Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Kentz (Australia) Pty Ltd

[2016] FWCFB 1501

[2016] FWC 669 [Note: An appeal pursuant to s.604 (C2016/2713) was lodged against this decision - refer to Full Bench decision dated 9 March 2016 [[2016] FWCFB 1501] for result of appeal.]

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
Kentz (Australia) Pty Ltd
(C2015/7983)

COMMISSIONER BISSETT MELBOURNE, 3 FEBRUARY 2016

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

[1] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) has notified the Fair Work Commission of a dispute in relation to employees who perform or performed work for Kentz (Australia) pursuant to the Kentz (Australia) Pty Ltd Ichthys Onshore Construction Greenfields Agreement (the Agreement). In particular, the dispute relates to whether it is permissible for a notice of termination to run concurrently with a period of Rest and Recreation (R&R) provided for in the Agreement.

Relevant Agreement provisions

[2] The parties to the Agreement are Kentz (Australia) Pty Ltd (Kentz), the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); the Australian Workers’ Union, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Construction, Forestry, Mining and Energy Union (clause 2 of the Agreement).

[3] Clause 3(b) sets out the coverage of the Agreement:

(b) The Agreement covers the Unions, the Employer and employees of the Employer who will perform:

(1) on-Site construction work;
(2) on-Site commissioning work; and
(3) onshore marine construction work and construction related activities at the marine offloading facility at Blaydin Point,

within the Employer’s scope of work on the Project, who work in any of the work classifications identified in clause 12 of the Agreement (Employees).

[4] The ‘Project’ is defined in clause 3(c) of the Agreement as meaning:

The Ichthys LNG Onshore Construction Project situated at Blaydin Point.

[5] Clause 5 of the Agreement provides for the duration of the Agreement:

(a) This Agreement shall operate on and from the date that is 7 days after the date on which this Agreement is approved by Fair Work Australia. The nominal expiry date of this Agreement shall be four (4) years after the date on which the Agreement comes into operation.
(b) This Agreement shall remain in force until it is terminated or replaced.
(c) A copy of this Agreement shall be made available to Employees at the time they commence work on the Project.

[6] The Agreement was approved on 22 February 2013 with a nominal expiry date of 21 February 2017.

[7] The Agreement provides, at clause 7.3, for notice to be given of termination of employment:

7.3 Termination of employment

(a) Subject to the Act, the Employer may terminate the employment of an Employee by giving written notice to that Employee as follows:

Where an Employee’s Period of Continuous Service with the Employer is:	The Period of Notice as qualified by the Notes set out below this table will be:
Not more than 1 year	1 week
More than 1 year, but not more than 3 years	2 weeks
More than 3 years, but not more than 5 years	3 weeks
More than 5 years	4 weeks

NOTES
(1) The period of notice is increased by one (1) week where the Employee is over forty-five (45) years of age and has completed two (2) years of continuous service with the Employer.
(2) The period of notice for a casual Employee is one (1) day.

[8] The Agreement also provides for periods of R&R:

8.6 Rest and Recreation (R&R)

(a) The work cycle of each Employee will commence on his or her commencement date on the Project. The Employer may choose to shorten or lengthen the Employee’s first work cycle to align the Employee’s work cycle with that of other Employees. The work cycle forms the basis for scheduling the staffing of the Project. Employees will only receive R&R where determined by the Employer and there are more than two (2) weeks’ work for the Employee to complete on the Project.

(b) R&R is classified as authorised non-work time unless accrued RDOs are paid out.

(c) The Employer may reschedule the taking of the R&R leave to meet operational requirements. The Employee may then be required to work a shortened/extended work cycle in order to regain their original work cycle. The Employer must provide at least one (1) week's notice of such change.

(d) The Employer shall transport Non-Local Employees by economy air transport to the High Capacity RPT airport nearest to the Employee’s Usual Place of Residence when the Employee commences a period of R&R. A bus pick-up and drop-off service will operate between Darwin airport and the Project Village Site. Specific details of R&R travel arrangements will vary relative to each individual Employee’s circumstances.

(e) Travel for R&R shall commence on the last working day of the Employee’s work cycle.

(f) Local Employees will commence R&R at the end of Project Working Hours on the final day of their roster.

Background

[9] On 1 December 2015 the CEPU notified this dispute to the Commission. Prior to this date Kentz had been gradually demobilising (ie terminating the employment of) its workforce as the work required to be done by it on the Project as contracted came to an end.

[10] At the time the CEPU notified its dispute there were still employees who had not yet been demobilised but who were to shortly thereafter finish work.

[11] At the time of hearing the dispute there remained six employees covered by the Agreement. These employees had been given written notice of termination of their employment which was due to end on 6 February 2016. It is common ground that these six employees were working out their notice period and, to that extent, were not captured by the dispute as notified.

[12] There is no dispute that the matter has been properly notified to the Commission and the requirements of the dispute settlement procedure complied with.

Jurisdictional objection

[13] There are two jurisdictional matters raised by Kentz that need to be resolved prior to the consideration of the merits of the application.

[14] The first is whether I have jurisdiction to deal with the application because the employees to whom the dispute relates no longer work for Kentz, having been given notice.

[15] On that matter Kentz submits that the situation before the Commission in the current application is distinguishable from that in Construction, Forestry, Mining and Energy Union v North Goonyella 1(North Goonyella) because, in that matter, as opposed to the one before me, the Agreement still had work to do.

[16] In this respect Kentz says the current situation can be distinguished from that considered by the Full Bench of the Commission in North Goonyella as, in that case, the Agreement still had work to do as there remained employees covered by the Agreement.

[17] Further, Kentz submits that that the powers of private arbitration are always subject to the limitations of the Constitution and of the Act. 2 It says that, regardless of what powers the parties may have decided to give to the private arbitrator they cannot be what would otherwise be allowable under the Constitution or relevant law.

[18] On this Kentz submits that the Commission can determine historical rights and obligations but only as part of a process of determining future rights and obligation. 3 It submits that, as there are no future employees to be covered by the Agreement, no future rights can be created by the arbitration. Any power exercised by the Commission would be the determination of historical rights which is an exercise of judicial power. There is therefore, no jurisdiction for the Commission to deal with the dispute.

[19] Kentz submits that Richards SDP considered a very similar factual matrix in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v CDJV Construction Pty Ltd 4 (CDJV) and determined that he was being asked to exercise arbitral powers and, therefore, found he did not have jurisdiction. It says that his reasoning is sound and I should follow that decision.

[20] The CEPU relies on the decision of the Full bench in North Goonyella to support its submission that the Commission retains jurisdiction to deal with a dispute even though the employees to whom it relates are no longer in employment. It says that the employees were still employed at the time the dispute was notified to the Commission and the Commission therefore retains jurisdiction.

[21] The CEPU submits that the conclusion of the Commission in CDJV at [61] is wrong and I should not follow it.

[22] The CEPU submits that what I am being asked to do is act as a private arbitrator in accordance with dispute settlement procedure of the Agreement. It says that the powers of the private arbitrator are restricted only by the terms of the private arbitration agreement (and the power under which the private arbitration agreement is reached). 5

[23] The CEPU submits that the decision in CFMEU v AIRC supports its submission that the Commission is bound to observe the limitation on private arbitration powers as established in the agreement for private arbitration (in this case the dispute settlement procedure) and the legislation which governs the exercise of the agreement to private arbitration (in this case s.739 of the Act). 6

[24] It says that, whilst it might look like the Commission is exercising judicial powers in granting the relief sought by the CEPU this is not the case. Absent the dispute settlement procedure in the terms provided in the Agreement the Commission could not grant the orders sought.

[25] Further, it says that the Commission is not being asked to make a determination that is inconsistent with the Act. It is not being asked to impose civil penalties for a breach of Agreement that are otherwise exercisable by the Courts in accordance with s.539 of the Act.

Consideration

[26] On the first jurisdiction matter I am satisfied that the Commission has jurisdiction to deal with the dispute even through the employees are no longer employed by Kentz.

[27] In North Goonyella the Full Bench found:

[43] The CFMEU’s correspondence of 25 September 2013, attached to the October 2013 application, makes it clear that there had been no attempt to engage the provisions of clause 41 in relation to the identified dispute prior to that date. The position here is distinguishable from that considered in ING Administration Pty Ltd v Jajoo, Telstra Corporation Limited v CEPU and Deakin University v Rametta, where in each case the dispute resolution procedure had been initiated by or on behalf of the relevant employee before the employee’s employment had been terminated even though the procedure had not been completed prior to termination. In each of those matters it was determined that arbitration under the disputes resolution procedure could proceed notwithstanding that the employment of the relevant employee/s had terminated. Here, it is apparent that there was no attempt to engage the procedures in clause 41 in respect of the dispute identified in the October 2013 application at a time when any of the employee parties to the dispute were actually employed by North Goonyella. In that circumstance, clause 41 had no application, and consequently there was no power for the Commission to deal with the dispute under s.739 of the FW Act.

[28] In ING Administration Pty Ltd v Jajoo, Ramsin 7 (ING) it was found by the majority that:

[38] We accept that a single person dispute which arises for the first time after the termination of employment is not a dispute between an employer and an employee. However, many disputes will arise while employment exists and continue after the termination of employment. In such a case, when the dispute arises, it is a dispute between an employee and an employer. If the dispute is progressed to the point of seeking the assistance of the Commission, the ING interpretation would require the employee to remain in employment. If it was intended to incorporate a limitation in s 170LW of the nature contended for by ING, we would expect there to be a clear express reference to that effect.

[29] I am satisfied that the dispute was raised and referred to the Commission prior to the termination of employment of the employees concerned. I am therefore satisfied that the Commission’s power to deal with the dispute is not lost solely because the employees to whom the dispute relates no longer work for Kentz. In this case the employees to whom the dispute relates were employed by Kentz at the time the dispute was notified.

[30] Kentz have not put anything to me as to why, because the Agreement may have nothing to do in the future, that effect the jurisdiction given the Commission by the proper notification of the dispute.

[31] The determination of the second jurisdictional question turns firstly on whether under a dispute settlement procedure, the Commission has powers of private arbitration only constrained by the terms of the dispute settlement procedure and s.739 of the Act or whether, regardless of the terms of the dispute settlement procedure, the Commission cannot determine past rights and obligations in circumstances where there are no future rights and obligations to be determined.

[32] In CFMEU v AIRC the High Court said:

30. There is, however, a significant difference between agreed and arbitrated dispute settlement procedures. As already indicated, the Commission cannot, by arbitrated award, require the parties to submit to binding procedures for the determination of legal rights and liabilities under an award because Ch III of the Constitution commits power to make determinations of that kind exclusively to the courts. However, different considerations apply if the parties have agreed to submit disputes as to their legal rights and liabilities for resolution by a particular person or body and to accept the decision of that person as binding on them.

31. Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator’s powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator’s award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.

32. To the extent that s 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of the parties to the Agreement, it merely authorises the Commission to exercise a power of private arbitration. And procedures for the resolution of disputes over the application of an agreement made by parties to an industrial situation to prevent that situation from developing into an industrial dispute are clearly procedures for maintaining that agreement. Parliament may legislate to authorise the Commission to participate in procedures of that kind. Accordingly, s 170MH of the IR Act is valid.

33. Although it is by no means clear, it may be assumed, for present purposes, that cll 21 and 22 are designed to ensure more than the maintenance of the Agreement. That, however, does not have the consequence that those clauses are wholly invalid. Nor does it follow that they are wholly invalid because they extend beyond what is authorised by s 170MH of the IR Act.

34. The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award.

35. It was not suggested that the general law operates to render cll 21 and 22 of the Agreement wholly invalid. Nor does s 170MH proceed on the basis that an agreed dispute resolution procedure is valid only if it is confined to disputes over the application of an agreement. That being so, there is no reason why cll 21 and 22 should not operate so far as it is concerned with disputes of that kind. Accordingly, this aspect of Kestrel’s argument for special leave to cross-appeal should also be dismissed.8

[33] In the minority decision in ING¸ Acton SDP said:

[72] Of course, the jurisdiction of the Commission as a private arbitrator under a dispute settlement procedure in a certified agreement is also subject to any limitations in the agreement conferring the power on the Commission. This was made clear by a Full Bench of the Commission in Charles Sturt University v National Tertiary Education Union⁹ the Full Bench of the Commission said:

[10] The jurisdiction of the Commission, as a creature of statute, is limited to the jurisdiction conferred on it by the Parliament. The Parliament has authorised the Commission to accept appointment as a private arbitrator for the resolution of disputes over the application of certified agreements (s.170LW). When the Commission acts as private arbitrator under the dispute settlement procedure in a certified agreement it does so pursuant s.89(a) and an approval given pursuant to s.170LW of the Act [CFMEU v AIRC (2001) 203 CLR 645, para [39]]. In its capacity as private arbitrator, the jurisdiction of the Commission is limited to disputes over the application of the agreement – a limitation arising from the terms of s.170LW. However, the jurisdiction and power of the Commission as private arbitrator under a dispute settlement procedure is also subject to any limitations in the agreement conferring power on the Commission [CEPU v Telstra Corporation (2003) 128 IR 385 (Giudice J, Harrison SDP and Simmonds C)].

[34] After considering the decision of the High Court in CFMEU v AIRC I am satisfied that, in settlinga dispute pursuant to a dispute settlement procedure agreed to by Kentz, employees of Kentz and the CEPU, I am exercising a power of private arbitration – regardless of whether there are employees still employed by Kentz (which I note, in any event, there are). The dispute settlement procedure is not an arbitrated dispute settlement procedure such that the limitation at [30] in the CFMEU v AIRC applies, rather it is one the parties have freely entered into. The Commission is empowered by the Act to deal with such disputes with the powers of the Commission constrained by the terms of the dispute settlement procedure and the Act.

[35] I am therefore satisfied that I am not being asked to exercise judicial powers in dealing with the dispute.

[36] I have carefully considered the decision of his Honour in CDJV, in particular the terms of the agreement and the particular circumstances in that case.

[37] In CDJV the agreement had a self-executing expiry provision such that the agreement would cease to operate at ‘practical completion of works by the employer for the GLNG Upstream Project.’ Further, the employer – a joint venture – was in the process of being wound up as a consequence of the conclusion of its scope of work on the GLNG project.

[38] After considering the relevant authorities, his Honour concluded in that matter:

[57] It is true that the power of private arbitration vested in the Commission (or any nominated third party) by virtue of a disputes clause is not judicial power as considered by the courts. The judgment of the High Court in Re: CFMEU was to this point: a power of private arbitration reasonably may provide for a third party to determine legal rights between parties as they may arise from past events or actions. 

[58] But even if I take this into account, difficulties arise as to the actual nature of the determinative power the Commission is being asked to exercise in the context of the particular factual circumstances now before it.

[59] As I mentioned above, given there are no employees to whom the Agreement any longer applies and there will be no employees employed under the Agreement as the purpose for the operation of the Agreement has concluded, the determination before me concerns an effective declaration of a contravention of the Act, which is an inquiry of a legal character and for a legal purpose (ultimately enforcement). Furthermore, the context to which the disputes clause was to apply has fundamentally altered - the application clause no longer applies and the scope of works has concluded.
[footnotes omitted]

[39] In the matter before me the expiry date of the Agreement is 21 February 2017. There is no ‘self-executing’ expiry date.

[40] I accept that the current scope of work of Kentz on the Project to which this Agreement applies is almost at completion and will conclude on 6 February. While it appears that, for all practical purposes, the Agreement has no further work to do there is nothing before me to suggest that the Agreement might not have work to do at some point in the future.

[41] The Agreement covers Kentz, the unions named and employees who perform on-site construction work, on-site commissioning work and onshore marine construction and construction related work within Kentz scope of work on the Project as defined.

[42] The Project is not complete. There is no suggestion that Kentz (Australia) as the employer covered by the Agreement is being wound up such that it could not seek and gain further work on the Project. Should it do so and the work fall within the work that is covered by the Agreement as set out in clause 3(b) the Agreement would apply to future employees. This is in marked contrast to the circumstances in CDJV where the employer was being wound up and the agreement contained a self-executing nominal expiry date, both of which indicate an intention that the agreement not apply to employees in the future.

[43] It seems to me that his Honour accepted that, if there were or could be future employees of the employer the task before him would be quite different. He was however unequivocal in his view as to the chances of future employment under the Agreement. As he said ‘there will be no employees employed under the Agreement as the purpose for the operation of the Agreement has concluded.’

[44] For these reasons I am satisfied that the circumstances in this case can be distinguished from those in CDJV. I therefore, respectfully, do not consider that I am bound to, or should, to follow it.

[45] For these reasons I am satisfied that I have jurisdiction to deal with the application before me.

Operation of the Agreement

[46] The CEPU put that the question to be answered by the Commission is if it is permissible for a period of notice to run concurrently with a period of R&R provided for in the Agreement.

[47] The CEPU submits an employer cannot give notice concurrent with other forms of leave. It says that where an employee has an entitlement to be absent from work, that absence cannot be offset by notice as to do so would vitiate the reason for notice or the reason for the absence.

[48] The CEPU says that R&R is an entitlement to be absent. It says it is an entitlement because:

• It forms part of the work cycle 10;



• It is classified as authorised non-work time 11; and



• It can only be re-scheduled in accordance with the Agreement. 12

[49] Further, the CEPU says that if R&R was not an entitlement arising under the Agreement there would not be limitations on the employer’s right to change when R&R could be taken. As the Agreement stands, the employer cannot require an employee to work during a period of R&R unless the requirements of the Agreement for such re-scheduling. If R&R was not an entitlement the CEPU says the employer would retain absolute discretion to change it at will.

[50] The CEPU says the purpose of R&R is to allow employees a period of time away from work to recover and rest. In this respect it says R&R is not dissimilar to recreation leave. The CEPU says it is not allowable that a period of notice run concurrent with a period of approved leave 13 such that it is not possible for Kentz to require a period of R& R to coincide with the notice given of termination.

[51] The CEPU submits that notice of termination of employment is given to enable an employee to seek alternative employment whilst still employed. Leave (including R&R) is to provide an employee with time away from the workplace for a designated reason. To allow notice to run concurrent with a period of leave, including R&R, vitiates either the reason for the notice or the reason for the period of time away from work.

[52] As R&R is an entitlement it cannot be offset against other entitlements such as notice of termination.

[53] In the alternative the CEPU says employees cannot be placed on R&R if there is less than two weeks’ work for the employee to do to complete his or her work on the Project. It relies on the last sentence of clause 8.6(a) which states:

Employees will only receive R&R where determined by the Employer and there are more than two (2) weeks’ work for the Employee to complete on the Project.

[54] This means that employees cannot be placed on R&R if there is less than two weeks work left for them on the Project. If an employee is given notice and the notice period is two weeks or less (which in virtually all cases it has been) implicitly there is less than two weeks work left for the employee to do and they cannot therefore be placed on R&R. In that case the period of time the employee would have worked is two weeks and any pay in lieu of notice must cover a two week work period.

[55] Kentz says that employees are paid out in lieu of notice and that this is based on the roster the employee would otherwise have worked. It submits that s.117(2)(b) of the Act requires that an employee either be given the required notice or paid what the employee would otherwise be due at the full rate of pay for the hours the employee would have worked.

[56] An employee rostered for R&R who is given notice and the notice coincides with the period of R&R is not entitled to any payment in lieu of notice for the period of R&R. For that period of R&R the employee is not entitled to any pay. Section 117(2)(b) of the Act relates to the hours an employee would have worked, during R&R an employee does not work and therefore no payment is required.

[57] Further, Kentz says:

• It is not seeking to reduce the amount of notice a person receives;



• R&R cannot be compared to a period of leave because R&R is a creature of the parties agreement, unlike annual leave, personal leave and the like which are creatures of statue. Further, R&R is in a separate part of the Agreement to that dealing with leave;



• Clause 8.6(c) of the Agreement does not prohibit notice being given during, or to coincide with, a period of R&R.

[58] Kentz says that, in considering clause 8.6 of the Agreement, it is necessary that the terms of the Agreement be considered in context. 14

[59] It says that clause 8.6(a) applies to the beginning of the work cycle of an employee only and not to the end of employment. It submits that the first sentence in clause 8.6(a) relates to when an employee commences employment; the second sentence allows for the roster to be shortened or lengthened during the first work cycle; the third sentence is a statement of intent and the last sentence from an industrial reality perspective, is a means by which the employer can keep an employee on-site in the first work cycle and is not required to provide R&R within the first two weeks. Whilst Kentz agrees the last sentence, on its view, is repetitive of the first sentence, it says this does no more than confirm the right of the employer and removes doubt. It says the words ‘to complete on the project’ mean that an employee cannot’ commence on the Project, do one or two weeks work, then proceed onto R&R.

[60] Further, Kentz says that clause 8.6 is a scheduling provision and not a prohibition on R&R being included in a payment in lieu of notice.

[61] Kentz says that the Agreement reflects what the parties negotiated. It is not to the Commission ‘to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award’. 15

[62] Kentz says, that, despite the submissions of the CEPU that may suggest otherwise, the matter in dispute is about payment in lieu of notice and not whether or not notice can be given concurrent with a period away from the workplace.

Consideration

[63] In Silcar Deputy President Gooley said that notice was given to enable an employee to seek alternative work whilst still working. 16 This much is clear from the termination of employment and redundancy provisions that appear in virtually all modern awards. These provisions were given effect in the TCR Test Case17 and the TCR Supplementary Decision.18 In the TCR Test Case the Full Bench of the Australian Conciliation and Arbitration Commission determined that the notice given to an employee of termination of employment should be extended. This increased notice period would overcome the lack of a more practical opportunity to an employee to respond to changed circumstances, re-organise their life and seek alternative employment.19

[64] The Full Bench also determined in the TCR Test Case that an employee should be given time off work without loss of pay during the notice period for the purpose of seeking other employment. 20

[65] The Fair Work Bill Explanatory Memorandum says, of notice and payment in lieu of notice:

465. Subclause 117(2) provides that an employer must not terminate an employee’s employment unless they have given the employee the necessary period of notice worked out under subclause 117(3), or they have paid the employee in lieu of that notice. If the employee is paid in lieu of notice, paragraph 117(2)(b) requires that the employee must be paid at least the amount the employee would have received had they continued in employment until the end of the required notice period. That is, the employee must be paid for hours they would have worked during that period, at their full rate of pay (as defined in clause 18).

466. The intention of paragraph 117(2)(b) is to impose on an employer that makes the payment in lieu of notice, an obligation to pay either to (or for the benefit of or on behalf of) the employee, everything which the employee would have been entitled to receive had the employee worked out the required period of notice…

[66] It is without dispute that the intention is that, where an employee is paid in lieu of notice pursuant to s.117(2)(b) of the Act, the obligation is to pay the employee everything the employee would have been entitled to had he or she remained working during the notice period.

[67] Whilst this information does not resolve the question of whether notice can be given so that it runs concurrent with R&R, it is clear from the Explanatory Memorandum that the amount paid in lieu of notice must be what the employee would have received had they continued to work. This enlivens the question as to what an employee of Kentz would have been entitled to had they worked out the notice period.

[68] The resolution of this requires a decision as to whether or not notice can be given concurrent with a period of R&R and/or if the last sentence of clause 8.6(a) of the Agreement means an employee cannot be scheduled for R&R if there is no more than two weeks’ work for the employee to complete on the Project.

Clause 8.6(a) of the Agreement

[69] I have decided to deal with the operation of clause 8.6(a) first.

[70] The last sentence of clause 8.6(a) states:

Employees will only receive R&R where determined by the Employer and there are more than two (2) weeks’ work for the Employee to complete on the Project.

[71] I do not accept the submissions of Kentz that clause 8.6(a) is only about work arrangements at the commencement of employment and hence the first work cycle.

[72] There is no basis to read the last sentence, which talks of there being ‘no more than two (2) weeks’ work…to complete on the Project’ as relating to the beginning of employment and not the end. It would be an enormous strain to find that an expression of ‘no more work to complete on the project’ was about starting on the Project. As Madgwick J said in Kucks ‘ordinary or well-understood words are in general to be accorded their ordinary or usual meaning’. 21 Contextual considerations cannot overcome the plain words.

[73] Whilst I acknowledge the evidence of Ms Shayon Land from Kentz, that, on commencement, Kentz ensured an employee did not work less than a two week roster, I am not convinced that this was because of the last sentence in clause 8.6(a). It seems to me that this practice could be fully supported by the Agreement without the last sentence in clause 8.6(a).

[74] Contrary to the submissions of Kentz, it seems to me that clause 8.6(a) is better read as:

● The first sentence sets the commencement of the work cycle;
● The second sentence allows for this first work cycle to be shortened of lengthened to get the employee on to a work cycle, which includes the taking of R&R, in sync with other employees;
● Scheduling (rostering) is done on the basis of the established work cycles (ie not the adjusted first work cycle of the employee); and
● When an employee gets to end of that employee’s work on the Project, the work cycle is again adjusted so that an employee is not put on R&R within the last two weeks of work.

[75] For this reason I am satisfied that if, at the time of being given notice, the employee had two weeks or less of work then the employee could not proceed on R&R. This being the case had the employee worked the notice period they would have been paid for the entire notice period. An employee paid in lieu of notice must receive what he or she would have received had they worked the period of notice.

[76] For any employee who received two weeks’ notice or less there must have been no more than two weeks’ work for the employee to complete. Such employees could not be put on R&R. In circumstances where such employees were paid in lieu of notice they should have been paid as if they had worked the full period of the notice.

Can notice run concurrent with a period of R&R?

[77] There is no definition in the Agreement of what ‘rest and recreation’ is. It is defined only in relation to rosters.

[78] The hours of work of employees is 36 hours per week averaged over a 52 week period. The evidence is that employees work four weeks on followed by one week of R&R. When at work the employees apparently work a 28 day straight roster.

[79] There is no dispute that R&R is an entitlement under the Agreement. It is a period of time within which, with the approval of Kentz, an employee is not required to be at work. That the employer cannot change the time off at will does not alter the character of the leave. That R&R is not paid time also does not change the character of the leave.

[80] It seems to me that leave, generally, is no more than a period of time an employee can be absent from the workplace without risk to the security of his or her employment. The things that characterise leave are that:

● It has a purpose (recreation, recovery from illness, birth of a child, emergency response);
● It is approved by the employer;
● There is a set time for returning from the leave – that is it is not open ended;
● The absence does not affect employment security or continuity;
● It may be paid (annual leave, maternity leave, emergency services leave) or unpaid (parental leave, personal leave for casual employees, leave without pay);
● It can be fixed in time (annual leave at Christmas close down); the timing negotiated (annual leave) or be required by an unexpected event (personal leave brought on by illness);
● It is subject to regulation of some form. The NES (annual leave etc); awards (job search entitlement) or enterprise agreements.

[81] Of course not all non-working time is leave for example, the weekends for five day workers. It does not seem to me however, that R&R can be equated to weekends. The Agreement provides for substantial penalties for working weekends and does not specify that, in addition, an employee will get extra time off to further compensate for weekend work.

[82] Rest & Recreation (R&R):

● Has a purpose which is rest and recreation.
● Is approved by the employer;
● Is not open ended;
● Does not affect security of employment or continuity of employment;
● Is unpaid;
● Is fixed by the roster; and
● Is regulated by the provisions of the Agreement.

[83] Given the absence of any construction or purpose of R&R to the contrary I am satisfied that R&R is a form of regulated and approved leave.

[84] Having found that R&R is leave I am satisfied, on the basis of the authorities before me, 22 that notice of termination of employment cannot run concurrent with a period of leave.

[85] If notice cannot be given concurrent with leave, then pay in lieu of notice cannot assume that the employee would have been on unpaid leave for part of the notice period and, consequently, reduce the amount of payment in lieu of notice.

[86] Further, R&R is a benefit provided under the Agreement as part of the bargain between the parties to the Agreement. That benefit would be lost without recompense if notice, a different benefit, could override it. Certainly the Agreement does not say notice cannot be served concurrent with a period of R&R but there are many other things the Agreement does not say – this cannot mean they are permissible.

Conclusion

[87] I am therefore satisfied that, in providing payment in lieu of notice under the Agreement, notice cannot be given such that it runs concurrent with a period of R&R.

[88] I am therefore satisfied that any payment in lieu of notice cannot include a period of R&R in the ‘hours an employee would have worked…had the employment continued until the end of the minimum notice period’ as specified in s.117(2)(b) of the Act.

[89] In addition I am satisfied that clause 8.6(a) of the Agreement does not allow the employer to place an employee on R&R if there is two weeks or less work for the employee to complete on the Project.

COMMISSIONER

Appearances:

C Massy of Hall Payne Lawyers for the applicant.

T Smetana of HLS Legal for the respondent.

Hearing details:

2016.

Melbourne, Perth, Darwin and Brisbane:

29 January

 1   [2015] FWCFB 5619.

 2   Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16, [26].

 3   Re Cram, Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 21 IR 177, at 179, 180. Also see Re Ranger Uranium Mines, Ex parte Federated Miscellaneous Workers’ Union (1987) 163 CLR 656 , [25]-[26].

 4   [2014] FWC 7970.

 5   See, for example, TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court & Anor [2013] HCA 5, [75].

 6   See CFMEU v AIRC, [31]-[32].

 7   PR974301 per Watson VP, Acton SDP and Cargill C)

8 Ibid at paragraphs 30-35.

9 PR96394, 5 October 2005 per Lawler VP, O’Callaghan SDP and Harrison C cited in ING [72].

 10   Clause 8.6(a) of the Agreement.

 11   Clause 8.6(b) of the Agreement.

 12   Clause 8.6(c) of the Agreement.

 13   See LHMU v Cuddles Management Pty Ltd [2009] FMCA 463, [116]; CEPU & Ors v Silcar Pty Ltd [2013] FWC 856, [46].

 14   AMIEU v Golden Cockerel[2014] FWCFB 7447, [22].

 15   Kucks v CSR Limited (1966) 66 IR 182, cited in Golden Cockerel[2014] FWCFB 7447, [19].

 16   [2013] FWC 856, [42].

 17 (1984) 8 IR 34.

 18 (1984) 9 IR 115.

 19 (1984) 8 IR 34 at 50.

 20 (1984) 8 IR 34 at 51.

 21   Kucks v CSR Limited (1966) 66 IR 182, cited in Golden Cockerel [2014] FWCFB 7447, [20].

 22   See Cuddles and Silcar, above.

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