Gould, Robinson and Boxshall v Effective People (Civil Dispute)
[2019] ACAT 124
•24 December 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
GOULD, ROBINSON & BOXSHALL v EFFECTIVE PEOPLE (Civil Dispute) [2019] ACAT 124
XD 423/2019
XD 772/2019
XD 773/2019
Catchwords: CIVIL DISPUTE – entitlement to long service leave under the Clerks (Long Service Leave – ACT) Award 2000 – intention of the Act – proper construction of section 113 of the Fair Work Act 2009
Legislation cited: Acts Interpretation Act 1901 (Cth) s 15AA, 15AB
Conciliation and Arbitration Act 1904 (Cth)
Fair Work Act 2009 (Cth) ss 26, 27, 113
Long Service Leave Act 1976
Long Service Leave Act 1987 (SA)
Workplace Relations Act 1996 (Cth) s 228
Subordinate
Legislation cited: Clerks (Long Service Leave – ACT) Award 2000
Clerks (ACT) Award 1985
Clerks (ACT) Award 1998 cl 12, 12.1, 12.3, 14.4
Clerks Award 2010
Clerks Long Service Award 1961 cl 2.3, 11
Clerks Long Service Aware 1978
Vehicle Industry Award cl 14
Cases cited: Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26
Epona Pty Ltd [2015] FWCA 5890
Finance Trust Company Limited v New South Wales Crime Commission [2009] HCA 49
Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94
Sztal v Immigration and Border Protection [2017] HCA 34
Taylor v The Owners – Strata Plan Number 11564 [2014] HCA 9
Unilever Australia Trading Limited v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) [2018] FWCFB 4463
Welsh v Erica’s Aesthetics Pty Ltd [2017] ACAT 68
List of
Texts/Papers cited: Explanatory Memorandum to the Fair Work Bill 2008 (Cth) rr 26, 76, 77
Tribunal: Senior Member H Robinson
Date of Orders: 24 December 2019
Date of Reasons for Decision: 24 December 2019AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 423/2019
XD 772/2019
XD 773/2019
BETWEEN:
TRACY GOULD
Applicant (XD 423/2019)
YVONNE ROBINSON
Applicant (XD 772/2019)
JOANNE BOXSHALL
Applicant (XD 773/2019)
AND:
EFFECTIVE PEOPLE PTY LTD ACN 063 100 201
Respondent
TRIBUNAL: Senior Member H Robinson
DATE: 24 December 2019
ORDER
The Tribunal orders that:
1. The applications are dismissed.
………………………………..
Senior Member H Robinson
REASONS FOR DECISION
1. This matter concerns three applications bought by the applicants in the Tribunal’s civil (debt recovery) jurisdiction to recover long service leave payments they claim are owed to them under the Long Service Leave Act 1976 (ACT) (LSL Act). The question before the Tribunal is whether their long service leave entitlement is determined by the LSL Act or by a Commonwealth industrial instrument. This matter illustrates the complexity of the national framework governing some employees’ entitlements.
Jurisdiction
2. The applicants have brought this application as a debt recovery application in the Tribunal’s civil jurisdiction. The say that a debt is owed to them by operation of section 11C of the LSL Act, which provides that where a person has completed a period of service of at least five years but less than seven years, that person is entitled to be paid out for the accrued leave. As this alleged debt accrued under Territory legislation, and is less than $25,000, it is appropriate that it be brought in the Tribunal. In considering whether the debt exists, the Tribunal must have regard to Commonwealth legislation, including the Fair Work Act 2009 (Cth) (FW Act) and a number of industrial instruments made under it and other Acts. However, it should be noted that the Tribunal has no jurisdiction to hear or decide claims for the recovery of wages or other entitlements determined under the FW Act or an award or enterprise agreement made under that Act – see Welsh v Erica’s Aesthetics Pty Ltd [2017] ACAT 68.
The LSL Act
3. Section 7 of the LSL Act provides that an employee who has completed seven years of service with a single employer is entitled to long service leave for the period of service, and then a further period for each additional year of service. Section 11C(1)(b) provides that an employee who has completed five years but less than seven years’ service may be paid out accrued leave upon cessation of their employment. The LSL Act applies to full time, part time and casual employees, but for reasons set out below, it does not apply to an employee who is covered by an inconsistent Commonwealth industrial instrument or law.
The issue in dispute
4. The facts are not in dispute. Determination of this case requires an analysis of the industrial framework that applies to the applicants.
5. The applicants were all casual employees of the respondent from some time prior to 1 January 2010 until the termination of their employment on or about 11 October 2016. The applicants claim that they are entitled to long service leave under the LSL Act for this period.
6. The respondent denies that it is liable to pay the applicants long service leave under the LSL Act, or at all, and says that they are covered by Commonwealth industrial instruments that do not permit casual employees to accrue long service leave.
7. It is not in dispute that prior to 1 January 2010 the applicants’ entitlement to long service leave was determined by an award-based transitional instrument, the Clerks (Long Service Leave – ACT) Award 2000 (2000 LSL Award). The 2000 LSL Award provides at section 5.1 that an employee who has completed fifteen years service with an employer is entitled to thirteen weeks long service leave.
8. However, section 8.1.1 of the 2000 LSL Award provides that long service leave accrues only under an “unbroken contract of service”, section 6.1.1, which deals with the rate of pay for longer service leave, only sets out how to calculate the rate of payment for full time employees, and clause 12 of the 2000 LSL Award provides that:
Leave is reserved to any party to apply for inclusion of provisions regarding:
• Part time workers;
• Casual workers.
9. Accordingly, it is common ground between the parties that although the 2000 LSL Award covered the applicants, as clerical employees, it does not include any provisions that permit the applicants, as casual employees, to actually accrue long service leave.
10. On 1 January 2010 the applicants became covered by a new modern award made under the FW Act — the Clerks Award 2010 (the Modern Award). The Modern Award operates to the exclusion of previous industrial instruments, including the 2000 LSL Award. Hence, when the Modern Award came into effect, the applicants ceased to be covered by the 2000 LSL award.
11. A modern award must not include terms dealing with long service leave, and hence the Modern Award does not incorporate the long service leave provisions from the 2000 LSL Award. However, section 113 of the FW Act provides, relevantly, as follows:
(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.
(2) However, subsection (1) does not apply if:
(a) …
(3) Applicable award‑derived long service leave terms, in relation to an employee, are:
(a) terms of an award that (disregarding the effect of any instrument of a kind referred to in subsection (2)):
(i) would have applied to the employee immediately before the commencement of this Part 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; or
(b) if the employee is a Division 2B State reference employee (as defined in Schedule 2 to the Transitional Act)—immediately before the Division 2B referral commencement (as defined in that Schedule).
12. It is not in doubt that the ‘test time’, for the purposes of section 3A, is 31 December 2009, the day immediately prior to the relevant provisions of the FW Act came into effect.
13. In effect, it appears that sections 113(1) and 113(2) of the FW Act preserve the operation of the 2000 LSL Award in relation to all employees who, as at 31 December 2009, would have been covered by it and who were ‘entitled’ to long service leave in accordance with its terms. In other words, under the FW Act, award-derived long service leave terms will override State or Territory legislation if the terms of the award would have applied to the employee immediately before 1 January 2010.
14. The question is therefore whether the applicants are still ‘entitled’ to LSL ‘in accordance with the terms’ of 2000 Award, notwithstanding that the entitlement would be quantifiable as ‘nil’.
The parties’ positions
15. Both parties appear to agree that the outcome of the application rises or falls on the meaning of the word ‘entitled’ in the phrase ‘’would have entitled the employee to long service leave’ in section 113(1) of the FW Act.
16. In effect, the applicants say that the starting point for construction is for the ordinary meaning of the statutory words to be interpreted according to their legislative purpose in context. The ordinary meaning of an ‘entitlement’ is something you have a right to or the benefit of. Because the 2000 LSL Award gives them no right or claim to an amount of long service leave, they are not in fact entitled to long service leave under that Award. The applicants rely upon an advice from the FWO (the FWO) in support of this position.
17. The term ‘entitled’ is not defined in the FW Act, and it is therefore is permissible to look to the dictionary meaning. The Macquarie Dictionary does not define entitled, but defines ‘entitle’ to mean:
Verb: to give (the person or thing) a title, right or claim to something.
18. This meaning would appear to support the applicant’s position that, under the Award, they have no ‘entitlement’, that is no right or claim, to long service leave.
19. The respondent, however, argues that the ‘golden rule’ of statutory construction permits courts to depart from the ordinary grammatical sense when its use results in inconsistency or absurdity. The respondent submits that this is one case where such a departure should be made. The reasons for this assertion are considered further below, but in essence, the applicants’ position results in full time employees having their entitlement determined by the award, and casual employees by the LSL Act, both of which have different terms.
20. The respondent submits that it is appropriate to take a more purposive and contextual approach. The respondent points to Taylor v The Owners – Strata Plan Number [2014] HCA 9 in which Gageler and Keane JJ discussed the relationship between grammar, meaning, context and purpose, and noted the importance of context and purpose in ascertaining the meaning of a statutory provision. Similarly, Keifel CJ and Nettle and Gordon JJ stated that “[c]ontext should be regarded at this first stage and not at some later stage and should be regarded in its widest sense.”
21. The respondents argue that, viewed in context, the word entitled in section 113(1) means that casual employees have their right or ‘entitlement’ to long service leave determined under the terms of the 2000 LSL Award, and it is of no matter that the right is quantified at zero.
22. The respondents also point to section 15AA of the Acts Interpretation Act 1901 (Cth), which provides that:
In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.
23. The respondent also points to section 15AB, which permits regard to be had to extrinsic materials, “to determine the meaning of a provision where: (a) the provision is ambiguous or obscure.” These provisions are important to the respondent’s case, because the respondent relies on extraneous material that suggests that the purpose of the section 113(1) of the FW Act was not to change or enhance the rights to long service leave, but only to clarify what legislation applies.
24. The first question, therefore, is whether section 113 is ambiguous, or subject to multiple interpretations, such that I may depart from the ordinary meaning of the word.
Is section 113(1) ambiguous?
25. The respondent relies upon the decision of Justice Katzman in Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94 (Maughan). In that case, her Honour, with whom Greenwood and Besanko JJ agreed, considered the meaning of the word ‘entitled’ in section 113(1) of the FW Act and concluded it was ambiguous, noting as follows:
…So what is meant by “terms of an award … that … would have entitled”?
The language here is awkward, the meaning ambiguous.” (emphasis added)
26. Authority from the Full Court of the Federal Court would be at least highly persuasive on this Tribunal, and I see no reason to depart from it in this case. In any case, I agree. I am satisfied that the context in which the word ‘entitled’ is used in section 113(1) makes it ambiguous. This is because the purpose of an industrial instrument is to set out an employee’s ‘entitlements’, being their salary and conditions and benefits of employment. The agreement may provide that certain benefits are only payable to some employees, and that others may not be entitled to that benefit, but the agreement could generally still be said to deal with all employees’ ‘entitlements’ to that benefit — notwithstanding that such an interpretation does appear to sit uncomfortably with the ordinary meaning of the word ‘entitled’.
27. I will consider Maughan in more detail below, but briefly, the respondent in that matter, Mr Cooper, sought to claim long service leave under the Long Service Leave Act 1987 (SA) (SA LSL Act). Mr Cooper asserted that he was able to claim long service leave under that Act because he had not yet had enough tenure to be ‘entitled’ to long service under his relevant industrial agreement. The court held that Mr Cooper was not entitled to long service leave under the SA LSL Act because he had a right to long service leave under his Award, despite the fact that he had not worked long enough to have actually accrued any. The respondent says that the circumstances are directly analogous to the present. The applicants say they are not, and that the Maughan case is a distinguishable case of double dipping. Either way, Maughan is the best authority on the operation of section 113, and I will come back to it below. For present purposes, it confirms that the term ‘entitled’ in ambiguous and that I should look beyond the ordinary meaning of the word.
28. However, before doing that, it is necessary to set out how the industrial framework that applies in this case, so as to better understand the purpose of section 113 of the FW Act.
The Fair Work Act 2009
29. Section 26 of the FW Act sets out a general intention that the FW Act will apply to the exclusion of all State or Territory industrial laws. The section includes a definition of industrial laws which I do not need to go into, but which would potentially include the LSL Act.
30. However, section 27 of the FW Act then sets out that long service leave is an exception to the exclusions in section 26, except in relation to an employee who is entitled to long service leave under Division 9 of Part 2-2 of the FW Act (that is, where there is an exception to the exception). This part includes section 113 of the FW Act.
31. Section 113 of the FW Act then effectively states that if there are award-derived long service leave terms in relation to an employee, and those terms would have entitled the employee to long service leave as at 31 December 2009, those terms continue to apply. If they are not so entitled, State or Territory legislation will apply.
Are the applicants ‘entitled’ to long service leave under the 2000 LSL Award?
32. In order to understand the scope of the 2000 LSL Award, it is necessary to review the history of the regulation of long service leave for clerks engaged in the Territory. Unfortunately, this is somewhat complicated.
33. The first industrial instrument of relevance is the Clerks Long Service Award 1961 (the 1961 LSL Award). This was a “respondency award” made under the Conciliation and Arbitration Act 1904 (Cth). Under that Act, awards were made by unions serving a log of claims on named employers. However, in the Territory, a respondency award could be converted into a common rule award, which would then apply to all employers of a relevant kind in the Territory. Clause 2 of the 1961 LSL Award provided that “an employee shall herein be provided to leave with pay in respect of long service”. Clause 3 then provided, that leave accrued in relation to “continuous service with one and the same employer.”
34. The 1961 LSL Award did not make reference to casual, part-time or full-time employment. Rather, it simply provided, at clause 11 that it covered persons engaged as clerks by relevant employers.
35. The respondent submitted that the 1961 Award did not grant long service leave to casuals:
It requires continuous service. It doesn’t define what that is but the employment of casuals, as a matter of law I submit … the very nature of casual employment is intermittent, uncertain and not continuous.
36. I do not think this could be in doubt, and certainly not in 1961. The common law position for casual employment has long been that each engagement stands alone, and constitutes a period of service, but there is no continuity of service from one engagement to the next. By limiting long service leave to those with ‘continuous service,’ the 1961 LSL Award denied long service leave to casual employees.
37. The 1961 LSL Award was eventually replaced on 13 February 1978 with the Clerks (Long Service ACT) Award 1978 (1978 LSL Award). The 1978 LSL Award was declared a common rule award applying to all Territory employers from 21 July 1998. Clause 3 of this Award stated that “Employees shall be entitled to long service leave with pay in respect of service with an employer as provided in this award”. Clause 1 then provided that, subject to certain exceptions:
For the purposes of this award the service of an employee with an employer means the period during which the employee has served his employment under an unbroken contract of employment…
38. Unlike the 1961 LSL Award, the 1978 LSL Award referenced casual workers. Clause 13 states:
Leave is reserved to any party for inclusion of provisions regarding part time workers, casual workers and boards of reference.
39. The respondent submits that the intention of the 1978 LSL Award was not to provide for long service entitlements to part-time workers or casual workers without further order. I note, however, the use of the term ‘worker’ rather than ‘employee’. I am unsure why the terminology changed. However, it appears clear in any case that casual employees are excluded from long service leave under the 1978 LSL Award due to the operation of clause 1.
40. The 1978 LSL Award appears to have remained in effect for some time, until a decision of Commissioner Larkin of 5 September 2000, giving effect to the 2000 LSL Award.
41. Before dealing with the 2000 LSL Award it is necessary to quickly look at the remainder of the industrial framework governing persons engaged as clerks.
42. It appears that at least since the 1961 LSL Award, a clerk’s entitlement to long service leave was determined by a separate instrument to the remainder of their entitlements. The most recent general industrial agreement, prior to the Modern Award, was the Clerks (ACT) Award 1985 (1985 General Award). This set out the majority of terms and conditions of employment for clerks. The General Award did not deal with long service leave, and that continued to be dealt with by the 1978 LSL Award.
43. The 1985 General Award was simplified by way of a decision of Commissioner Larkin on 27 November 1998 — this new Award became the Clerks (ACT) Award 1998 (1998 General Award). It covered “each and every person employed in any clerical capacity whatsoever” in the ACT. Again, it did not deal with long service leave, other than some provisions relating to when it could be granted. The accrual of long service leave continued to be covered by the 1978 LSL Award until the 2000 Award.
44. Clause 12 of the 1998 General Award set out three classifications of employment – full-time employment and regular part time employment, and:
Employees, other than full-time employees and regular part-time employees, will be regarded as casual employees…
45. There is no doubt that the 1998 General Award determined entitlements for casual employees, as well as full-time and regular part-time employees. It appears that that the 2000 LSL Award also did not define ‘employee’ or have provisions setting out when a person was an ‘employee’, because this question was to be determined under the 1998 General Award.
46. Turning back to the 2000 LSL Award, this instrument did not contain any provisions granting long service leave to casual employees, but it also does not exclude them. Clause 5.1, which deals with ‘entitlement to leave’, simply reads:
an employee is entitled to long service leave with pay in respect of service with the employer as provided in this award. (emphasis added)
47. By contrast, clause 6.1.1 of the 2000 LFL Award makes reference to “a full-time employee” by way of distinction.
48. However, it is worth noting that section 5.1 has been amended by way correction order. The clause initially expressly excluded casual and part time workers, providing that:
An employee other than a casual or part-time employee is entitled to long service leave with pay in respect of service with the employer as provided in this award.
49. I do not know the reason for this amendment. However, in the respondent’s submission, the amendment was crucial, because it appears to make it clear that long service leave ‘entitlements’ for part-time and casual employees can and should be made under the Commonwealth framework and inserted into the 2000 LSL Award at a later time. Clause 12, which states that leave is reserved to any party to apply for inclusion of provisions regarding part time and casual workers, is extracted above at paragraph 7.
50. I note here that, as with the 1961 LSL Award, the language in section 12 of the 2000 LSL Award is unhelpful, because it is not clear to me why this Award continues to use the terms part-time ‘workers’ and casual ‘workers’ in clause 12, rather than ‘employees.’ Within an industrial law concept, a ‘worker’ is usually a broader term than an employee, encompassing, for example, some contractors. Neither the 1998 General Award nor the 2000 LSL Award define worker, and nor did the then Workplace Relations Act 1996, (although a “shift worker” was defined in section 228 of that Act to mean, in effect, an employee who works shifts). It is not clear why the language differed, except perhaps as a legacy of the earlier awards. No party suggested that the different words had any consequence for these proceedings and in any case it is common ground between the parties (and consistent with the FWO Advice relied upon by the applicants) that the Award does not provide a means by which a casual employee can accrue long service leave.
51. So what is the consequence of this chain of definitions for the current proceedings?
52. Some guidance may be found in the case of Maughan, which was a similar case to the present one. Mr Cooper worked for Maughan Thiem Auto Sales Pty Ltd from 28 October 2002 until 19 September 2011. He then sought an entitlement to long service leave under the South Australian equivalent of the LSL Act. It was common ground that, if the Vehicle Industry – Repair Services and Retail – (Long Service Leave) Award 1977 (Vehicle Industry Award) applied to him, then he had no entitlement to long service leave under that Act because he had not had sufficient service with his employer.
53. In considering the matter, Her Honour Katzmann J observed that:
… it was necessary to decide first, whether there was an award containing terms which would have applied to Mr Cooper immediately before Part 2-2 of the Act commenced and secondly, whether the terms of that award would have entitled him to long service leave.
54. At first instance, the industrial magistrate accepted that the terms of the Vehicle Industry Award would have applied to Mr Cooper at the relevant time and on this basis his Honour found that section 113(3)(a)(i) was satisfied. But His Honour rejected Maughan’s argument that the award would have entitled Mr Cooper to long service leave at the relevant time. His Honour concluded that section 113(3)(a)(ii) required that, for there to be “applicable award-derived long service leave terms”, there had to be “an actual entitlement to take long service leave or to pro-rata long service leave at [the test time]” and there was no such entitlement in this case. That was because the award did not entitle an employee to take long service leave until he or she had completed at least 10 years’ service.
55. Maughan challenged this conclusion, based on the words in section 113. The question for the Full Court of the Federal Court effectively came down to whether any award that makes provision for long service leave entitlements for employees, even where that entitlement would amount to nil, contain an entitlement to long service leave?
56. Katzmann J observed that:
32. [Maughan’s]… point, based on the words used in s 113, is that any award that makes provision for long service leave entitlements for employees contains an entitlement to long service leave and there is nothing in the text to suggest otherwise. It submitted, in effect, that this construction would also best achieve the statutory purpose. As Maughan put it:
[T]he section is transitional in nature. The clear intent manifested by s.113 in its entirety is to maintain the various schemes for provision of long service leave. Thus s.113(2) preserves the effects of the various kinds of instrument already in existence – in particular, agreements – capable of conferring long service leave entitlements upon employees. Section 113(3) then, consistently, looks to preserve the operation of terms of awards that are already in place as at the test time which make provision for long service leave entitlements. It does this by continuing the application of those long service leave entitling award terms, both to those employees who are already bound by such awards (whether or not such entitlements have actually accrued) and extending the effect of those terms to employees engaged after 1 January 2010, who would have been entitled to long service leave under any such award had they been engaged before that date. By this means s.113, in its various subsections, continues the variety of provisions that confer long service leave entitlements.
The interpretation preferred by the Industrial Magistrate would have the reverse effect. Limiting the continuity of long service leave entitlements to entitlements actually accrued would significantly disrupt expectations of employers and employees alike. There is no purposive logic to such a limitation.
57. Maughan contended that this construction is supported by the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) (the EM), which relevantly stated 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 [National Employment Standards]).”
58. Mr Cooper, on the other hand, maintained that there was no ‘entitlement’ to long service leave under the award, for the purposes of section 113 of the FW Act until the he was eligible to take leave, that is to say, until his entitlement had actually accrued. Mr Cooper had worked an insufficient number of years to accrue long service leave under the LSL award, which only provided for long service leave after 15 years’ service and after 10 in certain circumstances. In contrast, Mr Cooper had worked a sufficient number of years for the purposes of the State Act, which provided for payment on termination after seven years (except in cases of termination for serious and wilful misconduct or unlawful termination by the employee).
59. After considering various arguments, Katzmann J concluded that:
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”?
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.
In my view, the first interpretation is to be preferred. The second condition in s 113(3)(a) is satisfied if, at the test time, the employee would have had a right to long service leave under a relevant award (that is, an award satisfying the first condition in s 113(3)(a)), irrespective of whether at that time the employee would have accrued long service leave. 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.
60. The distinguishing factor between Maughan and the present case is that the applicant in Maughan had not yet satisfied the preconditions for an entitlement under the Vehicle Industry Award, while under the 2000 LSL Award, it is not just a matter of time served – the applicants are not entitled to accrue long service leave under the Award at all, unless they move from casual employment to full time employment.
61. Justice Katzman, in Maughan, examined this situation very briefly, as obiter, but did not come to any conclusions:
46. The industrial magistrate also said (at [48]) that the LSL award had to be considered against the individual employee’s circumstances because it only covered permanent full-time employees (citing cl 16), whereas casual and part-time employees in South Australia were covered by the State Act. Clause 16, however, merely reserves leave to a party to the award to apply for inclusion of provisions regarding part-time and casual workers, amongst other matters. The award covers all employees. The opening paragraph of the coverage clause (cl 3), which is entitled “parties bound and incidence of award”, reads as follows:
This award shall as to all employees whether members of an organization or not operate in the States of New South Wales, Queensland, Victoria, South Australia and Tasmania in the industries set out in subclause 3(a) of the Vehicle Industry - Repair, Services and Retail - Award 1976 as varied from time to time and subject to clause 13 of this award to the same extent as the said award but subject to the same exceptions, exemptions and reservations as are provided by that award.
47. Clause 13 is irrelevant for present purposes.
48. Clause 14 states that:
An employee shall be entitled to long service leave with pay in respect of service with an employer as in this award provided.
49. ‘Employee’ is not defined. But the reservation of leave in cl 16 to include provisions regarding part-time and casual workers does not, of itself, limit the meaning of “employee” in cl 4 to permanent full-time employees. The coverage clause (cl 3) makes that clear. The award does not include an exception or exemption for part-time and casual employees. The only exemption in the award is contained in cl 12 and neither party argued it had any application to the present case. The evident purpose of cl 16 was to enable the award to be varied to include special provisions relating, amongst other things, to those classes of employees. In my opinion, the award was intended to apply to all employees in the relevant industries.
62. Two points can be made. First a ‘reservation’ clause, such as that clause 12 of the 2000 LSL Award, does not, of itself, limit the meaning of ‘employee’ in the remainder of the award. Second, the last sentence, at least, suggests that Her Honour was of the view that the award would set the entitlements for all employees in the covered industry, notwithstanding that it did not actually prescribe any entitlement for part time and casual employees. This is the respondent’s position in the present case, and these observations about the operation of a very similarly worded Award support that interpretation.
63. Ultimately, her Honour did not make any finding on this question, as she was satisfied that the applicant was not a casual and therefore the question did not arise. However, as this is a decision of the Full Court of the Federal Court, even Her Honour’s obiter comments in Maughan are highly persuasive. I would usually follow such an authority unless persuaded it was either wrong or distinguishable.
64. Are the facts of this matter distinguishable? I have closely examined the terms of Vehicle Industry Award and the 2000 LSL Award. I have concluded language used in relation to scope is remarkably similar in both. In particular, clause 4 of the Vehicle Industry Award is in the same terms as the amended clause 5.1 of the 2000 LSL Award. There is little substantive difference between the Awards. Accordingly, the weight of authority clearly supports the respondents’ case.
65. But was this the intention of the legislation?
What was the intention of the Act?
66. Was it the intention of the FW Act to preserve pre-reform entitlements, even where those entitlements were effectively of no benefit or substance?
67. The First Explanatory Memorandum to the Fair Work Bill 2008 (the EM) and the supplementary memorandums all provide some guidance about the purposes of section 113 of the FW Act.
68. In the regulatory analysis in the EM, it is noted, on page xxi of the EM that:
r.26 an entitlement to long service leave is currently provided by state and territory legislation, awards and agreements. Initially, the NES will draw on current state and territory arrangements for long service leave in providing this entitlement. Meanwhile, the Government is working with state and territory governments to develop nationally consistent long service leave entitlements.
69. And page 73 that:
r.76 An entitlement to long service leave is currently provided by state and territory legislation, awards and agreements. The NES will preserve current arrangements for long service leave. Meanwhile, the Government is working with the states and territories to develop nationally consistent long service leave entitlements.
r.77 Given that the overwhelming majority of employees currently have access to long service leave, the Department expects a minimal impact from this NES.
70. Pages 9 and 10 of the EM then go on to specifically to refer to clause 113:
Division 9 – Long service leave
436. This Division sets out the entitlement to long service leave for national system employees.
437. This entitlement is a transitional entitlement, pending development of a uniform, national long service leave standard with the States and Territories.
438. This Division preserves long service leave entitlements in pre-modernised awards (referred to as applicable award-derived long service leave terms).
439. 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).
Clause 113 – Entitlement to long service leave
440. An employee is entitled to long service leave under this Division in accordance with applicable award-derived long service leave terms (subclause 113(1)).
441. This 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).
442. 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.)
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445. The legislative note after this subclause makes clear if such an agreement or instrument ceases to apply, the employee will then be entitled to long service leave in accordance with any applicable award-derived long service leave terms.
446 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). (emphasis added)
71. Having regard to the EM, it appears that the purpose of clause 113 of the FW Act was to preserve the effect of long service leave terms in pre-modernised awards. The likely reason for this was to protect and preserve entitlements that may otherwise be lost during the reform process. Section 113 ensured that, even if an employee’s position fell outside the classification structure in the new modern awards, if that employee was entitled to long service leave under a pre-reform federal award, that entitlement would be preserved and continue to apply. In other words, it was a kind of ‘safety net’ for employees whose classifications were missed in the modernisation process. The intention may also have been to clear the way for State and Territory legislation to apply where there is no accrual under Commonwealth instruments – hence the use of the words “would have entitled the employee to long service leave” in section 113(3)(a)(ii). However, there appears to also be an acknowledgment in the regulatory statement, at rule 76, that some employees were not entitled to long service leave, and that preserving the existing arrangements would continue that. If I apply the reasoning in Maughan, that appears to be what has happened here.
The consequences
72. The respondent argues that the applicants’ interpretation would result in several absurdities, because it would result employees flipping between two different instruments, one Territory and one Commonwealth, as they moved from casual or part-time to full time employment (noting I have not considered the situation of part-time employment in this decision). The respondent’s lawyer outlined the following example:
A casual or part-time employee [who worked] as a clerk or in a clerical capacity for an ACT employer for seven years would have a right at that point to take long service leave under section 3 of the Long Service Leave Act. However, if at point without having taken the leave or their employment terminating … the employee’s employment changes from casual to full-time, they will then be covered by the award which would apply to the exclusion of the Long Service Leave Act. And so they would automatically lose their long service leave until they have served 10 years.
73. A similar problem arises in reverse:
A clerk [is] employed full-time for eight years then asks to go casual. ...If they had been employed eight years for full-time no one disputes that they are not entitled to long service leave at that point. Then they go casual and the unwitting employee agrees, and a week later they tell their employer their [sic] ceasing their employment … on the applicants’ interpretation that gives them 1.6 months’ payment in lieu of long service leave for one week of casual employment.
74. These are significant problems, although not insurmountable ones. The employer in scenario two would probably have reasonable business grounds for resisting the change, and the employee in scenario one would be expected to factor the loss of a long service entitlement into any decision to change employment classifications. Moreover, these problems are not limited to employees who change between full time, part time and casual employment. Although it is not entirely clear, it appears that section 113(1) will only apply if the work currently being performed by the employee could have been covered by the relevant award as at 31 December 2009. Employees moving between different types of work within the same workplace may also end up having their long service leave entitlements (and indeed, other entitlements) covered by different instruments. Still, these examples practically illustrate the difficulties involved in having multiple instruments in operation at various levels, and tphe consequences of section 113 preserving entitlements.
Summary and conclusion
75. To accept the respondent’s position in this proceeding is to effectively deny long service leave to most clerks employed on a casual basis in the ACT. This is something I would do only with the greatest of reluctance, particularly given what appears to be the intention of the legislation, as set out above. However, the ultimate question must be one of interpretation, not fairness.
76. The only issue is the proper construction of section 113 of the FW Act. The test is as stated by the Full Court of the Federal Court in Maughan. In that case Katzmann J (with whom Greenwood and Besanko JJ agreed) said:
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”?
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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. The second condition in s 113(3)(a) is satisfied if, at the test time, the employee would have had a right to long service leave under a relevant award (that is, an award satisfying the first condition in s 113(3)(a)), irrespective of whether at that time the employee would have accrued long service leave. 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.
77. In this case, the first condition is met because there is an award that would have applied to the applicants on 31 December 2009 when in their “current circumstances of employment”. This is an award that deals specifically with long service leave.
78. The second condition is met because there were terms in that federal award that provided for payment for long service leave, and it is common ground between the parties that those terms applied to all employees engaged as clerks in the ACT. On the weight of authority, the fact that under those terms the applicants did not actually accrue long service leave, and indeed could not accrue it, does not mean that the terms did not apply to those employees.
79. I understand that this decision will be a great disappointment to the applicants, who worked for the respondent for many years, and whose claims for long service leave are relatively modest. However, I am satisfied that this interpretation is most consistent with the EM, with its stated intention to “preserve the effect of long service leave terms in pre-modernised awards (i.e. awards as they stood immediately before commencement of the NES.)”, and with a decision of the Full Court of the Federal Court in Maughan, which is highly persuasive authority, and which I have no reason not to follow.
80. The applicants have been given various and inconsistent advice throughout this process. The legislation is confusing and, as the Full Court of the Federal Court recognised in Maughan, also ambiguous. Whilst I cannot be entirely sure of the intention of the legislation, it appears unlikely that this degree of uncertainty was it. Some statutory amendment may be needed to clarify the issue.
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Senior Member H Robinson
HEARING DETAILS
FILE NUMBER:
XD 423/2019
XD 772/2019
XD 774/2019
PARTIES, APPLICANT:
Tracey Gould
Yvonne Robinson
Joanne Boxshall
PARTIES, RESPONDENT:
Effective People Pty Ltd
ACN 036 100 201
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
Bradley Allen Love Lawyers
TRIBUNAL MEMBERS:
Senior Member H Robinson
DATES OF HEARING:
1 October 2019
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