Construction, Forestry, Mining and Energy Union v Asurco Contracting Pty Ltd
[2012] FWA 6512
•1 AUGUST 2012
Note: An appeal pursuant to s.604 (C2012/4999) was lodged against this decision.
[2012] FWA 6512 |
|
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Construction, Forestry, Mining and Energy Union
v
Asurco Contracting Pty Ltd
(C2012/391)
DEPUTY PRESIDENT BARTEL | ADELAIDE, 1 AUGUST 2012 |
Application to deal with a dispute.
[1] On 17 April 2012, the Construction, Forestry, Mining and Energy Union (CFMEU) made application for Fair Work Australia (FWA) to deal with a dispute pursuant to s.739 of the Fair Work Act 2009 (the Act). 1 The CFMEU is in dispute with Asurco Contracting Pty Ltd (Asurco or the employer). The matter in dispute is identified as employees not receiving their correct entitlements in accordance with a range of clauses in the Asurco Contracting Pty Ltd Collective Bargaining Agreement 2010-2013 (the Agreement).
The jurisdiction of FWA to deal with the dispute
[2] Division 2 of Part 6-2 of the Act deals with disputes and includes the following provisions:
“738 Application of this Division
This Division applies if:
(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or
(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or
(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or
(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.
739 Disputes dealt with by FWA
(1) This section applies if a term referred to in section 738 requires or allows FWA to deal with a dispute.
(2) FWA must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:
(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to FWA dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises FWA to deal with the matter.
Note: This does not prevent FWA from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effectas subsection 65(5) or 76(4) (see also subsection 55(5)).
(3) In dealing with a dispute, FWA must not exercise any powers limited by the term.
(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.
Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).
(5) Despite subsection (4), FWA must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.
(6) FWA may deal with a dispute only on application by a party to the dispute.”
[3] The Agreement contains a dispute settling procedure at Clause 2.3 which covers “Any grievance or dispute arising out of the implementation or operation of the provisions of this Agreement or the National Employment Standards”. The clause sets out the process for dealing with the dispute: in the first instance by discussions between the parties with the option to involve an independent arbitrator, and then referral to Fair Work Australia (FWA) for conciliation and/or arbitration.
[4] I am satisfied that the dispute between the parties comes within the scope of Clause 2.3 of the Agreement; that the steps for resolving the dispute have been followed; and that FWA has the jurisdiction to arbitrate the dispute between the parties.
[5] The subject matter of the dispute was narrowed through the conciliation process and the issue for determination is whether flexi-time accrues to an employee when a public holiday falls on a day that would otherwise be a normal working day.
The relevant terms of the Agreement and the working arrangements of employees
[6] Clause 5.2 of the Agreement provides for a system of flexi-time under which employees can accrue hours to be taken at a later time or elect to be paid out the value of the hours accrued, or a combination of both. This clause and the relevant terms of the public holidays clause provide that:
“5.2 FLEXI-TIME
5.2.1 Banking Of Time Accrued With The Agreement Of The Company
The Company will bank two (four) ordinary hours per week per 40 hours of ordinary time worked. In addition, an employee may elect to bank up to four hours of overtime worked. The banked hours may be used for the purpose of:-
• taking a flexi-day off; or
• taking a day off in conjunction with a period of annual leave; or
• using the time in lieu of taking personal (sick) leave; or
• being paid up to sixteen hours of the time accrued for a Saturday that the employee is not required to work
5.2.2 Pay Out Of Banked Time
An employee may in lieu of using the banked time as set out in 5.2.1 elect to be paid all or part of the banked hours accrued.
5.2.3 Scheduling Of Work - Public Holiday Weekends
The company where possible and with due regard to the company’s contractual obligations will try to avoid scheduling work on the Saturday where such day forms part of the Australia Day, Easter, Anzac day, Queens Birthday and Labour day weekends. On these weekends the company will also try to avoid scheduling work on either the day before and or the day after the long weekend.
5.2.4 The rate of pay for flexi time accumulated in accordance with subclause 5.2 will be the rate applying to the employee immediately prior to taking the accumulated flexi time.
5.2.5 On termination an employee will be paid at the employee’s then current wage rate for any untaken flexi time then credited to the employee.
5.2.6 Additional flexi-Day
Daily hire or full-time employees who are employed by the Company on the first Monday of December each year are entitled to an additional flexi-day off which may be taken on that day, or on another day as agreed between the Company and the employee concerned. An employee may also request, with the permission of the Company, to have this day paid out.”
“6.8 PUBLIC HOLIDAYS AND HOLIDAY WORK
6.8.1 Prescribed Holidays
An employee, other than a casual employee, is entitled to the following public holidays without loss of ordinary pay:
• New Year’s Day
• Australia Day
• Good Friday
• Easter Monday
• Anzac Day
• Adelaide Cup Day
• Queens Birthday
• Labour Day
• Christmas Day
• Proclamation Day
or such other day proclaimed by the State Holidays Act or State Proclamation in substitution for any of the above days in which case the substituted day will be deemed to be the holiday for the purposes of this Agreement.
... ”
[7] Under the Agreement, employees can elect to work an average of 36 ordinary hours per week or an average of 38 ordinary hours per week. 2 For the purposes of the issue in dispute, nothing of principle turns on the number of average ordinary weekly hours worked, and for the sake of convenience this decision will refer to an average 38 hour week, unless specifically stated otherwise.
The CFMEU case
[8] The issue in dispute between the parties is illustrated by the example of an employee who works 8 hours on 19 days and has a paid day off on the 20th day, reflecting a typical Rostered Day Off (RDO) arrangement. It is agreed that such an employee banks 0.4 of an hour on each of the 19 days on which 8 hours are worked, so that a total of 7.6 hours are banked and taken on the 20th day as a paid day off. For each 8 hour day worked, the employee receives 7.6 hours of pay and 0.4 hour accrued flexi-time. Flexi-time is paid time.
[9] Under the employer’s current practice, if a public holiday falls on one of the 8 hour days and the employee is not required to work, he or she still receives 7.6 hours pay but no flexi-time is accrued. As a result, on the 20th day of the cycle the employee receives only 7.2 hours of pay.
[10] Mr Borg, for the CFMEU, contends that employees should not receive a reduction in their ordinary pay because a public holiday falls in the relevant pay period. He maintained that, on a proper construction of the Agreement, employees are entitled to receive 7.6 hours pay plus 0.4 hours accrued flexi-time for a public holiday falling within the roster cycle. Mr Borg submitted that the employer’s practice is inconsistent with the terms of the public holiday clause that specifies that the entitlement to a public holiday is “without loss of ordinary pay” and is inconsistent with the entitlement of part-time employees to payment for the ordinary hours that he or she would have worked if the day was not a public holiday. 3
[11] It was also argued that the employer’s approach is inconsistent with the National Employment Standard (NES) for public holidays, which provides that:
“116 Payment for absence on public holiday
If, in accordance with this Division, an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay forthe employee’s ordinary hours of work on the day or part-day.
Note: If the employee does not have ordinary hours of work on the public holiday, the employee is not entitled to payment under this section. For example, the employee is not entitled to payment if the employee is a casual employee who is not rostered on for the public holiday, or is a part-time employee whose part-time hours do not include the day of the week on which the public holiday occurs.”
[12] Mr Borg contrasted the public holiday provision with the annual leave and personal leave provisions (“the leave provisions”) of the Agreement. The leave provisions are specific as to the number of hours that are accrued and paid, and Mr Borg argued that if the intent of the parties was to limit the accrual of flexi-time on public holidays the approach to the leave provisions would have been adopted in the public holiday provision.
[13] The CFMEU called evidence from Mr Darren Roberts, Assistant Secretary of the CFMEU, Construction and General Division, South Australia Divisional Branch. He stated that he had raised the public holiday issue with Asurco on a number of occasions without success. 4 According to Mr Roberts, the issue of flexi-time accruals during annual leave and personal leave was raised in the course of enterprise bargaining negotiations for the Agreement but accrual of flexi-time on public holidays was not discussed.
[14] Mr Roberts was not involved at the commencement of negotiations for the Agreement but replaced another official part way through the bargaining process. He had not been involved in the negotiations for the previous enterprise agreement, the Asurco Contracting Pty Ltd Collective Bargaining Agreement 2007 (the 2007 Agreement).
[15] He expressed concern that the lack of accrual of flexi-time on public holidays meant that employees at Asurco received a lesser benefit than the “industry standards” relating public holidays as reflected in the modern awards covering the employees under the Agreement. 5
The case for Asurco
[16] Mr Earls, of the Master Builders Association, appeared on behalf the employer. He argued that employees receive the same pay for the public holiday that they would have received had the day been an ordinary working day. He contended that the 0.4 hours of flexi-time hours worked on each 8 hour day are not ordinary hours but reflect a different category of hours under the Agreement. It was submitted that this must be the case, because the ability to cash out accrued flexi-time would otherwise put the employer in breach of the maximum weekly hours provision of the NES in s.62(1)(a) of the Act and the average weekly ordinary hours provision of the Agreement.
[17] Mr Earls also argued that the accrual of flexi-time on public holidays was the subject of negotiation between the parties in earlier rounds of enterprise bargaining and that the CFMEU understood that the underlying principle adopted by the employer, and reflected in past agreements as well as the Agreement, was that flexi-time would accrue only on time worked.
[18] Asurco called two witnesses. The first was Mr Des Pawelski, Managing Director. He was involved in the negotiations for the Agreement from about the time Mr Roberts became involved. His evidence generally went to the negotiations for the Agreement and negotiations for previous enterprise agreements on the issue of flexi-time accruals on public holidays and leave.
[19] Mr Pawelski stated that there was no substantive change in the Agreement from the 2007 Agreement in relation to accrual of flexi-time and in fact the employer’s approach had been the same since 2003. He stated that “… in our 2003 agreement we agreed to a higher pay increase on the basis that all accruals would be based on hours worked not on completed weeks of service. As a result we ceased to accrue RDO entitlements when an employee was on annual leave, sick leave or on public holidays.” 6
[20] It was his evidence that the Agreement simply clarified the operation of the flexi-time accruals. He stated that “… we spelt out that you could only accrue flexi-time on time worked, it couldn’t be accrued any other time, and it clearly spelt that out …” 7 A ‘tracked changes’ copy of the Agreement was provided.8 It indicates that clause 5.2.1 of the 2007 Agreement stated that:
“An employee may in any pay period elect to bank up to four (4) hours of ordinary time worked ......”
This was changed in the Agreement to:
“The Company will bank two (four) ordinary hours per week of 40 hours of ordinary time worked.”
[21] Mr Pawelski stated that Mr Roberts had raised the issue of flexi-time accruals in the course of the negotiations for the Agreement but that the workers decided to keep the situation as it stood at the time. Mr Pawelski’s notes of the negotiation meetings on 17 November and 8 December 2010 were appended to his witness statement. 9
[22] The second witness for Asurco was Adrian Coenraad, Supply Coordinator. Mr Coenraad was an employee representative for the Agreement and stated that he was present at negotiations where Mr Roberts raised the issue of flexi-time accruals on public holidays, annual leave and sick leave. He said that the company rejected this on the basis that it had been a trade off from an earlier agreement. Mr Coenraad stated that when the Agreement was voted upon, he, and to the best of his knowledge other employees, understood that there would be no flexi-time accruals on public holidays, annual leave or sick leave. 10 He confirmed in his oral evidence that this understanding was based on the fact that no questions were asked or concerns raised by any employee about the issue.
Consideration
The approach to the interpretation of the Agreement
[23] A Full Bench ofFair Work Australia recently considered the approach to the interpretation of enterprise agreements in Cape Australia Holdings Pty Ltd T/A Total Corrosion Control Pty Ltd v Construction, Forestry, Mining and Energy Union. 11 A number of decisions on the approach to the construction of awards and agreements were cited with approval by the Full Bench. The relevant principles contained in those decisions, and which I respectfully adopt as the proper approach in the present case, can be summarised as follows:
- The construction of a provision starts with a consideration of the ordinary meaning of the words, having regard to the context and purpose of the provision;
- Context is to be approached broadly: it may appear from the text of the agreement taken as a whole, its arrangement and the place in it of the provision being construed. Context may extend to other documents with which the provision being construed has an association. It may also include ideas that gave rise to an expression in a document from which the provision being construed has been taken. Context will also include the legislative background against which the agreement is made and in which it operates;
- The words of an agreement must not be interpreted in a vacuum, divorced from industrial realities. But while a generous and liberal interpretation will be given to the terms used, the agreement should make sense according to the basic conventions of the English language.
[24] The parties have each advocated an interpretation of the Agreement concerning employee entitlements for public holidays not worked. In my view neither is correct, for reasons which are set out shortly.
[25] I have made no finding on whether Mr Roberts raised accrual of flexi-time on public holidays in the negotiation meetings leading to the Agreement. Mr Roberts’ evidence on this topic was somewhat vague. Mr Pawelski’s notes of the negotiation meetings in November and December 2011 refer to “changes to the 36/38 [hour] accrual process” and to flexi-time accrual on “leave”, respectively. There is no specific mention of accrual of flexi-time on public holidays. It is possible that Mr Pawelski interpreted the term ‘leave’ to include public holidays, but his notes are also consistent with Mr Roberts’ evidence that only annual leave and sick leave flexi-time accruals were raised by him. As such, I find that Mr Pawelski’s notes are inconclusive. The most relevant feature of the negotiations is that they gave rise to a change to clause 5.1.2 of the Agreement so that accrual of flexi-time was linked to hours worked.
Problems with the CFMEU case on the accrual of flexi-time
[26] The CFMEU’s argument concerning the difference in terminology between the leave provisions and the public holidays clause in the Agreement would be persuasive if clause 5.1.2 of the Agreement was in the same terms as the 2007 Agreement. It is not, and the words in clause 5.1.2 are to be given their ordinary meaning. It would be contrary to general principles of interpretation to ignore the terms of the specific provision dealing with accrual of flexi-time in favour of a ‘deductive’ approach based on a comparison of other provisions that have not changed in any material way from previous agreements. I conclude that the leave provisions are of no assistance in determining whether flexi-time accrues on public holidays.
[27] The argument that employees at Asurco receive less than the industry standard as reflected in the modern awards that cover them is relevant only because these awards refer to the NES for public holidays. 12 The NES is discussed later in the decision.
Problems with the employer’s approach to public holidays
[28] Mr Earls’ argument that flexi-time is a different category of hours to ordinary hours of work is problematic. If 0.4 hours of flexi-time is not regarded as part of the ordinary hours of work for the purposes of an eight hour day, then the rostered day off can’t be regarded as ordinary time either. Over the course of the 20 day period only 144.4 ordinary hours are worked (19 x 7.6), less than the prescribed 152 ordinary hours that full time employees are entitled to be paid for.
[29] In addition, the overtime provision of the Agreement is explicit that ordinary hours include flexi-time hours. Clause 5.6.1 of the Agreement states that:
“Where an employee works at least the prescribed ordinary hours of work (inclusive of time worked for accrual purposes) ... time worked in excess of such prescribed hours or before the employee’s normal starting time for that day will be paid for at the rate of time and a half for the first two hours and at double time thereafter.” 13
[30] The public holiday provision of the Agreement provides that employees are entitled to a public holiday “without loss of pay”. If the day was not a public holiday, the employee would work 8 hours and receive 8 hours pay, of which 0.4 paid hour would be banked and expended at a later time in accordance with the flexi-time provision of the Agreement.
[31] Under the interpretation applied by the employer, an employee who is rostered over 19 days in a 20 day roster cycle which includes a public holiday receives only 151.6 hours of pay. Had no public holiday occurred in the roster cycle the employee would receive 152 hours of pay. This establishes that the employee has lost pay as a result of the public holiday, which is inconsistent with the terms of the public holiday provision.
[32] I agree with Mr Earls submission that, where employees request cash payment for the flexi-time accrued (rather than taking paid time off), the employees may potentially be in a position where they are working in excess of an average of 38 ordinary hours per week. The interpretation of the hours of work provision would be considered in the context of other relevant provisions of the Agreement, including clause 5.2.1, and it should not automatically be assumed that working in excess of an average of 38 hours per week in the circumstances referred to by Mr Earls is a breach of the Agreement. However, for the purposes of the present dispute it is not necessary to reach a concluded view on this issue.
[33] I am unable to agree with Mr Earls’ submission that if flexi-time hours are treated as ordinary hours then the employer contravenes the NES in relation to employees who elect to be paid out the value of the accrued flexi-time hours. Sections 62 and 63 of the Act concern the National Employment Standard for Maximum Weekly Hours, and provide as follows:
“62 Maximum weekly hours
Maximum weekly hours of work
(1) An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:
(a) for a full-time employee—38 hours; or
(b) for an employee who is not a full-time employee—the lesser of:
- (i) 38 hours; and
(ii) the employee’s ordinary hours of work in a week.
Employee may refuse to work unreasonable additional hours
(2) The employee may refuse to work additional hours (beyond those referred to in paragraph (1)(a) or (b)) if they are unreasonable.
Determining whether additional hours are reasonable
(3) In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2), the following must be taken into account:
(a) any risk to employee health and safety from working the additional hours;
(b) the employee’s personal circumstances, including family responsibilities;
(c) the needs of the workplace or enterprise in which the employee is employed;
(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
(e) any notice given by the employer of any request or requirement to work the additional hours;
(f) any notice given by the employee of his or her intention to refuse to work the additional hours;
(g) the usual patterns of work in the industry, or the part of an industry, in which the employee works;
(h) the nature of the employee’s role, and the employee’s level of responsibility;
(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;
(j) any other relevant matter.
Authorised leave or absence treated as hours worked
(4) For the purposes of subsection (1), the hours an employee works in a week are taken to include any hours of leave, or absence, whether paid or unpaid, that the employee takes in the week and that are authorised:
(a) by the employee’s employer; or
(b) by or under a term or condition of the employee’s employment; or
(c) by or under a law of the Commonwealth, a State or a Territory, or an instrument in force under such a law.
63 Modern awards and enterprise agreements may provide for averaging of hours of work
(1) A modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed:
(a) for a full-time employee—38 hours; or
(b) for an employee who is not a full-time employee—the lesser of:
- (i) 38 hours; and
(ii) the employee’s ordinary hours of work in a week.
(2) The terms of a modern award or enterprise agreement may provide for average weekly hours that exceed the hours referred to in paragraph (1)(a) or (b) if the excess hours are reasonable for the purposes of subsection 62(1).
Note: Hours in excess of the hours referred to in paragraph (1)(a) or (b) that are worked in a week in accordance with averaging terms in a modern award or enterprise agreement (whether the terms comply with subsection (1) or (2)) will be treated as additional hours for the purposes of section 62. The averaging terms will be relevant in determining whether the additional hours are reasonable (see paragraph 62(3)(i)).”
[34] Section 62 does not prohibit employees from voluntarily working additional hours beyond 38 in a week, nor from cashing out additional hours in the manner provided for in the Agreement. Section 62 prohibits an employer from requiring or requesting an employee to work unreasonable additional hours. Whether additional hours are reasonable is to be judged against the range of factors set out in s.62(3) of the Act, and which includes consideration of whether the additional hours are in accordance with averaging terms included in a modern award or enterprise agreement that applies to the employee.
The National Employment Standard for Public Holidays
[35] The NES have effect subject to the terms of the Agreement. However, the Agreement can only include terms that are ancillary or incidental to the operation of the NES or that supplement the NES. The terms of the Agreement cannot be detrimental to an employee in any respect when compared to the NES. 14 The minimum standards reflected in the NES cannot be displaced by the Agreement.15
[36] Section 116 of the Act requires that, if an employee is absent on a public holiday, the employer must pay the employee for the ordinary hours of work on the public holiday. Under a ‘19 day month’ pattern of work, this requires that the employee receives 8 hours pay, when 8 hours would have been worked if the day were not a public holiday. The interpretation of the Agreement adopted by the employer results in the employees receiving a lesser benefit than they are entitled to under the NES.
[37] Subject to the terms of a particular enterprise agreement, it would be consistent with the NES to make payment for the 8 hours by accounting for it as 7.6 hours paid and 0.4 paid hours accrued to the employee. Having regard to the terms of clause 5.2.1 of the Agreement, the accrual of 0.4 hours flexi-time for the public holiday is not allowed. In these circumstances the employees are entitled to receive 8 ordinary hours of pay (with no flexi-time accrual) for the public holiday.
Conclusion
[38] My conclusion on the entitlement of employees where a public holiday falls on a working day reconciles clause 5.2.1 with the public holiday provision that allows an employee to have the day off without loss of pay, it is consistent with the average 38 hour week provision for full time employees and ensures compliance with s.116 of the Act. It is also consistent with the entitlement of part-time employees to payment for public holidays and with the practice adopted by the employer under the inclement weather provisions of the Agreement. 16
[39] This decision deals with the operation and application of the provisions of the Agreement in accordance with the issues in dispute as agreed between the parties. 17 The public holiday entitlement of employees under previous agreements would require consideration of the specific terms of those agreements as well as the different legislative context in which they were approved.
In accordance with the terms of the dispute application filed by the CFMEU, the relief being sought is payment of the correct entitlements to employees under the Agreement. The parties should now enter into discussions on giving effect to this decision. Liberty is granted to the parties to have the matter relisted if necessary.
DEPUTY PRESIDENT
Appearances:
A Borg of the Construction, Forestry, Mining and Energy Union for the applicant.
T Earls of theMaster Builders Association for the respondent.
Hearing details:
2012
Adelaide
July 11
1 The application was initially dealt with by SDP O’Callaghan.
2 The previous agreement provided for a 36 hour week.
3 Clause 3.3.4 of the Agreement.
4 I understand Mr Roberts’ evidence to be that this was raised outside the negotiations for the Agreement.
5 Ex CFMEU 2, Supplementary Statement of Darren Roberts.
6 Ex Asurco 1, Statement of Des Pawelski, at para 9.
7 PN 135.
8 Ex Asurco 1, Annex DP 7.
9 Ex Asurco 1, Annex DP 3 and DP 5.
10 Ex Asurco 2.
11 [2012] FWAFB 3994 at paras [5] - [9] inc.
12 Building and Construction General On-site Award 2010 [MA000020], cl 41.1; Joinery and Building Trades Award 2010 [MA000029], cl 35.1; Manufacturing and Associated Industries and Occupations Award 2010 [MA000010], cl 44.1.
13 Clause 5.6.1 of the Agreement.
14 Section 55(4) of the Act.
15 Section 61 of the Act.
16 The inclement weather provisions in clause 9.2 of the Agreement provides for a bank of hours to be utilised in the event that the employee cannot perform work due to inclement weather. If the employee would otherwise work 8 hours (accruing 0.4 of an hour), but cannot do so because of inclement weather, the employee will be paid 8 hours pay (providing there is sufficient hours in credit to cover the absence) - PN 134.
17 As confirmed in correspondence to the parties, from SDP O’Callaghan’s Chambers, dated 1 May 2012.
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