CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
[2012] FCA 253
•20 March 2012
FEDERAL COURT OF AUSTRALIA
CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
[2012] FCA 253
Citation: CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2012] FCA 253 Appeal from: CEPU of Australia v CJ Manfield Pty Ltd [2011] FMCA 374 Parties: CJ MANFIELD PTY LTD (ACN 009 601 825) v COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA File number: NTD 47 of 2011 Judge: MARSHALL J Date of judgment: 20 March 2012 Catchwords: INDUSTRIAL LAW – employment contract – interpretation – whether contract provided for an “all-in” rate of pay – whether contract excluded an entitlement in the applicable industrial award to payout of accrued annual leave upon termination of employment – appeal dismissed Legislation: Fair Work (Registered Organisations) Act 2009 (Cth)
Workplace Relations Act 1996 (Cth)
Electrical Engineering and Contracting Industries (Northern Territory) Award 2002 cl 33Date of hearing: 29 February 2012 Place: Brisbane (heard in Melbourne) Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the Appellant: Mr S Wood SC with Mr M Follett Solicitor for the Appellant: Ward Keller Lawyers Counsel for the Respondent: Mr W Friend SC with Mr C Dowling Solicitor for the Respondent: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
FAIR WORK DIVISION
NTD 47 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: CJ MANFIELD PTY LTD (ACN 009 601 825)
Appellant
AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Respondent
JUDGE:
MARSHALL J
DATE OF ORDER:
20 MARCH 2012
WHERE MADE:
BRISBANE (HEARD IN MELBOURNE)
THE COURT ORDERS THAT:
1.The appeal is dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
FAIR WORK DIVISION
NTD 47 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: CJ MANFIELD PTY LTD (ACN 009 601 825)
Appellant
AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Respondent
JUDGE:
MARSHALL J
DATE:
20 MARCH 2012
PLACE:
BRISBANE (HEARD IN MELBOURNE)
REASONS FOR JUDGMENT
This appeal raises a short point concerning the proper interpretation of a written contract of employment. The appellant, CJ Manfield Pty Ltd (“Manfield”) employed Mr Gregory Stewart and Ms Julie Dilulio (“the employees”) pursuant to contracts which were in materially identical terms. The question for current determination is whether those written contracts provided an “all-in” rate of pay which excluded an entitlement of the employees found in the applicable industrial award to be accorded accrued annual leave payments on termination of employment. For the reasons which follow the answer to that question is “no”. The consequence of that answer is that the appeal from the judgment of the Court below which ordered Manfield to pay the employees their accrued annual leave entitlements on termination must be dismissed.
Background facts
Manfield provided refrigeration and electrical maintenance services at the Alcan Gove Processing Plant and Mine on the Nhulunbuy Peninsula in the Northern Territory. The workplace is at a remote location. The employees were employed on a “fly in-fly out” (“FIFO”) basis. They worked for two or three weeks at a time for 12 hours a day before having an equivalent period of non-working time.
The respondent (“CEPU”) is an organisation of employees registered pursuant to the provisions of the Fair Work (Registered Organisations) Act 2009 (Cth) and prior to that the Workplace Relations Act 1996 (Cth) (“the WR Act”). It is not in dispute that it had the standing to make the application before the Court below on behalf of the employees.
The terms and conditions of the employees, at all material times, were regulated by the WR Act, the Electrical Engineering and Contracting Industries (Northern Territory) Award 2002 (“the Award”) and a written contract of employment entitled “Manfield Colair Gove 2007 Employment Agreement” (“the Contract”).
Manfield terminated the employment of the employees by reason of redundancy in circumstances where they were not paid any entitlement by reference to accrued annual leave on termination of employment.
The Award
The Award deals with the topic of “Annual Leave” at cl 33 thereof. Clause 33 provides:
33. ANNUAL LEAVE
33.1A period of 28 consecutive days annual leave without loss of pay shall be allowed annually to an employee on weekly hire after twelve months continuous service (less the period of annual leave).
33.2Shift workers who are rostered to work continuous shift work (which includes working regularly on Sundays and holidays) in addition to the leave specified above, shall be allowed an extra seven consecutive days leave including non-working days.
33.3Annual leave is exclusive of public holidays
The annual leave prescribed by this clause shall be exclusive of any public holiday. If a holiday falls within an employee’s period of annual leave and is observed on what would have been an ordinary working day for that employee, one day for each such holiday shall be added to that annual leave.
33.4Calculation of continuous service
33.4.1For the purpose of this clause, service shall be deemed to be continuous notwithstanding:
33.4.1(a)any interruption or termination of the employment by the employer if such interruption or termination has been made merely with the intention of evading obligations under this award;
33.4.1(b)any absence from work on account of personal sickness or accident, or on account of leave granted, imposed or agreed by the employer; or
33.4.1(c)any absence with reasonable cause, proof shall be on the employee.
33.4.2In cases of personal sickness or accident, or absence with reasonable cause, the employee, to become entitled to the benefit of this subclause shall notify the employer, if practicable within 24 hours of the commencement of such absence, of the employee’s inability to attend for duty.
33.4.3In calculating the period of twelve months continuous service, any such absence in a twelve monthly period as aforesaid shall not, except to the extent of not more than fourteen days or the period for which an employee is entitled to, and is paid sick leave in accordance with the provisions of this award (whichever period is the longer) in the case of sickness or accident, be taken into account in calculating the period of twelve months continuous service.
33.4.4Any other absences from work by reason of any other cause being a cause specified in this subclause, will not be deemed to have broken the continuity of service unless the employer states in writing that the absence breaks the continuity of service within fourteen days of the employee’s return from the absence.
33.5Calculation of service
33.5.1Service before the date of this award shall be taken into consideration for the purposes of calculating annual leave, but an employee shall not be entitled to leave or a payment in lieu thereof for any period in respect of which leave or a payment in lieu thereof has been allowed. The period of annual leave to be allowed under this clause shall be calculated to the nearest day any broken part of a day in the result not exceeding half a day to be disregarded.
33.5.2Where the employer is a successor, or assignee, or transmittee, of a business, if an employee was in the employment of the employer’s predecessor at the time when he/she became such successor, or assignee, or transmittee, the service of the predecessor shall, for the purpose of this clause, be deemed to be in the service of the employer.
33.6Calculation of month
For the purposes of this clause, a month shall be reckoned as commencing with the beginning of the first day of the employment or the period of the employment in question and as ending at the beginning of the day which in the latest month in question has the same date number as that which the commencing day had in its month, and if there be no such day in any subsequent month, shall be reckoned as ending at the end of such subsequent month.
33.7Leave to be taken
The annual leave provided by this clause shall be allowed and shall be taken. Payment shall not be made or accepted in lieu of annual leave except on termination of employment.
33.8Time of taking leave
33.8.1Annual leave shall be given at a time fixed by mutual agreement, or failing that, at a time fixed by the employer and the leave provided in 34.1 may at the option of the employee be taken in conjunction with leave becoming due after the following twelve months of continuous service.
33.8.2Leave shall be given within six months of its becoming due, or as required by the employee, and after two weeks notice to the employer.
33.9Payment for period of leave
33.9.1Each employee before going on leave shall be paid such wages which have accrued on account of annual leave at the rate applicable at the time the leave is taken.
33.9.2During a period of annual leave, an employee shall receive a loading calculated on the rate of wage prescribed by 33.9.1 of this clause.
33.9.3The loading shall be as follows:
33.9.3(a)Day workers – an employee who would have worked on day work only had he not been on leave – a loading of 17.5%.
33.9.3(b)Shift workers – an employee who would have worked on shift work had he not been on leave a loading of 17.5%.
Provided that where the employee would have received shift loadings prescribed by clause 32 – Shift work, had he not been on leave during the relevant period and such loadings would have entitled him to a greater amount than the loading of 17.5%, then the shift loadings shall be added to the rate of wage prescribed by 33.9.1 in lieu of the 17.5% loading.
Provided further, that if the shift loadings would have entitled him to a lesser amount than the loading of 17.5%, then such loading of 17.5% shall be added to the rate of wage prescribed by 33.9.1 in lieu of the shift loadings.
33.10Proportionate leave on termination
If, after one month’s continuous service in any qualifying twelve monthly period, an employee lawfully leaves his or her employment, or his or her employment is terminated by the employer through no fault of the employee, the employee shall be paid at his or her ordinary rate of wage of 2.923 hours in respect of each completed week of continuous service, being service in respect of which leave has not been granted hereunder.
The loading on annual leave pay prescribed by 33.9.2 shall apply to proportionate leave on termination.
The structure of cl 33 is as follows:
·Subclauses 33.1 to 33.5 deal with the entitlement to annual leave and its calculation;
·Subclauses 33.7 to 33.9 deal with the actual taking of leave, including the manner of payment when it is taken; and
·Subclause 33.10 deals with the payment of pro-rata annual leave entitlements on termination of employment.
Operation of the Contract vis-à-vis the Award
There are several provisions in the Contract which are relevant to the issue for determination. The first of them is subcl 2.1 where it provides:
The wages and working conditions of the Workforce employed will comply with all statutory requirements and applicable industrial instruments and will take into consideration and generally align with the Enterprise Bargaining Agreements in place with other Contractors and their employees on the Alcan Gove Site. Any conditions not included within this Agreement or not clearly stated, in all cases will be covered by and no less than the Electrical Engineering and Contracting Industries (Northern Territory) Award 2002. (Emphasis added.)
The next crucial clause is cl 5 which is headed “leave”. It provides:
5. Leave
5.1 Annual Leave Entitlement
See Offer of Employment
5.2 Taking of Annual Leave
See Offer of Employment
5.3 Sick Leave
See Offer of Employment
5.4 Rest and Recreation Leave
See Offer of Employment
Subclauses 5.1 and 5.2 are particularly relevant to the issue for determination. The offer of employment section is the last page of the Contract. Next to annual leave the notation is “N/A”, being short for non-applicable. This is indicative of an intention in the Contract for the annual leave entitlement in the Award dealt with at subcl 33.1 to subcl 33.5 to be incorporated in the “all-in” rate. If there is no entitlement to annual leave it follows that there is no entitlement to actually take the leave. The reference to “See Offer of Employment” in subcl 5.2 indicates a desire to subsume the benefits of subcl 33.7 to subcl 33.9 in the all-in rate. However, cl 5 of the Contract is silent about the payment of accrued annual leave on termination. There is no “clearly stated” intention to oust subcl 33.10 of the Award.
Clause 6 is also an important clause to be considered. The opening paragraph provides:
Wages and Allowances
The weekly/hourly rates specified in the “Offer of Employment” reflect the All-Purpose Weekly Wage Rate. These wage rates comprehend all/any allowances including, without limiting, Agreement/Award entitlements, Industry or Company Agreements, over Award payments, the generality of site disability payments including Award special rates, i.e. confined space, wet underfoot, height, dust, dirt, special skill payments, wind, training, laundry and other similar or like payments which may be provided for in any other relevant Awards or Agreements (be they Federal or State) and not expressly provided for elsewhere in this Agreement, and/or relative to the scope or work to be undertaken on this site.
All Award provisions, which provide for an industry or like allowance, disability or similar allowance, special rates, fare and/or travelling allowances other than those stated elsewhere in this clause, are deemed to be incorporated in this Agreement.
An Employee’s remuneration shall be as provided for and notified to prospective Employees in their “Offer of Employment” form or as varied from time to time.
It has the flavour of emphasising that the all-in rate subsumes various allowances that would otherwise be paid.
Subclause 6.1 is headed “Employment Structure”. It makes provision for entitlements to specified classes of employees including FIFO employees. It makes specific reference to “the flat hourly rate” for FIFO employees and says that rate:
is inclusive of all overtime penalty rates, 20% loading in respect of annual leave, sick days, rostered days off and public Holidays This [sic] hourly rate is inclusive of all allowances.
There is nothing in subcl 6.1, where it refers to FIFO employees, to say that pro-rata payment of annual leave entitlements on termination is comprehended in the hourly rate. It only refers to a “loading” in respect of annual leave. Even if the Court is in error in considering that the Contract at cl 5.1 and cl 5.2 does not oust the Award entitlement at cl 33.10, in the specific case of FIFO employees, that entitlement remains untouched by reason of cl 6.1.
One can readily understand Manfield, given the remote location of its business, not wishing its employees to take leave, as such leave may interfere with its operations and the availability of staff. No such operational considerations impact on the provision of accrued annual leave entitlements on termination. It would have been easy for the framers of the Contract to specifically oust cl 33.10 of the Award by clearly stating so. In accordance with cl 2.1 of the Contract, the cl 33.10 entitlement is “not clearly stated” to be excluded either at cl 5 or expressly at cl 6.1 when in the latter case specifically dealing with FIFO employees.
Effect of preferred construction of the Contract
Counsel are agreed that the effect of the construction of the Contract which the Court considers to be the preferred one leads to the result that the judgment and order below is not disturbed. The effect of the reasoning below was that the employees were entitled to be paid accrued annual leave entitlements on termination. It is not in dispute, as a consequence, of the Court’s above reasoning that the other issues arising on appeal are not necessary to be dealt with and that there is no utility in so doing.
Disposition
Having regard to the foregoing the Court orders that the appeal is dismissed.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate:
Dated: 20 March 2012
2