Commissioner for Public Employment v Manny Koulakis
[2024] FWCFB 264
•22 MAY 2024
| [2024] FWCFB 264 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Commissioner for Public Employment
v
Manny Koulakis
(C2024/2208)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 22 MAY 2024 |
Appeal from decision [2024] FWC 738 of Commissioner Riordon at Sydney on 21 March 2024 in matter number C2023/2745
The Commissioner for Public Employment of the Northern Territory (appellant) has lodged an appeal under s 604 of the Fair Work Act 2009 (FW Act) against a decision of Commissioner Riordan made on 21 March 2024 ([2024] FWC 738) in which he determined a dispute that had been referred to the Fair Work Commission for arbitration under the dispute settlement provision in clause 11.7 of the Northern Territory Public Sector Fire and Rescue Services 2017-2021 Enterprise Agreement (2017 Agreement) and s 739 of the FW Act. The dispute was referred to the Commission by Manny Koulakis, a firefighter who is employed by the appellant and who was covered by the 2017 Agreement prior to the commencement of the current agreement, the Northern Territory Public Sector Fire and Rescue Services 2021-2025 Enterprise Agreement (2021 Agreement). The United Workers Union (UWU) is a registered organisation that was covered by the 2017 Agreement. It did not participate in the proceeding before the Commissioner but asked to be heard in the appeal. We determined to do so in order to inform ourselves in relation to the matter.
The application raised two essential questions, of which one is the subject of this appeal. Mr Koulakis contended that he was entitled under clause 31.2 of the 2017 Agreement, and similar provisions in earlier agreements, to 104 hours per year of programmed days off (PDOs), also known as ‘leisure time’, but that he had only ever received 90 hours per year. He said that the appellant had imposed a 90-hour cap on PDO accruals, but that the 2017 Agreement only capped accruals for dayworkers, not shift workers like him. Mr Koulakis asked the Commission to determine that he was entitled to an additional 14 hours of PDO accruals per year, being the difference between his annual entitlement to 104 hours of PDOs and the 90 hour cap that he said was wrongly imposed by the appellant.
Clause 31 of the 2017 Agreement dealt with hours of work for shift workers. As is common in the firefighting sector, it provided for a 10/14 roster, meaning a roster consisting of ten-hour dayshifts and 14-hour nightshifts. Typically a roster has 2 dayshifts and 2 nightshifts followed by four days off, repeated over an eight week cycle. Employees work an average of 42 hours a week comprised of 38 ordinary hours and four additional hours. The 2017 Agreement stated that the additional hours were compensated in two ways. Clause 31.2(a) provides that two hours per week were paid at overtime rates and formed part of the composite salary. Clause 31.2(b) stated:
‘An average of two hours per week over a period of 52 weeks, will be accumulated and taken as programmed days off within each calendar year, in accordance with the agreed leave roster posted by the Director or their delegate.’
Mr Koulakis contended that clause 31.2(b) gave him an entitlement to 104 hours of PDOs per year but that he had received only 90 hours as a result of the appellant’s cap, which was not authorised by the 2017 Agreement. Clause 30.1(e) imposed a cap on PDO accruals, but for dayworkers only.
Before the Commissioner, the appellant contended that although the text of clause 31.2 had a plain meaning, and the 2017 Agreement contained a 90-hour PDO cap only for dayworkers, the agreement was ambiguous because there was a longstanding custom and practice that the accumulation of PDOs for all firefighters, including shift workers, was capped at 90 hours. The appellant said that this practice dated back to the Northern Territory Fire Service Director’s Administrative Order 3 of 1988 (the Administrative Order), which stated that each member of the fire service accrued a maximum of 90 hours of leisure time per year. The origins of the cap could be traced back further to clause 9 of the Fire Service Employees (NT) Award 1983. The appellant submitted that the 2021 Agreement, which was negotiated with the UWU in 2023 and had replaced the 2017 Agreement, now expressly provides that the accumulation of PDOs for shift workers is capped at 90 hours per calendar year (see clause 39.2(b)). It submitted that during bargaining for the 2021 Agreement, the union had agreed to clarify this matter in the new agreement and that it had not made any claim for compensation in relation to 14 ‘lost’ hours of PDO accruals. The appellant further contended that the custom and practice on which it relied was confirmed by Mr Koulakis’s submission that the 90-hour cap had been applied to him throughout his long period of employment.
In his decision, the Commissioner said that he did not accept that it was the intention of the parties to the 2017 Agreement that firefighters should lose 14 hours a year of leave for no remuneration (at [191]), and that he agreed with Mr Koulakis that the additional PDO accruals above 90 had simply disappeared and that this was characteristic of a system ‘bordering on wage theft’ (at [192]). The Commissioner said that the appellant was operating in a manner that breached the National Employment Standards (NES) and the previous enterprise agreements, and that it was inappropriate for the appellant to rely on custom and practice to justify its approach of capping PDOs for shift workers (at [196]). He said that there was no indication that the entitlement to recreation leave covered the missing 14 hours of leisure leave, and that to deduct two hours of leisure time during periods when such leave was taken was illogical (at [200]). He concluded that if the appellant had deducted 14 hours from Mr Koulakis’s recreation leave on an annual basis then it had done so as a result of a misinterpretation of the agreement (at [200]), and that Mr Koulakis was entitled to be paid for any leisure leave that he had accrued but not taken (at [196]). The Commissioner noted that the amount of leisure leave that was now owed to Mr Koulakis was not before the Commission and he directed the parties to have further discussions about this question.
Jurisdiction
We note that the application was made on 17 May 2023, when the 2017 Agreement was still in operation and applied to Mr Koulakis. However, by the time that the dispute was heard in December 2023, and then determined in March 2024, the 2017 Agreement had been superseded by the 2021 Agreement (the scope of the two agreements is the same). The 2017 Agreement had therefore ceased to operate (see s 54(2) of the FW Act) and no longer applied to Mr Koulakis or the appellant (see s 52(1)(a)). A question therefore arises as to whether the Commissioner had power to determine the dispute under an agreement that did not apply to the parties at the time of the determination. The FW Act expressly preserves a person’s right to sue in a court for breach of agreement for a period of 6 years from the time of the breach (see s 544), but it does not expressly preserve a right for a person to have a part-heard s 739 application determined after the agreement ceases to operate. There are conflicting authorities. The decision of the Full Bench in Simplot Australia Pty Ltd v Australian Manufacturing Workers’ Union[2020] FWCFB 5054 (Simplot) says that the Commission cannot proceed to arbitrate under a disputes procedure in an agreement that has ceased to operate. The decision in Construction, Forestry, Maritime, Mining and Energy Union & others v Falcon Mining Pty Ltd[2022] FWCFB 93 says that the Commission may do so if, as in the present case, the dispute was referred to the Commission for arbitration at a time when the agreement was still in operation and applied to the parties. This matter was not raised by the parties before the Commissioner, nor was it raised in the appeal. The common position of the parties was that the decision of the Commissioner was within power and that the Full Bench can and should determine whether that decision was correct and thereby finally resolve the dispute. We will adopt this course.
Summary of appeal submissions
In its notice of appeal, the appellant contended that the Commissioner erred at [200] of the decision in concluding that there was no indication that the 312 hours of recreation leave contained 14 hours of leisure leave. The Commissioner had noted at [63] of his decision that clause 51.3(c)(iii) of the 2021 Agreement provides shift workers with 7 weeks (312 hours) of recreation leave, which in fact represented an amount of 7.43 weeks of leave a year. It said that the same provision had been contained in clause 41.3(b)(iii) of the 2017 Agreement, and that it should have been clear to the Commissioner that in each of the 7 weeks of recreation leave provided to Mr Koulakis under the 2017 Agreement, he was also provided with 2 hours per week of leisure leave, totalling 14 hours of leisure time per year. The notice of appeal stated that for this reason Mr Koulakis did receive 14 hours of leisure time while he was on 7 weeks of recreation leave.
In its oral submissions in reply the appellant appeared to retreat from these contentions and said that the additional 14 hours of leisure leave had not been offset by the quantum of recreation leave, but that PDO accruals and recreation leave were separate entitlements that needed to be understood in their historical context, and that 14 hours of PDOs had been ‘sacrificed’ in 1988 for additional leave. The appellant further submitted that in circumstances where the Commissioner had determined that the 2017 Agreement was ambiguous, he should have had regard to all of the surrounding circumstances, including the origins of the clauses in dispute and the custom and practice that the appellant had referred to, but that he had failed to do this, which amounted to error.
The appellant submitted that the consequence of the Commissioner’s decision had been to allow Mr Koulakis to ‘double dip’ on his PDO entitlements. It contended that permission to appeal should be granted in the public interest or otherwise, that the decision should be quashed and redetermined by the Full Bench, and that the determination should be that PDO hours for shift workers are capped at 90 hours a year. Alternatively, it said that the application should be remitted to a single member for redetermination.
Mr Koulakis contended that the Commissioner’s decision was correct. He said that there was no basis in the 2017 Agreement or its predecessors for the imposition by the appellant of a cap on the PDO accruals of shift workers, because the only cap related to dayworkers. It was simply not correct to say that the missing 14 hours of PDO accruals were recognised in the recreation leave entitlement, because PDO accruals were deducted when employees took recreation leave. Mr Koulakis said that permission to appeal should be refused, or alternatively that the appeal should be dismissed, because there was no appealable error in the Commissioner’s decision.
The UWU contended that the 2017 Agreement was perfectly clear about the PDO entitlements of shift workers and that these were different from those of dayworkers, which were capped at 90 hours a year. The entitlements of shift workers to recreation leave and PDOs were entirely distinct and there was no basis for the appellant to contend that in some way a portion of employees’ PDO accruals were recognised by the allocation of 312 hours of recreation leave to shift workers, whether by way of offset or some alleged historical compromise. It said that the past practice referred to by the appellant could not be relied on to depart from the plain words of the 2017 Agreement, and that the Commissioner’s conclusion was correct.
Consideration
The correctness standard applies to this appeal. The Commissioner was required to determine a dispute that had been referred to him for arbitration under an enterprise agreement. Section 739(5) prohibits the Commission, in dealing with such a dispute, from making a decision that is inconsistent with a fair work instrument which applies to the parties. The Commission’s task in such a matter is to give effect to the agreement of the parties, not simply to deliver an outcome that it may consider to be fair (unless that is what the terms of the dispute resolution procedure in the agreement require the Commission to do). The fundamental question that the Commissioner was required to determine in this case was whether, as Mr Koulakis claimed, he was entitled under the 2017 Agreement to an additional 14 hours of PDO accruals per year beyond the 90 hour cap imposed by the appellant. The Commissioner concluded that he was so entitled: there was no basis for the appellant to apply a 90-hour PDO cap to shift workers, and the additional 14 hours were not covered by recreation leave. In our opinion, this conclusion was correct.
The Commissioner stated that in his opinion the 2017 Agreement was relevantly ambiguous. On this point we disagree with the Commissioner. The starting point for the interpretation of an enterprise agreement is the ordinary meaning of the relevant words, read in context. Often this will also be the end point. We consider that the provisions that are relevant to the question for determination are clear. The 2017 Agreement is not ambiguous on its terms, or in light of the extrinsic materials. Contrary to the appellant’s contention, the fact that there are opposing views about the meaning of a provision, or that there is a longstanding practice that appears to be at odds with a term in an agreement, is not a reason to conclude that the agreement is ambiguous.
Clause 31.2 of the 2017 Agreement stated that shift workers would be compensated for their additional time worked in two ways, the second of which was the accumulation of two hours per week over 52 weeks to be taken as PDOs. The focus of the appellant’s argument before the Commissioner was a contention that despite the words of the agreement, it was permissible for it to have applied a 90-hour PDO cap to shift workers because there was a custom and practice to this effect. The Commissioner was right to reject this argument. Custom and practice cannot defeat the terms of an industrial instrument. It can inform the meaning of a term in an instrument, but it cannot create terms that do not exist. The 2017 Agreement said nothing about a cap applying to shift workers. It said that a cap applied to day workers. No serious contention was advanced to the effect that, properly construed, the terms of the 2017 Agreement contained such a cap.
In its written submissions in the appeal, the appellant’s argument shifted to a contention that Mr Koulakis and other shift workers actually received their 104 hours of PDO accruals as required by clause 31.2, because although only 90 hours could be accumulated, 14 were accounted for in the 312 hours of recreation leave provided to them under clause 41.3(b)(iii). It is not clear to us that this argument was squarely put to the Commissioner below, nevertheless, he was astute to perceive or anticipate it, and also to reject it. Although the appellant appeared to abandon this argument in its oral submissions in reply, we will deal with it in case the reply submissions were intended to be advanced only in the alternative. As we understood the written appeal submissions, the appellant contended that the 312 weeks of recreation leave provided to shift workers under clause 41 of the 2017 Agreement reflected their rosters, under which they worked an average of 42 hours a week, comprised of 38 ordinary hours, two hours of overtime, and an additional two hours in respect of which they accrued leisure time (see paragraph 30). The appellant submitted that it was ‘evident’ that the recreation leave entitlements that Mr Koulakis received had included the two hours per week of leisure leave (paragraph 28), for a total of 14 hours. The contention therefore appeared to be that the 14 missing hours of leisure leave was covered by the 312 hours of recreation leave.
This argument cannot be accepted. First, nowhere did clause 31.2 or any other provision in the 2017 Agreement state that 14 of the 104 PDO hours were absorbed by the 312 hours of recreation leave in clause 41.3. Secondly, it is not clear in what sense the leisure leave hours could have been absorbed or recognised, because it does not make sense that a deduction of accrued leisure leave would occur when a person is on recreation leave. In its written submissions, the appellant broke down the 312 hours of recreation leave as follows: 7x38 hours (266) were standard ordinary hours; 7x2 (14) were overtime hours; 7x2 (14) were hours of leisure leave; and 18 were extra hours. But the second allocation of two hours represents time actually worked. Thirdly, as was emphasised by the UWU, clause 31.4 of the 2017 Agreement stated that PDOs provided for in clause 31.2(b) ‘must be acquitted prior to recreation leave or long service leave being utilised’. We agree with the UWU that this indicates that PDOs and recreation leave are separate entitlements and tells against a scheme whereby some hours of leisure leave are recognised in the recreation leave entitlement.
In its oral submissions, the appellant maintained that its practice of applying a 90-hour cap on the accrual by shift workers of PDO hours was justified. But we see nothing in the 2017 Agreement that authorised such a cap. On one view, it might be thought that, because clause 31.2 stated that ‘additional time worked’ would be compensated by two hours a week of overtime and of PDO accruals, this would not accrue during periods of recreation leave, when employees were not working. This might be said to be compatible with the quantum of leave afforded to shift workers (seven weeks); forty-five working weeks per year multiplied by two hours of PDO accruals per week equals 90 hours of accruals. However, there are several textual impediments to this construction. First, clause 31.2(a) states that employees will accumulate an average of two hours per week over a period of 52 weeks as programmed days off within each calendar year. This contemplates 104 hours of accruals a year, not 90. Had it been intended to confine the accruals to the 45 working weeks, the clause could simply have said so. The wording of clause 31 would have been a very oblique and unlikely means of establishing a 90 hour cap for shift workers, particularly when there is an express cap for dayworkers. A second difficulty with a contention that a 90-hour cap for shift workers is to be inferred from their seven weeks of leave and 45 weeks of work is the fact that dayworkers also have a cap of 90 hours but receive six weeks of leave. Further, we note that the appellant’s contention before the Commissioner was that PDOs accrued during periods of recreation leave, that is, during periods when they were not working. In addition, the 1988 Administrative Order, which was among the extraneous materials on which the appellant sought to rely, stated that leisure time could not be accrued while members were absent from duty for any reason ‘other than recreation leave or shift changes’.
It was suggested by the appellant that the UWU had acknowledged in bargaining for the new agreement that the custom and practice it relied on reflected the common intention of the parties as to how the terms of the 2017 Agreement were to be understood. But there was no evidence of any common intention to support this statement, and the UWU made clear at the appeal hearing that it did not agree with it at all. Further, the fact that a 90-hour cap for shift workers has now been included in the present agreement does not of itself have any bearing on the meaning of the previous agreement. As we have said, we consider that the meaning of the relevant provisions in the 2017 Agreement is clear and unambiguous.
The appellant sought to adduce further evidence in the appeal in the form of a witness statement of Dale Blewett. We decline to admit this further evidence. The usual considerations that bear on the Commission’s discretion to admit further evidence under s 607 are not engaged in this case. In particular, there appears to be no reason why the evidence could not have been adduced at first instance, and we do not consider that there is any probability of the evidence producing a different result.
The appellant stated in its written submissions that the effect of the Commissioner’s decision was to allow Mr Koulakis to ‘double dip’ in relation to his PDO accruals. We reject this. What the Commissioner in fact concluded was that the appellant’s practice had deprived Mr Koulakis of the ‘first dip’ in respect of 14 hours of leisure time. In our view he was correct.
We make some final observations. First, the Commissioner stated in his decision that he considered the appellant’s practice of imposing a 90 hour cap on PDO accruals for shift workers to entail a breach of the maximum weekly hours in the NES. This does not appear to have formed part of the dispute, but if it did, we do not consider that there has been a contravention of the NES. Section 62 of the FW Act states that an employer must not request or require a full-time employee to work more than 38 hours a week unless the additional hours are reasonable, having regard to the various matters in s 62(3), of which payment for such hours is one. We do not regard the 42 average weekly hours of work in this case to be unreasonable, even in the context of the appellant’s erroneous approach to PDO accruals for shift workers.
Secondly, the appellant expressed concern at the hearing about certain passages in the decision in which it said that the Commissioner had appeared to express a negative opinion about a 90 hour cap on PDO accruals, regardless of whether it was authorised by the 2017 Agreement, and that this was unfair, especially given that the 2021 Agreement now contained such a cap for day workers and shift workers alike that had been agreed by the parties and approved by employees. It is not clear to us that the Commissioner intended to make any in-principle criticisms of such arrangements. For the avoidance of doubt, we see nothing wrong with them. This is a matter for bargaining.
Finally, we would not describe this case as one ‘bordering on wage theft’, as the Commissioner did. Theft involves the taking of another person’s property. An allusion to theft is not apt in a situation where there is a genuine disagreement about whether an employee has a particular entitlement, as was the case in this matter. There is nothing in the material before us to suggest any impropriety on the part of the appellant.
Conclusion
Pursuant to clause 11.7(d) of the 2017 Agreement, a person may appeal a decision of the Commission made under the dispute resolution procedure with leave of the Full Bench. ‘Leave’ connotes to us a mechanism in the nature of permission to appeal under s 604. We grant leave to appeal because the decision concerns a matter of general importance to public sector firefighters in the Northern Territory who were employed under the 2017 Agreement. However, in our opinion the Commissioner reached the correct conclusion and the appeal is therefore dismissed.
DEPUTY PRESIDENT
Appearances:
J. Murphy-Allen for the Northern Territory Commissioner for Public Employment
A. van Gent for the United Workers Union
L. Matarazzo for Mr Koulakis
Hearing details:
2024
Melbourne, by video link to Darwin
17 May
Printed by authority of the Commonwealth Government Printer
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