Construction, Forestry, Maritime, Mining and Energy Union v Kimberly-Clark Australia Pty Ltd

[2018] FWC 1866

[2018] FWC 1866

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 739 - Application to deal with a dispute

Construction, Forestry, Maritime, Mining and Energy Union
v
Kimberly-Clark Australia Pty Ltd
(C2017/5174)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 3 APRIL 2018

Application to deal with a dispute under a dispute settlement procedure in an enterprise agreement – private arbitration – personal leave under National Employment Standard – whether entitlement determined by calendar days or deduction of rostered hours – section 96 FW Act – principles of statutory interpretation – principles of interpreting enterprise agreements – Agreement excluded NES entitlement – effect of section 55 FW Act – no statutory bar to payment of annualised salary whilst on personal leave

[1] On 19 September 2017 the Construction Forestry Mining and Energy Union (CFMEU) (now the Construction, Forestry, Maritime, Mining and Energy Union 1) applied to the Fair Work Commission (the Commission) under section 739 of the Fair Work Act 2009 (FW Act) to deal with a dispute in accordance with a dispute settlement procedure.

[2] The dispute concerns personal / carers leave at the Kimberly-Clark Australia Pty Ltd Millicent Mill. In particular, it concerns the operation of the Kimberly-Clark Australia Pty Ltd Millicent Mill Production Enterprise Agreement 2012 (the Agreement) and the National Employment Standards (NES).

[3] I conducted a conciliation conference of the parties to the dispute on 18 October 2017. The matter did not resolve. The CFMEU pressed its rights under the Settlement of Disputes or Grievances Clause of the Agreement (clause 45) for arbitration of the dispute.

[4] On 5 December 2017 I issued directions for the arbitration of the matter.

[5] I arbitrated the matter on 23 February 2018. In advance of the hearing the parties produced, as requested by me, an Agreed Statement of Facts. At the hearing, the CFMEU was represented by Mr E White of Counsel with Mr D Malbasa. Mr A Farrof Counsel with Ms S Williams appeared for Kimberly-Clark Australia Pty Ltd (Kimberly-Clark). I granted permission for both parties to be legally represented pursuant to section 596 of the FW Act on the ground that representation would enable the matter to be dealt with more efficiently taking into account the complexity of the matter. At the conclusion of the hearing I reserved my decision.

[6] The matter before the Commission under section 739 of the FW Act is of a private nature between the parties to the dispute. It arises from the dispute resolution procedure in the Agreement. Clause 45 provides for Fair Work Australia (now the Commission) to exercise such powers relating to conciliation and arbitration as are given by the FW Act and as are necessary for resolution of the dispute. It is the exercise of a jurisdiction conferred on the Commission by the instrument itself: 2

“Thus it is well established that “arbitration” by FWC pursuant to a term in an enterprise agreement is a private arbitration, based upon the consent of the parties, and not upon the coercive authority of the Australian state.”

[7] The matter has come before the Commission in accordance with the dispute resolution procedure in the Agreement. I am satisfied that the parties have complied with the required steps of that procedure in advance of seeking assistance from the Commission. This included discussions between management and the CFMEU on 28 July and 18 September 2017. 3 Accordingly, I am satisfied that I have jurisdiction to now arbitrate the matter.

The Facts

[8] The Commission has before it:

● Statement of Agreed Facts 4
● Statement of Elizabeth Dooley (CFMEU)
● Indicative Shift Rosters.

[9] The Agreed Facts relevantly provide: 5

Enterprise Agreement

8. The Applicable Enterprise Agreement is the Kimberly-Clark Australia Pty Ltd Millicent Mill Production Enterprise Agreement, [2012] FWAA 10485, AE898808 PR532305 (the Agreement). The Agreement has a nominal expiry date of 1 July 2015.

9. Clause 3.2 of the Agreement specifies:

3.2 Subject to the exemptions prescribed herein, this Agreement is negotiated between and will cover and be binding upon:

3.2.1. Kimberly-Clark Australia Pty Limited.

3.2.2 Construction, Forestry, Mining, Energy Union Forestry and Furnishing Products, Pulp and Paper Workers’ District (CFMEU) as the bargaining representative of its members.

10. Clause 45 of the Agreement provides for the ‘Settlement of Disputes or Grievances’.

11. There is no dispute between the parties as to the Commission’s jurisdiction to arbitrate this dispute under the Agreement.

12. Clause 32 of the Agreement provides for Personal Leave.

13. Clause 33 of the Agreement provides for Sick Leave.

14. Clause 34 of the Agreement provides for Carer’s Leave.

15. Clause 15 of the Agreement provides for payment of an annualised wage.

16. Part 2-2, Division 7 of the Fair Work Act 2009 (Cth) provides for Personal leave.

Current Situation

17. KCA employs approximately 268 employees who are covered by the Agreement (‘the employees’).

18. In each fortnightly pay period, employees are paid 1/26th of the relevant annualised wage set out in clause 15 of the Agreement. The annualised wage compensates the employees for normal hours, overtime, shift penalties, shift allowance, leave loadings, relevant disability allowance, chemical allowance (Maintenance & Services), crew meetings, meal allowance and tool or licence allowance (Tradespeople only) (see clause 22.48 of the Agreement).

19. Crew meetings refer to utility and training days which are conducted by the Company during the year.

20. The employees work an average of 35 ordinary hours per week. Clause 24 of the Agreement provides for Hours of Work. According to Clause 24.2 of the Agreement, for continuous shift workers the average ordinary hours is not to exceed 37 hours per week and are to be fixed by agreement between KCA and the union. There are no arrangements at the site where average ordinary hours are in excess of 35 hours.

21. Clause 24.2 of the Agreement sets out the rostering arrangements. The specific rostering arrangements at the Mill in 2017 were as follows:

(a) rosters work over 5 days (see Roster A and Roster E);

(b) rosters work over 7 days (see Roster B and C); and

(c) rosters work over 6 days (see Roster D).

22. The employees all worked 8 hour shifts, except for the 5 day three shift roster (Roster A) and the 7 day two shift roster (Roster B) which include 8 hour days and one 9 hour day per roster cycle (3 weeks). This 9 hour day is indicated in the corresponding Rosters by a red letter “A”.

23. Employees occasionally are required to attend utility and training days. On these days the employee attends work for 12 hours, inclusive of the 8 hour rostered shift. The payment for utility and training days is built into the annualised wage.

24. Employees work day, afternoon and night shifts. A rostered day shift is represented on a Roster by the letter “D,” an afternoon shift is represented by the letter “A” and a night shift is represented by the “N.” Scheduled annual leave is represented by the letter “L” and is built into Rosters A and C.

25. KCA accrues sick leave for employees according to the provisions as specified in sub-clause 33.1 of the Agreement. KCA accrues carer’s leave for employees by clause 34.2 according to the provisions as specified in sub-clause 33.1.

26. When an employee is absent from his/her rostered shift due to Sick/Carer’s leave, KCA pays the employee at their annualised rate, and deducts the actual rostered hours from that employee’s personal leave accrual

Characterisation of the Dispute

[10] Although a single dispute is the subject of these proceedings, it is differently characterised by the parties.

[11] Being the notifier of the dispute, the dispute is succinctly described in the terms set out in the CFMEU’s application. This is as follows: 6

“1. Pursuant to clause 33 of the Agreement, workers are entitled to 10 days of sick leave per year, to be paid at their annualised wage rate for the absence.

2. Full time employees work an average of 35 ordinary hours per week, and accrue 70 hours of sick leave per 12 months of service.

3. When employees take a single day of sick leave (or carer’s leave per clause 34.2 of the Agreement), 8 hours are deducted from their accrual, on the basis that employees are rostered to work 8 hour days. Some employees are rostered to work 12 hour shifts from time to time. When sick leave coincides with a rostered 12 hour shift, 12 hours are deducted from an employee’s accrual.

4. The effect of the deduction of 8 or 12 hours per day of sick/carer’s leave taken is that employees’ 12 month entitlement only amounts to at most 8.75 days per year. This falls below the entitlement contained in clause 33 of the Agreement, and below the NES entitlement to a minimum of 10 days of paid personal leave per year of service.

5. The Applicant asserts that employees are entitled to 10 days of paid personal leave per year of service in accordance with the Agreement and with the NES, and to be paid for each day at their annualised wage rate.”

[12] Thus, the CFMEU characterise the dispute as a dispute as to whether the employer’s practice relating to the deduction of sick leave from an employee’s annual entitlement (set at 70 hours per year) on a day when the employee is sick provides the employee with their entitlement under the NES. Further, the CFMEU says that even if the employer’s current practice is in conformity with Clause 33 of the Agreement (Sick Leave), which it contends is not the case, then that term has no effect to the extent that it contravenes the NES.

[13] Hence, the CFMEU characterise the dispute as one concerning an employee’s entitlement to the NES.

[14] Kimberly-Clark characterise the dispute as one concerning the proper interpretation and application of the Agreement, and in particular Clause 33. It says that its current practice concerning the deduction of sick leave accords with a proper interpretation of the Agreement and that the Agreement is in conformity with the NES.

[15] These competing characterisations evidence the substantive matters that need to be determined. Howsoever the dispute may be characterised, what is in issue is whether the practice of deducting (from an employee’s annual sick leave bank) the number of hours an employee would have worked on that day had they not been sick up to 70 hours per year is consistent with the NES entitlement to ten days of paid personal/carers leave each year. If that practice is not consistent with the NES then, as a matter of law, 7 Clause 33 of the Agreement has no effect to the extent it contravenes the NES.

The Agreement Provisions

[16] Clauses 32, 33 and 34 of the Agreement relevantly provide as follows: 8

“32 PERSONAL LEAVE

Paid personal leave is available to an employee, other than a casual, when he or she is absent:

• due to personal illness or injury (Sick Leave- Clause 33); or

• for the purposes of caring for a member of his or her immediate family or household who is sick and requires the employee's care and support (Carer's Leave- Clause 34); or

• because of bereavement on the death of a member of his or her household or immediate family (Bereavement Leave- 35).”

“33 SICK LEAVE

33.1 Entitlement

Employees are entitled to 10 days of 7 hours sick leave in each sick leave year. Which shall accrue on the following basis:

• 70 hours which will accrue pro rata and be credited on a monthly basis in the first year of service;

• 70 hours which will accrue and be credited from the commencement of the second and each subsequent year of service.

33.1.1 Transitional Arrangements

In order to ensure that employees are not disadvantaged by the transition from common anniversary date to individual anniversary date accrual, any employee whose individual anniversary date occurs after 1 July in the first year of operation of this agreement shall accrue personal leave on a pro-rata basis between 1 July and their individual anniversary date, at which time they will receive a full year's credit.

Each year a further 10 days at 7 hours per day credit will be added to the employee's credits.

Out of this entitlement an employee who is absent from work on account of personal illness or injury shall be paid at the annualised wage rate for this absence subject to the following conditions:

• Employees shall advise the Company as soon as practicable, of their inability to attend for duty stating as far as practicable the length of time that the illness or injury will prevent them from attending for duty.

• The employee shall prove to the satisfaction of the Company that they were on account of the illness or injury, unable to attend for duty on the day or days for which such payment is claimed

• The employee shall not be eligible for such payment for any period in respect of which there is an entitlement to Worker's Compensation.”

“34 CARER'S LEAVE

34.1 Nature of Carer's Leave

Carer's leave is leave which an employee, .other than a casual, is entitled to without loss of pay, to care for members of his or her immediate family or household who are sick and require care and support.

34.2 Entitlement to Carer's Leave

Paid carer's Leave may be granted out of Sick Leave entitlements each year.”

The Statutory Provisions

[17] An employee’s statutory entitlement to paid personal/carers leave falls within the National Employment Standards (NES) in Part 2-2 of the FW Act. For present purposes, sections 96 and 99 are relevant.

[18] Section 96 of the FW Act provides as follows:

“96  Entitlement to paid personal/carer’s leave

Amount of leave
(1)  For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.
Accrual of leave
(2)  An employee’s entitlement to paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.”

[19] Section 99 of the FW Act provides as follows:

“99  Payment for paid personal/carer’s leave

If, in accordance with this Subdivision, an employee takes a period of paid personal/carer’s leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.”

[20] The relationship between the statutory NES and the terms of an enterprise agreement are set out in Part 2-1 of the FW Act. For present purposes, sections 55 and 56 are relevant.

[21] Section 55 of the FW Act provides as follows:

“55  Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2)  A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note:          In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3)  The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note:          See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4)  A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1:       Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2:       Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3:       Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5)  An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6)  To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note:          For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7)  To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).”

[22] Section 56 of the FW Act provides as follows:

“56 Terms of a modern award or enterprise agreement contravening section 55 have no effect

A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.”

The Submissions

CFMEU Position

[23] The CFMEU contend that the manner in which the employer is calculating the accrual of sick leave is unlawful in that it does not accord with the NES concerning personal leave in section 96 of the FW Act.

[24] The CFMEU also contend that clause 33 (Sick Leave) of the Agreement is not being lawfully applied by Kimberly-Clark Australia Pty Ltd (the employer) and, in any event, that the clause “does not properly afford the entitlement to the NES…that employees are entitled to receive”. 9

[25] The CFMEU consider that, as a result, employees are being denied the full quantum of sick leave accruals to which they are entitled.

[26] The CFMEU evidence 10 is that the roster system in place at the Millicent Mill provides for rosters either in excess of 7 hours per day (a 35 hour week) or in excess of 7.4 hours per day (a 37 hour week). It says that a majority of employees work 8 hours per day (under either a five shift continuous roster or a four shift continuous roster) whilst a minority of employees work under a five day three shift roster (which includes 8 hour days and one 9 hour day per roster cycle). In some cases employees work up to 12 hours per day.

[27] The CFMEU’s further evidence was that employees who take sick leave or carer's leave have either 8 or 9 or 12 hours (depending upon the hours for which they are rostered to work) deducted from their personal leave accrual.

[28] The CFMEU says that either as a result of the rate of deduction or by the specific limitation on the amount of accrual provided by the Agreement, employees do not receive 10 days leave. It says that a “days leave” should be a day of either 8 hours or 9 hours or 12 hours whichever is relevant and for which they are rostered and which they are unable to work because of the need to take the personal leave.

[29] The CFMEU says that this is the required application of the NES and in particular section 96 of the FW Act. It says that employees have a statutory right to “10 days of paid personal/carers leave”. It says that the entitlement created by section 96 of the FW Act is an entitlement to be measured by days rather than by reference to the ordinary hours of work, and that this proposition has been established by full bench decisions of the Commission (the RACV decisions 11).

[30] It says an enterprise agreement cannot exclude the NES or any provision of the NES (section 55(1) FW Act). It says that to the extent that clause 33 of the Agreement provides otherwise then section 55 of the FW Act operates to prescribe that the offending term has “no effect to the extent that it contravenes section 55”.

[31] The CFMEU seek to be further heard on the terms of any order so as to avoid any counterproductive or unintended consequences.

Kimberly-Clark Position

[32] Kimberly-Clark does not dispute that it sets an annual accrual of sick leave at 70 hours per year for a full time employee, and (when that employee takes sick leave) deducts from that bank the hours the employee was rostered to work on that day and would have worked but for the fact that they were absent on account of sickness. 12

[33] It says that this is the proper application of clause 33.1 of the Agreement which specifically provides for “10 days of 7 hours sick leave”. It accepts that an employee rostered to work more than 7 hours on a day (and who is absent sick) will have more than 7 hours deducted from the sick leave bank and that in theory and on occasions in practice this can lead to the bank of 70 hours being exhausted in less than 10 calendar days. However, it says that its practice can also mean that the bank of 70 hours is exhausted by absences of more than 10 calendar days where an employee is sick on a day when they would have been rostered for less than 7 hours.

[34] Having contended that its practice is consistent with the Agreement, the employer also says that the Agreement is consistent with the NES and does not “exclude” the entitlement to “10 days” provided for in section 96 of the FW Act.

[35] The employer says that the correct statutory interpretation of section 96 is one that avoids absurdity or a “windfall gain” to an employee on a non-standard roster. 13 It says that whilst section 96 provides for an entitlement of “10 days”, it is silent on the question of how sick leave is to be deducted. It says that this provides space for the Agreement method for deduction to lawfully apply.14

[36] The employer submits that the RACV Decisions are distinguishable on the facts and do not compel the conclusions sought by the CFMEU.

[37] Finally, the employer says that if the CFMEU contentions are correct, then clause 33.1 of the Agreement has no effect and the NES applies in which case, the employer asserts, payment for sick leave would need to be made at the employee’s base rate of pay in the relevant modern award and not the current practice of payment at the annualised rate of pay in the Agreement.

The Legal Principles

[38] This matter concerns both statutory interpretation and the interpretation of the Agreement. The principles governing the interpretation of both instruments are well established. I have regard to these principles in determining this matter.

[39] In summary, the principles of statutory interpretation established by the High Court of Australia require the language of a statute to be given its natural and ordinary meaning having regard to context and purpose. Although extrinsic materials are relevant aids to interpretation, the discernment of statutory purpose is derived from the language of the statute when read in context. 15 These principles have been followed by full benches of this Commission.16

[40] The principles applicable to the interpretation of Agreements were recently expressed by a full bench in of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union v Berri Pty Ltd ¹⁷ (‘Berri’). These principles modified an earlier formulation in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd¹⁸.

[41] It is not necessary to set out the Berri principles in full. Suffice to say that whilst enterprise agreements are not statutes, the modes of construction developed by the general law assist in their interpretation. Construction begins with a consideration of the ordinary meaning of the relevant words having regard to context and purpose. If the agreement has a plain meaning, evidence of surrounding circumstances cannot contradict the plain language of the agreement. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists or when interpreting ambiguous language or language that is susceptible of more than one meaning.

[42] In short, the Commission’s task is to ascertain the objective meaning of the contested words, based upon the language and terms of the Agreement, when read as a whole, having regard to context and purpose.

[43] In undertaking this task one must also bear in mind the cautionary note expressed by the Commission in DP World Brisbane Pty Ltd v The Maritime Union of Australia: 19

“Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:

‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’”

Consideration

[44] In practical terms, the dispute at its heart concerns the meaning of the word “day” in the expression “10 days of paid personal/carers leave” in section 96(1) of the FW Act.

[45] The issue for determination can be put as a question: When an employee covered by the Agreement is sick on a given day, can the employer draw down from an annual bank of 70 hours per year the number of hours for which that employee would have been rostered on that day and in so doing meet its obligation under the NES?

[46] To that question, the CFMEU says no. Rather the CFMEU says that the employer must provide an entitlement of ten calendar days per year to each employee, irrespective of the number of hours the employee had been rostered for work on the day they were absent on sick leave.

[47] Conversely, to that question the employer says, yes; and that is its current practice.

[48] Albeit in the context of a different Agreement and in a matter that concerned both annual leave and sick leave, this matter has been considered by full benches of the Commission in the RACV decisions. Those decisions determined that, in the context of the Roadside Assistance Centre Enterprise Agreement 2014 - 2017, the entitlement created by section 96 of the FW Act is to be measured by days rather than by reference to ordinary hours of work. In RACV No 1 the full bench said: 20

“The words “week” and “day” as used in the provisions concerning annual leave and personal/carer’s leave or elsewhere in the FW Act are not given any special definition by the FW Act. That immediately suggests that the words should be given their ordinary meaning unless the context dictates otherwise.”

“a “day” of leave is an authorised absence from the working time in a 24 hour period.”

“week” and “day” where used in the FW Act bear their ordinary meaning as descriptions of a calendar period of time; and

“The NES statutory provisions do not express the annual leave entitlement in terms of an employee’s hours of work, and do not provide that annual leave when taken is to be debited by reference to ordinary hours of work. The provisions cannot be read as if altered by the Explanatory Memorandum.”

[49] After having considered paragraph 396 of the Explanatory Memorandum to the Fair Work Bill 2009 and its illustrative examplesthe full bench went on to say: 21

“The above passage confirms our analysis as to how accrual of personal/carer’s leave based on ordinary hours in s.96(2) operates. It also confirms the expression of the entitlement as being 10 days per annum (or two weeks), which does not vary regardless of the pattern or number of working hours in particular weeks. However the subsequent reference to “76 hours” creates some confusion, and was relied upon by RACV. It is best explained by reference to the example used, namely an employee who works 38 hours per week, but in any event it cannot operate to displace the expression of the personal/carer’s leave entitlement in s.96(1) as being in days.” (my emphasis)

[50] Applying the reasoning of the RACV decisions to the matter before me leads to the conclusion that a “day” of leave for the purposes of the NES entitlement to sick leave is an authorised absence from the working time in a 24 hours period. If a day of personal leave is taken by an employee then that day is to be deducted from that employee’s personal leave balance which is itself expressed as a bank of days.

[51] Kimberly-Clark however submit that the RACV decisions should not be followed because, it is said, they can be distinguished on the facts. 22 For the reasons set out below, I do not agree.

[52] Firstly it is contended that the Agreement in the RACV decisions contained a specific provision (in its clause 4) which preserved the NES entitlement should there be a detriment to employees, whereas the Agreement at the Millicent Mill contains no such “self-correcting” clause.

[53] This factual difference is of no material significance to the determination of this matter. The “self-correcting” clause in the RACV decisions had no effect on the full bench’s construction of section 96 of the FW Act. Nor did it have the capacity to vary the statutory effect of the interaction between the NES and an Agreement that is set out in sections 55 and 56 of the FW Act. In any event, section 56 would have the consequence that the self-correcting clause sought to achieve whether that clause was or was not a term of the Agreement.

[54] Secondly, it is contended that employees at the Millicent Mill are paid annualised salaries whereas employees under the RACV Agreement were paid ordinary hours of work that were able to be averaged.

[55] This is also a difference of no consequence to the construction of the statute by the full bench in the RACV decisions. The fact that salaries at the Millicent Mill are annualised is a matter that concerns the calculation and payment of wages. The method of calculation and the method of payment of wages does not bear on the meaning of the word “day” when determining the quantum of an entitlement under section 96(1) nor on the accrual of that entitlement under section 96(2). Section 96 requires personal leave to be “paid” but otherwise its construction is not dependant on the mode of payment.

[56] Nor do I accept the employer’s submission that the issue of how personal leave is to be deducted from the entitlement in the NES is left untouched by the NES and the Agreement, thereby leaving it to the discretion of the employer. 23 The dispute is not properly characterised as one about deduction in any narrow sense. It is about the entitlement to personal leave and the calculation of that entitlement. A method of deduction that fails to afford an employee with their full entitlement under the NES is not permissible, whether the system of deduction is sourced from the Agreement or administratively.

[57] On the issue of the interpretation of the Agreement, I accept that the current practice of the employer is consistent with the meaning of the language of the Agreement in that clause 33.1 provides for an annual bank of personal leave expressed as “10 days of 7 hours” and as “70 hours”. It does not just refer to “10 days”. However, I conclude that, in doing so, clause 33.1 fails to provide an employee under the Agreement with the full benefit of personal leave provided for by the NES and in particular section 96 of the FW Act.

[58] To that extent, this is a prohibited exclusion of the NES. In Application by Canavan Building Pty Ltd a full bench of the Commission said: 24

“Section 55(1) of the Act relevantly provides that an enterprise agreement “must not exclude” the NES or any provision thereof. It is not necessary that an exclusion for the purpose of s.55(1) must be constituted by a provision in the agreement ousting the operation of an NES provision in express terms. On the ordinary meaning of the language used in s.55(1), we consider that if the provisions of an agreement would in their operation result in an outcome whereby employees do not receive (in full or at all) a benefit provided for by the NES, that constitutes a prohibited exclusion of the NES.”

[59] Accordingly, I conclude that clause 33.1 of the Kimberly-Clark Australia Pty Ltd Millicent Mill Production Enterprise Agreement 2012 has no effect to the extent that it contravenes section 55 of the FW Act. The provisions of section 96, properly interpreted, apply in lieu so as to provide 10 days of paid personal leave per year to the relevant employees, calculated as 10 calendar days and not as 70 hours.

[60] Nor do I accept the employer submission that, as a consequence, payment for sick leave would need to be made at the employee’s base rate of pay in the relevant modern award and not payment at the annualised rate of pay. The effect of section 56 of the FW Act is to only exclude the operation of the Agreement “to the extent” that it contravenes section 55.

[61] There is no contravention of the NES where an employer makes a payment of personal leave at a level above the base rate of pay. The NES is contravened if personal leave is not “paid” and if a full entitlement of personal leave is not provided. Under section 55(4) of the FW Act an Agreement can provide terms that “supplement the National Employment Standards” provided that supplementation “is not detrimental to an employee in any respect”.

[62] I have not heard from the parties on whether the word “paid” in clause 32 of the Agreement is to be properly interpreted as payment of an amount other than at the annualised rate of pay. A submission to this effect was alluded to by counsel for the employer though not advanced more formally. Counsel for the CFMEU reserved its rights to make submissions in response.

[63] Whilst I reserve a view on the question of the interpretation of clause 32 should the parties seek to make further submissions, I indicate that I see nothing in the operation of the statute that would debar such a result. Ultimately whether payment at the annualised rate of pay is permissible or required is a question of interpretation of the Agreement and potentially a matter of contract. If the Agreement was to be so interpreted, the Agreement would supplement the NES in that regard but not exclude it.

[64] I have determined the dispute by arbitration in the terms set out in this decision. Should I be requested by one or both of the parties, I will relist the dispute notification in light of this decision in order to ascertain whether any further steps in the arbitration of this dispute are required.

[65] I note that the parties are in the process of renegotiating the Agreement. I encourage them to take this decision into account in their renegotiation, noting that I have determined issues of construction of both the statute and their Agreement but, consistent with the decision in DP World Brisbane Pty Ltd v The Maritime Union of Australia 25, not necessarily issues of merit.

DEPUTY PRESIDENT

Appearances:

E. White, with permission, and D. Malbasa, for the CFMEU

A. Farr and S. Williams, with permission, for Kimberly-Clark Australia Pty Ltd

Hearing details:

2018.

Melbourne.

23 February.

<PR601615>

 1   Construction, Forestry, Mining and Energy Union; The Maritime Union of Australia and Textile, Clothing and Footwear Union of Australia (Amalgamation Decision) [2018] FWC 1017

 2   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 at [35] cited by Bromberg J with approval in Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245 at [64]

 3   Agreed Statement of Facts paragraphs 2 and 3

 4   Undated; filed 21.2.2018

 5   Paragraphs 8 to 26

 6   Application (F10) 19 September 2017 paragraph 2.1

 7 Section 56 FW Act

 8   Clauses 33.2 (War Service Related illness), 33.3 (Taking of Sick Leave) and 33.4 (Paying Out of Sick Leave) have not been set out, as they are not in issue in this matter

 9   CFMEU Submissions paragraph 18

 10   Statement of Elizabeth Dooley 11 January 2018

 11   RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 2881, 11 May 2015 (‘RACV No 1’) and RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 8554, 18 December 2015 (RACV No 2’)

 12   Respondent’s Submissions paragraph 9

 13   Respondent’s Submissions paragraphs 31 and 40

 14   Respondent’s Submissions paragraph 45

 15   Certain Lloyds Underwriters v Cross and Thelander [2012] HCA 56; [2012] 248 CLR 378 J at 24 – 25 per French CJ and Hayne. See also earlier decisions in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78] per McHugh, Gummow, Kirby and Hayne JJ

 16   CSL Limited t/as CSL Behring v Papaioannou[2018] FWCFB 1005 at [41] – [43], 16 February 2018; Health Services Union Victoria No 1 Branch v Sanli [2018] FWCFB 745 at [30] – [32], 6 February 2018

17 [2017] FWCFB 3005

18 [2014] FWCFB 7447

 19   [2013] FWCFB 8557 at [31]

 20   RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 2881 at [30], [32], [35], [41] and [46]

 21   RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 2881 at [46]

 22   Respondent’s Submissions paragraphs 16 to 20

 23   Respondent’s Submissions paragraphs 21 to 25

 24   Application by Canavan Building Pty Ltd [2014] FWCFB 3202 at [36]

 25   [2013] FWCFB 8557

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