Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Electrical, Energy and Services Division New South Wales Divisional Branch v Illawarra Coal..
[2018] FWC 4340
•24 JULY 2018
| [2018] FWC 4340 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - Electrical, Energy and Services Division - New South Wales Divisional Branch
v
Illawarra Coal Holdings Pty Ltd T/A South32
(C2018/1716)
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 24 JULY 2018 |
Dispute concerning long service leave entitlements – whether allowances payable during long service leave or when untaken accrued long service leave is paid out upon termination of employment.
[1] On 29 March 2018 the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) applied to the Commission under s. 739 of the Fair Work Act 2009 (the FW Act) to deal with a dispute in accordance with the dispute settlement procedure in the Appin Colliery & West Cliff CPP Enterprise Agreement 2015 (the 2015 agreement).
[2] The dispute concerns the amount of long service leave an employee is to be paid, in particular whether or not allowances should be included in calculating an employee’s long service leave entitlements when the employee is either taking or being paid out accrued long service leave.
[3] The dispute settlement procedure in the 2015 agreement provides for disputes about the application of the agreement to be referred (subject to certain conditions) to the Commission for conciliation, and if conciliation is unsuccessful, for arbitration.
[4] A conciliation conference was held on 12 April 2018; however the dispute was not resolved and the dispute was set down for arbitration. Neither party contends that the Commission lacks jurisdiction to arbitrate the dispute.
[5] A hearing was conducted on 11 July 2018, at which the CEPU was represented by L Andelman and the company by J Darams, both of counsel. Written evidence was tendered on behalf of the CEPU from Mark Toole, who was employed as an electrician under the terms of the 2015 agreement until he was made redundant by Illawarra Coal Holdings Pty Ltd (the company) on 6 April 2018 1. Mr Toole was not cross-examined. Written evidence was tendered on behalf of the company from Christine Hankel who provides human resources services to the company2. Ms Hankel was cross-examined on her evidence.
The relevant provisions of the 2015 agreement
[6] Clause 2 of the 2015 agreement contains a number of definitions. In particular, ‘As if at work’ is defined as ‘The sum of the Employee’s Classification rate, Bonus, Rostered overtime, and if applicable, Weekend penalties and Shift Allowance.’ ‘Ordinary Weeks Pay’ is defined as ‘35 hours pay that is paid at the Employee’s Classification rate.’
[7] Clause 8 is headed ‘RATES OF PAY’ and commences:
‘The classification rates and allowances for Appin Colliery are set out in Appendix 1 – Rates of Pay & Allowances, and for the West Cliff CPP are set out in Appendix 5 – West Cliff CPP.’
[8] Clause 18 deals with long service leave. Its provisions include the following:
‘18.1 Application of Federal Act to this Agreement
The Coal mining industry long service leave Scheme has been enacted in
Commonwealth legislation; an Employee’s entitlement will derive from that Act.
The following provisions provide a guide to the parties on the conditions upon which
Long Service Leave is accrued, taken and paid during the life of this Agreement.
…
18.5 Payment
Payment for Long Service Leave will be in accordance with Appendix 3 – Payment Rules.
…
25.7 Payment of Leave on Termination
Payment for Leave on Termination will be in accordance with Appendix 4 – Payments on Termination.’
[9] Appendix 1 to the 2015 agreement is headed ‘Rates of Pay & Allowances’. It contains a table which includes the following:
‘Rates of Pay
Classification | Classification Definition | Rate per hour |
Surface Operator/ SurfaceTrades | An Employee employed to work in surface based roles only and who does not possess the skills and experience to undertake underground roles. | $38.28 |
Underground Operator/ Underground Trades | An Employee who holds the experience and skills to work in both surface and underground roles. | $40.43 |
Specialist | An Employee, who in addition to being engaged in the operation and maintenance of mining infrastructure, must also be engaged in the advanced technical roles of a kind not within the normal scope of work expected of and performed by an Operator or Trades Employee. | $42.10 |
[10] This is followed by a further table:
‘Allowances
The following allowances are payable in addition to the base wage, and will remain the same for the life of the Agreement.
Allowance | Payment Rule | Rate per week |
Occupational First Aid | Where an Employee is appointed as an Occupational First Aid Officer. | $28.40 |
First Aid Attendant | Where an Employee is appointed as a first aid attendant. | $15.60 |
Trades Allowance | An allowance payable to Underground and Surface Trades Employees. | $63.00 |
Meal | In accordance with Clause 15.2 Overtime Meals of this Agreement. | $14.80 |
[11] Appendix 3 of the 2015 agreement is headed ‘Payment Rules’ and includes the following:
Component | Payment Rule |
Ordinary hours | Ordinary hours worked Monday to Friday inclusive are paid at the Employee’s Classification rate |
Ordinary hours worked on Saturday are paid at 1.5 times the Employee’s Classification rate for the first 4 hours and 2 times thereafter. | |
Ordinary hours worked on Sunday are paid at 2 times the Employee’s Classification rate. | |
Rostered Overtime | All rostered overtime is paid at 2 times the Employee’s Classification rate. |
Non Rostered Overtime weekday roster Employees | Non rostered overtime worked Monday to Saturday inclusive is paid at 1.5 times the Employee’s Classification rate for the first 3 hours and 2 times thereafter. |
Non rostered overtime worked on Sunday is paid at 2 times the Employee’s Classification rate. | |
Non-rostered overtime for Employees who work a weekend roster or a roster incorporating Saturday and Sunday | All non-rostered overtime is paid at 2 times the Employee’s Classification rate. |
Afternoon Shift Allowance | 15% for ordinary hours at the Employee’s Classification rate. |
Night Shift Allowance | 25% for ordinary hours at the Employee’s Classification rate. |
Casual Loading | 25% for hours worked at the Employee’s Classification rate. |
No 10 Hour Break between work on successive days | Where an Employee works overtime, other than rostered overtime, and is required to have a 10 hour break between the end of that overtime and the start of the Employee’s ordinary hours of work on the next day there will be no loss of pay for ordinary hours of work which occur during this absence. |
Where the Company instructs an Employee to resume work, not having had 10 consecutive hours off work, the Employee will be paid at 2 times the Classification rate during ordinary hours and thereafter until the Employee finishes work. | |
Public Holidays | An Employee who is not required to work during a Public Holiday will be paid for that Public Holiday at their Classification rate per hour for their normal rostered hours which fall during that Public Holiday. An Employee required to work during a Public Holiday will be paid 2 times the classification rate for the hours worked up to the hours calculated above in addition to the payment provided in above. For hours worked in excess of the above, an Employee will be paid 3 times the Classification rate. An Employee who is not rostered to work during a Public Holiday shall be paid 7 hours at their Classification rate. |
Annual Leave | Paid the greater of as if at work excluding any shift allowance; or the Employee’s Classification rate plus 20% leave loading for hours deducted. |
Long Service Leave | For each week of leave paid 1 Ordinary weeks pay and the weekly bonus. |
Personal/Carer’s Leave | Paid the hours the Employee would have worked at the Employee’s Classification rate. |
Parental Leave | Paid what the Employee would have been paid if they had attended work. |
Community Services Leave | Paid what the Employee would have received if they had attended work less any amount they receive from the Court or the Service. |
[12] Appendix 4 – Payments on Termination provides that on ‘retrenchment’ employees are paid accumulated long service leave ‘at ordinary weeks pay plus Average Bonus where Employee has more than 6 years of service’.
The evidence
[13] Mr Toole had been employed as an electrician with various employing entities at the Appin Mine since 1982 until his position was made redundant by the company on 6 April 2018. He was involved as a CEPU delegate in bargaining for the 2015 agreement.
[14] Mr Toole took four weeks of long service leave in November and December 2017. During this period of leave he was paid his Trades Allowance but not the Occupational First Aid Allowance that he was normally paid for working ordinary hours. He had previously been paid both of these allowances when he had taken annual, sick, compassionate or workers compensation leave. The only time he had not been paid both allowances was for periods of approved unpaid leave. He raised his concern with the company’s ‘payroll hub’. On 29 December 2017 Mr Toole raised a formal dispute with regard to the payment of allowances whilst on long service leave.
[15] In late 2017 the company provided Mr Toole with estimates of what he would be paid if he was included in an impending redundancy process. He was concerned that these estimates did not include allowances. He also notified a dispute in relation to this issue.
[16] Mr Toole gave uncontested evidence that while he was employed at the Appin Mine on enterprise agreements prior to the 2015 agreement he was paid both the First Aid Allowance and the Trades (or Tool) Allowance when he took approved paid leave.
[17] During the negotiations for the 2015 agreement there was no discussion about changing the arrangements for paying allowances during periods of paid leave.
[18] On 24 November 2015 the employer issued to employees a notice that a vote was to be held to approve the 2015 agreement attaching a number of documents. These included a ‘Summary of Changes and Key Features’ which indicated that key entitlements for employees would be retained and made no mention of any change to the inclusion or otherwise of allowances in calculating payments for periods of leave or on redundancy (though there were references to a number of other changes concerning leave.)
[19] The package of material sent by the employer to employees explaining the agreement included a document entitled ‘Questions and Answers’. In relation to Appendix 1 it included the following:
‘Q: As a tradesperson at West Cliff, when this EA is approved, my hourly rate will reduce. How am I being compensated?
A: The Appin Colliery EA and West Cliff EA approach the payment of tradespersons in different ways. At West Cliff, trades employees are paid at a higher rate than operator employees and also paid a small trades allowance. At Appin, the trades rate is the same as the operator, but a larger trades allowance is paid.
The trades allowance is paid when you are on leave and is included in the calculation of your superannuation contribution.’
[20] There then followed a table which, inter alia, showed an employee working a weekday day shift under the 2015 agreement being paid a total amount of $1,558.91 per week (which included 35 hours at the base rate, one hour of overtime and the trades allowance of $63.00) and an employee working a weekday night shift being paid a total amount of $1912.67 per week (which included 35 hours at the base rate, a shift allowance, one hour of rostered overtime and the trades allowance of $63.00). The table also demonstrated that employees under the then current West Cliff enterprise agreement would earn more under the 2015 agreement, primarily because the trades allowance under the West Cliff agreement was only $11.00 compared to $63.00 under the 2015 agreement.
[21] Ms Hankel gave evidence that her belief was that where Mr Toole or other employees had been paid their allowances when on paid leave this had been in error.
Consideration
[22] The principles to be applied in construing an enterprise agreement were summarised in Berri 3. In that decision the Full Bench said:4
‘1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.’
[23] In my view, this is a case where the agreement lacks a ‘plain meaning’ with regard to whether allowances are payable when an employee takes (or is paid out) accrued long service leave (or indeed any other type of leave).
[24] The ‘payment rule’ in Appendix 3 provides that employees receive for each week of leave one ‘Ordinary weeks pay and the weekly Bonus.’ The weekly bonus is not in dispute here. The term ‘Ordinary Weeks pay’ is defined as ‘35 hours pay that is paid at the Employee’s Classification rate’ in Clause 2 of the agreement. The respondent says that the employee’s ‘Classification rate’ is the rate provided for in the table in Appendix 1 under the heading ‘Rates of Pay’. The applicant says ‘the classification rate is the rate that an employee receives, and that is where an employee receives an allowance that’s the classification rate.’ 5
[25] One difficulty with the applicant’s line of reasoning is that the first sentence in Clause 8 reads:
‘The classification rates and allowances for Appin Colliery are set out in Appendix 1 – Rates of Pay & Allowances…’
[26] This certainly implies that classification rates and allowances are two different things.
[27] Following this line of reasoning the respondent says that – based on the payment rule in Appendix 3 - all an employee is entitled to be paid when on long service leave is the hourly rate specified in the table in Appendix 1 under ‘Rates of Pay’ plus the weekly bonus – in other words not including the allowances included under the following heading.
[28] As a literal reading this has a certain attraction. However it is noteworthy that nowhere in Appendix 3 is there ever provision for payment of any allowances. For example, Appendix 3 provides that ordinary hours worked Monday to Friday inclusive are paid at the employee’s Classification rate. Similar to the provision for long service leave (and indeed other forms of leave), there is no reference to the payment of allowances. Following the respondent’s line of reasoning even employees working ordinary hours are not entitled to be paid any of the allowances provided for in Appendix 1. This is clearly an absurdity. An alternative reading – and arguably a more plausible one – would be that there is no need to spell out in Appendix 3 when allowances get paid quite simply because the payment rule for allowances is set out in Appendix 1. In other words they are always paid (on a weekly basis) if the employee meets the appropriate test – whatever the hours the employee is working or whether or not the employee is on leave.
[29] The reference in Clause 18 to the Coal Mining Industry (Long Service Leave) Administration Act 1992 (LSL Act) does little to help resolve the issue. Section 39AC of that Act provides that at a minimum employees receiving long service leave must be paid at least an amount equal to the base rate of pay (including incentive based payments and bonuses) that would have been payable to the employee during the period had the employee not taken the leave. ‘Base rate of pay’ is to be given the same meaning as the FW Act which at s.16 expressly excludes monetary allowances. However the LSL Act also makes clear that it is not intended to override any entitlements provided for in an enterprise agreement.
[30] Because the text of the 2015 agreement is unclear this is a case where it is appropriate to have regard to the surrounding circumstances as that term is used in Berri.
[31] Mr Toole’s evidence leaves me in no doubt that prior to the making of the 2015 agreement employees who took paid leave at the Appin mine were paid at a rate that incorporated any allowances they would normally receive while working. There was no discussion about making any change to this arrangement during the negotiations for the 2015 agreement.
[32] Perhaps even more tellingly the information provided by the company to the employees explaining the effect of the agreement they were being asked to approve explicitly said that they would be paid the Trades Allowance when they were on leave. (It was of particular importance to make this point to employees who had previously been employed under a separate West Cliff agreement which had higher base rates of pay but a much lower trades allowance – however the point was generally made).
Conclusion
[33] Having regard to the text of the 2015 agreement and the relevant surrounding circumstances I find that employees under the 2015 agreement should be paid the Trades and First Aid Allowances (that they are qualified to receive in accordance with the relevant table in Appendix 1) when they take – or are paid out – long service leave. While it was not strictly the subject of the dispute, I would also observe that these allowances should also be paid when employees are on other forms of approved leave.
SENIOR DEPUTY PRESIDENT
Appearances:
L Andelman of counsel with M O’Halloran, solicitor, for the Applicant.
J Darams of counsel with T Dixon, solicitor, for the Respondent.
Hearing details:
Sydney.
2016.
July 11.
Printed by authority of the Commonwealth Government Printer
<PR609240>
1 Exhibit 1
2 Exhibit 2
3 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005
4 At [114]
5 PN263
1