CFMEU v Glendell Mining Pty Ltd - [2015] FCCA 3152

FEDERAL CIRCUIT COURT OF AUSTRALIA

CFMEU v GLENDELL MINING PTY LTD & ANOR

[2015] FCCA 3152

Catchwords:
INDUSTRIAL LAW – Statutory interpretation – whether annual leave and personal/carer’s leave can be deducted from an employee’s respective leave accrued if taken on a public holiday – where the relevant EA provides for leave entitlements in excess of NES – interpretation of ss.89 and 98 Fair Work Act 2009 – held that ss.89 and 98 are confined in their scope to leave entitlements arising under ss.87 and 96 of the Fair Work Act.

Legislation:

Fair Work Act 2009, ss.3, 12, 44, 50, 55, 87, 89, 90, 91, 92, 96, 98

C v Commonwealth of Australia [2015] FCAFC 113
Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100
Central Queensland Services Pty Ltd T/A BHP Billiton Mitsubishi Alliance [2015] FWC 1554
Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37
Khoury v GIO (NSW) (1984) 165 CLR 622 at 638
RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union [2015] FWCFB 2881

Applicant:

CFMEU

First Respondent:

GLENDELL MINING PTY LTD

Second Respondent:

ELIZABETH WATTS

File Number:

SYG 3503 of 2014

Judgment of:

Judge Altobelli

Hearing dates:

17-18 August 2015

Date of Last Submission:

18 August 2015

Delivered at:

Wollongong

Delivered on:

23 December 2015

REPRESENTATION

Counsel for the Applicant:

Mr Crawshaw SC

Solicitors for the Applicant:

Slater & Gordon

Counsel for the First and Second Respondents:

Mr Murdoch QC

Solicitors for the First and Second Respondents:

Corrs Chambers Westgarth

ORDERS

By consent, the Applicant’s claim as regards the Second Respondent be withdrawn and dismissed and there be no order as to costs.
The Application and Statement of Claim filed 17 December 2014 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

SYG 3503 of 2014

CFMEU

Applicant

And

GLENDELL MINING PTY LTD

First Respondent

ELIZABETH WATTS

Second Respondent

REASONS FOR JUDGMENT

Introduction

By way of an Application and Statement of Claim filed 17 December 2014, the Applicant seeks declaration and Orders in the following terms:
1. A declaration that contrary to section 44 of the Fair Work Act 2009 (Cth) (“FW Act”) the first respondent contravened the provision of the National Employment Standards in section 89 of that Act by taking Mr Brendan Noyes to be on paid annual leave on each of the following public holidays:
a. 26 January 2010 (Australia Day)
b. 14 June 2010 (Queen’s Birthday)
c. 26 December 2010 (Boxing Day)
d. 3 January 2011(New Year’s Day)
e. 1 January 2013 (New Year’s Day)
f. 27 January 2014 (Australia Day holiday)
g. 25 April 2014 (Anzac Day).
2. A declaration that contrary to section 50 of the FW Act, the first respondent contravened the Glendell Mine Operations Employee Enterprise Agreement 2013 by taking Mr Brendan Noyes to be paid on annual leave on each of the following public holidays:
a. 27 January 2014 (Australia Day holiday)
b. 25 April 2014 (Anzac Day).
3. A declaration that the second respondent was involved in the contraventions on:
a. 27 January 2014 (Australia Day holiday)
b. 25 April 2014 (Anzac Day).
4. A declaration that contrary to section 44 of the FW Act the first respondent contravened the provision of the National Employment Standards in section 98 of that Act by taking Mr Brendan Noyes to be on personal/carer’s leave on 26 January 2011 (Australia Day).
5. An order that Mr Brendan Noyes annual leave balance be adjusted by the addition of 8 days.
6. Orders that the respondents pay pecuniary penalties for each breach of s44 of the Fair Work Act 2009 pleaded herein.
7. Orders that the respondents pay pecuniary penalties for each breach of s50 of the FW Act
8. Orders that the pecuniary penalties be paid to the applicant.
9. Costs.
When the hearing commenced on 17 August 2015, the claim as it related to the Second Respondent was withdrawn and dismissed by consent on the basis that there be no order for costs.
By way of Response and Defence filed 23 January 2015, the Respondent in effect asks the Court to dismiss the claim.

Background

The Applicant is an employee organisation within the meaning of the Fair Work Act 2009 (hereafter referred to as ‘the Act’). The Respondent is the operator of the Glendell Open Cut Mining Operation, located in Ravensworth, in the Northern District Coalfields of NSW. The said mine is approved to produce up to 3.6 million tonnes of coal each year. Mr Brendan Noyes (hereafter referred to as ‘Noyes’) is a member of the Applicant and employee of the Respondent.
The parties of this care are also parties to the Glendell Mine Operations Employee Enterprise Agreement 2013 (hereafter referred to as ‘the 2013 EA’). The 2013 EA was approved by the Fair Work Commission, subject to undertakings.
The case before the Court relates to a dispute that arose between Noyes and the Respondent about whether annual leave and personal/carers leave can be deducted from Noyes’ respective leave accruals, if taken on a public holiday. The Respondent submits that the determination of this dispute by the Court has the potential to have implications not just for the Respondent, but across the coal mining industry, and possibly even other industries.

Uncontentious facts

The following facts are uncontentious:
a. The applicant is an employee organisation within the meaning of the Fair Work Act 2009 (“FW Act”).
b. The first respondent is a company incorporated pursuant to the Corporations Act 2001 (Cth) and capable of being sued as such.
c. The first respondent is an employer as defined in the FW Act.
d. The second respondent is employed as Operations Manager at the first Respondent’s Glendell Open Cut Mine.
e. Mr Brendan Noyes is employed by the first respondent.
f. Mr Brendan Noyes was rostered to work on the following public holidays but was on paid annual leave for those shifts:
i. Day shift on 26 January 2010 (Australia Day)
ii. Night shift on
1. 14 June 2010 (Queen’s Birthday holiday)
2. 26 December 2010 (Boxing Day)
3. 3 January 2011 (New Year’s Day holiday)
4. 1 January 2013 (New Year’s Day)
5. 27 January 2014 (Australia Day holiday)
g. Mr Noyes took personal/carer’s leave on 26 January 2011 which was also a public holiday (Australia Day).
h. The first respondent treated Mr Noyes as if he was on personal/carer’s leave on 26 January 2011 by paying Mr Noyes as if he was on personal/carer’s leave and deducting the day from his personal/carer’s leave accruals.

The evidence

At the hearing, the Applicant relied on the following Affidavits:
·Affidavit of Brendan Noyes, sworn 8 May 2015;
·Affidavit of Jeremy McWilliams, sworn on 8 May 2015; and
·Affidavit of Jeremy McWilliams, sworn 9 June 2015.
The Respondent relied on the following Affidavits:
·Affidavit of Leanne Frew, sworn 4 June 2015; and
·Affidavit of Ross Heath, sworn 5 June 2015.

Relevant provisions of the 2013 EA

The relevant provisions of the EA are:
21. ANNUAL LEAVE
21.1 Employees will be credited with annual leave progressively during a year in accordance with the Act and the employee's ordinary hours of work. Annual leave taken will be deducted in ordinary hours.
21.2 The amount of annual leave credited depends upon the Employee's roster as follows:
[Table not reproduced]
To the extent permitted by the Act, the Employee may elect, with the agreement of the Company, to cash out accrued annual leave or salary sacrifice future annual leave into an approved occupational superannuation fund. An Employee wanting to access this provision must retain, in their accrual, a minimum entitlement of four (4) weeks annual leave after the cashing out and enter into a separate written agreement with the Company through the appropriate Company form. The annual leave foregone will be paid at the "as if at work" rate.
21.3 When applying for Annual Leave, the Employee must complete the Company's leave form. Annual Leave will be granted unless in the opinion of the Company the operations will be adversely affected by the granting of Annual Leave at that time requested. The Company may require the Employee take annual leave provided at least 28 days' notice in writing is given to the Employee.
21.4 An employee taking annual leave must be paid either:
(a) the employee's Base Salary rate of pay plus a loading of 20% of that rate; or
(b) as if at work
whichever is the greater.
Payment of accrued Annual Leave on the termination of employment will be at the Employee's "as if at work" rate.
21.5 The Company may allow an employee to take annual leave in advance. Any annual leave which has been taken in accordance with this clause will be deducted from the employee's entitlement as it accrues. The Company may deduct from the employee's termination pay the payment for any annual leave taken in advance which the employee has not yet accrued in accordance with this clause.
21.6 An employee will be paid for annual leave in accordance with the employees normal pay period unless an employee requests that an entire period of annual leave be paid immediately prior to the employee commencing leave.
22. PERSONAL /CARER'S LEAVE
22.1 Personal /Carer's leave is defined as:
(a) paid leave taken by an Employee because of a personal illness, or injury, of the Employee; or
(b) paid or unpaid leave (carer's leave) taken by an Employee to provide care or support to a member of the Employee's immediate family, or a member of the Employee's household, who requires care or support because of:
(i) a personal illness, or injury, of the member; or
(ii) an unexpected emergency affecting the member.
For the purpose of personal/carer's leave, immediate family is defined as:
(a) a spouse, child (including an adult child, an adopted child, a step child, or an ex-nuptial child), parent, grandparent, grandchild or sibling of the Employee;
(b) a child (including an adult child, an adopted child, a step child, or an ex-nuptial child), parent, grandparent, grandchild or sibling of a spouse of the Employee.
22.2 Entitlement
An Employee on Personal or Carer's leave is entitled to paid leave subject to the following conditions and limitations:
22.2.1 Employees will be credited with three (3) weeks paid personal leave on the commencement of their employment and thereafter on their anniversary of employment date. The amount of personal leave credited depends upon the roster worked by the employee and is equal to the average rostered shifts per week multiplied by 3.
22.2.2 An Employee may use their personal leave as carer's leave. Employees are entitled to unpaid carer's leave of up to two (2) days on each occasion.
22.2.3 When an Employee becomes aware that they will be unable to attend and wish to take leave in accordance with this provision they are to notify the Company as soon as reasonably practicable and preferably before the commencement of their rostered shift.
In order to be entitled to paid personal/carer's leave an Employee must complete the Company's leave form immediately upon returning to work and prove to the satisfaction of the Company that the absence from work was on account of personal illness or injury to themselves or an illness or injury or unexpected emergency suffered by a member of the Employee's immediate family or household.
Late submissions will be processed in the next available pay.
Absences of (1) day must be supported by a statutory declaration or a certificate issued by a registered chiropractor, dentist, doctor, osteopath, physiotherapist, or psychologist and will only be accepted for conditions that prevent the employee's attendance at work.
Absences of two (2) or more days and any absence immediately prior to and I or following public holidays must be supported by a certificate issued by a registered chiropractor, dentist, doctor, osteopath, physiotherapist, or psychologist and will only be accepted for conditions that prevent the employee's attendance at work.
An Employee may be required to undergo a medical/occupational assessment at the Company's expense in cases where the employer may have concerns over the employee's fitness for work.
22.2.4 Payment and Deduction of Personal/Carer's Leave
Any personal leave taken must be deducted from the employee's personal leave entitlement as follows
(a) where the absence is for fewer than half the ordinary hours component of the shift, no deduction; or
(b) in all other cases, one day will be deducted from their accrued leave for each days absence.
For each day of personal leave taken in the course of employment an Employee will be paid as if at work.
22.2.5 Accident Pay- An Employee is not entitled to be paid personal/carer's leave for any period in respect of which the Employee is entitled to workers' compensation.
22.2.6 Accumulation - Personal leave will accumulate under this Agreement without limitation.
22.2.7 An Employee may elect to cash out accrued personal leave or salary sacrifice future personal leave into an approved occupational superannuation fund. An Employee wanting to access this provision must retain an equivalent accrued entitlement of fifteen (15) days personal leave after such cashing out/salary sacrifice. For the purpose of this clause the rate at which personal leave may be salary sacrificed I cashed out will be the "as if at work" rate, and the Employee and the Company must enter into a separate written agreement through the applicable Company form.
22.2.8 Payment of Personal Leave on Termination of Employment.
Where the employment of an employee, with more than twelve months employment with the Company, terminates or is terminated by the Company and the employee has accrued an entitlement of two or more weeks of unused personal leave, the employee will be paid for all untaken accrued personal leave at the employee's TARP rate.
The approval of the 2013 EA was subject to an undertaking by the Respondent as follows:
The provisions of clauses 21 and 22 of the Agreement will be applied consistently with the requirements of Part 2-2 of the Act.

Relevant provisions of the Act

Section 89 of the Act provides:
89 Employee not taken to be on paid annual leave at certain times
Public holidays
(1) If the period during which an employee takes paid annual leave includes a day or part-day that is a public holiday in the place where the employee is based for work purposes, the employee is taken not to be on paid annual leave on that public holiday.
Other periods of leave
(2) If the period during which an employee takes paid annual leave includes a period of any other leave (other than unpaid parental leave) under this Part, or a period of absence from employment under Division 8 (which deals with community service leave), the employee is taken not to be on paid annual leave for the period of that other leave or absence.
Section 98 of the Act provides:
98 Employee taken not to be on paid personal/carer’s leave on public holiday
If the period during which an employee takes paid personal/carer’s leave includes a day or part-day that is a public holiday in the place where the employee is based for work purposes, the employee is taken not to be on paid personal/carer’s leave on that public holiday.

Applicant’s contentions summarised

The Applicant contended that the Respondent was required by ss.89 and 98 of the Act to treat Noyes as not being on annual leave or personal carer’s leave on days which were public holidays, and that on the days referred to in the evidence the Respondent failed to do so, contrary to the terms of Part 2-2 of the Act, and contrary to s.44 of the Act, which prohibits an employer from contravening a provision of the National Employment Standards. Moreover, by so doing, the Respondent acted contrary to the undertaking given to the Fair Work Commission. The Applicant contends that ss.89 and 98 should be given their ordinary meaning, and thus apply to all annual and personal/carer’s leave without restriction. Specifically, insofar as ss.87 and 96 prescribe a quantum of leave, these sections should not be interpreted as restricting ss.89 and 98.

Respondent’s contentions summarised

The Respondent contends that Noyes was at all material times in receipt of his leave entitlements under the 2010 and 2013 EA’s, which were significantly superior to those under the National Employment Standards. As a matter of fact (not disputed), the Respondent contends that on the days when Noyes was rostered to work but look leave, he was taking leave that was in excess of the National Employment Standards. The Respondent contends that ss.89 and 98 are confined in their scope to the leave entitlements that arise out of ss.87 and 96, namely four weeks of paid annual leave (in this case) and ten days of paid personal /carer’s leave.

Alternate contentions

Both the Applicant and Respondent made alternate contentions, but these will only be considered if it is necessary to do so.

Principles of statutory interpretation

The Court in this case is required to interpret the sections of the Act referred to above, and their interaction with the relevant provisions of the EA.
In Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100 (hereafter referred to as ‘Centennial Mining’), the Full Court stated at [27]:
In determining the meaning of words in a statute one begins with the text (Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47]), albeit that the text must be read in context (Cooper Brookes (Wollongong) Proprietary Limited v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 304 (Gibbs CJ), 319320 (Mason and Wilson JJ)).
At [12]-[13], the Full Court notes:
12.The primary judge noted that there was no dispute about the principles to be applied, referring to Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]- [71]. At [69] McHugh, Gummow, Kirby and Hayne JJ explained:
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole" [picking up what was said by Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320]. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.

(Footnotes omitted.)
13.At [71] their Honours noted that a court construing a statutory provision must strive to give meaning to every word in it.
In C v Commonwealth of Australia [2015] FCAFC 113 at [40], the Full Court stated:
The established rules of statutory construction are to be applied. They were authoritatively restated by the High Court in Federal Commissioner of Taxation v Consolidated Media Holdings Limited [2012] HCA 55; (2012) 250 CLR 503 at 519:
‘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 materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.

Meaning of ss.89 and 98 of the Act

Sections 89(1) and 98 are in almost identical terms, the difference being reference to two different types of leave.
Paid annual leave is defined in s.12 of the Act:
paid annual leave means paid annual leave to which a national system employee is entitled under section 87.
Paid personal/carers leave is also defined in s.12:
paid personal/carer’s leave means paid personal/carer’s leave to which a national system employee is entitled under section 96.
These definitions refer to ss.87 and 96 of the Act. Section 87 states (insofar as it is relevant to this case):
87 Entitlement to annual leave
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
…
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.
Section 96 states:
96 Entitlement to paid personal/carer’s leave
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.
Accrual of leave
(2) An employee’s entitlement to paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
Both types of leave accrue progressively during a year, and accumulates from year to year.
The Full Court in Centennial Mining observed at [8] that the definition of paid annual leave in s.12 was unhelpful.
Should ss.89 and 98 be confined in their scope to the leave entitlements set out in ss.87 and 96? The Respondent contends that the combined effect of ss.12, 87 and 89, and ss.12, 96 and 98 results in ss.89 and 98 being restricted to the leave prescribed under the National Employment Standards so that provided a worker is not taking leave on a public holiday which results in the said worker using up part of his s.87 or 96 entitlement to leave, there has been no contravention of the Act. Of course, this could only occur in cases where the EBA provides leave entitlements in excess of the National Employment Standards, as in this case.
One difficulty with this interpretation of these sections is that it is not an interpretation consistent with the plain meaning of the text of the statute. Indeed, it would be reading into ss.89 and 98 a limitation that is not present in those sections.
The Respondent submits that the broader context of the legislation supports its interpretation. In this regard, the Respondent submits:
a)The object of the Act is established in s.3, which states:
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) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; 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) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.
The Respondent submits that Parliament was endeavouring to establish a regime that was fair and balanced for employers, employees and the community at large. Implied in this submission, the Court notes, is a contention that the interpretation of the relevant sections proposed by the Applicant was neither fair, nor balanced, from an employer’s perspective. In this regard, it is noted that the Respondent’s employees, including presumably Noyes, already receive an annualised salary that contains some compensation for public holidays. Clause 17 of the 2013 EA provides for a remuneration structure that is divided between base salary and a roster allowance, the latter of which includes payment for work on public holidays. The base salary and roster allowance, when added together, become the Total Annual Roster Payment (TARP). This payment includes payment at triple time rates for hours required to be paid on public holidays on average under a roster pattern and payment at ordinary time for other public holidays. Thus, the company in effect prepays employees at triple time for the work anticipated to be performed on public holidays on average during the year.
The practical effect of the interpretation contended for by the Applicant is that the employee receives a benefit for which he or she has potentially already benefitted in the TARP. The Respondent submits that this is hardly the fairness and balance contemplated in the objects of the Act.
b)Whilst the definition of paid annual leave, and paid personal/carers leave in s.12 are circular, the definitions are nonetheless clear – paid annual leave is defined by reference to s.87 and paid personal/carers leave is defined by reference to s.96. Parliament has spoken. If Parliament had intended that the defined leave entitlements include additional entitlements beyond ss.87 and 96, it would have said so.
c)Section 55 of the Act is consistent with the interpretation contended by the Respondent. This section deals with an issue presented before this Court – the interaction between the National Employment Standards relating to leave, and the provisions of an enterprise agreement. Section 55 states:
55 Interaction between the National Employment Standards and amodern 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).
The Respondent submitted that particular attention needs to be given to the note following s.55(6), which refers explicitly to the four week annual leave entitlement prescribed under s.87. Whilst the note was conceded not to be part of the Act, as a matter of law, it was part of the extrinsic material which the Court was entitled to consider when there was some uncertainty in interpreting the legislation. The Supplementary Explanatory Memorandum to the Fair Work Bill 2008 is also consistent with the interpretation advanced by the Respondent in this regard. At [29] of the said Memorandum, it is noted that:
As the note to subclause 55(6) makes clear, this means, for example, that if an enterprise agreement provides 6 weeks’ annual leave, the accrual rules and rules about taking of leave will operate as a minimum standard in relation to the NES entitlement (4 weeks’ leave), but not in relation to the additional leave. This provision is designed to ensure the integrity of the NES, while allowing flexibility in relation to ‘above-NES’ entitlements. In the case of an agreement with 6 weeks’ annual leave, it would be possible for the parties to agree that the additional two weeks would be provided in a ‘lump sum’ at the end of a year, rather than accruing progressively under the NES.
d)Division 6 of Part 2-2 of the Act, in context, supports the interpretation contended by the Respondent. Section 87 explicitly refers (on the facts of this case) to four weeks of paid annual leave: s.87(1)(a). Section 87(2) picks up the same definition of paid annual leave. Sections 88 and 89 again use the term “paid annual leave”. Thus, s.89(1) in effect uses the term “paid annual leave” as a term of art whose definition must, of necessity, be limited by reference to s.87, which creates an entitlement (in this case) to four weeks of paid annual leave. Sections 90, 91 and 92 all use the same term.
e)Precisely the same result was contended in relation to the term “paid personal/carer’s leave”.
The Respondent also submitted that the issue before this Court was similar, if not identical in part, to an argument the Applicant made without success before Deputy President Asbury in Central Queensland Services Pty Ltd T/A BHP Billiton Mitsubishi Alliance [2015] FWC 1554. The learned Deputy President said at [60]:
In response to the CFMEU’s assertion that the proposed Agreement contains terms that contravene the National Employment Standards (NES), BMA submits that s. 89(1) of the Act provides that if a period during which an employee takes paid annual leave includes a day or part-day that is a public holiday in the place where the employee is based for work purposes, then the employee is taken to not be on paid annual leave on that public holiday. Given that the proposed Agreement provides for six weeks of annual leave – one week in excess of the annual leave prescribed in the NES – the deduction from an employee’s leave is only a deduction from entitlements above the NES. Therefore, clause 18.2(c) of the Agreement does not exclude any provision of the NES and does not contravene s. 55 of the Act.
It was acknowledged that this was not authority binding this Court, but was persuasive.
In relation to the Enterprise Agreements, the Respondent contended that the annual leave and paid personal/carer’s leave entitlements are manifestly in excess of the National Standards for such leave.
In essence, the Respondent submits that when ss.89 and 98 are read in the context of the objects of the Act, the definitions in ss.12, 55 and Division 6 of Part 2-2 of the Act, together with the appropriate extrinsic materials, ss.89 and 98 should be read as limited to leave entitlements pursuant to the National Employment Standards only
The Applicant submits that this limitation does not apply, and the ordinary words of ss.89 and 98 should prevail. The Applicant submits that the evident purpose of these sections would be defeated on the Respondent’s interpretation because so long as there was at least one extra day over the ss.87 and 96 entitlements, one would not know which one of those extra days was a National Employment Standard entitlement, and which was not. Leave entitlements are pooled, and if ss.89 and 98 did not apply to entitlements above the National Employment Standards, one would not know whether the public holiday falls on a National Employment Standards leave day. The Court does not find this argument convincing. An Enterprise Agreement could include a provision dealing with this issue in some agreed manner. This is a mechanical issue of implementation which should not be permitted to dictate how the plain words of a statute should be interpreted. To do so would be akin to facilitating the tail wagging the dog.
The Applicant submits that its contended interpretation is supported by the Explanatory Memorandum to the Fair Work Bill 2008, which states in relation to Clause 89:
Clause 89 – Employee not taken to be on paid annual leave at certain times
Under clause 89, an employee will not be taken to be on paid annual leave:
· during a day or part-day that is a public holiday which falls during the period of their absence from work on annual leave; or
· while the employee takes other types of leave provided for under the NES, with the exception that paid annual leave may be taken in conjunction with unpaid parental leave.
369. The effect of this clause is that if a public holiday falls during a period when an employee is absent from work, or the employee is sick and takes paid sick leave for the period of their illness, then the employee’s annual leave accrual will not be reduced by that day or period.
and in relation to Clause 98:
Clause 98 – Employee taken not to be on paid personal/carer’s leave on public holiday
394. Clause 98 has the effect that an employee will not be taken to be on paid personal/carer’s leave when a day or part-day that is a public holiday falls during the employee’s absence on leave.
With respect, this does not assist the Applicant, but merely draws attention once again to the meaning of “paid annual leave” and “paid personal/carer’s leave”, defined and discussed in Clauses 87 and 96 of the same Explanatory Memorandum.
The Applicant further submitted that the ss.89 and 98 entitlements were not in themselves capable of supplementation for s.55 purposes. Reliance was placed in this regard on the Full Court’s recent decision in the Centennial Mining case. The submission is that ss.89 and 98 came into the same category as s.90(2), which was the subject of the decision in that case. Section 90 of the Act states:
90 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.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
The issue in that case was whether an employee whose employment has ended should have their unpaid annual leave calculated by reference to the ordinary hours worked, as opposed to the amount they would have received if the leave was actually taken. Centennial Mining contended that s.90(2) should be read by reference to s.90(1), i.e. at ordinary hours of work. Both at first instance and on appeal, the Court rejected this interpretation. Whereas s.90(1) is confined to a statement of minimum obligation, s.90(2) was, in effect, a statement that an employee should not suffer a reduction in the value of unpaid annual leave if employment came to an end while paid annual leave remains untaken: [15]-[17], [26], [37]-[38].
The Applicant concedes in argument that the interpretation of the words used in s.90 does not directly assist in the present case. The emphasis, however, is on the concept and principle, which is said to be to the effect that National Employment Standards provisions do not necessarily apply only to National Employment Standards benefits that are less than what is found in an EA. They can actually prescribe a minimum condition that must apply in relation to benefits that are not only found in the National Employment Standards, but in the EA. Thus, ss.89 and 98 should be read with reference to, but not limited by ss.87 and 96, and the Court should thus adopt a purposive approach to interpretation of these sections. It was contended that this is the principle to be derived from the Full Court in Centennial Mining.

The Court does not accept this submission. The Centennial Mining case dealt with s.90 which, as between subsections (1) and (2), adopts different contexts set out there. The issue in the present case is quite different. There are no internal inconsistencies in ss.89 and 98, or as between those sections and ss.87 and 96. There is no ambiguity to be resolved in the same way as there was in relation to s.90(1) and (2). There are other distinguishing points. Centennial Mining did not deal with the present situation of leave entitlements pursuant to an EA which were more generous than the National Employment Standards. Whereas the issues in this case focus on the quantum of leave entitlement, deduction and accrual, Centennial Mining focussed on leave entitlements on termination. In any event, this Court doubts very much that the Full Court drew the distinction contended for by the Applicant about provisions that can be supplemented, and those that cannot.
The Applicant further submitted that the legislation should be interpreted beneficially because the relevant provisions provide industrial benefits to employees. The Court was referred to the Full Court’s recent decision in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 (hereafter referred to as the ‘Quest South Perth case’). The relevant paragraphs appear to be [94]-[96]:
94.    Whilst the task of statutory construction must focus on the text of the provision in question, ascertaining the meaning of that text requires consideration of the purpose and policy of the provision in the context of the legislation as a whole: Informax International Pty Ltd v Clarius Group Ltd [2012] FCAFC 165; (2012) 207 FCR 298 at [162] (Besanko, Jagot and Bromberg JJ). As French CJ, Gummow, Hayne, Kiefel and Bell JJ said in AB v State of Western Australia (2011) 244 CLR 390 at [10] (by reference to the observations of Dixon CJ in Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; (1955) 92 CLR 390 at 397), the context, general purpose, policy and fairness of a statutory provision are guides to its meaning. Their Honours continued:
The modern approach to statutory interpretation uses “context” in its widest sense, to include the existing state of the law and the mischief to which the legislation is addressed. Judicial decisions which preceded the Act may be relevant in this sense, but the task remains one of the construction of the Act.
(Footnotes omitted.)
95.    Part 22 of the WR Act was replaced by Division 6 of Pt 3-1 of the FW Act. Each of ss 900–903 of the WR Act has a counterpart provision in Division 6. There can be no doubt that Division 6 seeks to address the same mischief as that addressed by Part 22 of the WR Act. The extrinsic material to which we have referred makes it clear that the mischief which is addressed by the provisions which are now found in Division 6 is the attempted avoidance of legal entitlements due to an employee through arrangements which falsely disguise the employee as an independent contractor. Those provisions were clearly intended to protect employees. They should be regarded as remedial and beneficial despite their penal nature. The same approach has been adopted in relation to other provisions of that character contained in Pt 3-1 of the FW Act: Barclay v Board of Bendigo Regional Institute of Technical and Further Education [2011] FCAFC 14; (2011) 191 FCR 212 at [14]–[17] (Gray and Bromberg JJ); Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council [2000] FCA 1231; (2000) 101 IR 143 at [75] (Madgwick J); National Union of Workers v Qenos Pty Ltd [2001] FCA 178; (2001) 108 FCR 90 at [48] (Weinberg J); Construction, Forestry, Mining & Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697 at [35] (Katzmann J); and see Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156 at 164-5 (Gibbs CJ, Mason, Wilson and Dawson JJ).
96.    We would accept that the avoidance of sham arrangements is a broad objective. We also accept, as the extrinsic material indicates, that the avoidance of sham arrangements includes arrangements achieved through triangular contracting involving labour-hire agencies (however described).
There are two difficulties with the Applicant’s submission in this regard. The first is that the facts of this case are so different to the Quest South Perth case. There is no extreme or repugnant behaviour in this case. Moreover, the Full Court recognised the second problem, which confronts the Applicant in this case, at [99]:
A second and complete answer is that whilst our approach to construction should strive to give effect to the evident purpose of the legislation, we must nevertheless arrive at a construction consistent with the terms of the legislation: AB v State of Western Australia at [23] (the Court). We do not accept that the construction for which the Ombudsman contended is consistent with the terms of s 357(1).
Thus, a beneficial interpretation cannot apply where the terms of the legislation is as clear as it is, in this case. Thus, even if the provisions in question were to be considered as remedial or beneficial, their interpretation “must be restrained within the confines of the actual language employed and what is fairly open on the words used”: Khoury v GIO (NSW) (1984) 165 CLR 622 at 638. The High Court’s recent decision in Fair Work Ombudsman v Quest South Perth Holidays Pty Ltd & Ors [2015] HCA 45 does not, in this Court’s view, assist the Applicant.
The Applicant’s argument fails. The Court accepts the Respondent’s contention that ss.89 and 98 are confined in their scope to the leave as defined in ss.87 and 96 respectively. Thus, Noyes was at all relevant times in receipt of his leave entitlements under the EA, which were more generous than the National Employment Standards. It is significant to note, however, that on facts of this case Noyes was not deprived of his National Employment Standards entitlements in any way. The outcome would have been different if he had been so deprived. The benefits he receives above his National Employment Standards entitlements accrue to him because of a beneficial EA, but ss.87 and 96 do not apply to those above National Employment Standards entitlements. That is what the legislation says, and means, in context. Any practical challenges that this interpretation creates can be overcome by a process agreed to between the employer and employee, or those representing the latter.

Applicant’s alternative contention

The Applicant’s alternative submission was not referred to in its Outline of Submissions, nor alluded to in its Statement of Claim. It was not clearly articulated in oral submissions. The thrust of the argument seems to be, doing the best the Court can, that the Respondents’ calculation of Noyes’ leave entitlements was incorrect, and that whilst he did in fact receive leave in excess of the National Employment Standards, it was not as great as asserted by the Respondent. The argument was based on the interpretation of the relevant leave provisions in the EA, and a decision of the Full Bench of the Fair Work Commission in RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union [2015] FWCFB 2881, despite the reservations expressed by the Full Bench at [90]. Quite apart from not fully understanding the submission, the difficulty that this Court has with this alternate argument is that it was not contended that it would bring about a different outcome if, as is indeed the case, the Court rejects the Applicant’s primary submission. On the evidence, it could not be said that the Respondent had contravened the Act. Indeed, the Respondent’s rebuttal to this alternative argument refers to evidence strongly suggesting that Noyes did in fact receive leave well in excess of the National Employment Standards. In these circumstances, it is unnecessary to enter into the merits of the alternative case.

Determination

The Application and Statement of Claim filed 17 December 2014 are dismissed. No contraventions of the Act have been established on the evidence.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Associate:

Date: 23 December 2015