Construction, Forestry, Mining and Energy Union v CSR Limited
[2012] FMCA 983
•7 December 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v CSR LIMITED | [2012] FMCA 983 |
| INDUSTRIAL LAW – Interpretation of the Joinery and Building Trades Award 2010 – whether hours worked on a rostered day off count towards the accrual of future rostered days off considered. COSTS – Whether costs should be awarded pursuant to s.570(2)(b) of the Fair |
| Fair Work Act 2009 (Cth), ss.45, 401, 545, 546, 570 Superannuation Guarantee (Administration) Act 1992 (Cth) Workplace Relations Act 1996 (Cth), ss.347, 824 |
| Barhoum v All Districts Coating Pty Ltd & Anor(No 2) [2008] FMCA 924 Collex Pty Limited v Roads and Traffic Authority of New South Wales [2006] NSWLEC 579 Commonwealth Bank of Australia v Hattersley & Anor [2001] NSWSC 60 Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 Fair Work Ombudsman v Melland Pty Ltd & Anor [2012] FMCA 645 Fair Work Omudsman v Proplas Industries Pty Ltd & Anor and Fair Work Omudsman v Blacklight Investments Pty Ltd & Anor(No 3) [2012] FMCA 130 Giuseppe Portale v Law Society of New South Wales (No 1) [2010] NSWDC 59 Law Society of New South Wales v Stephen Gary Spring & Anor [2007] NSWSC 1273 Imogen Pty Ltd v Sangwin (1996) 70 IR 254 Lenthall v Hillson [1933] SASR 31 Muzzicato v New Aged Cleaning Services Pty Ltd [2011] FMCA 1044 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72; 152 ALR 83; 72 ALJR 578 PG & LJ Smith Plant Hire Pty Ltd v Lanskey Constructions Pty Ltd [2005] FCA 134 Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355; 153 ALR 490; 72 ALJR 841 Re Joseph Michael Kanan v Australian Postal and Telecommunications Union (1992) 41 IR 257 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
| Respondent: | CSR LIMITED |
| File Number: | SYG515 of 2012 |
| Judgment of: | Driver FM |
| Hearing date: | 14 September 2012 |
| Date of Last Submission: | 9 November 2012 |
| Delivered at: | Sydney |
| Delivered on: | 7 December 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Ms L Charlson CFMEU |
| Counsel for the Respondent: | Mr D Mahendra |
| Solicitors for the Respondent: | Australian Lawyers and Business Advisors Pty Limited |
ORDERS
Pursuant to s.545 of the Fair Work Act 2009 (the Fair Work Act), the respondent is to pay within 28 days $2,630.04 to Scott Beddall in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $3,957.23 to Scott Burns in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,969.98 to Christopher Davies in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,657.03 to Mark Fagan in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,847.82 to Aiden Gibson in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,801.43 to Daniel Hansen in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $697.38 to Saiyad Hussain in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,847.82 to Sudan Liu in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $3,450.22 to Lui Maua in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,787.02 to Andrew Melnyczenko in respect of failure to provide RDOs from April 2011 until 14 May 2012.
Pursuant to s.545 of the Fair Work Act, the respondent is to pay within 28 days $2,442.83 to Washington Neron in respect of failure to provide RDOs from April 2011 until 14 May 2012.
The respondent shall pay interest up to judgment on the above amounts at the rate of 8.25 per cent per annum for the period from 7 March 2012 to 30 June 2012 and at the rate of 7.25 per cent per annum from 1 July 2012.
There is to be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 515 of 2012
| CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION |
Applicant
And
| CSR LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction and background
This judgment concerns the residue of a dispute between the parties which has substantially been resolved. The agreed resolution of the greater part of the dispute is reflected in the following application I granted by consent on 14 September 2012:
The applicant and the respondent jointly apply to the Court to make the following declarations:
(a)between April 2011 and 1 July 2012, the respondent contravened s.45 of the Fair Work Act 2009 (Cth) in that it breached subclause 28.2 of the Joinery and Building Trades Award 2010 by failing to provide its “day worker” employees at its Erskine Park plant with paid rostered days off.
(b)Between April 2011 and 1 July 2012, the respondent contravened s.45 of the Fair Work Act 2009 (Cth) in that it breached subclause 28.3 of the Award by failing to provide its “shift worker” employees at its Erskine Park plant with paid rostered days off.
The respondent and applicant jointly apply to the Court to make the following orders as to penalty:
(a)Pursuant to s.545 of the Fair Work Act 2009 (Cth), the respondent is to pay within 28 days a penalty of $15,000 in respect of declaration 1(a) above.
(b)Pursuant to s.545 of the Fair Work Act 2009 (Cth), the respondent is to pay within 28 days a penalty of $5,000 in respect of declaration 1(b) above.
(c) Pursuant to s.546 of the Fair Work Act 2009 (Cth), the above penalties are to be paid by the respondent to the applicant.
The remaining dispute between the parties is essentially over the question whether employees, having worked their rostered day off (RDO) and having received payment in accordance with the applicable award for that work, are also entitled to accrual of the RDO and consequential benefits. There is also a dispute in relation to payment of interest in respect of any further required payment to the employees and costs.
The application filed on 7 March 2012 by the applicant (the Union) concerned 11 employees at the respondent’s (CSR’s) glassworks at Erskine Park and related to:
a)payment of penalty rates for RDOs worked by the employees;
b)payment for accrued RDOs;
c)superannuation on the payments sought; and
d)penalties.
CSR’s position was that it had corrected the alleged underpayments and so no orders were necessary. At the hearing of the matter on 14 September 2012, however, it conceded the issue of payment of penalty rates (and superannuation entitlements) for RDOs and civil penalties payable for the established award breaches.
CSR operates glass processing facilities under the Viridian Brand.
Erskine Park is a new Viridian site that commenced operations in 2011.
Five employees were transferred from Viridian Wetherill Park to work at Erskine Park.
Three of those employees were covered by the CSR Building Product Limited (Veridian New World Glass) Wetherill Park Agreement 2008 (Wetherill Park Agreement).
All other employees commended in April and May of 2011.
The employees were offered the jobs at Erskine Park on the basis of a 40 hour week with no RDO consistent with the practice at Wetherill Park, which is based upon an enterprise agreement at Wetherill Park.
As no enterprise agreement is in place at Erksine Park, employees who perform glass process work are covered by the Joinery and Building Trades Award 2010 (Award).
On or around 9 November 2011, CSR received a letter from the Union in respect of pay issues as follows:
a)querying when CSR applied overtime – after 7.6 or 8 hours; and
b)RDOs.
CSR undertook a review of its method of calculation of overtime and found that employees were being paid overtime after 40 hours, rather than 38 hours as required by the Award. CSR rectified this underpayment by providing back pay to the affected employees and has since applied overtime rates after 38 hours.
CSR operated on a mistaken view that individual employment contracts specifying a 40 hour work week was sufficient written agreement for the purpose of clause 31 of the Award for its roster pattern of 40 hours per week with no RDOs.
On being informed by the Union, on or around 11 May 2012, that the majority of employees at CSR’s Erskine Park site wanted a RDO, CSR took steps to implement such a rostering arrangement as set out in the affidavit of Craig Dorward.
On 11 September 2012, the Union received from CSR an affidavit of Tegan Banks, CSR’s HR Coordinator, affirmed on 7 September 2012. In this affidavit, Ms Banks affirms at [7] that in “reviewing the evidence filed on behalf of the Applicant in this matter” she “re-checked” her calculation method as to the underpayments calculated in November 2011.
Annexed to Ms Banks’ affidavit is a copy of CSR’s calculations as to the underpayment, which were based on the calculations performed by Pamela Lesley Rodney of the Union and contained in Ms Rodney’s affidavit sworn on 20 June 2012 and filed in these proceedings. Ms Banks affirms at [11] of her affidavit that “the underpayments referred to in Annexure A will be made to the employees by electronic funds transfer on 13 September 2012”.
As set out in the affidavit of Tegan Banks, following receipt of the affidavit material of the Union, CSR undertook a further review of its method of calculation and payment for time worked for the 20th day worked by employees at Erskine Park. Although not completely in agreement with the method of calculation used by Ms Rodney for the Union, CSR agreed that an underpayment had occurred and corrected it.
CSR conceded at the trial of this matter that, in accordance with clause 28 of the Award, the glassworkers at its Erskine Park plant (the relevant employees) should have been paid penalty rates when required to work on what should have been RDOs.
On the assumption that CSR had made the payments to the relevant employees in accordance with the commitment contained at [11] of Ms Banks’ affidavit, the Union revised its calculations as to the underpayments owing to each of the relevant employees. These revised calculations were performed by Ms Rodney, and are annexed as “PR2” to the affidavit of Ms Rodney sworn on 9 October 2012.
The Union notes that both Ms Rodney’s original and revised calculations were for the period from commencement of employment of each employee in or after April 2011 until 14 May 2012, as this was the period for which CSR’s time and wages records were provided pursuant to a subpoena issued by the Court on 29 March 2012. The Union asserts that underpayments continued beyond 14 May 2012 which have not been quantified by the Union, and which have not been dealt with in these proceedings.
The disputed issue
The Union now seeks the following orders in respect of the asserted outstanding underpayments owed by CSR to the relevant employees:
a)Pursuant to s.545 of the Fair Work Act 2009 (the Fair Work Act), CSR is to pay within 28 days $2,630.04 to Scott Beddall in respect of failure to provide RDOs from April 2011 until 14 May 2012.
b)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $3,957.23 to Scott Burns in respect of failure to provide RDOs from April 2011 until 14 May 2012.
c)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,969.98 to Christopher Davies in respect of failure to provide RDOs from April 2011 until 14 May 2012.
d)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,657.03 to Mark Fagan in respect of failure to provide RDOs from April 2011 until 14 May 2012.
e)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,847.82 to Aiden Gibson in respect of failure to provide RDOs from April 2011 until 14 May 2012.
f)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,801.43 to Daniel Hansen in respect of failure to provide RDOs from April 2011 until 14 May 2012.
g)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $697.38 to Saiyad Hussain in respect of failure to provide RDOs from April 2011 until 14 May 2012.
h)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,847.82 to Sudan Liu in respect of failure to provide RDOs from April 2011 until 14 May 2012.
i)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $3,450.22 to Lui Maua in respect of failure to provide RDOs from April 2011 until 14 May 2012.
j)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,787.02 to Andrew Melnyczenko in respect of failure to provide RDOs from April 2011 until 14 May 2012.
k)Pursuant to s.545 of the Fair Work Act, CSR is to pay within 28 days $2,442.83 to Washington Neron in respect of failure to provide RDOs from April 2011 until 14 May 2012.
The Union notes that the outstanding amounts claimed in respect of underpayment by CSR to the relevant employees relate to:
a)hours worked to accrue RDOs, where RDOs were not provided;
b)superannuation payable on the hours worked to accrue RDOs; and
c)superannuation payable on the penalty rates payable for the RDOs worked.
The matter proceeded before me on the basis that I have available to me the affidavit material filed by the parties in the proceedings as well as the following documents tendered in evidence during argument before me on 14 September 2012:
A1 Letter from Viridian to Employees, 10.09.2012;
A2 Rules of the CFMEU;
MFI A3 Superannuation Guarantee Ruling;
A4 CSR Annual Report; and
MFI A5 Fair Work Australia decision – Annual Wage Review 2011‑2012
In addition, the Union relies upon two further affidavits by Leah Julia Lillian Charlson made on 9 October 2012 and Pamela Lesley Rodney made on 9 October 2012. None of the deponents were required for cross-examination.
CSR denies the employees are entitled to an accrual for a RDO worked as alleged by the Union.
CSR agrees that the rostering arrangement prescribed by the Award at sub-clause 28.2(a) in respect of day workers and sub-clause 28.3(b)(ii) in respect of shiftworkers requires the accumulation of 0.4 hours each day and a paid day off at the twentieth day of the rostering cycle.
However, CSR disagrees that this results in an accrual as alleged by the Union and calculated in the calculations annexed to Ms Rodney’s affidavit. This is because sub-clause 28.2(g) provides that a day worker who works on a paid rostered day off must be paid penalty rates and provisions prescribed for Saturday work. The payment of the penalty rate is the compensation for working the rostered day off. The Award does not expressly require that a substituted day be provided to the employee in those circumstances or an accumulation of an RDO to be taken at a later date, that is, the entitlement to the RDO for a day worker is said to be extinguished if the employee is required to work and is paid the Saturday penalty rates.
The position for shiftworkers under the Award is similar except that the relevant penalty rate is 200 per cent plus the time the employee would have been paid had they taken the RDO (sub-clause 28.3(b)(vi)). Additionally, sub-clause 28.3(b)(v) allows for accumulation of up to five RDOs by a written agreement between the employer and the employee.
CSR denies that it has underpaid superannuation as alleged by the Union.
The superannuation guarantee legislation requires that CSR make superannuation contributions on the ordinary time earnings of the employees. CSR submits that it has met its obligation by making contributions on the 20th day of eight hours at ordinary time.
CSR opposes any order for costs both in terms of general principles and because the Union was represented by its own employed solicitors.
Consideration
The employees of CSR the subject of these proceedings (the employees), the majority of whom are members of the Union, are and were at all relevant times employed as glassworkers at CSR’s Erskine Park plant. The Erskine Park plant is a new plant and the employees commenced employment there from approximately April 2011.
It is uncontroversial that the employees are covered by the Award which is a modern award made by Fair Work Australia pursuant to Part 2-3 of the Fair Work Act. At the commencement of their employment at CSR’s Erskine Park plant, some or all of the employees were provided with written offers of employment which state that the Award applies to the employment of the employees.
Pursuant to the Award, the employees are either employed as “day workers” or “shiftworkers”. Both day workers and shiftworkers are entitled under the Award to receive a paid RDO once in each 20 day work cycle.
The relevant Award subclause in respect of day workers is as follows:
28.2 Day workers
(a) Subject to clause 31—Alternative working arrangement, ordinary hours for a day worker must be worked as eight hours per day, between 6.00 am and 7.00 pm Monday to Friday, over a 20 day four week cycle, with 0.4 of one hour of each day worked accruing as a paid rostered day off in each cycle.
(b) Where it is agreed between a majority of employees and the employer that a paid rostered day off in each cycle is not practicable then agreement may be reached in writing on an alternative method of implementing ordinary hours, including:
(i) 38 hours within a work cycle not exceeding seven consecutive days;
(ii) 76 hours within a work cycle not exceeding 14 consecutive days;
(iii) 114 hours within a work cycle not exceeding 21 consecutive days;
(iv) 152 hours within a work cycle not exceeding 28 consecutive days; or
(v) any other work cycle during which a weekly average of 38 ordinary hours are worked.
(c) The paid rostered days off must be implemented:
(i) by the employer fixing one day in a cycle on which all employees will be off;
(ii) by the employer rostering employees off on various days in a cycle so that each employee has a paid rostered day off during the cycle; or
(iii) by any other method which is agreed to by the employer and a majority of employees in the affected factory, workshop or section of the enterprise.
(d) Where any paid rostered day off falls on a public holiday, the next working day must be taken instead of the paid rostered day off unless an alternative day is agreed in writing between the employer and an employee.
(e) Each day of paid leave (except the paid rostered day off) and any public holiday taken during a cycle of four weeks must be regarded as a day worked for accrual purposes.
(f) An employee who has not worked a complete 19 day four week cycle must be paid accrued pro rata entitlements for each day worked on the rostered day off or, in the case of termination of employment, on termination.
(g) An employee who works on a paid rostered day off, or any substituted day, must be paid the penalty rates and provisions prescribed for Saturday work in clause 30.6.
(h) An employee who works overtime must be paid overtime in accordance with clause 30—Overtime.
(i) An employee required to work on a public holiday must be paid for a minimum of four hours work at the rate of 250%.
During the period from the commencement of the employees’ employment to 7 March 2012, the date on which the application in these proceedings was filed, there was no written agreement between a majority of employees and CSR as to an alternative method of implementing ordinary hours.
The relevant parts of the Award clause in respect of shiftworkers are as follows:
28.3 Shiftworkers
(a) Definitions
For the purposes of clause 28.3:
(i) Afternoon shift means a shift finishing at or after 9.00 pm and at or before 11.00 pm.
(ii) Night shift means a shift finishing after 11.00 pm and at or before 7.00 am.
(iii) Early morning shift means a shift finishing after 12.30 pm and before 2.00 pm.
(iv) Early afternoon shift means a shift finishing after 7.30 pm and before 9.00 pm.
(b) Hours of work
(i) Subject to clause 31—Alternative working arrangement, the ordinary hours for a shiftworker are eight hours per day, inclusive of meal breaks, Monday to Friday provided that:
· an ordinary night shift commencing before, and extending beyond, midnight Friday is regarded as a Friday shift; and
· where shiftwork comprises three continuous and consecutive shifts of eight hours each per day, a crib time of 20 minutes duration must be allowed without deduction of pay in each shift, such crib time being instead of any other rest period or cessation of work prescribed elsewhere in this award.
(ii) An employee on shiftwork accrues 0.4 of one hour for each eight hour shift worked to allow one complete shift to be taken off as a paid shift for every cycle of 20 shifts. The 20th shift must be paid for at the appropriate shift rate as prescribed by clause 28.3(d).
(iii) Paid leave taken and public holidays occurring during any cycle of four weeks must be regarded as shifts worked for accrual purposes.
(iv) An employee who has not worked a complete four week cycle must be paid accrued pro rata entitlements for each shift worked on the programmed shift off or, in the case of termination of employment, on termination.
(v) The employer and relevant employees must agree in writing on the arrangements for the programmed shift off during the 20 day cycle or for the accumulation of the accrued shifts off, provided that such accumulation must be limited to no more than five such accrued shifts off and that when taken, the shifts must be regarded as shifts worked for accrual purposes in the particular 20 shift cycle.
(vi) Where an employer, for emergency reasons, requires an employee to work on the employee’s paid shift off, the employee must be paid, in addition to the employee’s accrued entitlement, at the rate of 200%.
There is no provision in the Award for the rostered day off entitlements for shiftworkers to be varied by written agreement other than at clause 31 of the Award. Clause 31 of the Award provides that:
31.1 By written agreement between the employer and the employees, the ordinary hours of work may be altered from those allowed under clauses 28—Ordinary hours of work and rostering, 29—Breaks or 30—Overtime to suit the needs of a particular enterprise, factory, workshop or section, provided that:
(a) where employees employed at the enterprise, factory, workshop or section request that the employer consult with their representatives on the proposed alteration, that consultation takes place at least five days prior to the introduction of the proposed alteration;
(b) the agreement must be made by at least 60% of employees in the enterprise, factory, workshop or section affected by the alteration; and
(c) no employee experiences a loss of ordinary time pay or status as a result of the alteration.
31.2 For the purposes of clause 31, section means a clearly identifiable production process.
During the period from the commencement of the employees’ employment to 7 March 2012, the date on which the application in these proceedings was filed, there was no written agreement in accordance with clause 31 of the Award between CSR and at least 60 per cent of employees to permit the ordinary hours of work to be altered from those allowed under clause 28 of the Award.
Subclauses 28.2 and 28.3 of the Award, as set out above, require that employees covered by the Award work eight hours per day, Monday to Friday, with a day off each twentieth day. In effect, employees are paid for 38 ordinary hours per week and work 40, accumulating the additional hours to pay for their RDOs. Each employee therefore progressively accrues an entitlement to the RDO.
In order to calculate these hours, the Union multiplied the two hour weekly accrual by the number of weeks within the calculation period, to give the number of RDO hours, and multiplied those hours by the employees’ ordinary rate of pay.
It is true, as CSR contends, that the Award does not expressly provide for RDOs to accrue where employees are required to work on a RDO. Neither does the Award expressly provide that RDOs are not to accrue in those circumstances. There are, however, implications that can be drawn from the Award that any hours worked on a RDO should accrue towards future RDOs. The Union points to subclause 28.2(g), subclause 28.3(b)(ii) and subclause 28.3(b)(vi) in support of their contention that hours worked on a RDO do accrue.
In my view, the implication is stronger by reference to subclauses 28.2(e) and 28.3(b)(iii). In the case of shiftworkers it is clear that paid leave (including RDOs) and public holidays occurring during any cycle of four weeks must be regarded as shifts worked for accrual purposes. It would, in my view, be absurd if an employee could accrue hours taken as leave or a public holiday towards a RDO but not hours actually worked.
In the case of day workers, paid leave on a RDO does not accrue towards future RDOs (although other paid leave and public holidays do) but that limitation, to my mind, only reinforces the implication that if an employee is unable to take leave on a RDO because he or she is required to work, the hours worked should accrue towards a future RDO. Having expressly excluded RDOs from accrual when taken, the failure to expressly exclude RDOs from accrual when worked is significant.
I accept the Union’s contention that hours worked on a RDO accrue towards future RDOs. It is immaterial what rate of pay applies to those hours worked. I also accept the Union’s contention that untaken but accrued RDO hours are required to be paid out on termination of employment.
Superannuation
I accept the submissions of the Union in relation to this issue. Clause 27 of the Award requires at subclause 27.2 that an employer “must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee”.
The current superannuation guarantee charge is 9per cent of ordinary time earnings.
CSR is required to pay superannuation on all of the employees’ “ordinary time earnings” as defined at s.6(1) of the Superannuation Guarantee (Administration) Act 1992 as follows:
“ordinary time earnings”, in relation to an employee, means:
(a) the total of:
(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
(A) a payment in lieu of unused sick leave;
(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997 ; and
(ii)earnings consisting of over‑award payments, shift‑loading or commission; or
if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter--the maximum contribution base.
The Australian Taxation Office has issued Superannuation Guarantee Ruling SGR 2009/2, which addresses the meaning of the term “ordinary time earnings” (or “OTE”). This Ruling addresses paid leave and holiday pay at [32]–[36], and states that RDOs are ordinary time earnings:
Paid leave and holiday pay
Subject to the exclusions mentioned at paragraph 34 of this Ruling, salary or wages that an employee receives, at or below his or her normal rate of pay for ordinary hours of work, in respect of periods of paid leave is simply a continuation of his or her ordinary time pay. It is OTE. It does not matter whether the entitlement to take the paid leave accrued gradually over time, arose in a specified circumstance or following a specified event, or was simply granted to the employee in the exercise of the employer’s discretion.
Similarly, salary or wages received at the ordinary time rate in respect of public holidays, rostered days off and the like is OTE.
However, payments made while a worker is on paid parental leave or other kinds of ancillary leave are not OTE as these types of leave payments are excluded from being ‘salary or wages’ in the SGAA by Regulation 7AD of the Superannuation Guarantee (Administration) Regulations 1993 (SGAR): see paragraph 59B of this Ruling.
The principle in paragraph 32 of this Ruling does not extend to extra payments by way of ‘leave loadings’, and like payments, that are demonstrably referable to a notional loss of opportunity to work overtime, or similar.
Lump sum arrears payments of unused leave or salary or wages otherwise than on termination of employment are also OTE.”
The Union has calculated the superannuation payable in respect of the underpayments arising from CSR’s failure to provide the employees with RDOs during the period from April 2011 until 14 May 2012. I accept that calculation.
Interest
The Union seeks an order that CSR pay interest on the amounts to be paid to the employees as set out above within 28 days, pursuant to s.547 of the Fair Work Act. I accept the Union’s submissions on that issue.
Section 547 of the Fair Work Act provides as follows:
Interest up to judgment
(1) This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument.
(2) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.
(3) Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made.
Section 76 of the Federal Magistrates Act 1999 (Cth) and s.51A(1)(a) of the Federal Court of Australia Act 1996 (Cth) both provide for the making of orders for the inclusion of interest in judgments.
The Federal Court of Australia’s Practice Note CM 16 provides as follows:
1.Section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) provides for the making of orders for the inclusion of interest in judgments.
2.Practitioners and litigants should expect that where, pursuant to section 51A(1)(a), interest in respect of a pre-judgment period is to be included in a judgment, the Court will have regard to the following rates, being rates agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices of Australia and New Zealand:
· in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
· in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
The Reserve Bank published cash rates on 6 December 2011 of 4.25 per cent, effective 7 December 2011, and on 5 June 2012 of 3.5 per cent, effective 6 June 2012.
The Union has used the following rates to calculate interest:
a)from 14 May 2012 to 30 June 2012 – Reserve Bank Australia Cash Rate of 4.25 per cent + 4 per cent = 8.25 per cent per annum;
b)from 1 July 2012 to 14 September 2012 – Reserve Bank Australia Cash Rate of 3.25 per cent + 4 per cent = 7.25per cent per annum.
The Union submits that these are the appropriate rates for the Court to use in making an order for pre-judgement interest pursuant to s.547 of the Fair Work Act. I agree.
The Union has calculated the pre-judgment interest owing on the outstanding underpayments to the relevant employees in respect of rostered days off from 14 May 2012 until the hearing date of 14 September 2012, as the date of judgment was unknown. These calculations are annexed as “PR3” to the affidavit of Ms Rodney sworn on 9 October 2012. The calculations will need to be amended up to the date of judgment.
Costs
The Union seeks an order for costs pursuant to s.570(2)(b) of the Fair Work Act. The Union has provided helpful submissions in relation to costs.
Section 570 of the Fair Work Act provides:
Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before FWA;
(ii) the matter arose from the same facts as the proceedings.”
In Construction, Forestry, Mining and Energy Union v Clarke[1], the Full Court of the Federal Court considered whether a costs order should be made pursuant to s.824 of the former Workplace Relations Act 1996 (Cth) (Workplace Relations Act), the predecessor to s.570 of the Fair Work Act. Section 824 of the former Workplace Relations Act relevantly provided:
[1] (2008) 170 FCR 574
Costs only where proceeding instituted vexatiously etc.
(1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) must not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.
(2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs.
The appellant in Clarke sought costs on the basis that the respondent had engaged in an “unreasonable act or omission”, both in abandoning its appeal at a late stage and in advancing a new point of law on appeal. At [28], the Full Court said:
We turn now to s 824(2) of the WR Act. This provision carves out another exception to the usual rule in s 824(1) that costs orders are not to be made in respect of proceedings in a matter arising under the WR Act. The exception applies when two criteria are satisfied. The first criterion is that one party must have engaged in "an unreasonable act or omission". As the reasoning of Tracey J in Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 and Siopis J in McAleer v The University of Western Australia (No 2) [2007] FCA 247; (2007) 161 IR 151 demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have "caused another party to the proceeding to incur costs in connection with the proceeding". Once both criteria are satisfied, then the Court "may" in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.”
At [29] in Clarke, the Full Court said:
In our view, the respondent has not engaged in "an unreasonable act or omission". As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.
In Fair Work Ombudsman v Proplas Industries Pty Ltd & Anor and Fair Work Ombudsman v Blacklight Investments Pty Ltd & Anor[2], the Court made an order for costs pursuant to s.570 of the Fair Work Act as a result of the poor conduct of a respondent in the proceedings, including failure to file submissions and evidence as ordered by the Court.
[2] (No 3) [2012] FMCA 130 (2 March 2012)
In Muzzicato v New Aged Cleaning Services Pty Ltd[3] (1 December 2011), costs were awarded pursuant to s.570 of the Fair Work Act against an applicant who should have been aware when examining the evidence that his case was not strong, and in circumstances in which an offer made to him to withdraw was generous. The applicant’s failure to accept the offer was an unreasonable act or omission.
[3] [2011] FMCA 1044
In Imogen Pty Ltd v Sangwin[4] a Full Court of the Industrial Relations Court of Australia ordered an appellant to pay costs under s.347 of the former Workplace Relations Act. The appellant had discontinued the proceeding on the day before the hearing of an appeal, in circumstances where the appellant had poor prospects of success and the respondent had incurred costs in preparing to resist the appeal. Orders for costs were also made by Justice Wilcox in Re Joseph Michael Kanan v Australian Postal and Telecommunications Union[5] and PG & LJ Smith Plant Hire Pty Ltd v Lanskey Constructions Pty Ltd[6].
[4] (1996) 70 IR 254
[5] (1992) 41 IR 257
[6] [2005] FCA 134 (25 February 2005)
The application in the matter presently before the Court was filed on 7 March 2012. Prior to commencing these proceedings, as set out in the affidavit of Terry Kesby affirmed on 19 June 2012, the Union brought to the attention of officers of CSR its failure to meet its Award obligations in respect of giving the relevant employees RDOs. Prior to commencing these proceedings, the Union put the matter before Fair Work Australia and attended before Fair Work Australia on two occasions for conciliation. That failed to resolve the dispute.
Following the commencement of these proceedings, the parties agreed to have the matter referred for mediation at an early stage of the proceedings, and attended twice before the Court for mediation; however mediation was unsuccessful. The Union made a formal Offer of Compromise to CSR on 14 May 2012. The Union did not receive any response to this Offer of Compromise. On 29 August 2012, the Union sent CSR a written proposal which entailed a proposed joint application to the Court for declarations and orders, and a proposed agreed statement of facts. The Union did not receive any substantive written response to this proposal although the joint application was ultimately made. The Union submits that CSR’s failure to respond to these offers constitutes an unreasonable act or omission by CSR which caused the Union significant expense. The Union further contends that CSR acted unreasonably during these proceedings by tardiness or unresponsiveness.
The Union has made no submission that CSR “failed to accept a reasonable offer of settlement” as asserted by CSR at [3.4] of its’ written submissions of 2 November 2012. Rather, the Union has submitted that the unreasonable acts or omissions of CSR, as set out at [25]–[31] of the Union’s written submissions of 12 October 2012, caused the Union to incur costs, justifying an order for costs pursuant to s.570(2)(b) of the Fair Work Act.
For its part, CSR denies that it has acted unreasonably and submits that the Union is, in effect, a litigant in person and so not entitled to recover legal costs.
The power to award costs is purely statutory[7]. The statutory test is the payment of costs incurred by another party. It is much broader than the test in s.401 of the Fair Work Act which refers to the costs of lawyers and paid agents. Section 570 of the Fair Work Act does not draw a distinction between persons who are represented by a legal practitioner and those who are not. The Union is a party to the proceedings. It has incurred costs. Those costs are quantifiable in the same way that the costs of an independent legal practitioner are quantifiable. As the Supreme Court of NSW held in Commonwealth Bank of Australia v Hattersley & Anor[8] at [21]:
Practitioners who choose to carry on their profession as an employee of the Crown, of a statutory authority or of a corporation are entitled to have their work assessed on the same basis as that of independent solicitors exercising comparable skills in the performance of comparable work. It is not the manner in which the practitioner carries on his or her profession which counts, it is the nature of the work, the time spent and the skill, care and responsibility involved.
[7] Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72; 152 ALR 83; 72 ALJR 578 (25 February 1998) at [63]
[8] [2001] NSWSC 60 (20 February 2001)
In Project Blue Sky v Australian Broadcasting Authority[9], Brennan CJ of the High Court adopted a purpose-based approach to statutory interpretation, saying at [41]:
The purpose of construing the text of a statute is to ascertain therefrom the intention of the enacting Parliament.” The purpose of s.570 of the Fair Work Act is to reimburse parties for costs incurred; regardless of how they are incurred. This Court has made orders pursuant to s 570 of the Fair Work Act to reimburse costs incurred by a party on many occasions.
[9] [1998] HCA 28; 194 CLR 355; 153 ALR 490; 72 ALJR 841 (28 April 1998)
Courts and tribunals have regularly awarded costs to parties who were represented in proceedings by their own “in-house” lawyers, including in the Hattersley decision referred to above.In Collex Pty Limited v Roads and Traffic Authority of New South Wales[10], Talbot J of the Land and Environment Court of New South Wales found at [117] that the applicant, Collex Pty Limited, was entitled to recover that part of its legal costs incurred by its employed solicitor. Talbot J noted at [118] the comments of Davies AJ in Hattersley to the effect that there was “no distinction between the work of independent solicitors and practitioners who carry on their profession as an employee of a corporation”.
[10] [2006] NSWLEC 579 (19 September 2006)
The Commonwealth is entitled to claim costs for its use of “in-house” lawyers[11]. In Fair Work Ombudsman v Melland Pty Ltd & Anor[12], Lindsay FM made an order for costs pursuant to s.570 of the Fair Work Act against a respondent whose unreasonable conduct had caused the applicant, the Fair Work Ombudsman, to incur costs. The applicant was represented by the Office of the Fair Work Ombudsman and counsel. That the applicant’s legal representation was apparently provided by “in-house” solicitors was no barrier to an award of costs.
[11] Lenthall v Hillson [1933] SASR 31
[12] [2012] FMCA 645 (31 July 2012)
The legal work performed for the Union in the present proceedings was carried out by an in house solicitor, who holds and at all relevant times held an unrestricted “corporate and NLE” (non-lawyer entity) practising certificate. In Giuseppe Portale v Law Society of New South Wales (No 1)[13], Cogswell SC DCJ of the New South Wales District Court said at [16] that it would be surprising if the legislature intended the Law Society and corporations which employ their own lawyers to act for them in litigation to be precluded from recovering costs in that litigation. At [18], Cogswell SC DCJ said:
The way of determining whether or not such a party/party bill is one for “legal costs” is to ask whether the amounts in the bill are amounts of a kind that “may be charged by a...law practice” or of a kind which “a person...may become liable to pay to a law practice for the provision of legal services.
[13] [2010] NSWDC 59 (11 February 2010)
In Law Society of New South Wales v Stephen Gary Spring and Anor[14], Barr J of the Supreme Court of New South Wales said at [53]:
The functions of advising on evidence, drafting and settling letters and affidavits and making oral and written submissions are, in actions before courts and tribunals, the stuff of barristers’ and solicitors’ work.
[14] [2007] NSWSC 1273
In Barhoum v All Districts Coating Pty Ltd & Anor(No 2)[15] Nicholls FM made an order for costs, pursuant to s.666 of the former Workplace Relations Act to an applicant who was represented by the Union in the present proceedings on the basis that the respondents had acted (including by omission) in an unreasonable manner. Federal Magistrate Nicholls said at [109]:
Nor do I see it as a barrier that the applicant be awarded costs in relation to legal and professional costs and disbursements and expenses of witnesses, because he was represented in this matter by a union (see Scott Sainsbury v Pilkington (Australia) Ltd [1999] NSWCIMC 124 and CFMEU (on behalf of) Justin Sutherland and Kevin Bowden [2005] NSWIRComm 220, cases to which the applicant specifically referred to Court).
[15] [2008] FMCA 924 (11 July 2008)
While I accept that the Union is not disentitled to its costs by reason of the fact that it was represented by employed solicitors, I am not persuaded that CSR unreasonably refused or ignored offers of settlement proffered by the Union or otherwise acted unreasonably in its conduct of these proceedings. CSR participated in good faith in the failed conciliation before Fair Work Australia and the failed mediation before this Court. There was a further process of discussion leading up to the trial of this matter on 14 September 2012. The bulk of the matters in dispute between the parties were resolved on that day. While the concessions could probably have been made earlier by CSR, they were made and were properly made. The concessions included agreement on the award of penalties to be paid to the Union. The remaining issue in dispute required close attention to the terms of the Award. The interpretation of that Award was not clear cut. CSR was entitled to obtain the Court’s determination on the disputed issue of interpretation.
I will order that there be no order as to costs in these proceedings.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Driver FM
Date: 7 December 2012
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