Construction, Forestry, Maritime Mining and Energy Union v DP World (Fremantle) Limited
[2019] FCCA 2879
•10 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MARITIME MINING AND ENERGY UNION v DP WORLD (FREMANTLE) LIMITED | [2019] FCCA 2879 |
| Catchwords: INDUSTRIAL LAW – Industrial agreement – whether contravention of terms. |
| Legislation: Fair Work Act 2009 (Cth), Div.7, Pt.2, ss.12, 44, 50, 52, 53, 54, 55, 56, 96, 97, 98, 99, 100, 101, 183, 186, 539, 540, 545, 546, 547, 739 Fair Work Bill 2008 (Cth), Explanatory Memorandum Fair Work (Registered Organisations) Act 2009 (Cth), s.79 Federal Circuit Court of Australia Act 1999 (Cth), s.75 Stevedoring Industry Award 2010 |
| Cases cited: Amcor Ltd v Construction, Forestry, Mining and Energy Union & Ors [2005] HCA 10 (2005); 222 CLR 241 City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813 (2006) 153 IR 426 City of Wanneroo v Holmes (1989) 30 IR 362 The Shorter Oxford English Dictionary on Historical Principles, Vol II (Oxford: Clarendon Press, 1973) |
| Applicant: | CONSTRUCTION, FORESTRY, MARITIME MINING AND ENERGY UNION |
| Respondent: | DP WORLD (FREMANTLE) LIMITED |
| File Number: | PEG 365 of 2016 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 7 June 2018 |
| Date of Last Submission: | 7 June 2018 |
| Delivered at: | Sydney (via video-link to Perth) |
| Delivered on: | 10 October 2019 (by video-link by Judge Street pursuant to s.75 of the Federal Circuit Court of Australia Act 1999 (Cth) |
REPRESENTATION
| Counsel for the Applicant: | Ms L Doust and Mr D Stojanoski |
| Solicitors for the Applicant: | Slater and Gordon Lawyers |
| Counsel for the Respondent: | Mr Y Shariff and Mr S Crilly |
| Solicitors for the Respondent: | Seyfarth Shaw Australia |
DECLARATIONS AND ORDERS
The Court declares that the respondent contravened:
(a)clause 16.9.2 of the DP World Fremantle Enterprise Agreement 2011 (“Agreement”) and section 50 of the Fair Work Act 2009 (Cth) (“Act”) on or about 28 November 2014 by failing to pay cashed out personal leave to Vincent Clegg at a rate calculated on the basis of eight hours per day for each day of personal leave cashed out; and
(b)clause 24.1.1(e) of the Agreement and section 50 of the Act by failing to accept the arbitrated determination in Maritime Union of Australia v DP World (Fremantle) Limited [2013] FWC 2914 that, for the purposes of cl.16.9.2 of the Agreement, cashed out personal leave is to be paid out at a rate calculated on the basis of eight hours per day for each day of personal leave cashed out when paying cashed out personal leave to Vincent Clegg on or about 28 November 2014.
The Court orders that these proceedings be adjourned to a directions hearing before a Judge of this Court on a date and time to be determined.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 365 of 2016
| CONSTRUCTION, FORESTRY, MARITIME MINING AND ENERGY UNION |
Applicant
And
| DP WORLD (FREMANTLE) LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the construction and operation of the DP World Fremantle Enterprise Agreement 2011 (“Agreement”), in particular:
a)the rate at which personal leave which is “cashed out” by an employee must be paid, having regard to the Agreement and the operation of the Fair Work Act 2009 (“FW Act”); and
b)whether the respondent contravened its obligation to abide by decisions made by the Fair Work Commission (“FWC”) under the disputes settlement procedure in the Agreement.
Statement of Claim
The Statement of Claim (“SOC”) is set out as follows:
The Parties
1.The Applicant ('MUA') was at all material times and is:
(a)an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth) ('FW (RO) Act') and by reason of being so registered, a body corporate by reason of Section 27 of the FW(RO) Act;
(b)an employee organisation within the meaning of section 12 of the Fair Work Act 2009 (the FW Act)
2.The MUA was at all material times governed by rules registered in accordance with the FW (RO) Act.
PARTICULARS
A copy of the registered rules of the MUA is accessible from the Fair Work Commission website - MUA is entitled by reason of its rules to enrol in membership and represent persons employed as waterside workers by the Respondent ('DP World').
4.DP World was at all material times:
(a)A "constitutional corporation" within the meaning of that term in section 12 of the FW Act;
(b)A "national system employer" within the meaning of that term in section 14 of the FW Act;
(c)a corporation liable to sue and be sued;
(d)the operator of a business engaged in the provision of Stevedoring services from port operations in Fremantle;
(e)the employer of persons eligible for membership of the MUA;
(f)the employer of Mr Vinnie Clegg until the time of the termination of his employment by way of redundancy on or around 28 November 2014 ('the Employee);
(g)a body corporate within the meaning of Section 793 of the FW Act;
(h)bound to comply with the provisions of the FW Act.
PARTICULARS
As to paragraph 4(f), the Employee commenced employment on or around 30 March 1998.
The Employee
5.The Employee was at all material times:
(a)an employee of DP World having commenced employment on or around 30 March 1998;
(b)a stevedoring employee classified at Grade 5 under the Stevedoring Industry Award 2010 (the Award);
(c)a permanent employee of DP World;
(d)a "Fixed Salary Employee" or "FSE" within the meaning of that term in the DP World Fremantle Enterprise Agreement 2011 (the Agreement);
(e)a member of the MUA;
(f)entitled to the benefit of an enterprise agreement made in accordance with the Fair Work Act and as defined in Paragraph 7 of this statement of claim.
6.The employment of the Employee was terminated by DP World on the grounds of redundancy on or around 28 November 2014.
The Enterprise Agreement
7.The Agreement was approved by the Fair Work Commission on 6 June 2012.
PARTICULARS
Decision of Fair Work Commission (Watson VP) [2012] FWAA 4839.
8.In its decision to approve the Agreement, the FWC noted that the Agreement covers the MUA.
9.Clause 4 of the Agreement provided that it was binding on DP World and its relevant employees engaged in stevedoring operations as stevedoring employees in Award Classifications Grades 1 to 6 (the covered employees).
10.The Agreement commenced operation from 13 June 2012.
11.The Agreement ceased to apply in respect of the covered employees on 14 September 2015.
PARTICULARS
By operation of section 58 of the FW Act, the Agreement ceased to apply when the DP World Fremantle Enterprise Agreement 2015 came into operation on 14 September 2015, following its approval on 7 September 2015 in [2015] FWCA 6140
12.In the premises above, between 13 June 2012 and 14 September 2015, the Agreement:
(a) covered DP World by reason of Section 53(1) of the FW Act;.
(b) applied to DP World by reasons of Section 52 of the FW Act;
13.In the premises above, between 13 June 2012 and 14 September 2015, the Agreement:
(a)covered the MUA by reason of Section 53(2) of the FW Act.
(b)applied to the MUA by reason of with 52 of the FW Act;
14.In the premises above, between 13 June 2012 and 14 September 2015, the Agreement:
(a)covered the Employee by reason of Section 53(1) of the FW Act. (b)
(b)applied to the Employee consistent with Section 52 of the FW Act;
15.Clause 16.9 of the Agreement states (relevantly):
16.9 Cashing out of Personal Leave
16.9.1 An employee may have their accrued personal leave cashed out in accordance with the following provisions:
(a) resigns their employment after 10 years, retires, is made redundant or dies;
(b) ...
(c) ...
(d) payment for excess accrued personal leave where at 1 July of any year, an employee has accumulated in excess of 28 days unused personal /eave.
16.9.2. Any personal leave cashed out in accordance with 16.9.1 will be paid at Clause 11.0 - Rates of Pay where a day of personal leave is 8 hours.
The Employee and his circumstances
16.On or about 28 November 2014, the Employee's employment was terminated by DP World by reason of redundancy ('the Redundancy').
17.At the time of the Redundancy, the employee had accrued 46.41 days of personal leave.
PARTICULARS
i.The Employee had accrued 23.16 days (185.3300 hours) of personal leave during the period of operation of the Agreement.
ii.The Employee had accrued 23.25 days (162.75 hours) prior to the period of operation of the Agreement.
iii.
18.At the time of the Redundancy, the Employee was entitled to have his accrued personal leave cashed out in accordance with clause 16.9.1(a) at his salary rate.
Particulars
i.Clause 16.9.2 of the Agreement;
ii.Clause 16.4.1 of the Agreement
iii.Clause 11.3 of the Agreement;
iv.Part B, Clause 2.1 of the Agreement;
v.Section 101(2)(c) FW Act.
19.At the time of the Redundancy, the Employee's salary was $107,556.00 per annum.
20.At the time of the Redundancy, the Employee's average hours of work per week were 35.3.
21.In the premises above, the Employee's hourly rate of pay at the time of the Redundancy was $58.94.
22.At the time of the Redundancy DP World paid the Employee $11,633 in respect of accrued personal leave.
23.In the premises above, DP World was obliged by the Agreement to pay the Employee $21,883.24 in respect of accrued personal leave.
PARTICULARS
The amount is calculated as follows:
46.41 (days) x 8 hours= 371.28
371.28 x hourly salary rate of $58.94
24.In the premises above, in contravention of section 50 of the FW Act DP World has contravened Clause 16.9.1(a) of the Agreement ('the contravention').
25.As a consequence of the contravention, DP World has failed to pay the Employee the amount of $10,250.24 which DP World was obliged to pay the Employee under the Agreement.
The DSP Contravention
26.The Agreement contains a dispute settlement clause in satisfaction of the obligations imposed pursuant to Section of 186(6) of the Agreement ('the DSP Clause').
PARTICULARS
Clause 24 of the Agreement
27.The DSP Clause permitted the parties to refer a dispute to Fair Work Australia for arbitration and provided that the decision would be accepted by the parties subject to any appeal rights.
28.On or around 16 October 2012, the MUA, notified the Fair Work Commission of a dispute about the application of the Agreement in respect of the payment pursuant to Clause 16.9.1 of the Agreement of personal leave accrued before 12 June 2012 ('the Dispute').
29.On 16 August 2013, the Fair Work Commission settled the Dispute by finding, inter alia, that:
(a) a day of personal leave is eight hours; and
(b)that approach should apply to all personal leave cashed out in accordance with sub-clause 16.9.1 of the Agreement ('the Dispute Outcome').
30.Contrary to the obligation in clause 24 of the Agreement DP World failed to pay the Employee his accrued personal leave in accordance with the Dispute Outcome.
PARTICULARS
DP World paid the accrued personal leave of the Employee on the basis that one day's personal leave accrued prior to the commencement of operation of the Agreement was 7 hours.
31.And the Applicant seeks:
(a)A declaration that DP World contravened clause 16.9.1 of the Agreement;
(b)A declaration that DP World contravened clause 24 of the Agreement;
(c)An order for the imposition of penalties upon DP World for the above contraventions;
(d)An order that DP World pay the Employee the amount of $10,250.24;
(e)An order that DP World pay the Employee interest on the sum of $10,250.24 from 28 November 2014 to the date of payment of such sum;
(f)An order that any penalty be made payable to the Applicant;
(g)Such further or other orders as this Honourable Court thinks fit.
The Amended Defence [AD] filed by DP World on 16 February 2018 is as follows:
1.The Respondent admits subparagraphs 1(a) and 1(b) of the Applicant’s Statement of Claim (Statement of Claim).
2.The Respondent admits paragraph 2 of the Statement of Claim.
Particulars
3. The Respondent admits paragraph 3 of the Statement of Claim.
4. In reply to paragraph 4, the Respondent:
a. admits subparagraphs 4(a) through to (e), and (g) and (h) of the Statement of Claim;
b.admits that it was the employer of Mr Vinnie Clegg, but otherwise denies subparagraph 4(f) of the Statement of Claim and notes that the Applicant has not properly particularised the pleading;
c.further says that the
Applicant’sEmployee’s employment was terminated by way of redundancy on 15 January 2015; andd. says that the
ApplicantEmployee signed a deed of release dated 4 September 2015 in full and final settlement of all claims relating to his employment, termination and unfair dismissal application in the Fair Work Commission (U2016/2830).Particulars
5. In reply to paragraph 5, the Respondent:
a.admits subparagraph 5(a) of the Statement of Claim;
b. admits subparagraph 5(b) of the Statement of Claim;
c. admits subparagraph 5(c) of the Statement of Claim;
d. admits subparagraph 5(d) of the Statement of Claim;
e. is unable to admit or deny subparagraph 5(e) of the Statement of Claim as it does not know that fact;
f.denies subparagraph 5(f) of the Statement of Claim, repeats subparagraphs 4(c) and (d) above, and notes that the Applicant has not properly particularised the pleading.
6.The Respondent denies paragraph 6 of the Statement of Claim and says that the
Applicant’sEmployee’s employment was terminated by way of redundancy on 15 January 2015.The enterprise Agreement
7. The Respondent admits paragraph 7 of the Statement of Claim.
Particulars
8. The Respondent admits paragraph 8 of the Statement of Clam.
9. The Respondent admits the general substance of paragraph 9 of the Statement of Claim but denies that clause 4 of the Agreement referred to “(the covered employees)”.
10. The Respondent admits paragraph 10 of the Statement of Claim.
11. The Respondent admits paragraph 11 of the Statement of Claim, but repeats paragraph 9 above as to the reference to “the covered employees”.
Particulars
12. The Respondent admits paragraph 12 of the Statement of Claim.
13.The Respondent admits paragraph 13 of the Statement of Claim.
14. The Respondent admits paragraph 14 of the Statement of Claim.
15. In reply to paragraph 15 of the Statement of Claim, the Respondent says that the Agreement speaks for itself.
The Employee and his circumstances
16. The Respondent denies paragraph 16 of the Statement of Claim and repeats paragraphs 4 to 6 of this Defence.
17. The Respondent denies subparagraphs 17 of the Statement of Claim and notes that the Applicant has not properly particularised these pleadings.17. In reply to paragraph 17, the Respondent:
a. denies subparagraphs 17(i) and (ii) of the Statement of Claim; and
b. says the Employee had 46.41 days of accrued personal leave.
18. The Respondent denies paragraph 18 of the Statement of Claim.18. The Respondent denies paragraph 18 and further says that to the extent that the Applicant relies upon section 101(2) of the Fair Work Act 2009 (Cth) (FW Act), that provision does not:
a. have the effect of contradicting the express language of the Agreement; and
b.if it does, the entirety of clause 16.9 is void in that the clause of the Agreement did not comply with the mandatory requirements specified in section 101(2) of the FW Act.
19. The Respondent denies paragraph 19 of the Statement of Claim and says that at the time the
ApplicantEmployee was made redundant, his salary was $107,276.11 per annum, as agreed between theApplicantEmployee and the Respondent.20. The Respondent denies paragraph 20 of the Statement of Claim and says that the
Applicant’sEmployee’s average hours of work was 35 hours per week.21. The Respondent denies paragraph 21 of the Statement of Claim and says that:
a. in accordance with clause 11 of the Agreement the
Applicant’sEmployee’s hourly rate of pay was $33.42 for the purposes of cashed out personal leave, not $58.94 as asserted at paragraph 21 of the Statement of Claim;b. in accordance with clause 16.9.2 of the Agreement, cashed out personal leave was paid at the clause 11 rates of pay;
c. under clause 16.4.1 of the Agreement, when a Fixed Salary Employee took personal leave they received payment at their annual salary rates, unlike cashed out personal leave;
d. under clause 16.4.2 of the Agreement, when a Variable Salary Employee took personal leave they received payment at the average graded rate worked for the previous 12 months as specified in clause 11 of the Agreement, unlike cashed out personal leave.
22. The Respondent denies paragraph 22 of the Statement of Claim and says that the
ApplicantEmployee was paid $11,958 in respect of accrued personal leave cashed out at the time of redundancy.23.
The Respondent denies paragraph 23 of the Statement of Claim.23. In reply to paragraph 23, the Respondent:
a. denies paragraph 23 of the Statement of Claim.;
b. without admission of liability, says that the Employee should have received an additional gross payment of $777.04; and
a.c. without admission of liability, says that it will pay the Employee the additional gross payment of $777.04 within 14 days of the filing and service of this Amended Defence.24.The Respondent denies paragraph 24 of the Statement of Claim.
25. The Respondent denies paragraph 25 of the Statement of Claim.
The DSP Contravention
26. The Respondent admits paragraph 26 of the Statement of Claim.
27. The Respondent admits paragraph 27 of the Statement of Claim.
28. The Respondent admits paragraph 28 of the Statement of Claim.
29. The Respondent admits paragraph 29 of the Statement of Claim.
30. The Respondent denies paragraph 30 of the Statement of Claim.
31. The Respondent opposes the relief sought in subparagraphs 31(a) through to (g) of the Statement of Claim.
Submissions
Applicant’s submissions
The applicant contends that:
a)when personal leave is cashed out for an FSE employee, that should occur at the employee’s salary rate on the basis that one day’s leave is paid out at 8 hours pay;
b)that proposition is correct on the proper reading of the Agreement;
c)if the Court was not persuaded that conclusion flows from a proper reading of the Agreement, it follows because of the operation of s.101(2)(c) of the FW Act;
d)by cashing out the accrued personal leave of Mr Clegg in early 2015 at a rate lower than the salary rate, the respondent contravened clause 16.9 of the Agreement and/or s.44 of the FW Act (which prohibits the contravention of the National Employment Standards);
e)by cashing out the accrued personal leave of Mr Clegg in early 2015 on the basis that each day of leave accrued prior to 13 June 2012 would be paid at 7 hours rather than 8, the respondent:
i)contravened clause 16.9.2 of the Agreement; and
ii)contravened clause 24.1.1(e) of the Agreement, which obliged it to abide by the decision of the FWC which determined that such leave should be paid out at 8 hours.
The Proceeding
The proceeding was commenced by an Application dated 26 August 2016 (“Application”), accompanied by a Statement of Claim (“SOC”) also dated 26 August 2016.
The respondent filed an Amended Defence (“AD”) in response to the SOC on 16 February 2018.
The applicant relies on the following affidavit evidence in support of its application:
a)affidavit of Adrian Evans, sworn 14 December 2017 (“Evans’ Affidavit”); and
b)affidavit of Vincent Clegg, sworn 14 December 2017 (“Clegg Affidavit”).
The applicant also proposes to read some passages of the Affidavit of Max Kruse, affirmed 19 February 2018 (“Kruse Affidavit”), and filed by the respondent in the proceeding.
There is limited dispute between the parties as to the facts in this matter, with much of the factual background established on the pleadings. The issues for determination involve the construction to be given to industrial instruments and the FW Act.
Summary of Facts and Arguments
The parties
The applicant (or the “MUA”) is an organisation of employees registered under the Fair Work Registered Organisations Act 2009 (Cth) and an “employee organisation” within the meaning of s.12 of the FW Act: SOC 1; AD 1: as a consequence of the recent amalgamation between the MUA and the Construction, Forestry, Mining and Energy Union and the Textiles Clothing and Footwear Union of Australia, a new registered organisation was formed on 27 March 2018. By the operation of s.79 of the Fair Work (Registered Organisations) Act 2009 (Cth), the MUA is de-registered and the new amalgamated body, the Construction, Forestry, Maritime, Mining and Energy Union is substituted as the party in the proceeding. The relevant party is referred to hereafter as the “MUA”.
The respondent (“DP World) is a corporation which meets the definition of a “national system employer” under the FW Act: SOC 4(a) & (b); AD 4(a). It therefore falls within the scope of the national industrial relations scheme established by the FW Act.
DP World operates a stevedoring business at the Port of Fremantle: SOC 4(d); AD 4(a). It employs a number of stevedores, whose industrial interests the MUA is entitled to represent: SOC 3; AD 3.
The Agreement
On 6 June 2012, the FWC approved the Agreement under s.186 of the FW Act. The Agreement operated from one week later, that is, 13 June 2012, in accordance with s.54(1)(a) of the FW Act.
The Agreement was expressed (at clause 4.0, Parties Bound) to bind DP World, its stevedoring employees and the MUA. It covered the MUA by operation of s.53(2)(b) of the FW Act, as under s.183 of the FW Act, the MUA was a bargaining representative for the agreement and gave notice to the then Fair Work Australia (“FWA”) that it wanted the agreement to cover it and the FWA noted in its decision that the agreement covered it.
The Agreement also applied to the MUA, by operation of s.52(1) of the FW Act. The agreement was in operation (from 13 June 2012), it covered the MUA, and (until 14 September 2015, when the DP World Enterprise Agreement 2015 came into operation) no other provision of the FW Act applied or had the effect of providing that the agreement did not apply.
Because the Agreement applied to the MUA, the applicant is an organisation entitled to bring these proceedings in respect of a contravention of an enterprise agreement, pursuant to Item 4 of the Table in s.539 of the FW Act.
The employee – Vincent Clegg
The current proceeding concerns Vincent (aka Vinnie) Clegg (“Clegg”), a member of the applicant. He was a permanent employee of DP World who commenced employment on around 30 March 1998 and was a Grade 5 stevedoring employee under the Stevedoring Industry Award 2010 (an award made by Fair Work Australia, which is now the FWC). The proceedings concern the cashing out of Mr Clegg’s accrued personal leave when he was made redundant in early 2015.
The MUA is entitled to bring proceedings in respect of a contravention of the NES relating to Clegg because Clegg was affected by the contravention and the MUA is entitled to represent his industrial interests: FW Act, s.540(2).
Clegg was employed as a “Fixed Salary Employee” (also referred to as an FSE): SOC 5 (a), (b), (d); AD 5(a), (b) and (d). A Fixed Salary Employee is a “full time permanent employee paid a Fixed Salary”: cl.7.8, Definitions, Agreement. Their position contrasts with that of the “VSE”, or Variable Salary Employee, who is irregularly engaged for work (ibid), and whose earnings are calculated on a wages basis (cl.25.2), subject to a guaranteed minimum salary (cl.25.3) and an arrangement to adjust “unders” and “overs”.
Clause 16 – entitlement to personal leave
Clause 16 of the Agreement established an entitlement for permanent employees of 13 days of personal leave per year (cl.16.1.1). That entitlement was notionally divided into sick leave (of up to ten days per year) and carers’ leave. The balance of the sick leave component of the leave entitlement left at the end of the year (that is, any of the ten days remaining after any sick leave or days or carer’s leave exceeding 3 days) could accrue from year to year (cl.16.1.2).
Payment for personal leave taken by FSEs was to be paid at the salaried rate (cl.16.4.1). The salaries for such employees appear in Part B of the Agreement at Clause 2.0.
In effect, this meant that an employee would receive their normal fortnightly salary although absent from work for a part, or one or more of their shifts due to illness or caring responsibilities.
There is a minor dispute between the parties as to the amount of Clegg’s salary. The applicant pleads that Clegg’s salary was $107,556.00 per annum. That amount appears in the table at Cl. 2.1 of Part B of the Agreement as the salary applicable from the first pay period on or after 1 July 2013 for a Grade 5 Crane Driver: Clegg: 3, 4. The respondent contends that it was $107,276.11. It is not clear how that figure is advanced.
Cashing out personal leave
Clause 16.9.1 of the Agreement identified circumstances in which employees could “cash out” their accrued personal leave. It provided as follows:
16.9.1 An Employee may have their accrued personal leave cashed out in accordance with the following provisions:
(a) resigns their employment after 10 years, retires, is made redundant or dies;
(b) is accepted by their superannuation fund as totally or permanently disabled;
(c) the Employee (or in the case of death, the Employee's personal legal representative) will be paid an amount equivalent to the Employee's unused accumulated sick leave entitlement;
(d) payment for excess accrued personal leave where at 1 July of any year, an Employee has accumulated in excess of 28 days unused personal leave.
16.9.2 Any personal leave cashed out in accordance with 16.9.1 will be paid at clause 11.0 - Rates of Pay where a day of personal leave is 8 hours.
There is no dispute that Clegg’s employment was terminated by reason of redundancy (AD: 4 c) or that he was entitled to cash out his personal leave at the time of his redundancy (AD: 22). The respondent paid Clegg $11,958 to cash out that accrued leave: the SOC incorrectly pleads that the amount was $11,633. The correct amount is pleaded at AD: 22. The applicant will seek the Court’s leave at the hearing to correct this slip at SOC: 22. There is also no dispute between the parties as to the amount of leave accrued by Clegg. The applicant pleads: SOC at [17], and the respondent admits: AD at [17], that Clegg had 46.41 days of personal leave accrued at the time of his redundancy.
The dispute between the parties is as to the basis on which such leave should have been cashed out and the amount that should have been paid to Clegg when that leave was cashed out.
The applicant contends that the leave should have been cashed out at the salary rate of $107,556.00. Working backwards from that rate, Mr Clegg’s weekly rate of pay was about $2,063.00 per week. Clegg’s payslip (Clegg: VC-1) shows a salary payment for the fortnightly pay period from 1 December 2014 to 14 December 2014 of $4,126.00, consistent with that weekly rate.
It is difficult to distil a “daily” rate from the weekly rate given the roster arrangements under the Agreement. The roster cycle in clause 1.0 in Part B of the Agreement provides for a 12-week cycle of 53 shifts, meaning an average of 4.416 shifts per week.
However, clause 16.9.2 (above), provides that cashed out personal leave is to be paid out on the basis that each day of personal leave is 8 hours.
Clegg’s payslip shows his base hours as 70 per fortnight. The rate displayed next to that, $58.94 represents an hourly rate, which when multiplied by 70, produces a figure which (allowing for a small margin of error) equates to Clegg’s salary rate of pay of $4,126.00. The Court would be satisfied that the appropriate hourly rate, based on Clegg’s salary rate is $58.94.
Accordingly, the applicant contends that on his redundancy, Clegg’s personal leave should have cashed out at $21,883.24, calculated as follows:
46.41 days of leave X 8 hours X $58.94
The respondent’s payment to him was therefore $9,925.24 short of his entitlement under the Agreement.
The respondent contends that the hourly rate applicable to the payment is $33.42, based on the minimum rate under the Stevedoring Award for a Grade 5 employee. That approach relies on clause 16.9.2, which provides that “Any personal leave cashed out in accordance with 16.9.1 will be paid at clause 11.0 - Rates of Pay where a day of personal leave is 8 hours.”
The applicant contends that such a reading is inconsistent with the scheme of the Agreement. The rates of pay referable to FSEs and VSEs, as provided for under that clause are those to which clause 11.3 refers, viz:
Salaries for Permanent Employees shall be as set out in the relevant sections of this Agreement.
That clause clearly cross-references the salaries in clause 25.3 of Part A of the Agreement (applicable to VSE employees) and Clause 2.0 of Part B (applicable to FSEs).
So far as 11.2 refers to “Rates of pay”, it refers to the rates contained therein as the basis for the rates within the Agreement, and not actual rates.
To give clause 16.9.2 the reading contended for by the respondent involves adopting an interpretation which is contrary to s.101 of the FW Act. That section provides:
Modern awards and enterprise agreements may include terms relating to cashing out paid personal/carer's leave
(1) A modern award or enterprise agreement may include terms providing for the cashing out of paid personal/carer's leave by an employee.
(2) The terms must require that:
(a) paid personal/carer's leave must not be cashed out if the cashing out would result in the employee's remaining accrued entitlement to paid personal/carer's leave being less than 15 days; and
(b) each cashing out of a particular amount of paid personal/carer's leave must be by a separate agreement in writing between the employer and the employee; and
(c) the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.
To read clause 16.9.2 as authorising payment at a lesser amount than if the leave had actually been taken is contrary to s.101(2)(c) of the FW Act: Construction, Forestry, Mining & Energy Union v Anglo Coal (Drayton Management) Pty Ltd [2016] FCA 689; (2016) 258 IR 85 (“Anglo Coal”) at [43] per Buchanan J. An enterprise agreement must not exclude the National Employment Standards: FW Act, s.55(1). To the extent a term of an enterprise agreement contravenes s.55, it has no effect: FW Act, s.56. Accordingly, to the extent, if at all, clause 16.9.2 purports to provide that cashed out personal leave shall be paid at a lesser amount than if actually taken, it will have no effect.
The Court should find that the respondent has contravened either:
a)section 50 of the FW Act, as it has contravened clause 16.9.1 of the Agreement; or
b)section 44 of the FW Act, as it has contravened a National Employment Standard, namely s.101(2)(c) of the FW Act.
Contravention of Clause 24 - Dispute Resolution
There is a further aspect of the respondent’s contravention of clause 16.9.2 of the Agreement. Prior to the filing of the respondent’s Amended Defence, it had taken the position that days of personal leave accrued prior to 13 June 2012 should be cashed out on the basis that one day of leave is 7 hours’ pay.
That approach was the subject of a dispute raised by the MUA under the dispute resolution procedure in clause 24 of the Agreement. Pursuant to s.739 of the FW Act, and clause 24.1.1(e) of the Agreement, the MUA referred that dispute to the FWC for arbitration. In its decision in that matter: Maritime Union of Australia v DP World (Fremantle) Limited [2013] FWC 2914, given on 16 August 2013, the FWC determined that all accrued personal leave cashed out in accordance with clause 16.9.1 of the Agreement was to be cashed out at the rate of 8 hours: [83].
Under clause 24.1.1(e) of the Agreement, where a matter had been referred to “FWA”: Re-named the Fair Work Commission after the making of this Agreement, for arbitration “the decision will be accepted by the parties subject to any appeal rights.”
The respondent did not appeal the decision of the FWC.
However, when the respondent cashed out Clegg’s accrued personal leave some 18 months later in early 2015, it proceeded contrary to the determination made by the FWC.
It continued to proceed in a way which was contrary to that determination even after the MUA commenced proceedings in this Court in August 2016.
By its Amended Defence, the respondent undertook to pay Clegg the amount of $777.04, which represents the difference between the amount paid to Clegg in respect of his pre-13 June 2012 annual leave, and the amount he would have received if such leave was calculated on the basis that one day of leave is 8 hours pay: see Affidavit of Max Kruse, affirmed 19 February 2018 and filed by the respondent.
However, the respondent continues to set its face against the decision of the FWC, purporting in its Defence [AD] to assert that the payment to Mr Clegg is made without admission of liability.
The respondent is bound by decision of the FWC because:
a)the decision represents the outcome of a private arbitration process to which the respondent agreed to submit itself: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645; and
b)clause 24.1.1(e) of the Agreement obliges it to abide the decision, which obligation is supported by s.50 of the FW Act.
The respondent’s determined resistance to the decision of the FWC:
a)contravenes clause 24.1.1(e) of the Agreement and s.50 of the FW Act; and
b)is relevant to the question whether that part of the respondent’s contravention of clause 16.9.2 constituted by cashing out the leave at 7 hours, rather than 8 hours, warrants the imposition of a penalty, given the deliberate and ongoing nature of the respondent’s conduct: Kelly v Fitzpatrick (2007) 166 IR 14.
Nor did it accept the decision until February 2018, some three years after the termination of Clegg’s employment, and eighteen months after the commencement of this proceeding.
Remedies Sought
In that event, the Court may, and should:
a)declare that DP World contravened clause 16.9.1 of the Agreement, contrary to s.50 of the FW Act;
b)declare that DP World contravened clause 24 of the Agreement;
c)further, and or in the alternative, declare that DP World contravened clause 24 of the Agreement;
d)impose pecuniary penalties on DP World pursuant to s.546 of the FW Act in respect of the above contraventions;
e)order pursuant to s.545(2)(b) of the FW Act that DP World pay compensation to Mr Clegg for loss he has suffered as a consequence of the contravention, namely the balance of his entitlement;
f)make orders pursuant to s.547 of the FW Act for interest on that amount from the time of Clegg’s termination until the date the Court’s order is made; and
g)order, pursuant to s.546(3) of the FW Act, that such penalty be made payable to the applicant, who has borne the burden of bringing the proceeding: such an order was referred to in Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 233 per Gray J as “the usual order”.
Respondent’s submissions
The respondent/DP World submitted as follows:
Background
a)this proceeding concerns the amount that Mr Vincent Clegg ought to have been paid for his accrued but untaken personal/carer’s leave upon the termination of his employment with the Respondent;
b)there is no right arising immediately under any applicable legislation to payment with respect to such leave upon termination of employment; as such, the outcome in this case turns entirely on the interpretation of the relevant industrial instrument;
c)the Respondent adopts and accepts the summary of the background facts in this matter set out in [6]-[14] of the Applicant’s outline of submissions dated 20 April 2018 (“MUA Outline”);
d)at all relevant times, Mr Clegg’s employment was subject to the DP World Fremantle Enterprise Agreement 2011 (“Agreement”). It is common ground that under clause 16.9.1(a) of the Agreement, upon the termination of Mr Clegg’s employment by reason of redundancy, he was entitled to payment with respect to his accrued but untaken paid personal/carer’s leave balance;
e)the dispute between the parties concerns the amount of such payment. That issue turns on the application and interpretation of clause 16.9.2, which provided that:
Any personal leave cashed out in accordance with 16.9.1 will be paid at clause 11.0 – Rates of Pay where a day of personal leave is 8 hours.
f)the parties differ as to the salary which Mr Clegg was paid as at the time his employment was terminated. That question is irrelevant, because for the reasons set out below, Mr Clegg’s personal leave was correctly paid at the applicable Grade rate of pay contained in clause 11.2 of the Agreement rather than any actual or salary rate;
The expression “clause 11.0 – Rates of Pay”
g)the Applicant contends that the expression “paid at clause 11.0 – Rates of Pay” must be read as referring to the applicable salary for an employee: MUA Outline at [31]-[34]. The Respondent contends that properly construed, this phrase refers to the table of rates of pay for each Grade under the Agreement’s classification structure which is in fact set out in clause 11.2 of the Agreement;
h)in interpreting an enterprise agreement, one must begin with the “natural and ordinary meaning” of the words used in the relevant provision: City of Wanneroo v Holmes (1989) 30 IR 362 at 378. That meaning alone is sufficient to dispose of the Applicant’s contentions regarding the meaning of the phrase “clause 11.0 – Rates of Pay”. In circumstances where clause 11 itself contains a comprehensive table of rates for each Grade under the Agreement’s classification structure, the ordinary and natural meaning of those words is of a reference to the rates actually contained in that clause, and not to salaries which are cross-referenced in clause 11.3 but in fact contained in some other provision of the Agreement (namely, clause 25.3 and Part B, clause 2);
i)the broader context in which clause 16.9.2 must be read (see Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 246 [2], 253 [30], 270-1 [96]) fully supports that interpretation. Throughout the Agreement, there is a clear distinction between “clause 11.0” rates of pay, which are effectively base rates on which other amounts are calculated, and salaries established for particular rosters or jobs which account for factors such as the penalty rates and allowances associated with the shifts on that roster and other entitlements: see Part B, clause 2.0 of the Agreement: “The salaries set out in this Agreement are in full and final settlement of all award and non-award allowances, leave loadings, public holiday rates, shift premiums, meal monies and any application of the irregular part of any roster, where a roster applies.”, which as such are higher than the base “clause 11.0” rate for the relevant Grade. In this respect:
i)various provisions of the Agreement relating to the rate of payment for employees performing various forms of work or taking leave provide that Fixed Salary Employees (FSEs) will be paid based on their “salary”, while Variable Salary Employees (VSEs) are paid an average amount based on “clause 11.0” rates: see clauses 14, 15.2, 16.4, 16.8.3 and 19.2;
ii)various provisions of the Agreement use the term “salary” rather than referring to “clause 11.0” rates of pay: see, in addition to the provisions referred to in [9(a)] above, clauses 11.3, 14.1 and 20.5. The variance in terminology would be curious (even nonsensical) if the latter phrase had the same meaning as the former;
iii)several provisions of the Agreement refer to VSEs being paid a “clause 11.0” rate, and specifically the Grade 2 rate: see clauses 14.1, 19.4, 21.7, 25.2 and 32.2. This must mean the rate specified for a Grade 2 employee in clause 11.2, because the VSE minimum salary in clause 25.3 is not expressed as relating to a particular grade;
iv)similarly, provisions of the Agreement relating to higher duties, shift extensions and overtime provide that calculations will be made based on an employee’s grade or classification as prescribed in clause 11: see clauses 12.2.1, 12.2.3 and 13.2. Because the VSE salary in clause 25.3 is not linked to a particular grade, and the FSE salaries in clause 2 of Part B are specified by position title rather than Grade, the references to clause 11 must mean the grade rates specified in clause 11.2;
v)the Agreement contains a scheme which “freezes” the rate at which employees are paid for long service leave which accrued before particular times. For FSEs, for example, long service leave is generally paid at the salary rate: clause 19.1. However, such leave accrued by a full-time employee before particular instruments commenced operation in 1999-2000 is paid at “clause 11.0” rates plus a loading: clause 19.4. Clause 19.5 then contains a mechanism by which employees may convert their “old” long service leave to a lesser amount of “new” leave paid at the presently applicable rate. It necessarily follows that an employee’s “clause 11.0” rate of pay is less than his or her salary rate; and
vi)clause 16.9.2 and other provisions which refer to clause 11.0 use the word “rate” or the term “rate of pay”. That term is inapt to refer to a “salary” as that term is used in clause 11.3, as the amounts set out in Part B, clause 2 are undifferentiated annual amounts rather than a rate of pay. Where the Agreement indicates that employees should be paid at a rate derived from a salary it uses the additional wording that an employee is paid at a “salary rate” or “salaried rate”: see clauses 10.4, 14.1.1, 15.2.1, 16.4.1, 16.8.3(a), 19.2.1 and 20.5. Indeed, clause 11.4 differentiates internally between “salaries” and a “rate of pay”;
j)in the premises, the Agreement consistently and clearly distinguishes between salaries and “clause 11.0” rates of pay. There is no basis to assume that in clause 16.9.2, the reference to “clause 11.0 – Rates of Pay” should have a meaning inconsistent with that of the same and similar wording elsewhere throughout the Agreement. There is moreover a readily apparent rationale for a carefully maintained distinction between “salary” and “clause 11.0” rates: the rates contained in clause 11.2 of the Agreement are employees’ base rates of pay, and effectively supplant the table in clause 13 of the Stevedoring Industry Award 2010 which would otherwise be incorporated into the Agreement (see Agreement clause 5);
k)in many cases where the Agreement bases a calculation on either a “salary” or “clause 11.0” rate, an objectively reasonable rationale for the relevant choice is apparent on the face of the relevant provision. By way of example, there is little difficulty explaining why a VSE who is paid for his or her annual leave based on “clause 11.0” rates of pay should receive an annual leave loading to compensate for the loss of opportunity to earn shift penalties, while a FSE whose annual leave is paid at a salary rate which incorporates such penalties should receive no such loading: Agreement clause 15.2;
l)given the clarity of the natural and ordinary meaning of the words used in the Agreement read in their context, there is no warrant to adopt any other construction. In any case, the specification by the Agreement that base or “clause 11.0” rates of pay are applicable in various circumstances creates no absurdity or unfairness which it should be presumed was unintended by its drafters. In this way it is distinct from the Applicant’s contention which would, among other consequences, require that FSEs’ overtime payments be calculated based on salaries which already include a component for penalty loadings: see Agreement clause 13.2. Such an outcome cannot have been reasonably intended any more than that employees would, for example, be entitled to two Anzac Day public holidays: Shop, Distributive and Allied Employees Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [18];
m)the Respondent submits that the above matters are conclusive and there is no basis for any further inquiry. To the extent that such matters are relevant, however, in the years prior to the making of the Agreement it was the common understanding and practice of all parties concerned that in predecessor instruments there was a distinction between “clause 11” and salary rates of pay: affidavit of Rachael Brady affirmed 20 February 2018 (“Brady affidavit”) at [12]-[16], [21] and [23]-[24]. That circumstance was an objective fact known to all framers of the Agreement, and may be taken into account to confirm the natural and ordinary meaning of the relevant provisions set out above: Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829 (“Linfox”) at [35]-[36] per Tracey J. Similarly, the Agreement is a product of a history under which paid personal/carer’s leave was paid out at ordinary time rates: Brady Affidavit at [25]-[30]. In this respect see the summary of relevant authorities in Linfox at [38]-[41] per Tracey J;
The alleged inconsistency with s.101 of the FW Act
n)the Applicant submits in the alternative that to the extent that clause 16.9.2 has the meaning for which the Respondent contends, it is inconsistent with s.101 of the FW Act and hence of no effect to that extent: MUA Outline at [35]-[36]. That submission is fundamentally misconceived;
o)section 101 of the FW Act provides that:
(1)A modern award or enterprise agreement may include terms providing for the cashing out of paid personal/carer’s leave by an employee.
(2)The terms must require that: …
Three specified requirements for “cashing out terms” then follow, including that referred to by the Applicant in s.101(2)(c) of the FW Act;
p)section 101 of the FW Act is part of Part 2-2, Division 7 of the FW Act, which establishes and regulates a legislative entitlement to personal/carer’s leave. That scheme establishes the basic entitlement to such leave and sets out the basis on which it accrues, may be taken, and is to be paid: FW Act, ss.96-99. Section 100 then provides that:
Paid personal/carer’s leave must not be cashed out, except in accordance with cashing out terms included in a modern award or enterprise agreement under section 101.
q)construed in context, s.101 merely permits, subject to minimum requirements, the inclusion in an enterprise agreement of a clause under which legislative entitlements to personal/carer’s leave may lawfully be “cashed out”. It does not itself impose any obligation which an employer is capable of contravening: Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd (2012) 213 FCR 549 (“Jeld-Wen Glass”) at [23] per Gray J. This is immediately fatal to the Applicant’s contention that the Respondent has contravened s.44 of the FW Act: MUA Outline at [37(b)];
r)further, for the same reason, clause 16.9.2 does not “exclude” any provision of Part 2-2 of the FW Act such that an inconsistent provision of the Agreement is otherwise of no effect: FW Act, s.55(1). The existence of s.101 of the FW Act therefore does not and cannot selectively invalidate only parts of an enterprise agreement’s “cashing out” framework;
s)in any case however, s.101 of the FW Act has no relevance to this proceeding. Sections 100 and 101 deal only with situations where leave is “cashed out”. This occurs when an employee receives a monetary payment in lieu of, and which extinguishes his or her entitlement to actually take, the part of the leave which is “cashed out”: Jeld-Wen Glass at [18]-[19] per Gray J;
t)Under the National Employment Standards in Part 2-2 of the FW Act, upon the cessation of employment an employee effectively forfeits his or her accrued but untaken personal/carer’s leave balance. In those circumstances, there is no future entitlement for him or her to take that personal/carer’s leave with respect to the employment. It follows that at this point, there is no entitlement to take leave which can be “cashed out”. Payment for personal/carer’s leave upon termination is no more a “cashing out” than is the payment for accrued but untaken annual leave required by s.90(2) of the FW Act;
u)in the premises, ss.100 and 101 of the FW Act have no application to the payment which Mr Clegg received upon the termination of his employment, even if they otherwise operated as contended by the Applicant. Despite the imprecise use of language in clause 16.9, what occurred was not a “cashing out” and hence s.101 of the FW Act is irrelevant;
v)Put another way, the “National Employment Standard” contained in s.101 of the FW Act, to the extent that this is a correct description, is only concerned with the cashing out of entitlements under Part 2-2 of the FW Act: Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Ltd (2017) 249 FCR 495 at [119] per White and Bromwich JJ. At the point of termination, the payment to which Mr Clegg was entitled had no basis in the National Employment Standards themselves, and hence was not subject to those Standards’ regime for the “cashing out” of statutory personal/carer’s leave;
w)the impossibility that the Applicant’s contentions in this respect can be correct is aptly demonstrated by Mr Clegg’s own circumstances. On the Applicant’s case, clause 16.9 of the Agreement is invalid to the extent that it does not meet the requirements of s.101 of the FW Act. The Applicant has however only referred to s.101(2)(c) of the FW Act, which concerns the relevant rate of pay, and not paragraphs (a) or (b). Section 101(2)(a) of the FW Act provides that “paid personal/carer’s leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid personal/carer’s leave being less than 15 days”. On the Applicant’s case, then, clause 16.9 should either be interpreted such that, or is partly invalid with the effect that, Mr Clegg should only have been paid with respect to the part of his personal/carer’s leave balance which exceeded 15 days, notwithstanding that those 15 days would have been of no use to him;
x)for completeness, the Applicant’s contentions are not assisted by its reference to Anglo Coal: MUA Outline at [36]. Anglo Coal concerned the interpretation of a cashing out provision, which the Court appears to have approached beginning with a presumption that the parties intended to enact a valid clause and not one which failed to meet the requirements of s.101 of the FW Act and hence was incapable of permitting a valid cashing-out under s.100 of the FW Act: Anglo Coal at [43] per Buchanan J. In this case however:
i)because there is no “cashing out” when personal/carer’s leave is paid out upon the termination of employment, for the reasons set out above, the requirements of ss.100 and 101 do not apply. As such, there is no room for any such presumption to operate; and
ii)in any case, the Court in Anglo Coal was applying an interpretive presumption which cannot override the clear words of a provision such as clause 16.9.2;
The “seven versus eight hours” issue
y)the Applicant further contends that by paying Mr Clegg for his personal/carer’s leave on termination on the basis that each “day” of such leave equalled seven hours’ work rather than eight, the Respondent breached clauses 16.9 and 24 of the Agreement;
z)even accepting the Applicant’s case in this respect in full, Mr Clegg’s asserted entitlement has been satisfied. The Respondent has made payment to Mr Clegg equalling the difference between the payment that was made to him and the amount payable, at his clause 11 base rate of pay, on the basis that a day of personal leave equals eight hours per day.
aa)in the premises, the Respondent submits that the Court ought not make any further order in this respect.
Consideration
The Court has set out the pleadings and written submissions in full above. Doing so relieves the Court of the necessity to otherwise deal with the facts, about which there is either no issue, or very little relevant issue, and the submissions set out and deal with the issues in a fulsome manner.
It is necessary to say succinctly something about the principles regarding interpretation of industrial agreements (which are essentially the same as those for awards).
In interpreting the Agreement the Court must begin with a consideration of the ordinary meaning of the words of the Award: City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813 (2006) 153 IR 426 at [53] per French J (“City of Wanneroo”), and generally give ordinary or well-understood words their ordinary or usual meaning: Kucks v CSR Ltd (1996) 66 IR 182 (“Kucks”) at 184 per Madgwick J. The Court must have regard to the context and purpose of the provision being construed, where context may appear from the whole of the text of the Agreement, the arrangement of the text, or the place in the text of the relevant provision: Amcor Ltd v Construction, Forestry, Mining and Energy Union & Ors [2005] HCA 10 (2005); 222 CLR 241 at [2] per Gleeson CJ and McHugh J; City of Wanneroo at [53] per French J, and also, as a contextual consideration, to the fact that it is an industrial agreement being construed, and therefore not open to literal, narrow or pedantic construction: George A Bond & Co Ltd (In liq) v McKenzie [1929] AR (NSW) 498 (“Bond”) at 503-504 per Street J; City of Wanneroo at [57] per French J; Kucks at 184 per Madgwick J.
Alleged contravention of cashing out provisions
The first issue is the meaning of the words “will be paid at 11.0 Rates of Pay” in cl.16.9.2 of the Agreement.
The use of the word “will” in this sense is the giving of an order that something be done - it is in the nature of a decree, and it is intended that it must be done: The Shorter Oxford English Dictionary on Historical Principles, Vol II (Oxford: Clarendon Press, 1973), p.2549.
The ordinary and natural meaning of the words set out at [24] and [52(e)] above in cl.16.9.2 of the Agreement therefore imposes the obligation to pay at the cl.11.0 rates of pay in the Agreement, and it is clear that that refers to the rate for the relevant grade in the table of rates in cl.11.0 of the Agreement. It is not a reference to other rates of pay or salaries contained elsewhere in the Agreement, and had it been intended to be so it would have been remarkably easy for the drafter (even a lay drafter: see Bond) of the Agreement to have made that distinction and said so. Indeed, as the submissions for DP World emphasise the Agreement does distinguish in a quite deliberate and frequent way between cl.11.0 rates of pay and salary, salary or salaried rates of pay: see [52(i)-(k)] above.
It follows that for present purposes DP World’s payment of the personal leave at the rate of pay in cl.11.0 of the Agreement for the grade at which Mr Clegg was classified at the time of termination was correct, and in this regard no contravention of cll.16.9.1 or 16.9.2 of the Agreement is made out.
The other issue that arises in relation to the interpretation of cl.16.9.2 of the Agreement is the meaning of “where a day of personal leave is 8 hours”, and whether this requires payment of the relevant rate of pay for 8 hours for each day of the paid out personal leave. The ordinary and natural meaning of those words in cl.16.9.2 of the Agreement is that each day of paid out personal leave is to be calculated on the basis that the day is 8 hours. It follows that at the time of the original payment to Mr Clegg there was a contravention of the requirement to pay for the hours prescribed in cl.16.9.2 of the Agreement, and therefore of s.50 of the FW Act, and there will be a declaration accordingly.
The Court notes that whilst Mr Clegg was originally paid out his personal leave on the basis of a day of 7 hours, that contravention was subsequently remedied by a further payment made to Mr Clegg by DP World on the basis of a day of 8 hours. Whether any penalty should be imposed in relation thereto is a question for another occasion, but the parties might contemplate whether a penalty hearing on such a contravention is worthwhile, and whether it is in the interests of justice. Costs issues might also arise if, ultimately, no penalty were to be imposed.
The argument that cl.16.9 of the Agreement is void by reason of s.101 of the FW Act or because of the combined effect of ss.55 and 56 of the FW Act cannot be made out. First, s.101 of the FW Act is a provision directed to the cashing out of part only of the personal leave of continuing employees and is designed to ensure that those continuing employees retain a minimum amount (15 days) of their personal leave: Fair Work Bill 2008 (Cth), Explanatory Memorandum at [398]-[399]. Clause 16.9.1(a) of the Agreement is directed to employees who are “made redundant” or who are otherwise no longer in, or not remaining in, employment, and is not a provision of a type caught by s.101 of the FW Act. Second, it follows from the foregoing that ss.55 and 56 of the FW Act have no application as cl.16.9.1(a) of the Agreement is not excluding a National Employment Standard: FW Act, s.55(1). Clause 16.9.1(a) of the Agreement is a “cashing out” provision of a different kind to that the subject of s.101 of the FW Act.
Alleged contravention of dispute settlement provisions
The next issue is whether or not there was a contravention of the dispute settlement provisions at cl.24.0 of the Agreement, and specifically cl.24.1.1(e) of the Agreement which provides that an arbitrated determination of a dispute “will be accepted” by the parties (and as to the meaning of “will” see [57] above].
There was on 16 August 2013 an arbitrated determination of a dispute as to the meaning of cl.16.9.2 of the Agreement in relation to whether it required a payment for seven or eight hours for each day of personal leave paid out: Maritime Union of Australia v DP World (Fremantle) Limited [2013] FWC 2914. It is not in dispute that arbitrated determination found that there was a requirement to pay for eight hours each day (a determination with which this Court agrees: see [60] above).
Mr Clegg was paid out personal leave based on a payment of seven hours a day on or about 28 November 2014.
In the Court’s view the failure to pay Mr Clegg based on a payment of eight hours a day some months after the arbitrated determination was published entailed a failure to accept the arbitrated determination. For that reason there was a contravention of cl.24.1.19e) of the Agreement, and of s.50 of the FW Act. There will be a declaration accordingly.
Insofar as this contravention was subsequently remedied by a payment at the eight hour a day rate, the Court repeats the comments made at [61] above.
The proceedings will be adjourned to a directions hearing before a Judge of the Court on a day and at a time to be fixed, when, if it is necessary, the Court will program a penalty hearing.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 10 October 2019
0
9
6