KERNAGHAN v Neffray Pty Ltd

Kernaghan (the applicant) brought proceedings against Neffray Pty Ltd (the respondent) in the Federal Court of Australia concerning the calculation of wages under the Road Transport (Long Distance Operations) Award 2010. The dispute centred on whether the respondent had correctly remunerated the applicant for his driving time and other entitlements under the Award, particularly in light of the contractual terms of his employment.

The court was required to determine several key legal issues. These included whether the respondent's method of paying a flat hourly rate for all hours worked constituted an election to use the hourly driving rate method under the Award, rather than the default cents per kilometre method. Further, the court had to consider how the Award's provisions for guaranteed minimum weekly rates interacted with the methods for payment based on cents per kilometre or hourly driving time. The court also needed to assess whether payments made during the first period of employment for non-driving hours could be offset against amounts owing for driving time. Finally, a dispute arose regarding the correct reference rate for calculating annual leave entitlements under the Award.

In its reasoning, the court emphasised that the Award must be read as a whole and outlined its multi-step process for determining minimum employee payments. This process mandates that for long-distance operations, employees must be paid for all driving time, either by a cents per kilometre method or an hourly rate method, with the employer required to nominate one at the commencement of employment. Crucially, if the amount calculated under either of these methods for a fortnight falls below the guaranteed minimum rate, the employee must be paid at least twice the minimum weekly rate for that fortnight. The court also considered the contractual provision allowing for the offset of above-component payments against other applicable entitlements, noting that the nature of industrial law set-off principles would apply.

The court found that the applicant's contractual remuneration, which included a flat hourly rate for all hours worked and a cents per kilometre rate for driving, did not necessarily satisfy the Award's requirements. The interaction between the contractual terms and the Award's specific payment mechanisms, particularly the guaranteed minimum rate provision, was central to the determination. The court's analysis focused on whether the total remuneration paid met or exceeded the minimum entitlements prescribed by the Award, considering the different calculation methods available and the employer's obligations.