Construction, Forestry, Maritime, Mining and Energy Union v Illawarra Coal Holdings Pty Ltd T/A Appin Mine & West Cliff CPP
[2023] FWC 3063
•21 NOVEMBER 2023
| [2023] FWC 3063 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Construction, Forestry, Maritime, Mining and Energy Union
v
Illawarra Coal Holdings Pty Ltd T/A Appin Mine & West Cliff CPP
(C2023/3073)
| DEPUTY PRESIDENT EASTON | SYDNEY, 21 NOVEMBER 2023 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]- Payment of wages
A dispute has arisen in relation to the application of clause 12 of the Appin Colliery & West Cliff CPP Enterprise Agreement 2022 (the Agreement).
The essence of the dispute is that the relevant members of the Construction, Forestry, Maritime, Mining and Energy Union (MEU) employed by Illawarra Coal Holdings Pty Ltd (South32) at the Appin Mine are aggrieved because additional payments for unscheduled overtime might be delayed by one week when payroll staff refuse to volunteer to work public holidays that fall on Mondays.
Clause 12.1 of the Agreement is in the following terms:
“12.1 Wages will be paid each week by Electronic Funds Transfer (EFT) into the Employee’s personal account(s) up to the limit of the Company payroll system, at any participating bank or financial institution.”
The issue was temporarily alleviated during the COVID-19 pandemic because payroll staff made themselves available to work on public holidays during lockdown periods, but in more recent times payroll staff have not volunteered to work on public holiday Mondays to process payments for unscheduled overtime.
The evidence in this matter was not controversial. The dispute is largely over the interpretation of one short clause in the Agreement, and in practice the only matter at stake is the one-week delay of unscheduled overtime payments for the last two days of the pay week.
As such I will summarise the evidence in short form as follows:
(a) South32 is a global mining and resources company that operates 13 mining operations across four continents. South32 operates five mines in Australia that employ about 5000 employees;
(b) South32’s Australian Headquarters is in Perth, Western Australia;
(c) Illawarra Coal Holdings Pty Ltd is a wholly owned subsidiary of South32 and operates two underground mines in New South Wales: Appin Mine and Dendrobium Mine;
(d) employees of Illawarra Coal Holdings Pty Ltd covered by the Agreement are the only employees in the South32 group in the world that are paid wages weekly;
(e) approximately 450 employees are covered by the Agreement;
(f) employees covered by the Agreement are not on annualised salaries, but receive and average wage (per Appendix 5 of the Agreement) plus additional payments for non-rostered overtime;
(g) wages can vary from week to week because of payments which cannot be determined in advance, including non-rostered over time, bonuses tied to weekly performance of the mine, and penalties associated with working on a public holiday;
(h) the weekly bonus has a fixed component and a variable component. The fixed component is calculated by reference to factors including attendance. The variable component is calculated by reference to surveyor measurements taken each week on Mondays;
the pay week commences on Sundays and closes on Saturday;
(j) there is a three-step process for the preparation and payment of weekly wages (1) the payroll is calculated on Mondays by local payroll personnel who work at the Appin site, using materials such as attendance sheets and other data including gate times, (2) the payroll is then reviewed and processed on Tuesdays by personnel in Perth and (3) payroll is peer checked and reconciled in South Africa on Wednesdays and a funding request sent to South32’s treasury then results in the employees being paid on Wednesday or Thursday each week;
(k) when payroll staff in Appin and/or Perth do not work on public holidays on Mondays, the payroll is closed off on Fridays, which means that any unscheduled overtime worked on Friday or Saturday is not paid until the next payroll run;
(l) in 2019 there was a dispute about payments over the Easter period. After numerous discussions the issue was not resolved. The MEU said that 2019 was the first time that South32 had made a deliberate decision not to pay parts of an employee’s weekly wage;
(m) in early January 2023 several members of the MEU were aggrieved about delays in receiving payments for overtime worked during the Christmas 2022 period; and
(n) similarly, several members were aggrieved about delays in receiving payments for overtime worked during the 2023 Easter period.
The MEU argued that the terms of the Agreement require South32 to somehow process the payments for unscheduled overtime so that members do not have to wait seven (7) extra days for payment of this additional portion.
The terms of the Agreement
Earlier iterations of clause 12.1 were provided in evidence. In 2004 the provision was:
“Unless agreed otherwise, wages shall be paid by each Friday. Employees will be paid by Electronic Funds Transfer into personal account(s) (maximum of three) at any participating bank or financial institution.
In the absence of agreement to the contrary, not more than one week’s pay will be kept in hand by the Company.”
In 2007 the clause was amended:
“Unless agreed otherwise, wages shall be paid by each Friday. Employees shall be paid weekly (unless agreed otherwise) and will be paid by Electronic Funds Transfer into personal account(s) up to the limit of the Company payroll system, at any participating bank or financial institution.
In the absence of agreement to the contrary, not more than one week’s pay will be kept in hand by the Company.”
In 2011 the clause changed again:
“Unless agreed otherwise, wages shall be paid by each Friday. Employees shall be paid weekly (unless agreed otherwise) and will be paid by Electronic Funds Transfer into personal account(s) up to the limit of the Company payroll system, at any participating bank or financial institution.”
In 2015 the current form of the provision was included for the first time and that form of words was repeated in the 2018 agreement.
MEU Submission
The MEU contends that South32 has failed in its obligation under clause 12.1 to pay employee wages weekly.
The MEU said that the words of clause 12.1 are unambiguous and clear and require that the frequency of wages paid to employees is weekly, and the method of payment is by electronic funds transfer.
The obligation to pay wages weekly can be traced through previous enterprise agreements applying to the employees at Appin. During bargaining for the Agreement South32 provided an explanatory document to employees explaining the terms and effect of the changes between the Agreement and the 2018 agreement it replaced. The explanation for clause 12 in this document states that the terms remain unchanged, and the term provides that employees will be paid each week by electronic funds transfer.
The MEU said that the Agreement does not permit or provide discretion to South32 to withhold payment of any part of the weekly payment of wages to an employee.
South32’s Submission
Unsurprisingly South32’s position is that it has met and continues to meet its obligations under clause 12.1 of the Agreement. South32 argued that clause 12.1 does not define the amount of wages that must be paid weekly or require that the total wages earned in a single pay period must be paid in the pay run immediately following that pay period. The words “up to the limit of the company payroll system” in clause 12.1 limit the operation of the obligation to make payments which can be reasonably made in the relevant week without extraordinary and unnecessary demands on the payroll personnel.
South32 urged that a purposive approach taken in light of the industrial context and purpose of the Agreement. South32 argued that the Agreement provides that employees do not receive a fixed salary, and the Agreement anticipates that employees receive remuneration based on factors which cannot be determined in advance, including non-rostered over time and performance payments. South32 said that “a purposive approach supports the interpretation that the intention of the clause was to provide employees with the benefit of payment of wages each week while also recognising that the payroll processes may limit wages paid in a week.”
South32 relies on the fact that clause 12.1 does not define the amount of wages payable per week, and wages are not defined elsewhere in the Agreement.
South32 said “if the intention of the clause was that ‘wages’ included all amounts earned by an employee in the relevant pay period (including amounts the payment of which cannot be determined in advance) then the clause would contain words to that effect.”
South32 argued that the words “up to the limit of the company payroll system” is a clear acknowledgement that the payroll system has some limitations which will affect the payment of wages, and includes the possibility that manual calculations for a particular pay run might be beyond the limit of the payroll system for reasons including that the payroll is closed early due to a public holiday falling on a Monday.
South32 said that the Payment of Wages provisions of the Act also provide context in which to understand the terms of the Agreement. Section 323 of the Act relates to the method and frequency of payment, but only requires that employees are paid in full at least monthly:
323 Method and frequency of payment
(1) An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b) in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
Note 1: This subsection is a civil remedy provision (see Part 4-1).
Note 2: Amounts referred to in this subsection include the following if they become payable during a relevant period:
(a) incentive-based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) leave payments.
(2) The methods are as follows:
(a) cash;
(b) cheque, money order, postal order or similar order, payable to the employee;
(c) the use of an electronic funds transfer system to credit an account held by the employee;
(d) a method authorised under a modern award or an enterprise agreement.
(3) Despite paragraph (1)(b), if a modern award or an enterprise agreement specifies a particular method by which the money must be paid, then the employer must pay the money by that method.
Note: This subsection is a civil remedy provision (see Part 4-1).
To the extent that this provision requires that monies are paid “in full”, that requirement can be satisfied even if payments are made in a subsequent pay week. South32 argued that the MEUs interpretation is “made in a vacuum divorced from the industrial reality, and has not been made in light of the customs and working conditions of the industry.”
Consideration
Enterprise agreements usually specify the frequency of the payment of wages – invariably specifying that wages must be paid either weekly, fortnightly or monthly. Agreements also usually specify the method of payment, in most cases now by electronic funds transfer.
On its face the terms of clause 12.1 of the Agreement specify no more than a requirement that the frequency of the payment of wages is to be weekly, and payments are to be made by way of electronic funds transfer.
I agree with South32’s submission that if the intention of the clause was that ‘wages’ included all amounts earned by an employee in the relevant pay period (including amounts the payment of which cannot be determined in advance), then the clause would contain words to that effect.
This understanding might appear counter-intuitive insofar as one would not ordinarily expect a term of an Agreement to give an employer discretion to simply not pay employees in full at the end of a pay period. Clause 12.1 does not give South32 such a broad discretion.
Clause 12.1 places limitations on the frequency of payments and the mode of payments in addition to the limitations in s.323 of the Act. Section 323(3) allows agreements to specify a particular method of payment that qualifies the operation of s.323(1)(b), but agreements cannot alter or qualify the requirements of s.323(1)(a) and (c) that monies are paid in full at least monthly.
Clause 12.1 does allow South32 some flexibility in relation to variable wage components by not specifying that all amounts must be paid in full after each pay week, subject to the limitations of s.323(1)(a) and (c).
Clause 12.1 in the Agreement can be contrasted with its earlier iterations in the 2004 and 2007 agreements. The additional sentence in those clauses that “In the absence of agreement to the contrary, not more than one week’s pay will be kept in hand by the Company” did two things (1) allowed for some wages to be withheld or at least not paid immediately after the pay week concluded and (2) set an outside time limit for how long those wages could be held.
I do not agree that the words “up to the limit of the Company payroll system” refer to limitations in the payroll system such as turn-around or processing times. Those words qualify the words “into the Employee’s personal account(s)” that precede them and, in my view, refer to payroll system limitations relating to payments into personal accounts. The obvious potential limitation is the number of personal accounts into which the payroll system might allow wages to be paid, but other limitations might apply – for example if the payroll system only allows payments to Australian bank accounts.
In conclusion the Agreement does provide sufficient flexibility within its terms to allow South32 to delay payment of unscheduled overtime and other variable components that are dependent on factors which cannot be determined in advance of the end of the pay period, subject to the requirements of s.323 of the Act.
DEPUTY PRESIDENT
Appearances:
Mr A Jacka, on behalf of the Applicant.
Mr D Williams, on behalf of the Respondent.
Hearing details:
2023.
17 October.
Sydney (in person)
Printed by authority of the Commonwealth Government Printer
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