Coal and Allied Mining Operations Pty Limited v Doran
[2011] FCA 1048
•8 September 2011
FEDERAL COURT OF AUSTRALIA
Coal and Allied Mining Operations Pty Limited v Doran [2011] FCA 1048
Citation: Coal and Allied Mining Operations Pty Limited v Doran [2011] FCA 1048 Appeal from: Doran v Coal and Allied Mining Operations Pty Ltd (Chief Industrial Magistrate’s Court of New South Wales, Case no. 2010/244262, 14 January 2011) Parties: COAL AND ALLIED MINING SERVICES PTY LIMITED v TERRENCE MICHAEL DORAN File number(s): NSD 89 of 2011 Judge: KATZMANN J Date of judgment: 8 September 2011 Catchwords: INDUSTRIAL LAW – Workplace agreement – entitlements on termination of employment to accrued annual holiday and long service leave – payment at “ordinary time remuneration” – whether entitlements for injured employee in receipt of accident pay for over 39 weeks include work pattern allowance – proper interpretation of workplace agreement Legislation: Fair Work Act 2009 (Cth) ss 12, 545(3)
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 2 item 4(1), Sch 3 item 2, Sch 16 items 2(2) and 16, Sch 17 item 24(2)
Federal Court of Australia Act 1976 (Cth) s 24(1A)
Workplace Relations Act 1996 (Cth) ss 172(1), 178, 228, 235(2), 527, 529Cases cited: Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Coal & Allied Mining Services Pty Ltd v MacPherson (2010) 185 FCR 383
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337ECH Inc v Halliday [2011] FCAFC 51
Goodwin v Phillips (1908) 7 CLR 1
Re Luck (2003) 203 ALR 1United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (2006) 152 FCR 18
Date of hearing: 1 August 2011 Date of last submissions: 5 August 2011 Place: Sydney Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 56 Counsel for the Appellant: Mr A B Gotting Solicitor for the Appellant: Freehills Counsel for the Respondent: Mr A M Slevin Solicitor for the Respondent: Mr Alex Bukarica, Construction, Forestry, Mining and Energy Union
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION
NSD 89 of 2011
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATE'S COURT
BETWEEN: COAL AND ALLIED MINING SERVICES PTY LIMITED
AppellantAND: TERRENCE MICHAEL DORAN
Respondent
JUDGE:
KATZMANN J
DATE OF ORDER:
8 SEPTEMBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The notice of contention be upheld.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
FAIR WORK DIVISION
NSD 89 of 2011
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATE'S COURT
BETWEEN: COAL AND ALLIED MINING SERVICES PTY LIMITED
AppellantAND: TERRENCE MICHAEL DORAN
Respondent
JUDGE:
KATZMANN J
DATE:
8 SEPTEMBER 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Terrence Michael Doran was a mineworker. At all relevant times the terms and conditions of his employment were regulated by the Mount Thorley/Warkworth Operations Workplace Agreement 2007 (“the workplace agreement”), a collective agreement reached between Mr Doran’s union and his employer, Coal and Allied Mining Services Pty Limited. It applied to all employees of Coal and Allied at the mine who were performing production and engineering work.
Mr Doran was injured at work and was unable to work for some time. After he returned to work his injuries were aggravated, his working hours reduced and in due course he resigned from his employment. Before he was injured Mr Doran worked 12 hour rotating shifts and his income was made up by a base salary and work pattern allowance. After he was injured he was paid accident pay. For a time the accident pay included the work pattern allowance but later it was limited to base salary.
At the time of his resignation Mr Doran had accrued annual and long service leave. Coal and Allied paid him termination pay, which included accrued leave payments calculated by reference to his base salary but not his work pattern allowance. Mr Doran believes that was wrong and that the work pattern allowance should have been taken into account. He sued Coal and Allied in the Chief Industrial Magistrate’s Court to recover the extra money and the Chief Industrial Magistrate agreed. Coal and Allied claims that the Chief Industrial Magistrate fell into error.
There are essentially only two questions on this appeal. The first is a procedural one: does Coal and Allied need leave to appeal? That question is of no moment, however, as Mr Doran agrees that, if leave is necessary, leave should be granted. The second question is whether the accrued leave entitlements should have included the work pattern allowance or only the base salary. The answer lies in the proper construction of the workplace agreement.
The factual context of the dispute
Mr Doran started work at the Warkworth Mine situated in Mount Thorley, New South Wales, on 4 February 1985. His employer at that time was Warkworth Mining Limited but in February 2004 Coal and Allied took over the management of the mine, and he accepted its offer of ongoing employment. For relevant purposes, however, it is common ground that Mr Doran was continuously employed from February 1985 until July 2009.
On 23 September 2004 Mr Doran suffered neck and back injuries as a result of an incident at his workplace. He returned to work after neck surgery, but on 18 June 2008 he was diagnosed as having suffered an aggravation of his work injury and a medical practitioner certified that he was fit only for working fewer hours (eight hours a day) with lifting restrictions.
For at least a month before the aggravation of his injury in June 2008 Mr Doran was working as part of the Coal and Partings B Crew on a four panel roster with seven day, 24 hour coverage. The crew was rostered to work rotating 12 hour day and night shifts, from Monday to Sunday, averaging 42 hours a week.
After the aggravation of his work injury Mr Doran worked an eight hour shift with the lifting restrictions his doctor had imposed (“suitable duties”). From 18 June 2008 until 19 September 2008 he received workers’ compensation and accident pay which, in combination, equalled the base salary and work pattern allowance he had been paid immediately before the aggravation. On 19 September Coal and Allied told him that suitable duties would no longer be available. He then stopped work altogether. The agreed inference from the evidence is that until then Mr Doran continued to work the four panel roster, doing rotating day/night shifts with seven day, 24 hour coverage, although his average weekly work hours had dropped from 42 to 28.
From 19 September 2008 until 13 March 2009 Mr Doran continued to receive workers’ compensation and accident pay which, in combination, equalled the base salary he would have received had he not been injured (including an increase paid from 27 February 2009) and the work pattern allowance. Thereafter he continued to receive accident pay but the work pattern allowance was omitted, in accordance with the terms upon which accident pay was payable under the workplace agreement. At all times he received the work pattern allowance, it was paid at the rate payable for work on the seven day 42 hour weekly roster.
On 10 June 2009 the parties entered into an agreement, approved in the Sydney District Court, to redeem Coal and Allied’s liability to pay workers’ compensation. The terms of that agreement provided for Coal and Allied to pay Mr Doran a lump sum. It was a condition of that agreement that Mr Doran resign from his employment, a condition he fulfilled on 7 July 2009.
From 20 June 2009 until he resigned from his employment, Mr Doran received no income at all from Coal and Allied.
By the time of his resignation Mr Doran had accrued 425 hours of annual leave (at the rate of 4.85 hours per week) and 63.38 hours of long service leave.
Mr Doran was paid termination pay on resignation, including amounts for accrued annual leave and long service leave. It is common ground that payments made on termination did not take into account any work pattern allowance.
The proceeding in the Chief Industrial Magistrate’s Court
Mr Doran applied (pursuant to s 545(3) of the Fair Work Act 2009 (Cth) (“FW Act”)) to the NSW Chief Industrial Magistrate for an order that Coal and Allied is liable to pay him the sum of $4,889.73 for unpaid annual and long service leave apparently reflecting the unpaid work pattern allowance component.
Jurisdiction was conferred on the Chief Industrial Magistrate under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (“Transitional Act”). Schedule 16 of that Act (especially items 2(2) and 16) extended the right of employees to apply to an eligible State or Territory court for a civil remedy for breaches of workplace agreements (Sch 3 item 2). An eligible State or Territory court includes a magistrates court (FW Act s 12 and Sch 2 item 4(1) of the Transitional Act).
The Chief Industrial Magistrate upheld Mr Doran’s claim for long service leave and with some qualifications accepted the arguments advanced on his behalf for annual leave.
First, his Honour noted that there was no suggestion in the workplace agreement that long service leave accruing over a period of eight years or more should be calculated by reference only to the pay the employee received immediately before the termination of his or her employment. In the absence of such a suggestion, he held that ordinary time remuneration in cl 24 must be taken to be a reference to the employee’s ordinary time remuneration over the period during which the long service entitlement accrued. Here, he said, this was the period during which Mr Doran received ordinary time remuneration that included both a base salary and work pattern allowance.
Secondly, his Honour said that annual leave accrues on a pro rata basis so that, at the time of termination, Mr Doran’s annual leave should have been calculated “reflecting on a fortnightly basis the level of remuneration to which [he] was entitled”. He said that it appeared to be common ground that at the time of termination Mr Doran had accrued approximately ten and a quarter weeks of annual leave. He saw no reason for each week to be paid at the same rate. He noted that before 2 April 2009 Mr Doran was paid a base salary and work pattern allowance, but only a base salary from 2 April 2009 until the date of termination (in fact, only until 19 June 2009). The inference is that he considered annual leave should be calculated on the two different bases for the two periods. He refrained from making the calculation himself.
His Honour invited the parties to prepare draft orders based on his findings and, if they did not agree on the calculations, he foreshadowed making directions for supplementary submissions. No draft orders were prepared, nor directions made. Instead, Coal and Allied filed an appeal, which also sought “to the extent necessary” that it have leave to appeal.
Is leave to appeal required?
An appeal lies to this Court from a decision of an eligible State or Territory court exercising jurisdiction under the Transitional Act or the Workplace Relations Act1996 (Cth) (“WR Act”) as it continues to apply because of the Transitional Act (Sch 17 item 24(1)). Item 24(2) provides that it is not necessary to obtain the leave of either court. But the decision made on 14 January was not a final decision; it was an interlocutory judgment (see Re Luck (2003) 203 ALR 1 at [4]). Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) (“FCA Act”) provides that an appeal shall not be brought from an interlocutory judgment of a court of a State exercising federal jurisdiction unless the Court or a Judge gives leave. To address the conflict in the terms of the two provisions, in ECH Inc v Halliday [2011] FCAFC 51 at [16]-[21] Gray J (with whom Mansfield and Besanko JJ agreed) considered the history of item 24(2) of Sch 17 of the Transitional Act, traced back to 1956. His Honour held that s 24(1A) of the FCA Act, introduced in 1984, is a general provision and should not be seen to derogate from the specific provision in the Transitional Act (cf. Goodwin v Phillips (1908) 7 CLR 1 at 14) and it follows that leave is not required to appeal from an interlocutory judgment of an eligible State or Territory court. I am bound by that decision.
As I indicated earlier, however, in this case Mr Doran did not oppose the grant of leave. Although a small sum of money is involved, the case concerns a question that is likely to affect a large number of workers. In those circumstances, if leave were required I would have granted it.
The appeal
Coal and Allied argued that the Chief Industrial Magistrate erred in several respects in his treatment of both parts of Mr Doran’s claim. Mr Doran defended the result of the decision, but not his Honour’s reasoning.
The notice of appeal pointed to five alleged errors in the interpretation of each of the two clauses of the agreement dealing with the contested entitlements. As Mr Doran did not seek to defend the Chief Industrial Magistrate’s reasons it is not necessary to deal with the particular errors. For present purposes it is sufficient to say that in each case Coal and Allied submitted that on its proper construction the workplace agreement required that on termination accrued annual and long service leave should be paid at the employee’s “ordinary time remuneration” immediately before termination, not at some earlier time or over some earlier period. As Mr Doran was receiving accident pay before his employment was terminated, which at the time consisted of only base salary, it submitted that his ordinary time remuneration was his base salary only. It argued that this construction was consistent with the context of the clauses, “consonant with the traditional practice of payments on termination” and produced an advantageous outcome for employees in the usual case.
Mr Doran filed a notice of contention, which was amended by leave after the hearing of the appeal. The amended notice of contention pleaded that the decision appealed from should be affirmed on the following ground:
At the time of his termination of employment [Mr Doran’s] Ordinary Time Remuneration under the Mount Thorley/Warkworth Operations Workplace Agreement 2007 for the purpose of calculating his entitlements to payment on termination for both annual and long service leave, comprised the base salary of $85,497 per year and work pattern allowance of $24,221 per year which is the work pattern allowance applicable prior to his absence on workers’ compensation from 18 June 2008.
The figure for base salary mentioned in the amended notice of contention reflects the increase first paid on 27 February 2009.
I accept Coal and Allied’s submission that in general accrued and long service leave should be paid at the employee’s ordinary time remuneration at the time of termination. But I do not accept that this means that only the base salary is brought into account in the particular circumstances of this case for which the workplace agreement makes no express provision.
The proper interpretation of the workplace agreement
The proper interpretation of the workplace agreement turns on the language used, understood in the light of the industrial context and purpose, including the legislative background against which the agreement was made and in which it was to operate: Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (“Amcor”) at [2], [30] and [96]. The intention of the framers should be ascertained objectively and not in a narrow or pedantic way: United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (2006) 152 FCR 18 at [51]-[52]. Moreover, as Coal and Allied acknowledged, leave clauses should be interpreted beneficially.
Annual and long service leave are covered by cll 23 and 24 of the workplace agreement respectively. Each provides for payment at the employee’s ordinary time remuneration. Ordinary time remuneration is defined in cl 14.
Clause 23 (omitting the summary table at the end of the clause) is in the following terms. Payment on termination is dealt with in the concluding paragraph.
23.Annual Leave
Amount of Leave Entitlement
Seven-Day Work Patterns 6 weeks
A Work Pattern which requires work on
Public Holidays and at least 34 Sundays per year 6 weeksAll other Work Patterns 5 weeks
Accrual of Annual Leave
Leave will accrue fortnightly on a pro-rata basis from the date of commencement. Where an employee changes Work Pattern during a year, the entitlement will be calculated on a pro rata basis.
Taking of Leave
Annual leave shall be allowed within 12 months of its accrual, at times and in periods suitable to the operations, subject to the approval by the Company.
Payment for Leave Taken
Payment will be at Ordinary Time Remuneration applicable immediately prior to the taking of leave. Payment may be either as usual or in advance of the taking of the leave.
Public Holidays During Leave Period
Except for employees working on Work Patterns where Public Holidays are rostered for work and payment is included in WPA, a public holiday falling during a leave period will not be counted as leave.
Annual Leave Shutdown
The Company may shut down all or a section of the operation by giving not less than one month’s notice. During such shutdowns employees may be directed to take annual leave. An employee who does not have leave entitlement sufficient for the shut down period will be allowed unpaid leave of absence. The Company may agree to advance annual leave to an employee who does not have sufficient accrued or pro-rata annual leave to cover the shut down period.
Payment for Leave on Termination
On termination, unused accrued and pro rata annual leave will be paid at the employee’s Ordinary Time Remuneration the same amount as the employee would have been paid had the employee taken that leave.
Clause 24 provides that employees will accrue long service leave on the basis of 13 weeks for each eight years of continuous employment and relevantly specifies that:
Payment whilst on long service leave will be at the employee’s Ordinary Time Remuneration.
…Payment on termination, for any accrued but untaken long service leave, will be at the employee’s Ordinary Time Remuneration.
Clause 14 relevantly provides:
14. Annual Salary
In this Agreement:
Base Salary
Full time and fixed term employees will be paid an annualised salary that includes compensation for the maximum ordinary hours under the Australian Fair Pay and Conditions Standard and provision for all other entitlements associated with meal breaks, annual leave loading, overtime penalties and all other disability payments and allowances. It covers 35 ordinary hours and payment for reasonable additional hours worked up to 40 hours.
…Work Pattern Allowance (WPA)
Means an annual amount paid to compensate for (where appropriate) rostered hours in excess of hours in Base Salary, and the disabilities of afternoon, night, weekend and public holiday work.
Ordinary Time Remuneration (OTR)
Means the annual salary comprising the employee’s Base Salary and Work Pattern Allowance.
Part-Time employees will be paid Base Salary and Work Pattern Allowance on a pro-rata basis.
Casual Employees will be paid the Casual Rate for each rostered hour worked in accordance with the casual rate in Appendix 1. Casual employees will be paid overtime in accordance with Clause 19 – Overtime.
…
Coal and Allied argued that ordinary time remuneration for Mr Doran was only his base salary because the clauses provided for the remuneration payable “on termination” and on termination Mr Doran was only receiving his base salary. There are several difficulties with this argument.
First, the argument ignores the terms of cl 14. “Ordinary time remuneration” is a defined term. There are no exceptions or qualifications. Yet, in effect, Coal and Allied seeks to erect one. Coal and Allied’s argument is that in the case of an employee who, at the time of termination of employment, has been in receipt of accident pay for more than 39 weeks the expression “ordinary time remuneration” should bear a different meaning to the meaning given to it in cl 14. This approach would limit the opening words of cl 14 (“In this Agreement”). It would also involve implying a term into the agreement which does not obviously reflect the intention of the parties and would contradict one of its express terms, circumstances in which the law does not countenance the implication of a term: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 (“BP Refinery”) at 283; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347.
Secondly, the words “on termination” at the beginning of the last paragraph of cl 23 do not define the amount of the payment. That is the task of the words “the employee’s Ordinary Time Remuneration”. “On termination” merely refers to the circumstance giving rise to the entitlement. Clause 23 does not provide that the employee is to be paid the same amount as he or she would have been paid had the leave been taken. It provides that the employee is to be paid at the ordinary time remuneration applicable immediately beforehand. The difference is a subtle but important one.
Thirdly, in construing the agreement it is necessary to look to the text and operation of the whole document, including other provisions in it (Amcor at [30] per Gummow, Hayne and Heydon JJ). Throughout the agreement different entitlements are fixed by reference to either ordinary time remuneration or base salary. For example, salary sacrifices for superannuation are to be at base salary (subcl 15.3); so, too, redundancy payments (cl 12). On the other hand, with one qualification to which I will come shortly, payment for leave entitlements of any kind (with the possible exception of parental leave, where the evidence does not permit a conclusion to be reached: cl 27) is at ordinary time remuneration, not at base salary.
In contrast, subcl 25.1 provides:
On termination of employment for reason of retirement, retrenchment, death or ill health, any untaken sick/carer’s leave entitlements shall be paid at the employee’s Base Salary.
If it were the intention of the agreement to pay leave entitlements to employees who were receiving only their base salary on termination, then one would expect to find a comparable provision in the clauses dealing with annual and long service leave (cll 23 and 24).
Fourthly, Mr Doran was receiving no salary immediately before the termination of his employment, nor for some time before then. The money which Coal and Allied paid him until the redemption was approved was not salary but accident pay. The last time he received a salary was in June 2008 when he suffered the aggravation of his work injury. Coal and Allied makes the mistake of equating ordinary time remuneration paid immediately before termination with remuneration paid shortly before termination. But for the definition of the term in the agreement, that might have been a reasonable approach. In the circumstances, however, it is not.
Accident pay is dealt with in cl 22 of the agreement. It relevantly provides:
22. Accident Pay
The provisions of the Workers’ Compensation Act 1987 (New South Wales) will apply.
Whilst an employee is in receipt of compensation under the above Act the Company will pay, or cause to be paid, fortnightly accident pay for a maximum period of 78 weeks for any one injury. Intermittent absences arising from the one injury will be cumulative in the assessment of the 78 weeks limitation.
For the purposes of this clause, an injury while employed under a Former Agreement will be considered as an injury under this Agreement.
For the purposes of this clause accident pay means payment on the following basis:
1.For an initial period of 39 weeks from the date of injury, the difference between the amount of compensation paid to the employee and the employee’s Ordinary Time Remuneration at the date of injury.
2.For a further 39 weeks, the difference between the amount of compensation paid to the employee and the Base Salary.
3.In respect of incapacity for part of a pay period the amount payable to the employee as accident pay will be a direct pro rata.
An employee will not be entitled to any payment under this clause in respect of any period of paid annual leave or long service leave.
In the event that an employee receives a lump sum in redemption of weekly payments under the above Act, the liability of the Company to pay accident pay as herein provided shall cease from the date of such redemption.
…Once again, the clause distinguishes between ordinary time remuneration and base salary. Plainly, the distinguishing feature is that the term “ordinary time remuneration” includes both base salary and work pattern allowance.
The agreement does not provide that leave payments for employees receiving accident pay are to be calculated having regard to the criteria in cl 22. Yet, this is the effect of Coal and Allied’s position. If that were the intention of the agreement, I would expect it say so. The agreement does not distinguish between the rate at which injured workers on accident pay and non-injured workers on a salary are to be paid accrued annual or long service leave on termination. The agreement is clear. All employees are to be paid at the rate of their ordinary time remuneration as defined. Unlike employees who have untaken sick or carer’s leave entitlements on termination, employees with accrued annual and long service leave are not limited to their base salary rate.
Coal and Allied argued that a work pattern allowance is only to be paid if the work pattern is actually worked, citing Coal & Allied Mining Services Pty Ltd v MacPherson (2010) 185 FCR 383 (“MacPherson”). But MacPherson is distinguishable. The decision turned on the particular terms of another workplace agreement in a different context – where the employee was seeking payment for a shift he had refused to work. The question there was whether the agreement evinced an intention to pay wages or salary irrespective of the performance of work. Here, of course, it is common ground that wages or salary would be paid irrespective of the performance of work. That is the nature of leave entitlements. Indeed, in MacPherson Marshall and Cowdroy JJ distinguished leave entitlements: 185 FCR 383 at [54]. Furthermore, the accident pay clause in the present workplace agreement shows that ordinary time remuneration is to be paid during the first 39 weeks after an injury (regardless of whether the employee is working at all, let alone working a work pattern, and when many would not be). Indeed, Mr Doran received his ordinary time remuneration, consisting of base salary and work pattern allowance, in this period. That demonstrates that in that context work pattern allowance is payable whether or not the work pattern is actually worked.
Finally, cl 23 contemplates that every employee entitled to annual leave works a work pattern. The parties must be taken to have realised that some employees with outstanding entitlements on termination were not working a work pattern immediately before termination and were not receiving a work pattern allowance. Yet, they did not provide for a different method of calculating the entitlements of those employees.
Coal and Allied argued that the industrial context favoured its interpretation. I disagree. In fact, to the extent that it helps at all, the industrial context points to the opposite conclusion.
The only relevant part of the industrial context upon which Coal and Allied relied was the Australian Fair Pay and Conditions Standard (“AFPCS”). The AFPCS, which is contained within Part 7 of the WR Act (ss 171–320), provided statutory minimum entitlements of employment. See WR Act, s 172(1). I accept that the AFPCS forms part of the industrial context of cl 23 of the agreement. But ss 235(2) and 228 of the WR Act, upon which Coal and Allied particularly relied, do not assist. Section 235(2) provides:
If the employment of an employee who has not taken an amount of accrued annual leave ends at a particular time, the employee must be paid a rate for each hour (pro-rated for part hours) of the employee’s untaken accrued annual leave that is no less than the rate that, immediately before that time, is the employee’s basic periodic rate of pay (expressed as an hourly rate).
[Emphasis added.]
Section 228 picks up the definition of “basic periodic rate of pay” in s 178.
The WR Act was concerned with minimum entitlements for employees. The parties to the workplace agreement were free to bargain for more beneficial entitlements. Coal and Allied’s point, however, was that the scheme of the WR Act supports its submission that the rate for accrued but untaken annual leave for a former employee is the rate payable at the time of termination of employment (referring to 235(2)). But, as I said earlier, accepting the general proposition that the workplace agreement envisaged a similar scheme does not resolve the question about what that rate should be. That is determined by the definition in the agreement of “ordinary time remuneration”.
Perhaps a more useful part of the industrial context is to be found in the Coal Mining Industry (Production and Engineering) Consolidated Award 1997 (“the award”), which the workplace agreement replaced (see cl 5 of the agreement). Coal and Allied argued (in effect) that the award provisions were irrelevant as they had been superseded by the AFPCS but, as Mr Doran pointed out, the annual leave provisions were preserved award terms within the meaning of s 527 of the WR Act and prevailed over the less generous provisions of the AFPCS: WR Act, s 529. The long service leave provision in the award was also preserved: WR Act, ss 527(2)(d) and 529(3)(b).
Clause 36 of the award provided that accrued long service leave on termination is to be paid at “the appropriate classification rate”. That expression is not defined, though Mr Doran contended (and Coal and Allied did not submit otherwise) that it did not include roster payments. Neither party was able to point to any authority which considered the operation of this clause.
Clause 29 of the award dealt with annual leave. Unlike cl 23 of the workplace agreement it specified that the rate of annual leave credits payable on termination of employment did not include roster earnings or loadings. Subclause 29.8 stated:
29.8 Annual leave paid out instead of being taken
29.8.1Annual leave credits can only be paid out instead of being taken when an employee’s employment is terminated other than for wilful misconduct.
29.8.2In the case of termination other than for wilful misconduct, the employee must be paid for all outstanding credits (including any pro-rata entitlements for less than a full year of employment) but not for projected roster or any loading.
[Emphasis added.]
The absence of a similar qualification in the workplace agreement, coupled with the exhaustive definition of ordinary time remuneration, tends to confirm that it was the intention of the parties that on termination accrued annual leave would include the work pattern allowance, regardless of whether the work pattern was being worked immediately before termination.
Coal and Allied conceded that on a strict application of its reasoning Mr Doran should receive nothing because on and immediately before termination he was earning nothing, and nothing multiplied by any amount of unused accrued leave is nothing. It argued, however, that as a matter of practice and on the facts that did not occur. But the practice cannot supplant the express terms of the agreement. On the other hand, suppose that “on termination” or “immediately before termination” were to be taken to refer to the time when the employee was last paid anything, then an injured employee who has a prolonged period of recovery and who during the 39th week of accident pay agreed to resign as a condition of accepting a redemption, but whose application for approval was unable to be heard in Court until the 40th week, would have his or her entitlements calculated by reference to base salary only. In my opinion, the workplace agreement did not intend such a result.
The better view is that, where employment is terminated while the employee is absent from work through injury and not then in receipt of a salary, the references to the rate of ordinary time remuneration in cll 23 and 24 of the agreement are to be taken as references to ordinary time remuneration comprising the base salary payable at the time of termination and the work pattern allowance last paid before termination. To the extent that it might be argued that this would amount to implying a term into the agreement, it satisfies the criteria in BP Refinery.That is, the term to be implied is reasonable and equitable, is necessary to give business efficacy to the agreement, is an obvious reflection of the apparent intention of the parties, is capable of clear expression, and would not contradict the express terms of the agreement.
Mr Doran is therefore correct to contend that termination payments for both accrued annual and long service leave are not limited to his base salary.
Conclusion
On a proper construction of the workplace agreement Mr Doran was entitled to have his work pattern allowance taken into account in the calculation of his leave entitlements on termination of his employment. Both the agreement considered as a whole and the industrial context in which it was made point to this conclusion.
Accordingly, the appeal should be dismissed and the notice of contention upheld. There should, however, be no order as to costs: FW Act, s 570.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann. Associate:
Dated: 8 September 2011
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