Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Essential Energy
[2024] FWC 604
•6 MARCH 2024
| [2024] FWC 604 |
| 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
v
Essential Energy
(C2023/5666)
| DEPUTY PRESIDENT EASTON | SYDNEY, 6 MARCH 2024 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – shift workers – are shift allowances payable if employee is absent on personal leave – published policy – shift allowances payable on permanent afternoon or night shift – shift allowances not payable on employees engaged on rotating shift.
A dispute has arisen in relation to the payment of shift allowances when employees are absent on personal leave. Essential Energy has never paid shift allowances to employees when they take personal leave. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) relies on the terms of an enterprise agreement, and a published policy referred to in the agreement, to claim that Essential Energy is required to do so.
The dispute was referred to the Fair Work Commission under the dispute resolution provisions of the Essential Energy Enterprise Agreement 2021 (the Agreement).
Clause 4.4.1 (c) of the Enterprise Agreement states:
“4.4.1 An employee who is absent from work due to personal illness or injury, not due to injury by accident arising out of and in the course of employment, shall have access to personal leave with pay subject to the following:
…
(c) The management of personal leave shall be in accordance with Essential Energy’s Personal and Carer’s Leave Policy (CEOP2000.44) as varied from time to time with consultation, which may include a requirement that the employee undergo personal leave case management.
...”
Essential Energy’s Personal and Carer’s Leave Policy (Leave Policy) includes the following:
“2.1.3 Rate of Pay During Personal Leave
Paid personal leave will be at the employee’s ordinary rate of pay plus any allowance that the employee normally would have received, in accordance with the relevant Enterprise Agreement.
The parties prepared the following statement of agreed facts and question for arbitration:
“Essential Energy maintains a distribution network that distributes electricity to approximately 95% of New South Wales. It is Australia's largest electricity network, delivering essential network services to more than 844,000 homes and businesses in 1,500 regional, rural and remote communities and also provides water and sewerage services to 20,000 customers in far west NSW.
Essential Energy is responsible for building, augmenting, maintaining, and repairing approximately 200,000 kilometres of powerlines, 1.4 million power poles, 150,000 streetlights, 135,000 distribution substations and 400 zone substations that span a diverse geographical area.
Essential Energy currently employs approximately 2,921 individuals under the Essential Energy Enterprise Agreement 2021 (“the Enterprise Agreement”).
The CEPU is covered by the Enterprise Agreement.
Clause 1.14 of the Enterprise Agreement provides:
“The dispute resolution procedure will be used to deal with all disputes arising out of the employer-employee relationship”.
Amongst the employees covered by the Enterprise Agreement are employees who perform shift work. Those employees have entitlements to personal leave in accordance with:
(a) their contract of employment;
(b) the National Employment Standards;
(c) the Enterprise Agreement; and/or
(d) the Essential Energy policy “Company Procedure” Personal and Carer’s Leave
CEOP2000.44 (the Personal and Carer’s Leave Policy).
The parties accept, for the purpose of the resolution of this dispute, that the obligations and entitlements contained in the above are binding on Essential Energy and its employees.
Clause 4.4.1 (c) of the Enterprise Agreement states: …
The Personal and Carer’s Leave Policy provides, inter alia, the following paragraph …
Currently, Essential Energy does not pay Shift Allowance on the following leave types:
i.Personal Leave
ii.Carers Leave
iii.Compassionate Leave
Question for Arbitration
Are shift workers who are absent on personal leave entitled to be paid the shift allowance that would have been paid had the employee not been absent from work that day?”
The parties accept, for the purpose of the resolution of this dispute, that the obligations and entitlements contained in the Leave Policy are binding on Essential Energy and its employees.
Essential Energy does not pay shift allowance on Personal Leave, Carers Leave or Compassionate Leave.
The Evidence
Mr Stephen Magann has been an organiser and/or recruitment officer for the CEPU since 2018. Mr Magann also worked for Essential Energy for 33 years as a dual qualified electrician/linesman. Mr Magann finished his employment with Essential Energy in 2015.
Mr Magann said that in July 2023 he was contacted by a member from the Northern Control Room in relation to employees not being paid the shift penalties while on personal/carer’s leave. Mr Magann thinks that Essential Energy has approximately 110 employees who would be classified as shift workers across two Control Rooms and the Call/Contact Centre.
To Mr Magann’s knowledge the payment of shift allowances on personal leave has not been raised in any enterprise agreement bargaining rounds.
Ms Eloise Ayling is an Employee Relations Senior Specialist at Essential Energy. Ms Ayling has held this position since September 2023. Ms Ayling has been employed by Essential Energy since 2018 in other human resources roles.
Ms Ayling said that Essential Energy has not paid shift allowance on personal leave since at least 2005. Ms Ayling reviewed Essential Energy’s business records and found one grievance raised by an employee in 2013 regarding shift allowance on personal leave, but otherwise has not found a record of any dispute about paying shift allowance on personal leave.
Ms Ayling also reviewed records of negotiations for various enterprise agreements and has not identified any issue raised by a union about the fact that Essential Energy does not pay shift allowance on personal leave.
In his statement in reply Mr Magann provided a copy of the roster for a member who works in the Southern Control Room. The roster covers 26 people working morning (6:00am to 2:00pm), afternoon (2:00pm to 10:00pm) and night shifts (10:00pm to 6:00am). The roster covers a period of approximately six months and contains a mixture of morning, afternoon and night shifts.
The Submissions
The CEPU acknowledged that the Agreement does not expressly provide for a rate of pay during personal leave. Clause 2.2 of the Agreement deals specifically with terms and conditions applying to employees performing shift work. Clause 2.2 does not expressly provide for a rate of pay for shift workers during personal leave.
The CEPU relies on the ordinary meaning of the relevant words of the Agreement and said that “the clear meaning of the clause is inclusive of the payment of shift allowances.”
The CEPU also submitted that the Leave Policy should be interpreted using the established principles for interpreting contracts.
The CEPU submitted:
“The text of clause 2.1.3 clearly provides that an employee who takes paid personal leave is entitled to not only their “ordinary rate of pay” but also “any allowance”, if the employee would “normally would have received” that allowance under the Enterprise Agreement. Unambiguously, the policy does not distinguish one allowance from another, requiring only that an employee would “normally have received” the allowance. Nor does the Enterprise Agreement distinguish one allowance for another in relation to the payment of personal leave; the Enterprise Agreement having no provision explicitly dealing with the rate of pay on personal leave. In the circumstances, the CEPU respectfully submits that the shift allowance is payable.”
Essential Energy submitted that under the terms of the Agreement employees only receive a shift allowance when they work particular shifts. By contrast allowances that are paid per week, or by reference to an employee’s position, are permanent, recurring allowances that “would normally be paid to an employee and therefore are included in the payment for personal leave in accordance with clause 2.1.3 of the Policy.”
Essential Energy submitted that there was no evidence that the terms of the Leave Policy were binding in contract, perhaps submitting that principles of contract interpretation do not therefore apply to the Leave Policy.
Clause 4.4.1(c) of the Agreement refers to the Leave Policy, but Essential Energy argued that clause 4.4.1(c) imposes no obligation on Essential Energy in relation to the payment for personal leave. That is, the Leave Policy forms no part of the Agreement and cannot be enforced as though it were part of the Agreement.
The obligation to pay shift allowances, Essential Energy argued, is only found in clause 2.2 of the Agreement. Clause 2.2 only requires Essential Energy to pay shift allowances when shift work is performed.
In oral submissions the CEPU argued that it is no answer to its claim to say that the shift itself must be worked in order for shift allowances to be payable, because the Leave Policy itself recognises that the shift hasn’t been worked – hence the requirement is expressed to be in relation to any allowance that the employee normally would have received. It seems to flow, the CEPU argued, that the words of the Leave Policy require the reader to suppose that the shift had been worked for the purposes of establishing which allowance might be payable. Moreso, the reader of the Leave Policy would know with certainty that a particular shift would have been worked because of the rostering arrangements under the Agreement.
To that extent that clause 4.4.1 of the Agreement requires that “an employee who is absent from work due to personal illness or injury … shall have access to personal leave with pay …”, the CEPU agreed that the words “with pay” do not give the reader “much to work with” in understanding precisely how much an employee is to be paid on personal leave.
In its oral submissions Essential Energy referred clauses 2.2.11 and 2.2.12 of the Agreement that specify how shift allowances are to be treated for Annual Leave and Long Service Leave. Essential Energy argued that there is an intentional difference between how shift allowances are dealt with in relation to personal leave as against annual and Long Service Leave.
Essential Energy argued that the word “normally” in the expression “any allowance that the employee normally would have received” in clause 2.1.3 of the Leave Policy refers to allowances that an employee might receive “as a rule” under the Agreement.
Essential Energy emphasised that only permanent or recurring allowances are payable on personal leave because these allowances are paid when set unchanging criteria is met.
Consideration
In construing the terms of the Agreement I have applied the standard interpretation principles from AMWU v Berri Pty Ltd[2017] FWCFB 3005 at [114], (2017) 268 IR 285 at 310 (Berri), and I have not taken into account evidence or assertions of post-agreement conduct or usage.
The NES provisions in the Act specify that personal leave must be paid at the base rate of pay (s.99). The underpinning modern award requires shift penalties to be paid on Annual Leave and Long Service Leave, and does not require shift penalties to be paid on personal leave. The Agreement specifies that shift allowances are to be paid on Annual Leave and on Long Service Leave, but is silent on whether shift allowances must be paid on personal leave.
The starting point is the text of the Agreement, considered in its context. Clause 4.4 of the Agreement contains various provisions in relation to personal leave. The overarching provision within clause 4.4 is as follows:
“Essential Energy operates a debit free personal leave arrangement. In light of the need to manage personal leave absences, the parties recognise that access to personal leave is not an unfettered right.”
Clause 4.4 has four subclauses: 4.4.1 Managing personal leave absences, 4.4.2 Avoidance of duplicate benefits, 4.4.3 Pre 30 June 1997 accumulation and 4.4.4 Illness during annual and Long Service Leave.
Subclause 4.4.1 contains a positive entitlement to “access to personal leave with pay” that is expressed to be “subject to” certain conditions:
“4.4.1 Managing Personal Leave Absences
An employee who is absent from work due to personal illness or injury, not due to injury by accident arising out of and in the course of employment, shall have access to personal leave with pay subject to the following:
(a) An employee shall notify their immediate supervisor, within one (1) hour of the employee’s usual starting time, of the employee’s inability to attend on account of personal illness or injury and the estimated duration of absence.
(b) An employee will be required by Essential Energy to produce a medical certificate or other satisfactory evidence of their illness or injury where the period of absence is for more than two (2) consecutive working days, or where Essential Energy identifies a pattern of absences.
(c) The management of personal leave shall be in accordance with Essential Energy’s Personal and Carer’s Leave Policy (CEOP2000.44) as varied from time to time with consultation, which may include a requirement that the employee undergo personal leave case management.
Where an employee is undergoing Personal Leave Case Management, Essential Energy reserves the right to refer the employee to an independent medical practitioner where there is a disputed diagnosis of the employee’s medical condition.
(d) Where an employee has a long term illness or injury, which has caused the employee to be absent for more than six (6) months in any twelve (12) month period, Essential Energy will consult with the employees medical adviser or refer the employee to a nominated medical practitioner to determine the likelihood of the employee returning to work. If the medical advice confirms that the employee will be unable to return to work, Essential Energy may terminate the employee’s service.
(e) At any stage of the management of personal leave the employee may involve their union.
Where Essential Energy terminates employment in accordance with this clause, the employee will be paid an amount equivalent to two (2) week’s pay for each year of service with Essential Energy up to a maximum of twenty six (26) week’s pay plus four (4) week’s pay in lieu of notice.”
As the heading for clause 4.4.1 suggests, the conditions to which the access to personal leave with pay is subject, are essentially directed to the need to manage personal leave absences: notification requirements, medical certificate requirements particularly when a pattern of absences is identified, the management of personal leave under the Leave Policy including personal leave case management, termination of employment after long-term absences and union involvement in managing leave issues.
In this context, clause 4.4.1 of the Agreement refers to the Leave Policy as one of the management conditions that the otherwise unlimited entitlement is subject to.
Steps taken under the Leave Policy by Essential Energy can impact an employee’s entitlement to personal leave under the Agreement because the entitlements are “subject to” the management of personal leave “in accordance with [the Leave Policy].”
The Leave Policy applies to employees covered by the Agreement and other employees. The Policy contains many provisions that relate to the “management” of personal leave such as medical certificates, personal leave during other leave, the interaction with other compensation received by an employee, management of personal leave where an employee has frequent personal leave absences and so on.
The Leave Policy also refers to the “rate of pay during personal leave” in clause 2.1.3 by reference to “the relevant enterprise agreement”:
“2.1.3 Rate of Pay During Personal Leave
Paid personal leave will be at the employee’s ordinary rate of pay plus any allowance that the employee normally would have received, in accordance with the relevant Enterprise Agreement.”
This crucial question for resolving this dispute is whether clause 2.1.3 of the Leave Policy fills an apparent gap left in the Agreement by conferring an additional entitlement.
Clause 2.1.3 might create a separate entitlement to the payment of allowances, or it might do no more than refer back to the relevant agreement and signal a possibility that in some enterprise agreements allowances might be payable during personal leave. The CEPU urges the former interpretation and Essential Energy urges the latter interpretation.
Clause 2.1.3 is slightly ambiguous. If the words “in accordance with the relevant Enterprise Agreement” were not included then the clause is much clearer and would confer a specific entitlement that would apply regardless of the terms of any particular enterprise agreement: “paid personal leave will be at the employee’s ordinary rate of pay plus any allowance that the employee normally would have received.”
The words “in accordance with the relevant Enterprise Agreement” create some ambiguity because it is not clear whether those words qualify the entitlement to normally receive certain allowances or whether they qualify the entitlement to receive allowances during personal leave. The two different interpretations can be compared by inserting the phrase at two different points within clause 2.1.3:
(a)Paid personal leave will be, in accordance with the relevant Enterprise Agreement, at the employee’s ordinary rate of pay plus any allowance that the employee normally would have received; or
(b)Paid personal leave will be at the employee’s ordinary rate of pay plus any allowance that the employee, in accordance with the relevant Enterprise Agreement, normally would have received.
In the context in which it appears, being in a published policy that focuses on the management of personal leave, clause 2.1.3 is most logically understood to contain only a reference to entitlements under an enterprise agreement rather than setting additional entitlements.
Even though the words “in accordance with the relevant Enterprise Agreement” create some ambiguity, they speak against the possibility that clause 2.1.3 creates an entitlement that is separate to the entitlements conferred by the relevant enterprise agreement. If the intention of clause 2.1.3 was to confer a separate entitlement then, as observed above, the words “in accordance with the relevant Enterprise Agreement” would not have been included at all.
Absent clear words to the contrary in the Agreement and the Leave Policy, the setting of rates of pay for personal leave does not fit within the portfolio of managing personal leave. The rate of payment is not squarely a matter to be managed under the Leave Policy. Almost all of the other matters dealt with in the Leave Policy set out the parameters within which Essential Energy can manage personal leave.
I am fortified in this view by the fact that clause 4.4.1 only refers to the Leave Policy directly in relation to managing personal leave. Clause 4.4.1 relates to managing personal leave, and the other sub-clauses of 4.4 apply to specific instances that do not touch upon the rate of payment for personal leave.
The only reference therefore to the rate at which personal leave is paid, is the reference to “personal leave with pay” in clause 4.4.1.
The Agreement specifies that shift allowances are to be paid on Annual Leave and on Long Service Leave. The Agreement is silent on payment of shift allowances on personal leave and carers leave.
Essential Energy pays some allowances during periods of personal leave, being allowances that it describes as permanent or recurring, or payable when set unchanging criteria is met. Essential Energy distinguished these kinds of allowances from the shift allowances under the Agreement.
This distinction is not particularly satisfactory. Putting aside the fact that the payment or non-payment of particular allowances is conduct under the Agreement and irrelevant to interpreting its terms, the shifts worked or to be worked under the rostering arrangements of the Agreement are for all intents and purposes, permanent or recurring. Whilst in emergency situations shifts might change at short notice, shift workers appear to work under rosters set a long way in advance.
In my view the words of clause 4.4.1, particularly the words “personal leave with pay” does not require that all shiftworkers receive shift allowances when they take personal leave. The NES provisions provide for personal leave at the base rate of pay. The Agreement supplements or improves the NES provisions. If the intention of clause 4.4 was to incorporate shift allowances for all shiftworkers then the drafters could have, and would have, included provisions similar to those included in the Annual Leave and Long Service Leave provisions. The different treatment under the Agreement for these different forms of leave compels the conclusion that the drafters intended for there to be different rates to apply.
It is necessary to consider the possibly that the shift work provisions in clause 2.2 of the Agreement require shift allowances to be paid during personal leave. Essential Energy submitted that shift allowances under clause 2.2 are only paid when particular shifts are worked.
Broadly speaking there are two different forms of shift work under the Agreement: rotating shifts and permanent afternoon or night shifts.
Rotating shift workers are paid fixed dollar shift allowances depending upon shifts actually worked (per clause 2.2.3). The fixed dollar amounts vary for the different shifts worked: afternoon shift, night shift and early morning shift. There does not appear to be any possibility for averaging of shift allowances across a roster cycle and therefore employees are only paid shift allowances when they work particular shifts.
Employees who work permanent night shift or permanent afternoon shift receive a 30 per cent shift allowance “in addition to the ordinary time rate of pay” (per clause 2.2.4). Permanent Afternoon or Night Shift is defined in clause 2.2.1 to be “comprising only one permanent shift to be worked each afternoon or each night and not rotating or alternating with any other span of hours.”
It is difficult to see why employees who work permanent afternoon or night shift should not receive their shift loading when they are on “personal leave with pay”. By definition the only shift these employees work is afternoon shift or night shift.
The base rate of pay for such workers would not include the shift allowance. As such, the NES does not require Essential Energy to pay shift loadings on personal leave (see s.99).
However clause 4.4 of the Agreement confers an entitlement to “personal leave with pay”. The pay of these shift workers does not change from day to day or week to week (at least in relation to shift penalties) because the hours rostered are “not rotating or alternating with any other span of hours.”
For these shift workers, clauses 4.4.1 and 2.2.4 require Essential Energy to pay an additional allowance because the employees work a particular kind of roster, as opposed to paying an allowance because the employee worked particular hours on a particular afternoon or night.
In answering the question posed:
“Question: Are shift workers who are absent on personal leave entitled to be paid the shift allowance that would have been paid had the employee not been absent from work that day?”
Determination: Yes for employees engaged on permanent afternoon shift or night shift, and no for employees engaged on rotating shift work.
DEPUTY PRESIDENT
Appearances:
A Kentish for the Applicant
L Shanahan for the Respondent
Hearing details:
2023.
Sydney
November 28.
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