Epona Pty Ltd T/A EC Throsby Pty Ltd

[2015] FWCA 5890

[2015] FWCA 5890

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Epona Pty Ltd T/A EC Throsby Pty Ltd
(AG2015/3345)

EPONA PTY LTD ENTERPRISE AGREEMENT 2015

Meat Industry
SENIOR DEPUTY PRESIDENT HAMBERGER	SYDNEY, 25 AUGUST 2015

Application for approval of the Epona Pty Ltd Enterprise Agreement 2015.

[1] An application has been made for approval of an enterprise agreement known as the Epona Pty Ltd Enterprise Agreement 2015 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the FW Act).

[2] The Australasian Meat Industry Employees Union (AMIEU) has objected to the approval of the Agreement on the ground that clause 19, dealing with long service leave, is inconsistent with the National Employment Standards (the NES). A hearing was conducted on 25 August 2015.

[3] Clause 19 of the Agreement essentially replicates the long service leave provisions of the Federal Meat Industry (Processing) Award 1996 (the Award) as it existed immediately before the commencement of Modern Awards. Relevantly, those provisions did not provide an entitlement for long service leave for casual employees. Indeed clause 9 of the Award expressly indicated that the casual loading in that award was in lieu of (amongst other things) the payment of long service leave.

[4] At the hearing the AMIEU contended that the relevant entitlements for the purposes of the NES for casual employees under the Agreement are those contained in the NSW Long Service Leave Act 1955 (the LSL Act). Under the LSL Act casual workers who have completed a continuous period of at least 10 years’ service with the same employer are entitled to long service leave. The effect of this, it was submitted by the AMIEU, is that the long service provisions of the Agreement are inconsistent with the NES, and therefore the Agreement cannot be approved.

[5] Section 113 of the FW Act deals with entitlement to long service leave. That section relevantly provides:

‘113 Entitlement to long service leave

Entitlement in accordance with applicable award-derived long service leave terms

(1) If there are applicable award-derived long service leave terms (see subsection (3)) in relation to an employee, the employee is entitled to long service leave in accordance with those terms.

Note: This Act does not exclude State and Territory laws that deal with long service leave, except in relation to employees who are entitled to long service leave under this Division (see paragraph 27(2)(g)), and except as provided in subsection 113A(3).

(2) …

(3) Applicable award-derived long service leave terms, in relation to an employee, are:

(a) terms of an award … that:

(i) would have applied to the employee at the test time (see subsection (3A)) if the employee had, at that time, been in his or her current circumstances of employment; and

(ii) would have entitled the employee to long service leave; and

(b) any terms of the award … that are ancillary or incidental to the terms referred to in paragraph (a).

(3A) For the purpose of subparagraph (3)(a)(i), the test time is:

(a) immediately before the commencement of this Part…’

[6] Part 2 of the FW Act (which includes s.113) commenced on 1 January 2010. Thus the ‘test time’ for the purpose of s.113 is 31 December 2009.

[7] It is not in dispute that the Award would have applied to the employees covered by the Agreement, if those employees had, at 31 December 2009, been in their current circumstances of employment. Indeed the AMIEU does not deny that there are ‘applicable award-derived long service terms’ that apply to non-casual employees covered by the Agreement. The issue is whether any such terms apply to casual employees covered by the Agreement. If there are not, then the provisions of the LSL Act would apply and the Agreement is inconsistent with the NES. However if such terms do apply then those constitute the employees’ entitlement to long service leave under the NES (and the Agreement is therefore consistent with the NES.)

[8] The issue of the proper construction of s.113 of the FW Act was dealt with by the Federal Court of Australia in Maughan Thiem v Cooper 1. In that case Katzmann J (with whom Greenwood and Besanko JJ agreed) said:

‘38 Interpreting the true meaning of the section begins with a consideration of the text: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [47]; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [33]–[34]. But the words of the section must be read in context and having regard to the statutory purpose or object: CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408. In interpreting a provision in an Act, the interpretation that would best achieve the purpose or object of the Act (regardless of whether the purpose or object is expressly stated) is to be preferred to each other interpretation: Acts Interpretation Act 1901 (Cth), s 15AA.

39 Turning first to the text, for there to be “applicable award-derived long service leave terms” the section expressly requires that two conditions be satisfied.

40 The first condition is that there is an award which would have applied to Mr Cooper at the test time if, at that time, he had been in his “current circumstances of employment”. …

41 The second condition is that the terms of the award “would have entitled” Mr Cooper to long service leave. This was the subject of the dispute. So what is meant by “terms of an award…that…would have entitled”?

42 The language here is awkward, the meaning ambiguous. On one possible interpretation the phrase refers to terms that provide for an entitlement to long service leave. Alternatively, as Mr Cooper argued, it may refer to an entitlement that would have actually accrued.

43 In my view, the first interpretation is to be preferred. … If there was a federal long service leave award or terms in a federal award that provided for the payment of long service leave that would have applied to the employee at the test time, then they continue to apply. If not, then the State or Territory Act applied. If, under the terms of the award, Mr Cooper was not eligible for long service leave at the time of his redundancy, s 113 does not give him an entitlement under the State Act.’

[9] In relation to casual employees employed under the Agreement a similar process of reasoning applies. The first condition is met because there is an award which would have applied to those employees on 31 December 2009 if they had been in their ‘current circumstances of employment’. The second condition is met because there were terms in that federal award that provided for payment for long service leave, and those terms applied to those employees. The fact that under those terms they were not eligible for long service leave does not mean that the terms did not apply to those employees.

[10] This interpretation of the s.113 is consistent with the Explanatory Memorandum (the EM) to the Fair Work Bill 2008 (Cth), which states at 441 that the clause ‘preserves the effect of long service leave terms in pre-modernised awards (i.e. awards as they stood immediately before commencement of the NES.)’

[11] Under 442 the EM states:

‘To determine whether there are applicable award-derived long service leave terms, it is necessary to consider the award that would have applied to the employee’s current employment if the employee had been in that employment immediately before commencement (paragraph 113(3)(a)). (This applies to existing employees and new employees after commencement of the NES.)’

[12] Then under 446 the EM notes:

‘If an employee does not have applicable award-derived long service leave terms, any entitlement to long service leave will be derived from State or Territory long service leave legislation (subject to its modification or exclusion by certain industrial instruments.)’

[13] I am satisfied that there are applicable award-derived long service leave terms for all the employees that will be covered by the Agreement (even though in some cases those terms mean they are not eligible for long service leave). Those terms constitute the NES entitlement to long service leave for those employees. Given that the Agreement essentially replicates those terms I am satisfied that it is consistent with the NES.

[14] One further issue was briefly alluded to by the AMIEU at the hearing. This concerned the dispute resolution clause in the agreement. Clause 27 commences:

‘This dispute resolution procedure is implemented to address any disputes, disagreements and all issues that relate to this Agreement and your working relationship with the Company’ (Emphasis added)

[15] Under s.186(6) of the FW Act the FWC must be satisfied, before approving an enterprise agreement, that the agreement includes a term that, amongst other things, allows an independent third party (such as the FWC) to settle disputes about any matters arising under the agreement or in relation to the NES. While it is not expressly stated, I am satisfied that the procedure, by including the words I have emphasised above, is broad enough to allow the resolution of disputes in relation to the NES.

[16] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

[17] The Australasian Meat Industry Employees Union, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) of the Act, I note that the Agreement covers the organisation.

[18] The Agreement is approved and will operate from 1 September 2015. The nominal expiry date of the Agreement is 1 September 2019.

SENIOR DEPUTY PRESIDENT

Appearances:

K McKell with M Ayton and A Ross for Epona Pty Ltd T/A EC Throsby Pty Ltd.

G Smith with G Courtney and J Roe for the Australasian Meat Industry Employees Union.

Hearing date:

2015.

25 August.

Sydney, with video link to Adelaide.

 1   Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94

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