Fair Work Ombudsman v Kensington Management Services Pty Ltd
[2012] FMCA 225
•27 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v KENSINGTON MANAGEMENT SERVICES PTY LTD | [2012] FMCA 225 |
| INDUSTRIAL LAW – Employer’s failure to pay employee entitlements - Basic minimum hourly rate of pay and casual loading for resident caretaker – legality of weekly deduction for ‘rent’ - identification of hours of ‘work’ – effects of preserved APCS and employer’s greenfields collective agreement – contraventions established – rights of compensation – further hearing ordered. |
| Fair Work Act 2009 (Cth) Industrial Relations Act 1996 (NSW), ss.118,119 Workplace Relations Act 1996 (Cth), ss.16(3), 171, 172, 173, 178, 179, 181, 182, 183, 185, 186, 208(1), 330, 333, 344, 346M(1)(b), 346R, 346T(2), 346X, 346ZD, 347(4), 349, 350, 351, 719, 722 Workplace Relations Regulations 2006 (Cth), sub-reg.7.1(5A), 7.1(18) |
| Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Fair Work Ombudsman v Essendene Security Pty Ltd & Anor [2010] FMCA 384 Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 10 (25 January 2002) Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 116 (23 July 2002) Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 157 (21 October 2002) United Firefighters’ Union of Australia v Metropolitan Fire & Emergency Services Board (2006) 152 FCR 18 Warramunda Village Inc v Pryde (2002) 116 FCR 58 |
| Applicant: | Fair Work Ombudsman |
| Respondent: | Kensington Management Services Pty Ltd ACN 064 931 415 |
| File Number: | SYG 844 of 2011 |
| Judgment of: | Smith FM |
| Hearing dates: | 14, 15 & 16 February 2012 |
| Delivered at: | Sydney |
| Delivered on: | 27 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms F Hancock |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondent: | Mr S Meehan |
| Solicitors for the Respondent: | Macpherson + Kelley Pty Ltd |
ORDERS
The matter is adjourned for further hearing.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Sydney |
SYG 844 of 2011
| Fair Work Ombudsman |
Applicant
And
| Kensington management services Pty Ltd ACN 064 931 415 |
Respondent
REASONS FOR JUDGMENT
Mr Walder and his partner Ms Kilbourne were chosen by Kensington Management Services Pty Ltd (“Kensington”) to fill a position as caretaker at one of its retirement villages which was under development near Albury in NSW. Kensington appointed them both to the one position, and required at least one of them to be in attendance and to undertake the responsibilities of the position at all times during specified ‘attendance hours’ when the day-time village manager was not present. It was also a condition of their employment that they should live together in designated caretaker’s accommodation in the village. They were given, and accepted, a letter of appointment which told them that they would, in effect, receive a single wage consisting of a weekly net ‘on call allowance’ of $115.13 as well as the benefit of the accommodation.
The couple moved into the village, and Mr Walder undertook all the duties of caretaker for the required attendance hours from 17 January 2009 until 15 April 2009, except on three days when he was absent on volunteer fire-fighting duties. Ms Kilboune filled the caretaker position at those times. They were told that they did not need to submit time-sheets for the periods when they performed particular caretaking activities, but Mr Walder submitted time-sheets showing some periods when he undertook additional duties of gardening and cleaning. The promised weekly remuneration was paid into his bank account, together with some additional payments for these extra duties. No additional payments were claimed by Ms Kilbourne.
The Fair Work Ombudsman now claims that the remuneration given to the couple as a wage for their caretaking employment over this period was not calculated in accordance with the hourly rates for a caretaker with a loading for casual employment, which were applicable by force of law. Over the relevant period, the required rates were found in the Kensington Management Services Greenfields Collective Agreement (‘the Kensington Greenfields Agreement’), or, to the extent that its rates fell below guaranteed minimum rates, the basic rates derived from the Miscellaneous Workers General Services (State) Award (NSW) (‘the Award’) as it stood at 26 March 2006. The Ombudsman contends that Mr Walder and Ms Kilbourne were entitled to be paid wages calculated by applying these hourly rates to the specified attendance hours for which Mr Walder undertook the duties of caretaker, and for which Ms Kilbourne did so on the three days of his absence.
If this is a correct approach to calculating their entitlements, it is clear that there were substantial underpayments, even if deduction is made for a notional amount of $300 per week for rent which was shown on Mr Walder’s payroll advices. Moreover, the Ombudsman disputes that a deduction for rent was legally permissible.
The Ombudsman now seeks the imposition of two pecuniary penalties under s.719(1) of the Workplace Relations Act 1996 (Cth), in respect of breaches of three ‘applicable provisions’ resulting in the underpayment of wages, being:
i)In the period 17 to 26 January 2009, the failure to pay to Mr Walder at least the guaranteed basic rate pay required by s.182(1) of the Act which derived from the Award rate in relation to caretakers.
ii)In the period 17 to 26 January 2009, the failure to pay Mr Walder a guaranteed 20% casual loading on that rate of pay, required by s.185(2) of the Act.
iii)In the period 27 January 2009 to 15 April 2009, the failure to pay Mr Walder, or Ms Kilbourne in his absence, the casual hourly rate of pay for caretakers, inclusive of casual loading, as specified in the Kensington Greenfields Agreement and varied by an undertaking given by Kensington on 27 January 2009 under s.346R of the Act.
The Ombudsman also seeks an order under s.719(6) of the Act, that Kensington pay compensation for the underpayments to Mr Walder and Ms Kilboune. He has calculated this as $22,987.38 for Mr Walder and $351 for Ms Kilbourne, if allowance is made for rental deductions. If, as he contends, rental deductions were unlawful, then they suffered an additional underpayment of $3,900. Interest under s.722 is claimed on any compensation.
Kensington has not claimed that the wages actually paid to Mr Walder were calculated by reference to the rates set out in its own Greenfields Agreement or the minimum rates under the Act. Manifestly they were not so calculated. However, it disputes that it is liable for penalties or compensation under the terms of the Greenfields Agreement and the legislation on their proper construction. In particular, it disputes that the caretaker attendance hours specified in its employment contract should be treated as hours of ‘work’ in relation to the wage rate tables found in either the Award or the Greenfields Agreement.
To solve this dispute, it is necessary for me to explore the relevant legislation, award and agreement, and to consider how they are to be applied in accordance with law to the circumstances of Kensington’s employment of Mr Walder and Ms Kilbourne. Unfortunately, this takes me into intricacies of the ‘WorkChoices’ legislative regime, which have now passed into history. It is important to note that all my references to the Workplace Relations Act are to its provisions found in the reprint as at 4 July 2007, which both counsel agreed provided the relevant law as to the employees’ entitlements and the employer’s liabilities in this case. The continuing effect of these provisions, and the Ombudsman’s standing to pursue these issues under transitional provisions of the current Fair Work Act 2009 (Cth), were not in dispute, and it is unnecessary for me to trace the provisions having these effects.
In his closing submissions, counsel for Kensington criticised the Ombudsman’s statement of claim and its amendments, and submitted that it did not raise the contentions which I have summarised above. However, I am satisfied that these criticisms have no substance, and that the Ombudsman’s claims have been clearly put to Kensington in its correspondence, pleadings, evidence, and submissions. Indeed, I consider that Kensington’s defence, evidence, and ‘summary list of issues’ filed before the hearing show that it has always appreciated the claims against it.
For the reasons which follow, I have decided that the Ombudsman’s case is soundly based in fact and law, and that Kensington is liable both for penalties and compensation. I shall direct a further hearing into the appropriate orders to make in relation to both of these matters.
Employer greenfields agreements
The ‘WorkChoices’ amendments to the Workplace Relations Act permitted employers to exclude their employees from penalty rates and many other entitlements under industrial awards, by giving supremacy to individual ‘Australian Workplace agreements’ and various types of collective agreements. The latter included:
330 Employer greenfields agreements
An employer may make an agreement (an employer greenfields agreement) in writing if:
(a) the agreement relates to a new business that the employer proposes to establish, or is establishing, when the agreement is made; and
(b) the agreement is made before the employment of any of the persons:
(i) who will be necessary for the normal operation of the business; and
(ii) whose employment will be subject to the agreement.
The general wages and terms of employment included by an employer in an ‘employer greenfields agreement’ did not require anyone’s ‘agreement’, nor negotiation or participation in its making by anyone on behalf of the prospective employees. The agreement was ‘made’ and took immediate legal operation upon lodgement by the employer with the Workplace Authority Director (see ss.333(e), 344, 347(4)). While in operation, the agreement displaced awards and other statutory conditions of employment (see ss.349 and 350).
Under s.351:
351 Persons bound by workplace agreements
A workplace agreement that is in operation binds:
(a) the employer in relation to the agreement; and
(b) all persons whose employment is, at any time when the agreement is in operation, subject to the agreement; and
(c) ….
An employer’s greenfield agreement was, however, subject to two statutory restraints as to their content. These were the ‘fairness’ test, and the ‘minimum guarantees’ under the Australian Fair Pay and Conditions Standard (‘the AFPCS’) prescribed by the Workplace Relations Act.
The application of the fairness test
The ‘fairness’ test provisions of the Act did not impose a condition on the agreement coming into operation, but under s.347(4):
(4) A workplace agreement ceases to be in operation if:
(a) …
(b) …; or
(ba) the Workplace Authority Director decides under section 346M that the agreement does not pass the fairness test and the employer who is bound by the agreement does not take the action referred to in subsection 346R(2) within the relevant period (as defined in subsection 346R(7)) in relation to the agreement; or
(bb) the Workplace Authority Director decides under section 346U that the agreement as varied does not pass the fairness test; or
…
It is unnecessary to closely to examine the provisions of s.346R and the sections allowing an employer to vary an agreement so as to conform to the fairness test. In short, the fairness test was framed in very broad terms, requiring the Director to consider whether the lodged collective agreement “provides fair compensation, in its overall effect on the employees whose employment is subject to the collective agreement, in lieu of the exclusion or modification of protected award conditions that apply to some or all of those employees” (see s.346M(1)(b)). If the Director notified the employer that the agreement “does not pass the fairness test”, then the employer had 14 days, or such longer period as was extended by the Director, to lodge a variation to the agreement containing “a written undertaking in relation to the AWA or collective agreement”.
If a variation was lodged, the agreement continued in operation with the variation taking effect on the date when the undertaking was given (see s.346T(2). The Director was then required to test the varied agreement, and, if it passed the fairness test, it continued in operation, subject to then current and former employees having a right to compensation for the period preceding the variation (see s.346X). The compensation was, in effect, the shortfall between the wage rates under the original agreement and the rates under the award or other instrument which would have otherwise bound the employer (see s.346ZD). The operation of these provisions was examined by me in a different context in Fair Work Ombudsman v Essendene Security Pty Ltd & Anor [2010] FMCA 384.
The 2007 Kensington greenfields agreement
The present “Kensington Management Services Pty Ltd Greenfields Agreement 2007” took effect when it was lodged on 3 August 2007. It expressly excluded entitlements to a wide range of loadings, penalty rates, and other matters to which its employees would otherwise have been entitled under awards. Clause 7 defined an employee’s ‘ordinary hours’ as ‘an average of 38 hours per week over a 12 month period’ and allowed the employee to require the performance of ‘reasonable additional hours’. Cl.8 provided:
8.SPREAD OF HOURS
8.1The hours or (sic: ‘of’) work referred to in clause 7 may be worked over any time during the week from midnight Monday to midnight the consecutive Monday.
The agreement contained a classification of ‘employment status’, and it is to be noted that ‘casual employees’ were not defined by reference to any maximum total hours of work:
6.EMPLOYMENT STATUS
6.1Full Time Employees
Full time Employee is an Employee engaged to work an average of 38 ordinary hours per week over a 12 month period.
6.2 Part Time Employee
A part time Employee is employed to work less than an average of 38 ordinary hours a week over a 12 month period.
A part time Employee will receive the same terms and conditions paid on a pro-rata basis to that of a full time Employee.
6.3 Casual Employees
A casual Employee is an Employee who has no guarantee of ongoing or continuing work.
A casual Employee will be paid the Casual Hourly Rate of Pay contained in Schedule A which is inclusive of casual loading.
6.4 Fixed Term Employees
A fixed term Employee is one who is employed for a specific purpose or a specific period.
6.5 Probationary Qualifying Period
For Permanent Employees, 3 months of your initial employment will be as probationary Employees serving the qualified period of employment.
It then provided for hourly rates of pay for non-managerial employees:
10.HOURLY RATES OF PAY AND CLASSIFICATION STRUCTURE – NON MANAGERIAL EMPLOYEES
10.1The range of Hourly Rates of Pay and classifications for Employees are set out in Schedule A of this Agreement.
10.2The Employer will at the commencement of an Employee’s employment designate the Employee’s classification. The Employer will also designate the Hourly Rate of Pay for each individual Employee provided that the designated Hourly Rate of Pay will be within the range specified for the relevant classification.
10.3The classification structure outlined in Schedule A replaces the classification structure that would be applied to the Employees under the preserved Australian Pay and Classification Scales (“APCS”) derived from any pre-reform awards and/or Notional Agreements Preserving State Award (“NAPSA”).
10.4It is agreed that no Employee will be financially worse off as a result of the classification structure contained in Schedule A when compared to any entitlement that an Employee may have had pursuant to a preserved Australian Pay and Classification Scale.
10.5The hourly rates of pay contained in Schedule A are inclusive of all penalties, disabilities, loadings and allowances associated with the work including (but not limited to) rest breaks, incentive based payments and bonuses, leave loadings, public holiday loadings, monetary allowances for expenses incurred in the course of employment, responsibilities or skills that are not taken into account in rates of pay for Employees or disabilities associated with the performance or particular conditions or locations, loadings for working overtime or for shift work, penalty rates and outworker conditions.
10.6The Employer may increase an Employee’s rate of pay in July each year. It is in the Employers discretion as to whether a particular Employees rate of pay is increased and if so by what amount.
Relevant to the work carried out by Mr Walder and Ms Kilbourne, Schedule A to the Greenfields Agreement provided:
Classification
Permanent Hourly Rate of Pay (Full Time or Part Time)
Casual Hourly Rate of Pay
Secretary
$14.56 - $18.63
$17.91 - $22.92
Kitchen Hand
$13.65 - $17.80
$16.79 - $21.89
Bar Attendant
$13.65 - $17.80
$16.79 - $21.89
Chef
$13.65 - $17.80
$16.79 - $21.89
Cook
$13.65 - $17.80
$16.79 - $21.89
Head Cook
$13.65 - $17.80
$16.79 - $21.89
Gardeners
$13.91 - $15.05
$17.11 - $18.52
Cleaners
$13.91 - $15.05
$17.11 - $18.52
Caretakers
$13.91 - $15.05
$17.11 - $18.52
Personal Carers
$15.44 - $23.38
$18.99 - $28.76
Nurses
$17.31 - $24.51
$21.30 - $30.15
Juniors
$4.78 - $13.47
$5.85 - $16.57
All Other Employees not specifically provided for in the classifications above
$13.47
$16.16
It is notable that the Kensington Greenfields Agreement did not provide for the remuneration of a caretaker on any basis other than by way of its Schedule A hourly rates. It contained no definition or other provision governing the meaning of ‘work’ or ‘ordinary hours’ or ‘engaged to work ordinary hours’ or ‘employed to work ordinary hours’, in relation to the payment of caretakers or any other classification of employee. It made no provision for a fixed annual salary or ‘on-call allowance’ for caretakers, such as was offered to Mr Walder and Ms Kilbourne, whether additionally or in lieu of remuneration calculated under its specified hourly rates of pay for caretakers.
The Kensington Greenfields Agreement also contained other provisions in relation to annual and other types of leave, superannuation, termination with and without notice, and a dispute resolution process. However, it is unnecessary for me to examine these provisions.
The 27 January 2009 variation of the Greenfields Agreement
The outcome of the application of the fairness test to the 2007 Kensington Greenfields Agreement was not communicated to Kensington until 19 December 2008, when Kensington was told that the Workplace Authority (which had replaced the Director) “is not satisfied that, on balance, your Agreement provides fair compensation for the removal or modification of protected conditions.” Kensington was told how the agreement could be varied to pass the fairness test, including by adopting a suggested higher scale of hourly pay rates, inter alia, for caretakers.
On 27 January 2009, the solicitors for Kensington requested an extension of time to submit a variation. They enclosed a written undertaking under s.346R(2)(b), in which Kensington proposed to modify the agreement by substituting higher rates for those in Schedule A. Relevant to the present case, these were:
Classification
Minimum Permanent Hourly Rate of Pay (FT or PT)
Casual Hourly Rate of Pay
Gardeners
$14.67
$17.43
Cleaners
$15.69
$18.75
Caretakers
$16.41
$19.61
On 9 February 2009, the Workplace Authority responded by implicitly extending the 14 day period for varying the agreement, and informing Kensington that the agreement now passed the fairness test. The letter noted that “your Agreement as changed by your undertaking continues to operate from the date the undertaking was received by the Workplace Authority. However, your employees may be entitled to back pay for the period between when you first lodged the Agreement and the date the Workplace Authority received your undertaking.”
It may be noted that the first week of the employment of Mr Walder and Ms Kilbourne occurred before the date when the varied rates of pay under the Kensington Greenfields Agreement took effect, and that the balance of their employment occurred subsequent to that date.
The preserved APCS minimum wage rates
Part 7 of the Act contained provisions for ‘The Australian Fair Pay and Conditions Standard’, which was to govern ‘key minimum entitlements of employment’, including “basic rates of pay and casual loadings” (see s.171(2)(a)). They were to be found in new instruments to be made by a new agency, the Australian Fair Pay Commission, or in parts of previous industrial instruments given continuing transitional effect as ‘preserved APCSs’. The minimum entitlements of a relevant AFPCS or preserved APCS, prevailed over the terms of workplace agreements, notwithstanding that the agreement otherwise excluded entitlements otherwise arising. This was clear from s.172, and s.173:
172 Operation of the Australian Fair Pay and Conditions Standard
(1) The Australian Fair Pay and Conditions Standard provides key minimum entitlements of employment for the employees to whom it applies.
(2) The Australian Fair Pay and Conditions Standard prevails over a workplace agreement or a contract of employment that operates in relation to an employee to the extent to which, in a particular respect, the Australian Fair Pay and Conditions Standard provides a more favourable outcome for the employee.
…
(4) The regulations may prescribe:
(a) what a particular respect is or is not for the purposes of subsection (2) or (3); or
(b) the circumstances in which the Australian Fair Pay and Conditions Standard provides or does not provide a more favourable outcome in a particular respect.
173 Australian Fair Pay and Conditions Standard cannot be excluded
A term of a workplace agreement or a contract has no effect to the extent to which it purports to exclude the Australian Fair Pay and Conditions Standard or any part of it.
In the present case, I was taken to the regulations made under s.172(4) only in so far as they have a bearing on whether or not deductions for rent shown in Mr Walder’s pay slips were lawful or unlawful. I shall set out these regulations and address that debate below, since it forms a secondary element in the case. As I shall explain, I have concluded that these deductions were not unlawful, but that even if account is made for them, Mr Walder and Ms Kilbourne still did not receive the full amount of remuneration to which they were entitled under law at any time during their employment.
In relation to guaranteed basic rates of pay and casual loadings under the APCS, Division 2 of Part 7 contained the following relevant definitional provisions:
178 Definitions
In this Division:
APCS means a preserved APCS or a new APCS.
...
basic periodic rate of pay means a rate of pay for a period worked (however the rate is described) that does not include incentive‑based payments and bonuses, loadings, monetary allowances, penalty rates or any other similar separately identifiable entitlements. The meaning of basic periodic rate of pay is also affected by section 210.
…
casual loading provisions has the meaning given by section 179.
classification has the meaning given by section 180.
coverage provisions means:
(a) for a pre‑reform wage instrument—all provisions (whether of that instrument or of another instrument or law), as in force on the reform comparison day, that would have affected the determination of whether the employment of any particular employee was covered by the instrument on that day; or
(b) for an APCS—provisions of the APCS that determine whether the employment of a particular employee is covered by the APCS.
Note: For a preserved APCS, the coverage provisions will (at least initially) be the coverage provisions for the pre‑reform wage instrument from which the APCS is derived (see paragraph 208(1)(g)).
covered: for when the employment of a particular employee is covered by a particular APCS, see sections 204 and 205.
current circumstances of employment, in relation to an employee, includes any current circumstance of or relating to the employee’s employment.
default casual loading percentage has the meaning given by subsection 186(1).
derived from: for when a preserved APCS is derived from a particular pre‑reform wage instrument, see subsection 208(2).
…
frequency of payment provisions means:
(a) for a pre‑reform wage instrument—provisions (whether of that instrument or of another instrument or law), as in force on the reform comparison day, that would have determined the frequency with which an employee covered by the instrument had to be paid; or
(b) for an APCS, a workplace agreement or a contract of employment—provisions of the APCS, workplace agreement or contract that determine the frequency with which an employee covered by the APCS, workplace agreement or contract must be paid.
Note: For a preserved APCS, the frequency of payment provisions will (at least initially) be the frequency of payment provisions (if any) for the pre‑reform wage instrument from which the APCS is derived (see paragraph 208(1)(f)).
…
pre‑reform non‑federal wage instrument means a pre‑reform State wage instrument or a pre‑reform Territory wage instrument.
pre‑reform State wage instrument means:
(a) a State award (as defined in subsection 4(1) of this Act as in force immediately before the reform commencement) as in force immediately before the reform commencement; or
…
pre‑reform wage instrument means a pre‑reform federal wage instrument or a pre‑reform non‑federal wage instrument.
preserved APCS has the meaning given by subsection 208(1).
…
rate provisions has the meaning given by section 181.
…
179 Meaning of casual loading provisions
(1) For the purposes of this Division, casual loading provisions, of a pre‑reform wage instrument or an APCS, are provisions of the instrument or APCS that determine a casual loading payable to an employee, or an employee of a particular classification, in addition to a basic periodic rate of pay.
…
180 Meaning of classification
(1) For the purposes of this Division, a classification of employees is a classification or category of employees, however described in the pre‑reform wage instrument or APCS concerned.
(2) A classification or category of employees may be described by reference to matters including (but not limited to) any of the following, or any combination of any of the following:
(a) the nature of work performed by employees;
…
181 Meaning of rate provisions
(1) For the purposes of this Division, rate provisions, of a pre‑reform wage instrument or an APCS, are provisions of the instrument or APCS that determine a basic periodic rate of pay, or basic piece rates of pay, payable to an employee, or an employee of a particular classification.
(2) The means by which such provisions may determine a basic periodic rate of pay, or a basic piece rate of pay, include the following, or any combination of any of the following:
(a) direct specification of a rate;
(b) identification of a rate by reference to other provisions (whether or not of the same instrument or APCS);
(c) direct specification, or identification by reference to other provisions (whether or not of the same
…
208 Deriving preserved APCSs from pre‑reform wage instruments
(1) If a pre‑reform wage instrument contains rate provisions determining one or more basic periodic rates of pay, or basic piece rates of pay, payable to employees, then, from the reform commencement, there is taken to be a preserved APCS that includes (subject to this Subdivision):
(a) those rate provisions; and
(b) if those rate provisions determine different basic periodic rates of pay, or different basic piece rates of pay, for employees of different classifications—the provisions of the instrument that describe those classifications; and
(c) any casual loading provisions of the instrument that determine casual loadings payable to employees, other than employees for whom the instrument provides basic piece rates of pay; and
(d) if the casual loading provisions determine different casual loadings for employees of different classifications—the provisions of the instrument that describe those classifications; and
(e) any provisions of the instrument that determine, in relation to employees to whom training arrangements apply, whether hours attending off‑the‑job training (including hours attending an educational institution) count as hours for which a basic periodic rate of pay is payable; and
(f) any frequency of payment provisions for the instrument; and
(g) the coverage provisions for the instrument.
(2) The preserved APCS is derived from the pre‑reform wage instrument.
…
The guarantee of a minimum basic rate of pay was made by s.182, and the identification of ‘guaranteed hours’ was performed under s.183:
182 The guarantee
Guarantee of APCS basic periodic rates of pay
(1) If:
(a) the employment of an employee is covered by an APCS; and
(b) the employee is not an APCS piece rate employee;
the employee must be paid a basic periodic rate of pay for each of the employee’s guaranteed hours (pro‑rated for part hours) that is at least equal to the basic periodic rate of pay (the guaranteed basic periodic rate of pay) that is payable to the employee under the APCS.
…
183 An employee’s guaranteed hours for the purpose of section 182
Employees employed to work a specified number of hours
(1) For the purposes of section 182, if an employee is employed to work a specified number of hours per week, the guaranteed hours for the employee, for each week, are to be worked out as follows:
(a) start with that specified number of hours (subject to subsection (4));
(b) deduct all of the following:
(i) any hours in the week when the employee is absent from work on deductible authorised leave (as defined in subsection (6));
(ii) any hours in the week in relation to which the employer is prohibited by section 507 from making a payment to the employee;
(iii) any other hours of unauthorised absence from work by the employee in the week;
(iv) any hours in the week when the employee is stood down (but only if the stand down is an authorised stand down);
(c) if, during the week, the employee works, and is required or requested to work, additional hours that are, under the terms and conditions of the employee’s employment, not counted towards the specified number of hours—add on those additional hours.
Note: The actual hours worked from week to week by an employee who is employed to work a specified number of hours per week may vary, due to averaging as mentioned in section 226 or to some other kind of flexible working hours scheme that applies to the employee’s employment.
(2) If an employee is employed on a full‑time basis, but the terms and conditions of the employee’s employment do not determine the number of hours in a period that is to constitute employment on a full‑time basis for the employee, the employee is, for the purpose of subsection (1), taken to be employed to work 38 hours per week.
(3) If an employee is employed to work a specified number (the number of non‑week specified hours) of hours per period (the non‑week period), but that period is not a week (for example, it is a fortnight), then, for the purpose of subsection (1), the employee is taken to be employed to work the number of hours per week determined, subject to the regulations (if any), in accordance with the formula:
…
Employees not employed to work a specified number of hours
(5) For the purpose of section 182, if subsection (1) of this section does not apply to the employment of an employee, the guaranteed hours for the employee are the hours that the employee both is required or requested to work, and does work, for the employer, less any period in relation to which the employer is prohibited by section 507 from making a payment to the employee.
Definitions
(6) In this section:
deductible authorised leave means leave, or an absence, whether paid or unpaid, that is authorised:
(a) by an employee’s employer; or
(b) by or under a term or condition of an employee’s employment; or
(c) by or under a law, or an instrument in force under a law, of the Commonwealth, a State or a Territory;
but not including any leave or absence:
(d) that is on a public holiday and that is so authorised because the day is a public holiday; or
(e) any leave or absence that is authorised in order for the employee to attend paid training hours (within the meaning of paragraph (4)(c)) of off‑the‑job training.
hour includes a part of an hour.
Note: An employee’s guaranteed hours may therefore be a number of hours and part of an hour.
public holiday means:
(a) a day declared by or under a law of a State or Territory to be observed generally within the State or Territory, or a region of that State or Territory, as a public holiday by people who work in that State, Territory or region, other than:
(i) a union picnic day; or
(ii) a day, or kind of day, that is excluded by regulations made for the purposes of this paragraph from counting as a public holiday; or
(b) a day that, under (or in accordance with a procedure under) a law of a State or Territory, or an award or workplace agreement, is substituted for a day referred to in paragraph (a).
The guarantee of casual loadings, calculated as at least 20% of the guaranteed basic periodic rate of pay, was conferred by s.185 and 186:
185 The guarantee
(1) This section applies to a casual employee for whom, under section 182, there is a guaranteed basic periodic rate of pay, other than a casual employee in relation to whom the following paragraphs are satisfied:
…
(2) The casual employee must be paid, in addition to his or her actual basic periodic rate of pay, a casual loading that is at least equal to the guaranteed casual loading percentage of that actual basic periodic rate of pay.
Note: The employee’s actual basic periodic rate of pay should at least equal the guaranteed basic periodic rate of pay under section 182.
(3) The guaranteed casual loading percentage is as set out in the following table:
Item In this situation … the guaranteed casual loading percentage is … 1 … 2 … 3 If:
(a) subsection 182(1) applies to the employment of the employee; and
(b) the employee’s employment is covered by a workplace agreement;
the default casual loading percentage. 4 …
186 Default casual loading percentage
(1) The default casual loading percentage is 20%, subject to the power of the AFPC to adjust the percentage.
(2) Any adjustment of the default casual loading percentage must be such that the adjusted rate is still expressed as a percentage.
Applying all the above provisions, it is common ground in the present case that relevant entitlements ‘derived from’ the Award as it stood at 26 March 2006 provided the terms of the APCS in relation to the basic minimum rate of pay to which Mr Walder and Ms Kilbourne were entitled throughout their employment by Kensington. However, there was controversy as to how the hourly rate under the award was to be applied for the purposes of calculating their entitlements. In particular, there was debate arising from the expressed terms of their employment, as to their ‘guaranteed hours’ for the purposes of the calculations required under ss.182 and 183. This involved a dispute as to which of the subsections of s.183 was applicable to their employment.
This debate formed part of the fundamental dispute whether all of the ‘attendance’ hours required under their written contract of employment constituted hours attracted the minimum hourly rate derived from the Award which constituted the ‘preserved APCS’. It was Kensington’s case that the hourly rate was applicable only to their periods of actual activity when performing tasks at the request of their employer, and that it was impossible to calculate their entitlements so as to show that they were underpaid, due to the absence of records kept by either Kensington or the employees as to their daily periods of active caretaking work.
I shall address that debate below, after identifying the hourly rates which were preserved from the Award, and the extent to which the terms of the Award reveal an intention that its rates of hourly pay for caretakers encompassed only periods of active caretaking work. I shall then examine the evidence as to the actual employment of Mr Walder and Ms Kilbourne, and make findings as to the extent to which the Ombudsman has established that they were underpaid.
The Award basic hourly rate for caretakers
To establish the terms of the Award, the Ombudsman tendered, without objection, a copy of the Award published by the NSW Office of Industrial Relations at 1 November 2006. Its hourly rates applicable to caretakers are not clearly explained on its last page, but the Ombudsman invited me to accept the accuracy of a ‘pay scale summary’ of rates derived from the Award, published by the Workplace Authority. This shows that as at 26 March 2006 the ‘basic hourly rate’ of the wages of a ‘caretaker’ under the Award was $15.89. I was invited to find that this was the rate under the relevant ‘preserved APCS’ for the purposes of s.182, and that the relevant casual loading was 20% of this amount for the purposes of s.185. Counsel for Kensington did not take issue with this evidence, and neither counsel availed themselves of a liberty which I gave them to draw to my attention a NSW statutory instrument which might reveal inaccuracy in the published ‘pay scale summary’ rates. I accept their accuracy.
No submission was made by the Ombudsman seeking to apply the provisions of the Act allowing recognition of increases of relevant Award basic rates of pay taking effect after 26 March 2006. The Ombudsman’s calculations of the lost entitlements of Mr Walder and Ms Kilbourne over the period of their employment in 2009 applied the 2006 rate without allowance for any cost of living increases.
I therefore find that the relevant ‘preserved APCS’ “basic periodic rate of pay for each of the employee’s guaranteed hours” was $15.89 per hour, for the purposes of s.182(1) and 185(2).
Notwithstanding submissions by both counsel which emphasised that only the basic hourly rates from the Award were preserved for the purposes of the APCS, in my opinion it is necessary to understand the Award hourly rates in their immediate context in the Award in which they are found. Patently, this is necessary, when performing the necessary tasks of classification of the employees for the purposes of the preserved rates, and reference to the classification provisions of the Award is expressly required by s.208(1)(b) and (d) of the Act.
I also consider that under normal principles of construction, references in the Award to the work of a ‘caretaker’, as classified under the Award so as to attract its hourly rate of basic wage, are relevant to a proper understanding of the ‘preserved APCS’ hourly rate of pay for employees falling within that classification. In particular, I consider that reference to relevant definitional elements in the body of the Award is necessary to give effect to the sections of the Act which ‘preserved’ and gave binding legal effect to the basic Award rate as part of the APCS. They also illuminate the Act’s concept of periodic ‘work’ for which hourly rates of wages for caretakers were intended to be payable.
An examination of the definitions which I shall set out below, in particular, of ‘caretaker’ shows clearly, in my opinion, that the Award intended that its basic hourly rate of pay for such an employee was intended to cover all of his or her required hours of attendance at the employer’s premises for the performance of passive or active caretaking duties, and not just such parts of these hours when the caretaker was actively engaged in physical or mental effort. This was regardless of whether the caretaker was provided with residential accommodation on the employer’s premises, and whether the required hours of attendance included night times or weekends. I do not accept that it covered only those hours of required caretaking duties when the employee was also required to be awake. Relevant definitions and other provisions pointing to this effect of the Award are found in the following:
3.Definitions
(i)Caretaker means an employee whose presence is required on premises for the protection, good order or convenient use thereof and/or the cleanliness or upkeep thereof, including routine or minor maintenance, which may involve the use of a variety of hand and power tools; provided that such work is not of a nature so as to require a qualified tradesperson.
…
(iv)Weekly employee means an employee engaged and paid by the week or fortnight, as the case may be.
(v)Part-time employee means an employee engaged by the week but who is required to work a constant number of ordinary hours each week less than the ordinary number of hours prescribed for weekly employees.
(vi)Casual employee means an employee engaged and paid as such but shall not include an employee working 38 ordinary hours or more per week in the same work and shall not include a cleaner who is required to work a constant number of ordinary hours each week, except where such employee is engaged to relieve a weekly or part-time employee.
…
9.Wages
(i)Weekly Employees - The minimum rate of pay for classifications shall, from time to time effective, be as set out in Table 1 - Wages, of Part B, Monetary Rates, and the rates for allowances shall be as set out in Table 2- Allowances, of the said Part B.
(ii)Part-time employees for each hour worked during the ordinary time shall be paid the hourly equivalent of the appropriate weekly wage prescribed by this award for the class of work performed by them, subject to the provisions of clause 10, Part-time Employees - Terms of Engagement.
(iii)A casual employee for working ordinary time shall be paid per hour 1/38 of the weekly wage prescribed by this award for the class of work performed, plus 15 per cent.
…
12. Shift Allowances
…
(iii)Caretakers – A caretaker required to work ordinary hours after 6.00 p.m. or 9.00 p.m., as the case may be, shall receive the following allowances for each hour so worked:
(a) In public buildings -
Percentage
Between the hours of 6.00 p.m. and midnight 15
Between the hours of midnight and 6.00 a.m. 30
(b) In other than public buildings -
Between the hours of 9.00 p.m. and midnight 15
Between the hours of midnight and 6.00 a.m. 30
…
20. Miscellaneous Conditions
(i)Caretakers -
(a)Where a caretaker is provided with accommodation a deduction may be made from the wages of not more than $4.00 per week being a deduction for rent, fuel and lighting.
(b)An employer shall not require a resident caretaker to vacate living quarters during the annual leave period for use by a relieving caretaker unless such arrangements are mutually agreed to between the caretaker and the relieving caretaker.
(c)Where a resident caretaker is transferred to a building owned or controlled by the same employer, removal expenses shall be paid by the employer, who shall grant the employee reasonable paid time to effect the transfer.
…
(v)Board and Lodging – It shall not be made a term of employment that an employee shall board or lodge with the employer. This subclause shall not apply to caretakers.
…
43. Area, Incidence and Duration
…
This award shall apply to caretakers and cleaners employed in or in connection with any place of business, in and about Strata Title units and Company Title units, in schools of arts, literary institutes, lodge rooms (including building used for lodge meetings), museums, schools, excepting female school cleaners employed in schools under the control of the Department of Education, and caretakers and cleaners (as distinguished from groundsmen) in sports grounds, also caretakers and cleaners employed in the Botanic Gardens, in the Sydney Domain, caretakers of racecourses, agricultural grounds and recreation grounds, and cleaners employed in cleaning building, other than grand and public stands, stables and animal pavilions on racecourses, agricultural grounds and recreation grounds, office cleaners, tea attendants, caretakers and lift attendants in the State, but shall not apply to persons employed in or in connection with retail stores, excluding the County of Yancowinna, within the jurisdiction of the Security and Cleaning, &c. (State) Industrial Committee.
The employment of Mr Walder and Ms Kilbourne
Mr Walder and Ms Kilbourne are partners in a long-term de-facto relationship. In December 2008, they saw an advertisement in the Border Mail, which said:
Kensington Gardens Albury – Caretaker
Kensington Gardens requires a responsible motivated couple for a live-in onsite caretaking position.
The successful applicants would be required to be on call 7 nights/week to monitor and respond to the village emergency call system. A First Aid certificate is required.
Remuneration is negotiable and includes the provision of a new three bedroom home.
Closing date for applications December 30, 2008 to:
(address omitted)
They inspected the village, which was under development in a semi-rural location on the outskirts of Albury, and spoke to Ms Fraser, the ‘Village Manager’ or ‘Estate Manager’. About 20 detached retirement units had already been built at that time, and a large community and amenities building was under construction. They then applied for the position, summarising their qualifications as follows:
To Col Ward,
We are expressing our interest for the position of Caretaker advertised in the Border Mail in 20/12/08.
We meet the criteria for which you are asking.
I have 20 plus years in the health system and currently employed by North East Health as a registered nurse therefore my first aide skills are up to date and am able to attend to most healthcare problems which may suddenly arise.
My partner of 20 years also has first aide skills due to 22 years as a fire fighter in the permanent fire brigade this however may need to be updated of which he is willing to do.
Ern also spent a number of years as a gardener, maintenance and fire safety person at St George hospital in Sydney and at a Multicultural Hostel for the aged.
He is unemployed at the moment as we have only recently sold a business.
We are both fit and well and in our fifties, are able to be available 7/7 nights a week and have no other commitments. Our résumés are attached and we look forward to meeting with you should we receive an interview.
Yours Sincerely
C. Kilbourne and E. Walder
After two interviews by Ms Fraser and Mr Ward, the regional manager for Kensington, they were offered the position. Their appointment was confirmed in a letter of appointment which they were asked to sign. Its first two pages provided:
Dear Ernest & Caroline,
Re: Appointment – Caretaker position at Kensington Gardens Albury
I am pleased to formally confirm your appointment for the position of Caretaker at Kensington Gardens Albury (“the village”) commencing on 17 January 2009.
This letter and the enclosed Job Description set out the terms and conditions of the position.
The appointment is subject to a three month probationary period.
AGREEMENT
The appointment of caretaker is a casual on-call position. This is a joint position however only one person is required to be available during the on-call hours. You shall be employed as a Caretaker at Kensington Gardens Albury and your employer will be Kensington Management Services Pty Ltd.
You acknowledge that as a Caretaker you are not covered by any award but your terms and conditions of employment are governed by the Kensington Management Services Pty Ltd Greenfields Collective Agreement. A copy of this Agreement is available upon request.
REMUNERATION
Your total salary package is $26,200. Your remuneration includes $5,986.60 per annum ($115.13 per week) being an on call allowance for your Caretaking duties, $15,600 per annum ($300 a week) to offset your weekly rent of $300 for Unit No.12 which will be provided to you, curtained and unfurnished as the Caretaker’s Residence. The remainder of the package includes the operating fee, telephone line rental, electricity and caretakers leave allowance.
The weekly housing rental deducted directly from your salary and paid to Kensington Management Services Pty Ltd removes any fringe benefits tax implications for you. You will be required to reside, for the period of your employment, in the Caretakers Residence on site.
The company will meet the cost of telephone rental to the residence, electricity used to charge the buggy and the Village operating fee applicable to the home. You will be responsible for payment of electricity consumption, and if required, household contents insurance, and the general cleaning and maintenance of the residence.
Your net weekly salary of $114.13 (after tax and rental deductions) will be paid weekly into your nominated bank account.
Superannuation – compulsory 9% paid to your nominated super fund.
OTHER CONDITIONS
Annual Leave – 4 weeks unpaid annual leave per year to apply following the first year of service. Timing and duration of each period of leave will be by agreement to allow management to schedule relief caretaker/s. Annual leave shall not be taken at times which unreasonably interfere with the operational requirements of the Employer and will be arranged at least three months prior.
Relief – Kensington Gardens has to provide and pay for the relief caretaker during annual leave. A suitable relief caretaker may be nominated by the position holder for consideration by the Estate Manager. The caretakers residence may be required to be made available to the relief caretaker. If this happens, reimbursement for telephone, electricity and rental will continue to the position holder. A nominal rent may be charged by the permanent caretaker to the relief caretaker as agreed between both.
Personal/Sick Leave – Not applicable to the position.
First Aid Certificate – You will be required to obtain/update first aid certificate. The company will meet costs incurred.
HOURS
Attendance at the village is required during the hours of 5pm to 8.30am Monday to Thursday, 5pm to 10am Friday – Saturday; 2pm to 8.30am Saturday – Monday and on Public Holidays, for assuming responsibility of the village call system or as directed by the village manager.
The letter also contained provisions concerning termination, confidential information, and intellectual property, which are unnecessary to describe.
The description of the attendance hours in the appointment letter has some ambiguities. However, all witnesses clearly understood that the employment required at least one of the employees to be physically in attendance and able to undertake the responsibilities of the position at all times on week days from 5pm on Monday to Friday and until 8.30am on Monday to Friday, and over the weekends except for the period of 10am until 2pm on Saturday, when Ms Fraser was in attendance. These required attendance periods total 121.5 hours per week, not including additional public holidays. I consider that their understanding reflected the correct interpretation of the letter of appointment (particularly noting Ms Fraser’s evidence at transcript p.129, and Mr Ward’s evidence at p.140).
The required period for attendance on the village by at least one of the employees undertaking the duties of a caretaker was the period when Ms Fraser was not in attendance at the Village, and when no other employee or representative of Kensington was in attendance. As Mr Ward agreed, the caretaker was expected to take responsibility for the company’s property and the running of the village to the extent that it needed to be supervised during this period. In particular, they were expected to be able to respond immediately to emergencies, when summoned by one of the residents on a dedicated ‘emergencies’ telephone. Ms Fraser made clear in her evidence that she tolerated no exception to the required attendance at the premises by at least one of the employees, even for a very brief absence, and that she expected Mr Walder and Ms Kilbourne to plan their separate involvements in fire-fighting and casual nursing activities accordingly. It is clear that the presence of an out-of-hours full-time caretaker was a very important marketing point for the Village, and this is demonstrated by the fact that Ms Fraser and Mr Ward themselves stayed overnight and performed this role when the caretaker position was vacant.
The job description and selection criteria attached to the letter of appointment was:
JOB DESCRIPTION
JOB TITLE Caretaker
COMPANY Kensington Gardens Albury
MAIN PURPOSE OF JOB:
Reporting to the Estate Manager, this position is required to provide onsite after hours caretaking of the Estate in absence of the Estate Manager by performing the following duties:
KEY FUNCTIONS
The key functions include, but are not limited to:
· Liaison with residents
· To respond promptly to emergency calls after working hours or during the Manager’s absence
· To respond promptly to any breakdowns or damage to Estate infrastructure after hours
· Organise preferred contractors/workers for an
· Direct workers/contractors in maintenance and repairs after hours
· Adhere to workplace safety regulations
MAIN DUTIES
1.Assume full responsibility for the Estate during week nights, weekend and public holiday or when the Estate Manager is absent.
2.To maintain privacy, dignity and respect in all dealings with residents or potential residents and treat all information concerning the estate and residents as strictly confidential.
3.To undertake all work allocated by the Estate Manager as effectively as possible and to required standards.
4.To report to the Manager as soon as possible of any incidents occurring overnight and to maintain a record log of the incident.
5.To secure Estate in evenings and open in mornings and generally oversee security of the Estate.
6.To attend and participate in meetings as directed by Estate Manager.
7.The careful use of materials and the maintenance of equipment to required standards.
8.To communicate effectively with the Estate Manager and colleagues at all times, in particular with regards the progress of work.
9.To observe all Occupational Health and Safety policies and procedures and to report any identified hazards immediately to the Manager.
10.To complete all necessary paperwork/records accurately and to deadline.
11.To work effectively as part of a team.
CRITERIA FOR SUCCESSFUL PERFORMANCE OF THE JOB
KNOWLEDGE, SKILLS AND ATTITUDES REQUIRED
Knowledge
· Complete understanding and knowledge of Estate
· A knowledge and understanding of emergency evacuation procedures
· A basic understanding of English and Mathematics
· A current driver’s licence
· A current first aid certificate
· A basic knowledge of health and safety legislation – desirable
Skills
· The ability to coordinates activities in an emergency situation
· Ability to read, understand, follow and enforce safety procedures and Kensington Gardens policies
· The ability to establish and maintain positive and cooperative working relationships with those contacted in the course of work at all levels, including a culturally diverse public, with a focus on quality service to all
· Ability to follow established polices and procedures
· Ability to maintain records/complete paperwork as required
Attitude
· At all times behave in a pleasant, helpful and personable manner towards all residents of Kensington Gardens and their guests
· A flexible approach to working duties
· The ability to work effectively as part of a team is essential
Kensington Gardens provides all training and PPS required by Occupational Health and Safety Act 2000 to ensure employee safety.
Ms Fraser gave additional directions to Mr Walder as to the duties she required him to perform. She recorded these in a list which she gave to him in the course of his employment:
LIST OF CARETAKER DUTIES
The following is a list of Caretaker duties at Kensington Gardens Albury which form part of this position requirement.
Each Morning before 8.30am:
1.Take out gardeners’ Polaris and have ready for their use.
2.Take out buggy and put “Now Open” sign at front entry roundabout. Park buggy in driveway of House 10, until there is a designated parking space at community facilities building.
3.Open the office and handover diary, emergency mobile phone and master keys. Make sure all events, regardless of how insignificant, are written into the diary. Report to Manager any evening or weekend events.
Each Afternoon before 5.00pm
1.Collect the “Now Open” sign from front entry roundabout.
2.Handover of daily report from manager, diary, emergency mobile phone and master keys from office.
3.Charge the “Emergency Phone” each night.
4.Park buggy in garage and connect to electric charger.
5.Park Polaris in garage for the evening.
Other:
1.Speeding Vehicles – If possible, ask offending drivers to please obey the speed limit in a friendly, but firm, manner (as per Kensington Gardens village rules).
2.Unleashed dogs – Ask offending owners to please leash their dogs while walking through our estate in a friendly, but firm, manner. Remind them that Kensington Gardens is private property (as per Kensington Gardens village rules).
3.Charge batteries in smoke detectors in homes as directed by Manager, until such time as a maintenance person is employed.
All witnesses confirmed that Mr Walder was regarded by himself, Ms Kilbourne, and the relevant managers at Kensington, to be the employee principally occupying the position of caretaker and undertaking its responsibilities, and that Ms Kilbourne only occupied the position as his deputy on a few days when Mr Walder was away from the Village as a volunteer fire-fighter. His role as primary caretaker was then reflected in Kensington’s pay arrangements. Only Mr Walder received weekly pay, which encompassed the salary of caretaker and some additional amounts for the hours he spent on gardening and cleaning duties.
It is notable that Kensington’s ‘head office’ directed that Mr Walder should prepare and present weekly time-sheets for his additional duties as gardener or cleaner, but did not require any accounting for ‘active’ periods performing duties as a caretaker. Ms Fraser compared their salary arrangement with her own management position, and said: “they never had timesheets for their caretaker hours and I never had a timesheet, because the hours were known.” A typical example of Mr Walder’s pay-slip was:
| Kensington Management Services Pty Ltd | Cheque No: | Debit | ||||||||
| ABN: 98 0649310415 | Payment Date: | 4/02/2009 | ||||||||
| Ernst Walder | Gross Pay: | $464.13 | ||||||||
Pay Frequency: | Weekly | Net Pay: | $115.13 | |||||||
Pay Period | 19/01/2009 To 25/01/2009 | |||||||||
Annual Salary: | $24,134.76 | |||||||||
Hourly Rate: | $12.2139 | |||||||||
Employment Classification: | Caretaker | |||||||||
Superannuation Fund: | OAMPS Super Fund | |||||||||
Description | Hours | Calc Rate | Amount | YTD | Type | |||||
Base Salary | $464.13 | $928.26 | Wages | |||||||
Housing Rental | -$300.00 | $600.00 | Deductions | |||||||
PAYG Withholding | -$49.00 | -$139.00 | Tax | |||||||
Superannuation Salary | $41.77 | $83.54 | Superannuation Expenses | |||||||
Cleaning | $210.00 | Wages | ||||||||
As appears in this pay-slip, Kensington attributed an amount of ‘rent’ for the unfurnished three bedroom house which Mr Walder and Ms Kilbourne were required to occupy at the Village during the period of their employment, adding it to the gross salary and then deducting it in each pay-slip. This amount was not negotiated with them, although it was identified in the letter of appointment. According to Mr Ward “the $300 which was the rent that we retrieve back was grossed up, I guess you’d call it, so that the net figure was the $115.13 being the on call allowance which forms part of that letter of appointment” (transcript p.148).
As a result of being directed not to keep any records of his activities during the required caretaking attendance hours, Mr Walder was able to give only impressions of the amount of time spent actively performing the above duties. Perhaps a better reconstruction of this time could have been achieved by analysis of the Village ‘diary’, but neither party attempted to do this, and the diary is not in evidence. It is clear that on several occasions during their brief employment there were ‘emergencies’ and other incidents at the Village to which Mr Walder responded, some involving health matters to which Ms Kilbourne also responded. There were also routine daily tasks performed by Mr Walder, some of which are described in Ms Fraser’s written directions. I gained the impression that both Mr Walder and Ms Kilbourne probably gave underestimates of the time spent on these matters, including on Mr Walder’s routine tours of inspection around the Village. However, ultimately, as I shall explain, I do not consider that I am required to attempt to quantify the ‘active’ hours performing caretaking duties spent by either of the employees, before concluding that they were not paid their wages entitlements according to law.
Mr Walder and Ms Kilbourne gave evidence which was unchallenged, and which I accept, that Ms Kilbourne acted as sole caretaker at the Village in the absence of Mr Walder only on identified hours on the evenings of 17, 20 and 23 February 2009. I accept that for the remainder of the period of their employment, the responsibilities of the position were performed by Mr Walder. This splitting of the duties of the position was, in my opinion, at all times in accordance with the directions and with the agreement of the relevant managers of Kensington.
In effect, the two employees were employed by Kensington on a ‘job share’ arrangement in relation to one position, with the splitting of hours to be a matter of agreement from time to time between the two employees and their local managers. In practice, the parties gave this arrangement effect by Mr Walder filling the position at all times when he was present at the Village during the required ‘attendance’ hours for the position. I do not accept the submissions of counsel for Kensington, that this splitting was in some way inconsistent with the provisions of the Workplace Relations Act or the Kensington Greenfields Agreement, nor that it leads to uncertainty as to the basic entitlements of each of the employees in relation to their hours of work in the position of caretaker.
The caretaker’s remunerated hours of ‘work’
It is apparent that the employment agreement made with Mr Walder and Ms Kilbourne, and Mr Walder’s pay advices purporting to implement its provisions, had no regard to the hourly basic and casual rates for caretakers provided under the Kensington Greenfields Agreement, or under the preserved parts of the Award with the APCS guaranteed casual loading. Neither of these statutory sources of their entitlements contained any provision for caretakers to be paid only a small fixed salary designated as “an on call allowance for your caretaking duties” together with a notional value for the provision of compulsory accommodation. Kensington did not contend that the Workplace Relations Act allowed it to do this, and it has not yet explained how it regarded the legality of its calculation of the wages paid to Mr Walder.
Kensington did not argue that, under the Greenfields Agreement, a caretaker was a ‘managerial employee’ who under cl.11 was to be “paid a salary to be agreed upon by the parties at the commencement of employees”. Prima facie, therefore, an employee classified as a ‘casual caretaker’ over the period of Mr Walder’s employment was entitled by law to the specified hourly rate for every hour for which he or she was ‘engaged to work’, which was to be paid at $19.61 under the approved variation subsequent to 27 January 2009, and at $19.07 for the preceding period under the preserved APCS Award rate with the guaranteed 20% loading for that period.
If the hours for which the caretaker was engaged to work were all the attendance hours agreed between the parties, then on calculations performed by a Workplace Inspector, the underpayment of wages in relation to the position shared by Mr Walder and Ms Kilbourne amounted to the following:
| Period | Number of hours | Amount payable | Amount paid | Underpayment (per hour) | Underpayment (per period) |
| Mr Walder | |||||
| 17/01/09 to 26/01/09 | 168.5 | $19.07 per hour (i.e. $15.89 + 20% casual loading) | $4.00 per hour (based on $464.13 per week) | $15.07 per hour | $2,539.11 less a total amount of $30.00 paid in respect of cleaning duties sub-total: $2,509.11 |
| 27/01/09 to 15/04/09 | 1400.5 | $19.61 per hour | $4.00 per hour | $15.61 per hour | $21,860.24 less a total amount of $1,381.97 paid in respect of cleaning and gardening duties sub-total: $20,478.27 |
| Sub-total (Mr Walder): $22,987.38 | |||||
| Ms Kilbourne | |||||
| 17/03/09 – 23/02/09 | 22.5 | $19.61 per hour | $4.00 per hour | $15.61 per hour | $351.20 |
| Sub-total (Ms Kilbourne): $351.00 | |||||
| Total (Mr Walder and Ms Kilbourne) | $23,338.58 | ||||
In my opinion, these calculations are supported by the evidence which has been presented before me, and reflect a correct understanding of the evidence. As is apparent, they give allowance for some payments made to Mr Walder in relation to cleaning or gardening duties which overlapped his caretaking attendance periods, and for which he was paid hourly rates (less than that of caretaker) according to his submitted time-sheets. They also assume that the responsibilities of caretaker during the required attendance hours were shared between Mr Walder and Ms Kilbourne over the total period of their employment in the position, in the manner which I have found above.
The above calculations of underpayment also assume that Kensington was entitled to deduct an amount of $300 for ‘rent’ from the weekly wages to be paid for the caretaking position. There is a secondary dispute about this, which I shall address below. On the submissions of the Ombudsman, these deductions were contrary to law, so that the amount of underpayments should include an additional amount of $3,900, being $3,844.86 owing to Mr Walder, and $55.14 owing to Ms Kilbourne.
In its pleadings and throughout much of the trial, Kensington declined to make various factual admissions relevant to the above calculations. However, I am now satisfied, assisted by some admissions made in the course of submissions by its counsel, that the Ombudsman’s calculations are properly based on the evidence now before me.
Otherwise, Kensington took general issue with the assumption that all the agreed attendance hours attracted the hourly rates under the Kensington Greenfields Agreement and the preserved APCS. It submitted that only some of those hours attracted the specified hourly rates, but never satisfactorily formulated how they were to be defined and identified from the evidence before me. At first, Kensington suggested that they were only entitled to hourly rates for such periods as were occupied in responding to emergency calls, but this contention was later abandoned by its counsel, who accepted that their duties encompassed more than this. As I understood Kensington’s case at the end of the trial, it submitted that only times ‘actively’ occupied by Mr Walder or Ms Kilbourne in non-passive caretaking duties could attract the relevant hourly rates. Obviously, it could not clearly identify these hours, since it kept no records of them and did not require the employees to keep work-sheets to allow them to be identified. However, its submissions suggested that I could infer that their ‘active’ hours of caretaking duties were probably fewer than would attract remuneration exceeding the wages in fact paid to Mr Walder, so that, at least, the Ombudsman had failed to establish any underpayments contravening the provisions of the Workplace Relations Act. It did not attempt to prove that, in fact, this was so, but only that the Ombudsman had not shown otherwise.
I do not accept these submissions. In my opinion, they propound a narrow and meaningless interpretation of the ‘work’ of a caretaker in the present situation, which is inconsistent with the correct understanding of the preserved APCS rate derived from the Award, and with the wage rates provided for caretakers in the Greenfields Agreement, and with the work and responsibilities for which Kensington in fact employed its caretakers.
I have above already explained why, on the correct construction of the parts of the Award which provided the preserved APCS, its basic hourly rate for a caretaker was intended to be payable for every hour for which a caretaker was employed to be in attendance at his or her employer’s premises for the purpose of performing the duties and responsibilities of that position as directed and whenever and however necessary. I have pointed to definitional aspects of the Award which show this intention in relation to caretakers covered by its provisions, including its basic rate of pay. That interpretation therefore applies to the effect of the preserved APCS minimum rate.
The ordinary concept of a ‘caretaker’ itself suggests that the occupation may not always require activity by way of specific physical or mental exertion during the periods of employment, and that in some situations the employment of a caretaker can encompass a caretaker’s periods of permitted sleep or private activities when not called upon to perform actual duties. The circumstance giving the character of ‘work’ even to these periods, is that the caretaker is expected immediately to interrupt his or her sleep or other private activity, and to immediately assume a caretaker’s responsibility for the employer’s premises and for the employer’s business undertaken on them.
As counsel for the Ombudsman submitted, the possibility that some species of ‘work’ might be performed and be remunerated even for permitted periods of sleep on the employer’s premises, is not strange to the common law, if this is part of the “service reasonably demanded under a subsisting relationship of master and servant” (cf. Dixon J in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 466).
In Warramunda Village Inc v Pryde (2002) 116 FCR 58, a majority of the Full Court held that a supervising nurse required to attend and perform a ‘sleepover shift’ at a hospital was engaged in ‘work’ rather than merely being ‘on call’ for the purpose of award provisions which drew that distinction. Lee J said:
17. It cannot be said that, in rendering a "sleep-over shift", an employee is "on call" within the meaning of cl 32. For the purpose of cl 32 an employee who is off duty but "on call" is free to conduct his, or her, private life subject to the employer being able to direct the employee to report for duty, and to the employee organizing his or her affairs to be able to respond to that direction if given. (See: Suffolk County Council v Secretary of State for the Environment [1984] ICR 882 (House of Lords)). An employee who attends at the place of employment pursuant to the employer's direction to be at the employer's premises for a period of time and be available to provide service at the premises as required by the employer, is not carrying on private activities but is providing service to the employer. Such an employee is at "work" for the purposes of the 1995 Award and is entitled to be remunerated according to the terms of the Award. (See: Hospital Employees' Industrial Union of Workers, WA v Proprietors of Lee-Downs Nursing Home (1977) 57 WAIG 455 per Burt CJ at 456).
Finkelstein J noted at [36] that the particular award did not “require the worker actually to perform any work to be entitled to his pay. Provided the worker is available to carry out his duties, he has earned his pay.” He also referred to a general concept of ‘work’:
37. The other answer is that the words "work" or "worked" when used in provisions such as cl 13 and cl 15 do not bear the meaning assigned to them by the appellant. The authorities show that when such words are used in instruments of the type presently under consideration, what is referred to is an employee who is under the instruction of an employer: the time under instruction is time worked. In the Hospital Employees' Industrial Union of Workers v Proprietors of Lee-Downs Nursing Home (1977) 57 WAIG 455 the question was whether a nurse on night duty who was permitted to sleep nights and be on call was entitled to wages for "time worked in excess of the ordinary time" within the meaning of the Nursing Aides and Nursing Assistants' (Private) Award. The Western Australian Industrial Appeal Court (Burt CJ, Wickham and Wallace JJ), held that the nurse was entitled to her pay. Burt CJ said (at 456):
"In my opinion, once [the magistrate] held that the worker was on the premises pursuant to instructions received from the employer `to report any emergencies which arose relative to the inmates of the home' it follows that the whole of the time during which she was on the premises pursuant to those instructions was `time worked' within the meaning of the award. It may be that an emergency seldom arose and it may be that an emergency never arose but that, I think, would make no difference. The worker was not on call in the sense that she could be called upon by the employer to work. She was, I think, under a continual duty to act if called by a patient and she falls into the category of persons who serve while waiting."
In my opinion, this reasoning is directly applicable to the present situation and to the interpretation of the parts of the Award providing the APCS, and of the Kensington Greenfields Agreement, and is binding on me. I do not consider that I should prefer the reasoning in dissent of Gyles J.
Counsel also took me to a series of judgments of NSW Chief Industrial Magistrate Miller, in which the remuneration of a caretaker living on the premises was considered (Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 10 (25 January 2002), Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 116 (23 July 2002) and Mark Dickinson and Jenny Bates v The Proprietors of Body Corporate Strata Plan No.125 [2002] NSWCIMC 157 (21 October 2002)). The case appears to have turned on entitlements to various allowances and loadings, and not the employee’s entitlement to basic hourly rates. Although illustrative of the nature of employment of some caretaker positions, and of a caretaker position being shared with a domestic partner, I did not find the judgments to be of assistance in the present matter.
I have noted that the Kensington Greenfields Agreement did not contain any special definition or limitation on the concept of the ‘work’ for which the rate payable for positions classified as ‘caretaker’, in particular to confine the obligation to pay the specified rate to only part of the period for which the employee was required to be in attendance to perform the duties of the employment. In the absence of any indication that this was intended, I consider that the ordinary concepts of remunerative ‘work’ of a caretaker, which I have explained above, prevent the implication of any such term.
It is therefore unnecessary for me to decide whether the structure of the Award, or such parts of it from which the preserved APCS rate of pay was derived, themselves provide a legislative context pointing to the same construction of the Kensington Greenfields Agreement. It is also unnecessary for me consider whether an implied limitation on the apparently unqualified references in the Kensington Greenfields Agreement to the hours of work of a caretaker can be meaningfully formulated as an implied term of the contract of employment, although I am inclined to think that this would be not be possible (cf. Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422).
I am doubtful whether the interpretation of the references to the hourly rates of pay for caretakers in the preserved APCS, and in the Kensington Greenfields Agreement, can gain much assistance from a consideration of how these obligations were or were not implemented by the employer, either in the present instance or generally in its workforce, even accepting a practical approach to interpreting industrial instruments and agreements (see United Firefighters’ Union of Australia v Metropolitan Fire & Emergency Services Board (2006) 152 FCR 18 at [51] and following). I therefore had some difficulty understanding why both parties gave so much attention to exploring some particular incidents in the employment of Mr Walder and Ms Kilbourne.
However, I accept that the evidence of their employment provides relevant background and an illustration of the nature of the employment of a ‘caretaker’ for which the Kensington Greenfields Agreement was designed to provide. In this respect, the evidence confirmed the importance given by the employer to the requirement that one of the employees sharing the position of caretaker should be physically present on the premises at every moment of time in the required ‘attendance’ hours, and should be immediately available to perform the required duties of the position on the site, particularly in relation to emergencies, at all those times. This aspect of their employment did not support a narrow interpretation of the hours of the ‘work’ for which they were employed. I was not persuaded that evidence, which confirmed that the required period of attendance by a caretaker at the Village might include periods of sleep or private activities, showed that the authors of the preserved APCS or the Greenfields Agreement regarded those periods as being outside the concept of ‘work’ for which the caretaker was employed during all of his or her required attendance hours.
My above reasoning as to the remunerated hours of work of the caretaker position occupied by Mr Walder and Ms Kilbourne, has the consequence, in my opinion, that, for the initial period of their employment which was governed by the preserved APCS, the ‘guaranteed hours’ of the employees in their shared position under ss.182 and 185 is to be identified under s.183 of the Fair Work Act, as being the required ‘attendance’ hours totalling 121.5 hours per week. In my opinion, these hours meet the description in subsection 183(1) of “the specified number of hours” that “an employee is employed to work”. Alternatively, they meet the description in s.185(5) of “the hours that the employee both is required or requested to work, and does, work, for the employer …”.
I am therefore satisfied that the calculations of underpayments presented by the Ombudsman in the above table are based on a correct appreciation of the effect of the relevant legislation and collective agreement providing the rates which Kensington was obliged by law to pay its employees, and that the table reflects the correct application of those rates to the evidence of the employment of Mr Walder and Ms Kilbourne in one shared position as caretaker. The three contraventions alleged by the Ombudsman are established to my confident satisfaction, even if the Kensington was entitled in law to make weekly deductions of $300 for ‘rent’.
The deduction of rent from wages
The Ombudsman submitted that these deductions were contrary to law, and that no adjustment for rent should be allowed to Kensington when calculating the quantum of the underpayments arising from its contraventions. It contended that there were two reasons for this:
i)They were not a deductions permitted to be made under Workplace Relations Regulations 2006 (Cth), because reg.7.1(5A) and (18) excluded “the imposition of a penalty on an employee” from the “particular respects” in which an employee’s actual wage was to be compared with the rate in the preserved APCS, when deciding whether that rate “provides a more favourable outcome for the employee” so as to prevail under s.172(2), and/or
ii)They were prohibited by ss.118(1) or 119 of the Industrial Relations Act 1996 (NSW), which were given effect by s.16(3)(j) of the Workplace Relations Act 1996 as a preserved State law dealing with “deductions from wages or salaries”.
However, I do not accept either of these contentions.
The concept of an excluded “penalty” under sub-reg.7.1(5A) was defined in sub-reg 7.1(18) as follows:
(18) In subregulations (5A) and (17):
penalty:
(a) means any of the following:
(i) a deduction of an amount from an employee’s remuneration;
(ii) a reduction of an employees entitlements;
(iii) a requirement that an employee makes a payment to the employer; but
(b) does not include a deduction, reduction or requirement that is:
(i) for the benefit of the employee; or
(ii) authorised under law;
(iii) made or imposed because the employee was provided with an entitlement to which the employee was not entitled.
Sections 118 and 119 of the NSW Act provided:
118 Employees to be paid in full
(1) Payment of remuneration to an employee is to be made in full without any deduction for goods, board or lodging or any other services supplied by the employer in payment (or part payment) of remuneration.
(2) However, an employer can deduct and pay on behalf of an employee from any remuneration payable to the employee:
(a) any payments principally for the benefit of the employee that are authorised in writing by the employee to be deducted and paid, or
(b) any payments that are authorised by an industrial instrument to be deducted and paid.
(3) An employer must not pay remuneration to an employee contrary to this section.
Maximum penalty: 100 penalty units.
119 Employer not to stipulate how remuneration to be spent
An employer must not, directly or indirectly, impose as a condition of the employment of an employee any terms as to the place where or the manner in which or the person with whom any remuneration paid to the employee is to be spent.
Maximum penalty: 100 penalty units.
Counsel for Kensington submitted that the deduction of rent in the present situation constituted a ‘benefit of the employee’ within both sub-reg.7.1(18)(b)(i) and s.118(2)(a) of the NSW Act.
I can see no reason to confine the concept of ‘benefit’ so as to exclude the benefit of residential accommodation provided to an employee and his family, whether or not the use of that accommodation was a condition of the employment. The valuation of the benefit in terms of a weekly ‘rent’ of $300 was something accepted by Mr Walder and Ms Kilbourne, and I am not satisfied that it represented an inflated, unreasonable or unfair valuation. I accordingly accept this submission, which answers the first contention of the Ombudsman, and also answers the second contention in so far as it invokes s.118(1).
The terms of s.119 have a long history in industrial legislation. However, no authority was cited to me which appears to me to be directly on point. As presently advised, I do not accept that Kensington’s provision of accommodation to caretakers and the deduction of an amount by way of rent were ‘imposed’ on Mr Walder or Ms Kilbourne within the meaning of s.119. I accept that their use of the accommodation and the payment of $300 per week rent were ‘conditions’ of their employment, but these conditions were held out to them before they accepted the employment. They were clearly indicated in the letter of appointment, which Mr Walder and Ms Kilbourne voluntarily accepted before commencing their employment. I am not satisfied that this involved any unfairness or unconscionability on the employer’s part. I therefore do not consider that this deduction comes within the language or policy of s.119.
I therefore reject both of the Ombudsman’s contentions that no allowance should be made for rental deductions, when finding the extent of the underpayments of Mr Walder and Ms Kilbourne.
Conclusion
For the above reasons, I find that Kensington is liable for the three contraventions of the Workplace Relations Act which I identified at the commencement of this judgment. The matter should now proceed to a further hearing on penalty.
I am also satisfied that the Ombudsman has established a case for an order that Kensington pay compensation of $22,987.38 to Mr Walder and $351 to Ms Kilbourne, with interest.
I shall invite the parties to prepare short minutes of appropriate declarations and orders to give effect to my above reasons, and to calculate the appropriate amount of interest applying Federal Court Practice Note CM 16.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Smith FM.
Date: 27 April 2012
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