendar year the average hours worked per week if 42.

   Ordinary Pay

   12.In order to minimise fluctuations in the pay received by employees over the Shift Cycle, every employee is paid for 42 hours per Normal Working Week regardless of the number of hours actually worked in that week.

   13.For example, Annexure A and C to the Affidavit of BCS employee Anthony William Burge dated 10 January 2013 (“the Burge Affidavit) records that in the Normal Working Week 16 June – 22 June 2011, Mr Burge worked 4 shift, or 48 hours. His weekly pay slip for that period records that he was paid for 42 hours, that is 6 hours less than he worked in that particular week.

   14.Conversely, in the Normal Working Week 23 June -29 June 2011, Mr Burge worked 3 shifts, or 36 hours. His weekly pay slip for that period records that he was paid for 42 hours of work, that is 6 hours more than he worked in that particular week. Annexed and marked with the letter “E” are pages 1 and 20 of the Annexures to the Burge Affidavit which are the relevant pages of Annexures A and C.

   15.As the annexures to the affidavits filed by the other employees who are participating in these proceedings show, they were paid in the same way as Mr Burgess, namely pay based on 42 hours work irrespective of whether in the particular week they worked 48 hours or 36 hours.

   Annual Leave and Annual Leave Accrual

   16.Since 1 January 2010, the employees have been entitled to 5 weeks of paid annual leave in accordance with schedule 3, part 2, of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and section 87 (1)(b) of the Fair Work Act 2009 (FW Act).

   17.As is acknowledged in each of the affidavits filed by the employees since 1 January 2010, the employees have accrued paid annual leave at the rate of 4.038 hours per week.

   18.This evidence accords with the Respondent’s position that for each year of service, the employees accrue 210 hours of annual leave at the rate of 4.038 hours per week, as is shown in Annexure E. This figure reflects an entitlement of 5 weeks annual leave at 42 hours per week as

   5 weeks x 42 Ordinary Hours of Work = 210 hours

   210 hours ÷ 52 weeks = 4.038 hours

   19.Consistent with the position adopted with weekly pay, in order to minimise fluctuations in the rate at which leave accrues and to ensure that it corresponds with the amounts paid to employees in any particular week, the Respondent credits employees with 4.038 hours leave per week irrespective of whether in that particular week they worked 48 hours or 36 hours. This method of accrual is recorded in the pay slips appearing Annexure E to this Affidavits.

   20.When an employee takes a period of annual leave he is paid for the same way he would have been paid had not taken annual leave and had attended work during that week namely he is paid for 42 hours work.

   21.For example the Annexures A and C of the Burge Affidavit shows that in the week 15-21 March 2012, Mr Burge was rostered to work four shifts or 48 hours. He took that week off as annual leave for which he was paid for 42 hours. As explained above, this is the same amount he would have been paid if he had worked during this week.

   22.Conversely in the Week 29 March – 4 April 2012, Mr Burge was rostered to work three shifts or 36 hours. He took that week off as annual leave and was paid for 42 hours. Once again, this is the amount he would have been paid had he worked during the week even though he actually worked less than 42 hours. Annexed and marked with the letter “F” are pages 2 and 24-25 of the Annexures to the Burge Affidavit which are the relevant pages of Annexure A and C.

   23.As the exhibits attached to the affidavits of the other employees who prepared affidavits in these proceeding show, when they took annual leave they were paid on the same basis as Mr Burgess, namely pay based on a 42 hour working week, the pay they would have received had they attended work during the week in question.

   …”

Submissions

Applicant’s submissions

1. The applicant filed written submissions on 22 February 2013 wherein it was contended that:

   “The inconsistency between the term of the agreement and the NES

   24.There is an inconsistency between the express term of the Agreement at clause 15) a) as it states that the annual accrual for shift workers will be 210 hours per year as compared to the express term of section 87 which states that the annual leave entitlement is five weeks per year of service.

   25.The proper application of clause 1, f), ii) requires that it is the NES entitlement of five weeks which must prevail over the Agreement entitlement to 210 hours.

   26.The effect of the above provisions is that the Employees have been covered by the annual leave provisions of the NES from 1 January 2010 and continue to be.

   Interpretation of section 87(1)(b)

   27.    The entitlement is for five weeks of annual leave.

   28.The use of the term “week” has no specialised industrial meaning which would distinguish it from the ordinary understanding of the work “week” to denote a period of seven days. (see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 at 47 & 48; Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 28 at 69).

   29.This interpretation would comply with the object of the Act at 3(b) by ensuring that a guaranteed safety net of fair pay and enforceable minimum terms and conditions through the National Employment Standards.

   30.Further the Explanatory Memorandum to the Fair Work Bill 2008 at paragraph 363 states that the “minimum entitlement to paid annual leave is four weeks for each year of service, unless the employee is a shift worker, in which case the employee is entitled to a minimum of five weeks’ paid annual leave for each year of service.”

   31.This explanation makes no allowance for the five week annual leave entitlement to be anything less than five weeks.

   32.This interpretation is buttressed by section 196(2) of the Act which requires that before an enterprise agreement can be approved by the Fair Work Commission, the Tribunal member must be satisfied that an employee who is a shift worker, as described by the relevant award, is described as such in the enterprise agreement.

   33.The note at the bottom of that section and the corresponding paragraph of the explanatory memorandum make clear that this requirement has been placed on the Tribunal for the sole purpose of ensuring that a shift worker does receive the five week entitlement and that they do not “trade away his or her extra week of annual leave under the agreement.”

   34.The intent of the legislature is that a shift worker can take five weeks of annual leave during a year and be paid for the hours which they would have worked during those five weeks. This is the approach which has been taken by industrial tribunals to the entitlement (see I.C.I Australia Operations Pty Limited and the Australian Workers’ Union, New South Wales Branch v Electricity Commission of New South Wales 1987 A.R. No. 577 of 1987 at 10; Australian Rail, Tram and Bus Industry Union and Australian Federate Union of Locomotive Employees v QR Limited T/A QR National [2012] FWA 3730 at [78] to [84] & [93]).

   …

   Failure to comply with the arbitrated outcome of the dispute procedure

   38.The dispute which the Applicant referred to Commissioner Ryan was the question of whether or not Robin Taveria, when he took five consecutive weeks of annual leave, was entitled to be paid for the hours he was rostered to work during that period.

   39.On this question the Commissioner found Robin was entitled to be paid for all the hours which he would have worked within the five week period.

   40.The upshot of the decision was that the Respondent was required to credit the eighteen hours which it had taken from Robin annual leave accrual so that he was paid for five weeks annual leave and adopt an annual leave accrual and payment system which would afford Robin and all other Employees with a guaranteed five weeks of annual leave per year.

   41.Despite the decision the Respondent made no change to its annual leave accrual or payment system and made no change to the annual leave accrual of Robin in recognition of his right to take five weeks of leave and have his 19 rostered shifts paid from his annual leave accrual for the last twelve months.

   42.Due to its failure to act in response to the decision of Commissioner Ryan the Respondent contravened the enterprise agreement by failing to act in accordance with the arbitrated outcome.”

2. In submissions before the Court (and by reference to inter alia provisions of the supplementary explanatory memoranda for the Fair Work Bill) Counsel for the applicant contended the entitlement to annual leave shift workers was written in terms of weeks and the entitlement must be in weeks.

3. Counsel for the applicant relied on inter alia a dictionary definition,[3] how the New South Wales Industrial Commission had dealt with cases before it in ICI Australia Operations Pty Limited and the Australian Workers Union, New South Wales Branch[4] and Electrical Trades Union of Australia, New South Wales Branch v Electricity Commission of New South Wales [5]concerning shift workers and annual leave and a decision of the High Court from 1931 in Dunlop Perdriau Rubber Co Ltd v Federated Rubber Workers’ Union of Australia[6].

   [3] Collins English Dictionary, 3^rd edition

   [4] No. 48 of 1986 Industrial Commission of New South Wales

   [5] No 577 of 1987 Industrial Commission of New South Wales

   [6] [1931] HCA 33

4. In relation to the second alleged contravention when pressed to identify the order upon which the second allegation was based Counsel for the applicant indicated this was not the ‘main thrust’ of the application. Counsel for the applicant told the Court all he had was the ‘decision’ of the Fair Work Australia and ‘no order’. Whilst not formally abandoning the second alleged contravention, the applicant could not take issue with the respondent’s submissions on this allegation to which I will return.

Respondent’s submissions

1. The respondent filed points of defence on 1 February 2013 and (without objection) an outline of submissions at the hearing on 24 April 2013. The respondent’s position in submissions was:

   “Leave Accrual

   4.Leave accrues according to the employee’s ordinary hours of work and is cumulative: section 87 of the Fair Work Act 2009 (the “Fair Work Act”); Explanatory Memorandum accompanying the Fair Work Bill 2009 (the “Explanatory Memorandum”) at [363].

   5.The Explanatory Memorandum makes it clear that Parliament proceeded on the basis that in respect of employees covered by an enterprise agreement ordinary hours are the hours so identified by the enterprise agreement: Explanatory Memorandum [235]; Explanatory Memorandum [106].

   6.The BCS Infrastructure Support Pty Ltd, Melbourne Airport Enterprise Agreement 2010 (the “2010 Enterprise Agreement”) defines normal hours as the deemed hours worked during the normal rostered period (clause 13) which is to be 42 hours (clause 13 (b)(v); Appendix C). See to the BCS Infrastructure Support Pty Ltd Melbourne Airport Collective Agreement 2007 (the “2007 Enterprise Agreement”) at clause 10.

   7.It is common ground that the respondent has accrued leave on the basis of 4.038 hours per week which equates to 5 weeks leave at 42 hours per week.

   8.In the circumstances no breach is established.

   Leave Payment

   9.Section 90 of the Fair Work Act provides that payment is to be made at the base rate of pay for ordinary hours in the period.

   10.It is common ground that this amounts to pay for 42 hours work and that this has been paid on each and every occasion an employee has taken annual leave.

   11.In the circumstances no breach is established.

   12.The conclusions contended for above are consistent with the reasoning of Asbury C in The Australian Workers’ Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197 at [64] – [66], [78], [80] and [82]. It is also consistent with the way in which the Commission has traditionally dealt with annual leave accrual and payment in respect of shift workers: see in this regard the Full Bench decision in Transport Workers (Oil Companies) Award 1992 Print M3222 a decision of SDP Polities; DP Action and Cargill C at pages 4 of 7 – 5 of 7.

   The Application is Premature

   13.Alternatively the respondent submits that the application is premature. The entitlement is to leave, not credits in respect of leave. There must be a denial of annual leave to which the employee would otherwise be entitled.

   14.The entitlement prescribed by the NES is to paid leave: s.87(1). That entitlement arrives throughout the year and from year to year: s.87(2). Absent there having been a request for such leave and a refusal that entitlement subsists. The fact that an employer has indicated that it does not intend to honour the entitlement is different from the fact of a refusal to provide the entitlement.

   15.No such refusal of leave has occurred here. The situation is analogous to that considered by the Full Court in Meneling Station Pty Ltd. v. Australasian Meat Industry Employees' Union (1987)18 FCR 51, at pp65-66. In that case the Court said:

   "However, in our view, a breach of a term of an award constituted by refusal to comply with a demand or request may arise in one of two ways. It is most commonly proved by establishing a failure to perform the obligation at, or within, the time stipulated by the request or demand in accordance with the term of the award. Secondly, it may arise from an explicit statement by a party to the award that he will not perform his obligation thereunder. Such a statement does not have the consequences imported by the law of contract where one party accepts what is sometimes called an "anticipatory breach" by another party. Accordingly, an applicant under s 119 of the Act, who relies on such a refusal to perform in the future an obligation imposed by a term of an award, runs the risk of the respondent's adducing evidence that he resiled from the anticipatory refusal before the time for performance had arrived. Where, as in this case, no evidence of that kind is adduced, the Court is entitled to presume, as the learned trial judge apparently did, that the unequivocal refusal continued up to the time fixed for performance." (My emphasis)

   16.In this case there is no evidence of an employee having refused leave.

   17.In these circumstances at their highest the allegations contained in the claim establish a potential breach which has not yet eventuated and may never do so.

   18.Even on the unions construction as foreshadowed by Ryan C, it would be open for BCS to control the taking of leave so as to ensure that the alleged anomaly identified by the union did not give rise to a situation where an employee exhausted their accrued leave prior to their having availed themselves of the 5 weeks mandated by the NES.  This could be done through the expedient of ensuring that when taking leave the employees balance the numbers of “48 hour weeks” with “36 hour weeks”. If this were done the alleged breach contended for by the union would not eventuate. Given this potential the application should be dismissed as premature. See too the reasoning of Gray J in Construction Forestry Mining and Energy Union v Jeld-Wen Class Australia Pty Ltd [2012] FCA 45 at [23] – [25].

   Conclusion

   19.For all of the above reasons the application should be dismissed.”[7]

   [7] Respondent’s outline of submissions filed 24 April 2013

2. In submissions before the Court, Counsel for the respondent contended that the ‘touchstone’ or issue central to the resolution of this case was the concept of ‘ordinary hours’.

3. Counsel for the respondent submitted that, as provided for in the Fair Work Act, the 2010 Agreement provided for normal or ordinary hours for the employees, the respondent complied with the 2010 Agreement in relation to annual leave for shift workers and there was no breach (either as alleged or otherwise) of the Fair Work Act.

4. By reference to the terms of the 2010 Agreement, Counsel for the respondent submitted that in this case the 2010 Agreement provided a roster system which averaged hours and wages. Counsel for the respondent submitted the parties to the 2010 Agreement agreed that ordinary hours would be on average 42 hours per week and this is what employees covered by the 2010 Agreement were paid when they work and when they accrue and take annual leave.

5. Counsel for the respondent submitted the applicant’s claim misconstrued the National Employment Standards. Counsel for the respondent submitted that when inter alia clauses 13 and 15 of the 2010 Agreement are read together there is no inconsistency between the 2010 Agreement and the annual leave provision for shift workers in the National Employment Standards.

6. Counsel for the respondent submitted that on the uncontested evidence in this case, where it was agreed employees were accruing 4.038 hours of annual leave per week, the requirements of s.87 of the Fair Work Act were met. Counsel for the respondent also submitted that given the position of the applicant referred to earlier and the provisions of the 2010 Agreement there was no inconsistency with s.90 of the Fair Work Act nor was there any breach of the Fair Work Act established on the evidence before the Court.

1. Counsel for the respondent also submitted that the construction he contended for in written submissions was also consistent with the explanatory memorandum to the Fair Work Bill. By reference to the terms of the 2010 Agreement and the provisions of ss.87 and 90 of the Fair Work Act, the respondent submitted employees who work an average of 42 hours per week accrue annual leave at a rate which equates to 5 weeks annual leave per year of service and that they have been paid the equivalent of 42 hours per week on each and every occasion an employee has taken annual leave.

2. In submissions before the Court, and by reference to the objects of the Fair Work Act, Counsel for the respondent submitted the interpretation the applicant contended for would not be consistent with the intention of the legislature, embodied in the objects of the Fair Work Act. It was submitted the interpretation the applicant contended for, which on the applicant’s own case would provide different outcomes, would not ensure a guaranteed safety net of fair or enforceable minimum terms and conditions.

3. Counsel for the respondent referred to the decision of Commissioner Ashbury in The Australian Workers Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197 and an earlier Full Bench decision on the issue of annual leave accrual for shift workers in support of its contention that the approach to the interpretation of and application of the annual leave entitlement for shift workers under the 2010 Agreement in this case was not in breach of the Fair Work Act.

4. By reference to the reasoning in The Australian Workers Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197[8] the respondent submitted that the 2010 Agreement provides the ordinary hours of work for shift workers are an average of 42 per week over the averaging period being an 8 week cycle. Thus the respondent submitted those ordinary hours are the basis for the calculation of, accrual and payment of the annual leave entitlement and consideration of whether those entitlements under the 2010 Agreement are consistent with the National Employment Standards. The respondent maintained they were and in this case there was no breach.

   [8] See in particular paragraph 79 of decision in The Australian Workers Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197

5. In relation to the second alleged contravention on the material before the Court and in absence of any order said to have been contravened, Counsel for the respondent submitted the applicant’s claim in this regard (which was denied) was either misconceived or premature and should be dismissed.

The legislation

1. Section 3 of the Fair Work Act provides:

   “Object of this Act

   The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

   (a)...; and

   (b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

   (c)...; and

   (d)...”

2. Among the provisions of the Fair Work Act are the National Employment Standards, which came into effect on 1 January 2010.

53.Section 44(1) of the Fair Work Act provides that an employer must not contravene a provision of the National Employment Standards.

1. Section 50 of the Fair Work Act provides:

   “Contravening an enterprise agreement

   50.A person must not contravene a term of an enterprise agreement.

   Note 1:This section is a civil remedy provision (see Part 4-1).

   Note 2:A person does not contravene a term of an enterprise agreement unless the agreement applies to the person: see subsection 51(1).”

2. Section 50 of the Fair Work Act provides that a person must not contravene an enterprise agreement. It is a civil remedy provision. The applicant (as an employee organisation) may apply for orders relating to the contravention or proposed contravention of an enterprise agreement. The application may be made in this Court.[9]

   [9] The maximum penalty which may be imposed on an individual for a contravention of s 50 is $6,600 and, on a body corporate, $33,000.

3. The National Employment Standards are minimum standards that apply to the employment of employees covered by the Fair Work Act. National Employment Standards cannot be displaced. This is dealt with in ss.55 & 56 of the Fair Work Act.

4. Section 55 of the Fair Work Act provides:

   “Interaction between the National Employment Standards and a modern award or enterprise agreement

   National Employment Standards must not be excluded

   (1)A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

   Terms expressly permitted by Part 2-2 or regulations may be included

   (2)A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

   (a)     by a provision of Part 2-2 (which deals with the National Employment Standards); or

   (b)     by regulations made for the purposes of section 127.

   Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

   (3)The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

   Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

   Ancillary and supplementary terms may be included

   (4)A modern award or enterprise agreement may also include the following kinds of terms:

   (a)terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

   (b)terms that supplement the National Employment Standards;

   but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

   Note 1:  Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

   (a)under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

   (b)that specify when payment under section 90 for paid annual leave must be made.

   Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

   (a)that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

   (b)that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer's leave at a rate of pay that is higher than the employee's base rate of pay (which is the rate required by sections 90 and 99).

   Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

   Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

   (5)An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

   Effect of terms that give an employee the same entitlement as under the National Employment Standards

   (6)To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement ) that is the same as an entitlement (the NES entitlement ) of the employee under the National Employment Standards:

   (a)those terms operate in parallel with the employee's NES entitlement, but not so as to give the employee a double benefit; and

   (b)the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

   Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

   Terms permitted by subsection (4) or (5) do not contravene subsection (1)

   (7)To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

   Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).”

5. Section 56 of the Fair Work Act provides:

   “Terms of a modern award or enterprise agreement contravening section 55 have no effect.

   A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.”

6. The National Employment Standards include section 87 which provides:

   “Entitlement to annual leave

   Amount of leave

   (1)For each year of service with his or her employer, an employee is entitled to:

   (a)     4 weeks of paid annual leave; or

   (b)     5 weeks of paid annual leave, if:

   (i)     a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

   (ii)     an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

   (iii)   the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).

   Note: Section 196 affects whether the FWC may approve an enterprise agreement covering an employee, if the employee is covered by a modern award that is in operation and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.

   Accrual of leave

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

   Note: If an employee's employment ends during what would otherwise have been a year of service, the employee accrues paid annual leave up to when the employment ends.

   Award/agreement free employees who qualify for the shiftworker entitlement

   (3)An award/agreement free employee qualifies for the shiftworker annual leave entitlement if:

   (a)     the employee:

   (i)     is employed in an enterprise in which shifts are continuously rostered 24 hours a day for 7 days a week; and

   (ii)     is regularly rostered to work those shifts; and

   (iii)   regularly works on Sundays and public holidays; or

   (b)the employee is in a class of employees prescribed by the regulations as shift workers for the purposes of the National Employment Standards.

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

   (5)Without limiting the way in which a class may be described for the purposes of paragraph (3)(b) or subsection (4), the class may be described by reference to one or more of the following:

   (a)     a particular industry or part of an industry;

   (b)     a particular kind of work;

   (c) a particular type of employment.”

7. Section 90(1) of the Fair Work Act provides:

   “Payment for annual leave

   (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.

   …”

8. The term “enterprise agreement” is defined in s.12 of the Fair Work Act, by reference to other provisions of the Fair Work Act. It is sufficient for present purposes to note that the 2010 Agreement between the applicant and the respondent was an enterprise agreement for the purposes of the Fair Work Act.

The 2010 Agreement

1. The parties were agreed that the terms of the two agreements referred to above were for all intents and purposes identical. Given this, and as the parties submissions proceeded on this basis, only the terms of the 2010 Agreement need to be referred to.

2. On 8 June 2011 the BCS Infrastructure Support Pty Limited Melbourne Airport Enterprise Agreement was made. The Agreement which came into operation from 15 June 2011 inter alia provides:

   “1)     Introduction and Parties Bound

   …

   c)Where there is inconsistency between the Agreement and the incorporated awards, the clause in the agreement shall apply and shall be deemed to expressly oust the operation of the Award clause.

   
   

   To remove any doubt, clauses in the agreement, including but not limited to Mode of Engagement, Classification Structure, Rate of pay, Hours of Work, Leave Arrangements, Shift Work and Allowances, Rosters and Roster arrangements, Penalty rates, Overtime arrangements, the “all-in-rate”, week-end work, Public Holidays, call-outs, standby, out of town, vehicle, meal, tool and travel allowances shall stand alone and shall not be read in conjunction with any clause contained in the incorporated awards. In addition, the Classification Definitions contained in the incorporated awards have no application to this agreement.

   …

   f)This Agreement incorporates and is to operate in conjunction with the NES. Subject to the Act:

   i)      where this Agreement is more beneficial in particular respect to an employee, then this Agreement shall prevail to the extent of the inconsistency;

   ii)     where the NES is more beneficial in a particular respect to an employee, then the NES shall prevail to the extent of the inconsistency.

   …

   5)Mode of Engagement

   …

   b)A full-time employee is one who is engaged for the minimum ordinary hours specified in Clause 13) b) on an ongoing basis.

   …

   7)Salary, Allowances and Penalty Rates

   a)“All in Rate”

   i)      ‘All in Rate’ is defined as a base rate that has been salary averaged to incorporate all weekends, public holidays, shift loading, applicable allowances and penalty rates (except as otherwise prescribed in this Agreement).

   …

   13)Hours of Work

   a)Definitions

   ‘Normal hours’ of work are deemed hours worked during the normal rostered period.

   v)     A ‘working day’ is defined as any full duty shift. Even where employment continues after midnight in which case the total time worked will be deemed to have been completely in one day.

   vi)     A ‘normal working’ week is defined as Thursday through to Wednesday.

   vii)    ‘Hours worked’ is the time spent whilst employed by the employer and does not include travel time.

   b)Minimum Hours of Work

   The number of hours to be worked each week and the times those hours are to be worked may be varied from time to time as operational requirements or the customer demands,

   v)     Except where part time or casual employment is offered, it is intended that there be an average over the roster cycle of forty two (42) hours per week.

   vi)     Hours worked in excess of the hours specified in Clause 13) b) v) constitute reasonable additional hours.

   vii)    Variations to Hours of Work.

   c)Employees agree to work extended or altered hours when required.

   v)     The employer shall not request extended or altered hours without consultation with the employee whose reasonable needs shall be taken into consideration.

   vi)     The hours and days of work of part time employees may be varied by agreement or with the giving of at least 2 weeks’ notice of the change.

   d)Minimum Break Periods Between Shifts

   v)     Where in excess of 12 continuous hours has been worked in any one day, the employee shall be allowed a minimum of a 10 hour break (excluding travel time to and from their place of residence) before returning to work.

   vi)     An employee who resumes work without first having the 10 hr break will be entitled to be paid at the standard rate plus ½ time for each hour up until the time that the 10 hour break would  otherwise have been completed (i.e. if the Employee had not resumed work earlier).

   e)Meal Break

   v)     The Employee is entitled to a 30-minute paid meal break to be taken between hour 5 to 8 of the duty shift wherever possible provided that this may be taken later in circumstances where an extreme operational requirement prevents the Employee from taking the meal break at the normal time.

   f)Rest Breaks

   v)     Two paid rest breaks, each of 10 minutes’ duration, on each shift will be allowed employees, the first occurring between commencement time and the time of the meal break and the second occurring between the time of the meal break and finishing time.

   g)Rostered Shift Hours

   v)     As at the commencement of this Agreement and subject to sub-clause h) below, Rostered Shift Hours are:

   Early shift:    0600-1800

   Night shift     1800-0600

   vi)     Shifts are arranged in rotation between Early and Night shifts – refer Appendix A for typical shift roster

   vii)    Standard Variations for Shift Changeover

   viii)   The only permissible change to Rostered Shift Hours concerns Start and Finish times.

   ix)     (ii)Shift members normally arrive at least 15 minutes early for shift changeover to enable the incoming shift team to be fully briefed by the outgoing shift team and, in this case, the finish time of shift members may be changed by 15 minutes earlier than the posted end of shift times (i.e. from 0600 to 0545 and from 1800 to 1745) subject to all of the following conditions:

   x)the employee arrives at least 15 minutes early (i.e. 0545 or 1745 as appropriate) and

   xi)there is someone to replace them when they leave and

   xii)they have prior consent from the Manager or a person nominated by the Manager

   xiii)if an employee arrives less than 15 minutes prior to the beginning of the shift, the start and finish times listed in “Rostered Shift Hours” apply.

   h)Other Variations to Shift Hours

   v)     Modifications different than those described in “Changes to Rostered Shift Hours” arising from exceptional circumstances will be addressed on an individual basis and must have approval by the Manager or a person nominated by the Manager.

   i)Coverage of Unforseen Absences

   v)  Employees are encouraged to work flexibly between themselves to reach mutual agreements to cover unforseen absences like being late for duty. Non-attendance at the rostered time will incur ratable deductions from the employee’s salary if these mutual agreements cannot be reached.

   …

   15)Annual leave

   a)Employees shall be entitled to 210 hrs annual leave after each year of complete service.

   b)Annual Leave must used so as to not carry any more then 420 hrs at any one time.

   c)Rostering of annual leave will be done via consultation and agreement with the majority of employees to ensure employees are treated equally and fairly.

   d)Employees are required to provide reasonable notice of the intention to take Annual Leave and are subject to work requirements and, in particular the availability of relief staff to cover the absence. Unless exceptional circumstances dictate, the period of reasonable notice shall be two (2) weeks prior to taking of annual leave.

   e)All leave that will fall between the 1^st of December and the 31^st of January must be submitted for approval by no later than the 31^st October so that the allocation of leave can be done fairly.

   f)Should an employee be requested to return to work by the employer the employee shall be paid in accordance with clause 4) of this agreement with a minimum of eight hours of ordinary rates if brought in prior to the midpoint of the shift or four hours of ordinary rates if brought in after the midpoint of the shift and that day will then not be classified as an annual leave day.

   g)The employees shall only be allowed to take a maximum of 10 single day annual leave absences in a 12 month period.”[10]

   [10] see also Appendix C of 2010 Agreement for sample roster

Consideration

1. The relevant provisions of the Fair Work Act and the 2010 Agreement have been set out earlier. The applicant’s ability to commence these proceedings was not controversial nor was that the employees who were members of the applicant were shift workers for the purposes of the relevant provisions of the Fair Work Act.

2. The issue before the Court centres on the terms of the National Employment Standards in respect of annual leave for shift workers and whether there was an inconsistency between those and the 2010 Agreement.

3. There was no real dispute between the parties on the relevant authorities. In approaching the interpretation of the relevant provisions of the Fair Work Act both parties referred to Alcan (NT) Alumera Pty Ltd v Commissioner of Tertiary Revenue [2009] HCA 41 and Project Blue Sky Inc & Ors v Australia Broadcasting Authority (1988) 194 CLR 355.

4. In the former decision it was said:

   “4.The starting point in consideration of the first question is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaurdron J In Corporate Affairs Commission (NSW) v Yuill as:

   “dictated by elementary considerations of fairness, for, after all, those who are subject to the law’s commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage.”

5. The most recent judgment of the High Court dealing with the issue of statutory construction is that of the Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257. At [57] in the joint judgment of French CJ, Hayne, Crennan, Bell and Gageler JJ, the Court said as follows:

   “This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic material cannot displace the meaning of the statutory text. Nor is their examination an end in itself.”

6. The applicant’s claims fall to be determined by reference to the legislation set out above and the terms of the 2010 Agreement.[11]

   [11] The guidelines to the construction of enterprise agreements were applied by the Full Court of the Federal Court in Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [14]- [18].

7. In the Explanatory Memorandum to the Fair Work Bill 2008 [12]at para.235 it was noted:

   [12] House of Representatives, Explanatory Memorandum, Fair Work Bill 2008

   “235.Various employee entitlements under the NES are based on the employee’s ordinary hours of work:

   …

   The ordinary hours of work for an employee to whom an enterprise agreement applies will be the hours identified in the enterprise agreement…

   …

   236An employee’s base rate of pay is defined in clause 16 as the rate of pay payable for the employee’s ordinary hours of work…

   …”

8. The Explanatory Memorandum to the Fair Work Bill 2008 also provided that:

   “363.The minimum entitlement to paid annual leave for each year of service, unless the employee is a shiftworker, in which case the employee is entitled to a minimum of five weeks’ paid annual leave for each year of service (subclause 87(1)). Leave accrues progressively according to an employee’s ordinary hours of work and is cumulative (subclause 87(2)). (The meaning of ordinary hours of work is outlined at the beginning of this Part.)[13]

   [13] This is a reference to section from explanatory memorandum extracted immediately above

   …

   370Subclause 90(1) entitles an employee to be paid at their base rate of pay (as defined in clause 16) for the employee’s ordinary hours of work for the period of their absence on leave. (The meaning of ordinary hours of work and base rate of pay are outlined at the beginning of this Part.)[14]

   [14] Ibid

   …”

9. The starting point for construing paid leave entitlements under the National Employment Standards is the ordinary hours of work of the employees concerned. The Fair Work Act and the National Employment Standards provide a mechanism for averaging of ordinary hours and allow for the enterprise agreements made under the Fair Work Act to provide for this.

10. The evidence in this case is that under the 2010 Agreement, employees accrue annual leave in accordance with the ‘normal’ or ordinary hours over the averaging period.

11. The Fair Work Act and the National Employment Standards provide that the ordinary hours under an enterprise agreement made under the Fair Work Act are the basis for the payment of annual leave entitlement for shift workers.

12. In submissions before the Court, Counsel for the applicant identified

    
    

    5 employees who it was submitted were “owed” annual leave. However despite the claims made in the affidavit material Counsel for the applicant also told the Court, this case wasn’t about a “pay issue” and none of the employees had been denied or not paid for annual leave when they had requested or taken it.

13. Whilst not referred to in submissions in Shop, Distributive and Allied Employees’ Association v Woolworths Ltd [2012] FCA 540 at paragraph 78 Barker J said:

    “In my view, the question whether or not a modern award or enterprise agreement excludes the NES or a provision of the NES for the purposes of s.55(1) of the FW Act, is not to be determined simply by assessing or trying to assess whether there is a practical inconsistency, as Woolworths puts it, between the benefits realisable under the award or agreement compared with the position might otherwise be. Either an award or agreement will, by its terms, be found to exclude the NES or a provision of the NES or it will not. It may be that exclusion will be found where the effect of the agreement or one of more of its terms is to exclude the NES or a provision of them.”

14. None of the witnesses were required for cross examination and the provisions of the enterprise Agreements (including the Agreement), the operation of the roster system, the hours of work and the accrual of annual leave were not in dispute.[15]

    [15] See Mr Cachia’s affidavit filed 1 February 2013

15. In approaching the legislative provisions regard can be had to the purpose or object of the legislation. Both parties sought to bolster their construction arguments by reference to certain of the objectives of the Fair Work Act, extraneous material[16] and the provisions of the 2010 Agreement.[17]  However the starting point is the words of the legislation with the objective being to give effect to the purpose of the legislation.

    [16] See section 15AA & 15AB Acts Interpretation Act1901. Both parties referred in submissions to the Explanatory Memoranda to the Fair Work Bill.

    [17] To the extent that the applicant resorted to the use of dictionary definitions it necessary to exercise caution when doing so (see Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth (1998) 82 FCR 175 at 181.

16. So far as is relevant for present purposes s.87 of the Fair Work Act relevantly provides for each year of service with his or her employer, a shift worker employee is entitled to five weeks of paid annual leave which accrues progressively during a year of service according to the employee’s ordinary hours of work. In the context of the current case s.90 of the Fair Work Act requires that where a shift worker takes a period of leave, the employer must pay the shift worker the shift worker’s base rate of pay for that employee’s ordinary hours of work.

17. The relevant provisions of the Fair Work Act and the National Employment Standards operate by reference to the phrase “ordinary hours of work”. The relevant provisions of the Explanatory Memorandum confirm this. Section 90(1) of the Fair Work Act provides that there is an obligation to pay each employee on paid annual leave an amount based on their ordinary hours.

18. One of the difficulties confronting the interpretation the applicant contended for is that it construes day or week for the purpose of the National Employment Standards in isolation from how employees covered by the 2010 Agreement, have their day or their normal or ordinary hours structured and how they are paid.

19. The vice in the argument made in submissions on behalf of the applicant (which I accept is apt to lead to the trap referred to by the respondent in submissions) is that it attempts to read the provisions of s.87 of the Fair Work Act and the reference to 5 weeks annual leave in isolation. The submissions made on behalf of the applicant appeared to proceed without reference to how that entitlement accrued and was calculated (i.e. the employees ordinary hours).

20. A similar vice is attendant the construction placed on s.90 of the Fair Work Act by the applicant in submissions. In this case the normal or ‘ordinary’ hours of work prescribed by the 2010 Agreement, is the basis for the calculation and payment of annual leave and whether those provisions are consistent with the National Employment Standards.

21. Both parties sought to call in aid of their submissions different decisions of single members of the Fair Work Commission. Whilst the applicant referred inter alia to decisions of the Industrial Commission of New South Wales[18] the respondent relied on inter alia the decision of a Full Bench of the Australian Industrial Relations Commission in support of its case.[19] Given those decisions are of the federal industrial tribunal and deal with employees who work shifts of varying lengths they are in this case of more assistance.

    [18] see decisions referred to in paragraph 38 above

    [19] Transport Workers Union of Australia v Airport Fuel Services Pty Ltd and others, decision of Full Bench of Australian Industrial Relations Commission, 20 July 1995, Print M3222

22. In last mentioned case the Full Bench dealt with a claim in the context of what was the Transport Workers (Oil Companies) Award 1992 that annual leave for continuous shift workers had been reduced below the 5 week annual leave standard in the relevant award. The Full Bench considered the history of the relevant award standard, how that was applied for shift workers including those who worked different shift lengths, on systems of average hours over shift cycles and found that the standard of 5 weeks annual leave had been expressed in terms of hours rather than weeks in a number of awards of the Australian Industrial Relations Commission.[20]

    [20] Ibid

23. The Full Bench noted under a system of varying shift lengths there was no perfect solution but the problem before it could be avoided by careful rostering.[21] The Full Bench issued a draft order as a result of its decision that recorded annual leave entitlements and their accruals in hours and provided for that to be debited on the basis of the number of hours that the employee would have worked on their ordinary roster during any period of leave.[22]

    [21] Ibid.

    [22] Ibid

24. In The Australian Workers’ Union v BP Refinery (Bulwer Island) P/L [2012] FWA 1197 (10 February 2012) Commissioner Ashbury noted there was nothing novel or unfair about accruals of leave being calculated on the basis of a notional day and that the ordinary hours of work prescribed by the agreement (in that case) were the basis for calculation of paid leave entitlements and for any consideration of whether those entitlements were consistent with the provisions of the National Employment Standards.

25. In Transport Workers Union of Australia v Airport Fuel Services Pty Ltd and others, (20 July 1995, Print M3222) a Full Bench of the Australian Industrial Relations Commission found nothing exceptional about awards (which are also minimum standards) expressing what was an annual leave standard of 5 weeks in hours in the context of different awards dealing with different shift patterns and lengths.

26. In this case, the 2010 Agreement provides that normal or ordinary hours of work are on average over the roster cycle 42 hours per week. The normal or ‘ordinary’ hours of work are the basis for the calculation of and payment of annual leave entitlements under the 2010 Agreement. Given this on the material before the Court the applicant has been unable to demonstrate an inconsistency between the 2010 Agreement and the National Employment Standards.

27. In Shop, Distributive and Allied Employees’ Association v Woolworths Ltd (supra) Barker J said an agreement will be found to exclude the National Employment Standards or it will not.[23] Where on the evidence before the Court it is common ground the employees accrue annual leave on the basis of 4.038 hours per week[24] and the base rate of pay for the employees’ ‘ordinary’ hours has been paid on each and every occasion an employee has taken annual leave no evidence of an inconsistency with or a breach of the Fair Work Act is established.

    [23] See paragraph 76 above

    [24] This equates to 5 weeks leave at 42 hours per week. It was not suggested the accrual rate was in dispute

28. With respect to the submissions made on behalf of the applicant the arguments do appear to conflate the entitlement in s.87 of the Fair Work Act with the obligation in s.90 of the Fair Work Act. I accept the National Employment Standards deals with the obligations or entitlement with respect to annual leave accrual separately from the obligation in relation to annual leave payment. Putting to one side the difference between the parties on the construction argument, there is a further difficulty confronting the applicant successfully prosecuting the allegations made in the statement of claim. In light of the concessions referred to above there is no evidence on the applicant’s own case of a breach of either the National Employment Standards or the 2010 Agreement.

29. In the event the construction preferred is wrong, then on the evidence before the Court in relation to the first alleged contravention, I accept the submission made on behalf of the respondent that the application in relation to the first alleged contravention is in any event premature given the state of the evidence and the concessions made by the applicant.[25]

    [25] See para.13-18 of respondent’s outline of submissions. See also Meneling Station Pty Ltd. v. Australasian Meat Industry Employees' Union (1987)18 FCR 51, at pp.65-66 and Construction, Forestry, Mining and Energy Union v Jeld –Wen Glass Australia Pty Ltd [2012] FCA 45 at 23-25

30. In relation to the second alleged contravention, s.739 of the Fair Work Act permits the Fair Work Commission to deal with certain disputes. Where an enterprise agreement (such as the 2010 Agreement) includes a term that provides a procedure for dealing with disputes, s.739 of the Fair Work Act confers upon the Fair Work Commission jurisdiction to deal with the dispute in accordance with that term.[26]

    [26]Cases decided previously must be understood in the context of the particular terms of the dispute resolution procedure of the agreement in question, as well as the statutory context applying at that time to that agreement.

31. A determination that results from a private arbitration is binding by force of the agreement of the parties to accept it as such.[27] The terms of the enterprise agreement remain in effect and enforceable pursuant to the compliance and enforcement scheme prescribed in Chapter 4 of the Fair Work Act.

    [27] Construction, Forestry, Mining and Energy Union v Australia Industrial Relations Commission (2000) 203 CLR 645 at 658 [31]-[34].

32. The decision of the Fair Work Commission,[28] referred to in paragraph 17 above, noted that:

    “1.The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) has made an application for Fair Work Australia to deal with a dispute in accordance with the dispute settlement procedure of the BCS Infrastructure Support P/L, Melbourne Airport Enterprise Agreement (the Agreement). The dispute concerns the proper entitlement of employees who are shift workers to annual leave.

    …

    6.The dispute arises because where an employee requests 5 weeks annual leave commencing at the start of a shift cycle then the period of 5 weeks (35 calendar days) includes 19 shifts of 12 hours, which amounts to 228 hours. Whilst BCS will grant the period of leave applied for, BCS deducts 228 hours from the employees annual leave balance. The employees and the CEPU claim that where an employee takes 5 weeks annual leave then no more than 210 hours can be deducted from the employees annual leave account even if the employee is absent from work for 19 shifts. The position of BCS is simply that the Agreement is explicit in providing an annual leave entitlement of 210 hours per annum and that this equates to 5 weeks where each week is 42 hours. BCS does not object to an employee taking more leave so long as the amount of actual leave (days not attending shifts) is accounted for.

    [28] [2011] FWA 7723

    …”

33. The decision of the Fair Work Commission[29] later on provided that:

    [29] Ibid

    “…

    27.Properly applied, clause 15 c) provides a real means of fairly regulating the taking of annual leave in a manner which does not prevent an employee from having a period of 5 weeks of annual leave, but which would ensure that over time employees averaged 210 hours for their 5 week periods of annual leave. Having said this it is always within the discretion of BCS to grant applications for 5 weeks annual leave to each and every employee on the basis that the period of annual leave will commence on the first or second day of a 4 day period of shifts thus providing employees with a period of 5 weeks annual leave which covers 19 shifts.

    28 Where, as in the present matter, the evidence is that BCS has approved a period of 5 weeks of annual leave for Mr Robin Taviera which commenced on the first day of a 4 day period of shifts then BCS would be in the position of having to pay Mr Taviera for the 19 shifts that fell within that period of annual leave. Such an outcome is required by s.90(1) of the Act.”

34. Any determination by the Fair Work Commission on the question of statutory construction would not bind the Court and it was not suggested otherwise. There was no order of the Commission in evidence[30] and the respondent denied the allegation of a breach of the 2010 Agreement[31] made by the applicant.

    [30] All that the applicant relied on was the decision cited as [2011] FWA 7723

    [31] Referred to as the second alleged contravention

35. As noted earlier the applicant’s position before the Court was that the second alleged contravention was not the ‘main thrust’ of the application and the applicant had no “order” of the Fair Work Commission.

36. The respondent submitted with respect to the second alleged contravention that the applicant’s claim was misconceived.[32] The respondent submitted that the decision of the Fair Work Commission concerned the issue of payment for leave not its accrual.[33] Accordingly, the respondent submitted in light of the evidence the applicant’s claim in relation to the second alleged contravention should be dismissed.

    [32] See respondent’s points of defence filed 1 February 2013

    [33] See paragraphs 24 to 28 of Fair Work Commission decision [2011] FWA 7723

37. The applicant sought inter alia a declaration in relation to the second alleged contravention. The applicant bore the onus to establish the contravention and in the face of this made the concessions referred to earlier. Given this the respondent’s submissions in relation to the second alleged contravention are to be preferred.

38. In the absence of an order from the Fair Work Commission and on the evidence before the Court[34] this allegation is also not made out.

    [34] For example there is no evidence that Mr Taveira has been refused or has not been paid for annual leave when he has taken it or hasn’t been paid for his ordinary hours

Conclusion

1. In the circumstances and for the reasons set out above the application should be dismissed.

I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Judge O’Sullivan

Date:  24 May 2013