Construction, Forestry, Maritime, Mining and Energy Union v Akd NSW Pty Ltd

[2021] FWC 1984

[2021] FWC 1984

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Maritime, Mining and Energy Union
v
AKD NSW Pty Ltd
(C2020/7167)

COMMISSIONER RIORDAN SYDNEY, 27 MAY 2021

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

[1] The Construction, Forestry, Maritime, Mining and Energy Union (the Applicant) referred a dispute to the Commission under section 739 of the Fair Work Act (Cth) 2009 (the Act) on 22 September 2020.

[2] The dispute relates to the application of Clause 19 of the AKD Tumut Agreement 2019- 2022 (the Agreement).

[3] Clause 19.1 of the Agreement provides as follows:

“19.1 Accrued Personal Leave

The Parties acknowledge that the Mondelez Case may change the way Personal leave is calculated. It is agreed that if the Mondelez case changes how a day of Personal leave is to be calculated in the National Employment Standards, AKD will recognise the change when the NES is changed but backdate the accruals to the date of the Mondelez Decision.

Backdating of Personal leave accrual will only occur because of changes to the NES because of the Mondelez case.

Unless there is a change to the NES, an accrued day of Personal leave will continue to be calculated as 7.6 hours.” 1

[4] The Agreement applies to employees of AKD NSW Pty Ltd (the Respondent) who operates a sawmill in Tumut NSW.

[5] On 23 August 2019, the Full Court of the Federal Court of Australia handed down its decision in Mondelez v AMWU [2019] FCA 138 (the FCAFC Decision). The FCAFCDecision stated that a ‘day’, for the purposes of section 96 of the Fair Work Act (Cth) 2009 (the Act), of leave was an employee’s ordinary working day.

[6] On 13 August 2020 the High Court of Australia handed down its decision in Mondelez v AMWU [2020] HCA 138 (the HCA Decision). The HCA Decision set aside the FCAFC Decision and defined a ‘day’, for the purposes of section 96 of the Act as:

“One “day” refers to a notional day consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week period. To account for the fact that patterns of work or distribution of hours do not always follow two-week cycles, the entitlement can also be calculated as 1/26 of an employee’s ordinary hours of work in a year.” 2

[7] The Agreement was approved on 1 November 2019. From the date that the Agreement was operational, employees accrued leave as per the definition of a ‘day’ as defined by the FCAFCDecision.

[8] From 13 August 2020, when the HCA Decision was handed down, employees of the Respondent began to accrue leave consistently with the definition of a ‘day’ outlined by the HCA Decision. Further, the Respondent proposed to claw back or recalculate employees leave balance in line with the definition of a ‘day’ outlined by the HCA Decision.

[9] This decision addresses whether the employees of the Respondent were entitled to accrue and keep leave from 23 August 2019 to 13 August 2020 in line with the definition of a ‘day’ as per the FCAFCDecision.

Establishing Jurisdiction

[10] The Agreement’s Dispute Resolution is outlined as follows:

“7. Dispute Resolution Procedure

7.1 Union members are entitled to be represented by their Union at every stage of this process. Employees who are not Union members may also choose to be represented and any reference to the Union in this process shall be treated as a reference to the employee’s representative, if any. Each party shall recognise the other’s representative for all purposes involved with the resolution of the dispute.

7.2 If a dispute arises about any matters arising under this Agreement or; in relation to the NES (including subsections 65(5) or 76(4)) or in relation to the application, but not the making or variation, of any policy or procedure pertaining to the employment relationship, the parties will attempt to resolve the dispute in a timely manner by discussions at the workplace in accordance with the following procedure:

(a) Initially formal discussions will take place between the employee, or employees concerned, the Union delegate, and the relevant supervisor or management representative.

(b) If the dispute is not resolved as a result of those discussions the matter shall be referred to the Union’s organiser and a more senior management representative for further discussion.

(c) In the event that the dispute remains unresolved further discussions shall take place between an appropriate senior official of the Union and management representative.

7.3 If the matter cannot be resolved by discussions in the workplace a party may refer the dispute to the Fair Work Commission for resolution by conciliation, or arbitration if necessary.

… “

[11] Clause 3 of the Agreement identifies the Applicant as a party to the Agreement. It is not in dispute that the matter could not be resolved by discussions in the workplace.

A Brief Summary of the Applicant’s Submissions

[12] The Applicant’s central contention was that Clause 19 of the Agreement:

“Created a stand-alone obligation to accrue certain amounts of personal leave in certain factual circumstances, which were enlivened…” 3

[13] In support of this contention the Applicant submitted that Clause 19:

“a. identif(ies) a common understanding that the question of how the personal leave provisions of the NES should be interpreted in respect of shiftworkers was in flux,

b. insert(s) an express commitment to apply that standard from the date of the Full Court decision, until any further changes occurred; and

c. by the second paragraph, restrict(s) ‘backpay’ to the date of the change, unless the NES itself was actually amended.” 4

[14] The Applicant elaborated on the factual circumstances which they believed enlivened Clause 19:

“The Full Court decision changed ‘the way personal leave is calculated’ on and from 23 August 2020. The clause was thus enlivened, and AKD was required to accrue the additional amounts.

The effect of the High Court decision was, for the purposes of this clause, to change again the ‘way personal leave is calculated.’ Clause 19.1 was re-enlivened on 13 August 2020, and AKD was no longer required to deviate from its past practice.

Nothing, however, permits AKD to claw back the accruals which had, as result of this clause, been obtained by shiftwokers between 13 August 2019 and 23 August 2020.” 5

[15] It is the Applicant’s submissions that the Commission should determine and order that clause 19.1 restrains the Respondent from reducing personal leave balances.

A Brief Summary of the Respondent’s Submissions

[16] The Respondent submitted that the Clause 19 plainly outlines several preconditions to the back dating of personal leave accruals:

“i. It was necessary that there be an outcome from the Mondelez case that had the effect of changing the NES and how a day of personal leave was to be calculated.

ii. The outcome of the Mondelez case was decided by the High Court resulting in no

change.

iii. Had the outcome of the Mondelez case been the same as the Federal Court decision, AKD agreed to recognise this and backdate the accrual to the date of the Federal Court decision.

iv. Backdating would only occur if there was a change to the NES because of the Mondelez case. There was no change to the NES. The decision of the Federal Court was set aside and effectively cancelled. There was, and is, no decision of the Federal Court capable of being relied on to establish:

a. A right to increased accruals.

b. An entitlement to increased accruals for the period between the two court decisions.

v. Unless there was a change to the NES, the rate of accrual would remain at 7.6 hours for a day of personal/carer’s leave. There was no change to the NES and the rate of accrual remained the same from the time when personal/carer’s leave accruals were first recorded on employee pay slips in about March 2019 and hereafter on an ongoing basis, including during the period between the Federal Court decision and the High Court decision.” 6

[17] The Respondent submitted that there is no ambiguity in Clause 19 that requires the Commission to consider other matters. In advancing its position, the Respondent submitted that it is apparent from the circumstances in which clause 19.1 was agreed that the parties expected the FCAFCDecision to be appealed, whichever party was successful. The Respondent submitted that the focus of the negotiations was on the operative date for backdating additional accruals should there be an actual change to the method of calculating personal leave because of the Mondelez case.

[18] Further, the Respondent claimed that if there was ambiguity than the following objective background facts supported their interpretation of the Agreement’s provision:

•  That the Mondelez litigation, which was currently before the courts, may affect the way in which section 96 of the Act was applied.

•  The Mondelez litigation would likely be appealed to the High Court.

•  Evidence of prior negotiations to the extent they establish objective background facts known to the parties to the agreement.

•  Evidence of what employees were told during the bargaining process.

[19] The Respondent submitted that it was apparent from the conduct of the parties that the consensus was that the Mondelez case was not finalised and no action was requested by the Applicant pursuant to clause 19.1 until and unless the NES change because of the decision of the High Court.

[20] The Respondent further stated that personal/carer’s leave accruals for employees have remained unchanged, in that the payslips of all employees covered by the Agreement continued to record accruals based on 7.6 hours.

Brief outline of the Applicant’s Submissions in Reply

[21] The Applicant reiterated its position as set out in its primary submissions.

[22] It submitted firstly, that while the FCAFCDecision stood, this Decision was a binding decision on how the personal leave provisions of the NES were to be applied to shift workers, i.e., the Respondent was obliged by the terms of the Agreement to conform with the accrual practice so prescribed. In this period, the Applicant submits that shift workers were entitled to additional accruals as the FCAFCDecision existed as a ‘thing of fact’. 7

[23] Secondly, the Applicant submitted that when the HCA Decision was handed down and the FCAFCDecision quashed, that obligation fell away, and it was then open to the Respondent to return to the earlier approach. At this point in time, the shift workers ceased having a ongoing entitlement on the basis that the FCAFCDecision ceased to exist as a thing of fact.

[24] The Applicant submitted that clause 9.1 does not operate to ‘roll back the clock’ and remove accruals or require the repayment of accrual which had arisen under the ‘crystallised earlier entitlement’.

[25] The Applicant rejected the Respondent’s submissions that leave accruals remained unchanged and submitted that, presently, shiftworkers have lower personal leave balances than they should because of the actions of the Respondent.

Submissions on ‘Set Aside’

[26] Directions were issued during the Hearing, requiring the parties to file submissions in relation to the meaning of the phrase ‘set aside’ as used by the High Court.

[27] The Respondent submitted that the High Court Decision ‘the setting aside of an order or decision of the Full Federal Court meant that the Federal Court judgment was set aside as if it had never had operation or effect’. 8

[28] The Respondent, in advancing its position, relied on the decision of De Robillard v Carver [2007] FCAFC 73 (De Robillard). In this decision., the Federal Court concluded:

“We, of course, are not strictly bound by Simon v Vincent J O’Gorman Pty Ltd except by considerations of comity. However, with respect, any other approach would accept an implicit fetter upon the appellate powers clearly granted by s 28 of the Federal Court of Australia Act 1976 (Cth). In my respectful opinion the course followed by Gyles J was not only correct as a matter of precedent but was correct in law. The power of this Court on appeal to set aside a sequestration order with the result that ‘it is as if no valid sequestration order was ever made’ was also referred to, and not doubted, in Pattison v Hadjimouratis (2006) 155 FCR 226 (per Nicholson J at [14]; see also per Jacobson J at [51] - [53] and per Lander J at [177] – [181]).”

[29] The Respondent submitted that the consequence of a judgement being set aside is that the judgement being set aside is vacated and the case is put in the same position in which it was before the judgment was entered.

[30] The Respondent submitted that the decision of the High Court put the parties back in the position as if there had been no FCAFCDecision.

[31] The Respondent concluded that the decision on which the Applicant relies was set aside and for the purposes of the law, it is as if it never existed. Further, the Respondent stated that the method by which a day of personal leave was to be calculated pursuant to s.596 of the Act did not change nor did the NES.

[32] The Applicant submitted that the Order of the High Court did not change the fact that the FCAFCDecision existed, for the purposes of the very specific clause 19.1 of the Agreement, in the period between the Federal Court and High Court decisions. The Applicant submitted that both concepts may coexist.

[33] In advancing its argument, the Applicant relied on the judgement of Gageler J in State of NSW v Kable[2013] HCA 26 (Kable) at [52]:

“Yet a purported but invalid law, like a thing done in the purported but invalid exercise of a power conferred by law, remains at all times a thing in fact. That is so whether or not it has been judicially determined to be invalid. The thing is, as is sometimes said, a “nullity” in the sense that it lacks the legal force it purports to have. But the thing is not a nullity in the sense that it has no existence at all or that it is incapable of having legal consequences. The factual existence of the thing might be the foundation of rights or duties that arise by force of another, valid, law. The factual existence of the thing might have led to the taking of some other action in fact. The action so taken might then have consequences for the creation or extinguishment or alteration of legal rights or legal obligations, which consequences do not depend on the legal force of the thing itself. For example, money might be paid in the purported discharge of an invalid statutory obligation in circumstances which make that money irrecoverable, or the exercise of a statutory power might in some circumstances be authorised by statute, even if the repository of the power acted in the mistaken belief that some other, purported but invalid exercise of power is valid.”

[34] The Applicant submitted that while the decision of the Federal Court existed, clause 19.1 compelled the Respondent to make additional accruals. The Applicant claimed that when the decision was set aside by the High Court and ceased to have legal effect, the obligation to make additional accruals ceased going forward. The Applicant argued, however, that this did not turn back time. It is the Applicant’s submission that at all times, the obligation of the increased accruals arose from clause 19.1 of the Agreement, and not the continuing legal effect of the FCAFCDecision

[35] The Applicant concluded that clause 19.1 provided an independent obligation to the Respondent to apply the most definitively stated interpretation of the NES at any particular time.

CONSIDERATION

[36] I have taken into account all of the submissions that have been provided by the parties and all of the evidence that has been attested by the witness.

DETERMINATION

[37] I am satisfied that clause 19.1 of the Agreement has a plain and ordinary meaning.

[38] The FCAFCDecision clarified the meaning of the work “day” in the NES so that it related directly to the actual length of the working day of every individual employee in Australia. I am satisfied that this clarification by the Full Federal Court “changed the NES” for the purposes of clause 19.1 of the Agreement.

[39] As a result, the employees of the Respondent were entitled to accrue their personal leave of 10 days per annum, with a day being the length of their ordinary working day. For example, for those employees who were working a 9.5 hour shift, they would accrue 95 hours of personal leave per annum. The Respondent accrued these additional hours for every employee in a “shadow” accrual register.

[40] However, the HCA Decision “set aside” the FCAFCDecision. From my experience, this phrase is rarely used in industrial law.

[41] The Oxford Australian Law Dictionary defines the phrase “setting aside” to mean:-

“Cancelling or invalidating a decision or order, making void”.

[42] The definition is in accordance with the decision in De Robillard. As a result, I am satisfied that the correct interpretation of the HCA Decision is to return the parties to their respective positions on the day before the FCFCA Decision, i.e., 22 August 2019.

[43] On 22 August 2019, employees of the Respondent were receiving 76 hours of personal leave per annum.

[44] The Respondent has indicated it has no intention to recover the hours or money that is has paid to those employees who has accessed the FCAFCDecision accrued leave from their shadow register prior to the HCA Decision. Such a move is commendable and dissipates an issue which may arise as per the Decision in Kable.

CONCLUSION

[45] The High Court “set aside” the decision of the Full Federal Court in Mondelez. I find that this means that the FCAFCDecision is void, in other words, it is as if the FCAFCDecision never occurred or existed. As a result, the employees continued to accrue 7.6 hours of personal leave per annum for the life of the Agreement as if the NES never changed.

[46] I find that the Respondent has acted in accordance with the HCA Decision. Whilst it was open for the Respondent to maintain the increased accrual which resulted from the FCAFCDecision, it was under no legal obligation to do so as a result of the HCA Decision.

[47] I so Order.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

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 1   AKD Tumut Agreement 2019- 2020, Clause 19.1.

 2   Mondelez v AMWU [2020] HCA 138, [2].

 3   The Applicant’s Outline of Submissions, [28].

 4   The Applicant’s Outline of Submissions, [23]

 5   The Applicant’s Outline of Submissions, [25]-[27]

 6   The Respondent’s Outline of Submissions, [23]

 7   State of NSW v Kable (2013) CLR 118 at [52]. See also Lewski v ASIC [2016] FCAFC 96 at [247]; Jadwan Pty Ltd v Secretary, Department of Health and Aged Care [2003] FCAFC 288 at [42] per Gray and Downes JJ.

 8   The Respondent’s Outline of Submissions regarding ‘set aside’, [6]