Knox, L. v Grace Bros. Holdings Ltd

[1985] FCA 433

Re: LYNETTE KNOX
And: GRACE BROS. HOLDINGS LIMITED
No. ACT1 of 1985
Industrial Law
12 IR 78

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
INDUSTRIAL DIVISION
Davies J.
Sheppard J.
Burchett J.

CATCHWORDS

Industrial Law - interpretation of Award - leave loading - whether employee who voluntarily retires entitled to loading

Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1903 - cl. 33

Annual Holidays Ordinance 1973 (A.C.T.) - ss. 4, 5, 6, 11, 14

Fuller v Engineering Testing and Research Services (W.A.) Pty Limited (1984) 65 WAIG 65

An Application in the Matter of the Clothing Trades Award 1964 (1973) 152 CAR 249

Federated Liquor & Allied Industries Employees Union of Australia v Ansett Airlines of Australia (1974) 166 CAR 610

Re Queensland Annual Leave Loading Case (1973) 84 QGIG 1217

Re Annual Holidays Loading Case (1974) 74 AR (N.S.W.) 130

Re South Australian Annual Leave Case (1974) 41 SAIR 300

In the Matter of An Application by the Food Preservers

Union of Australia (1976) 177 CAR 292

Re Food Preservers Award (1982) 3 IR 264

HEARING

CANBERRA
#DATE 23:8:1985

ORDER

The appeal be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

I have had the opportunity of reading the reasons for judgment prepared by each of my colleagues. I agree with each and with the order proposed. I have nothing to add.

JUDGE2

In question in this appeal is Clause 33 of the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1983 ("the Award") which is binding upon the respondent. Clause 33(g) provides that during a period of annual leave an employee shall receive a loading of 17.5 per cent calculated on the appropriate rate of wage prescribed by Clause 5 or Clause 6 of the Award. At all material times the appellant was employed by the respondent as a shop assistant. On 2 July 1983 the appellant voluntarily retired from her service with the respondent and her services with it terminated by agreement on or about that date. On the date that she voluntarily retired the appellant had an entitlement to 175 hours of recreation leave. She was paid the award rate for leave which she had accumulated, but was not paid the 17.5 per cent loading. This was because she had voluntarily terminated her employment. The decision of the Court is required on whether the appellant was entitled to the loading in addition to the amount received by her for the leave to which she was entitled. The learned primary Judge determined that she was not.

Clause 33 of the Award is entitled "Annual Leave". The relevant paragraphs of it are as follows:-

"(a) In addition to the public holidays specified in this award all employees not otherwise entitled to recreation leave under this award, shall be entitled to leave of absence on full pay for a period equal to four working weeks exclusive of public holidays where any such employee has been in the continuous employment of the same employer during the preceding twelve months.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) Should an employee not complete twelve months' service he shall on the termination of his employment provided that he has been employed continuously for one month or more, be entitled to pay on a pro rata basis for each completed month of service.

(e) Before an employee proceeds on annual leave he shall be paid any monies then due to him in respect of the annual leave being taken or which may accrue due to him during his period of leave.

(f) Payment in lieu of annual leave shall not be made by an employer and not accepted by an employee except in accordance with all requirements of this clause. An employee shall not offer his services to any other employer during the period he is on paid annual leave and an employer shall not engage an employee who is on paid annual leave.

(g) During a period of annual leave an employee shall receive a loading of 17.5 per cent calculated on the appropriate rate of wage prescribed by clause 5 or clause 6 of this award.

The loading prescribed by this subclause shall apply to proportionate leave on termination of employment where employment is terminated by the employer but it shall not apply where the reason for termination is misconduct or wilful disobedience."

With the Award needs to be considered the Annual Holidays Ordinance 1973 (A.C.T.). Sub-section 4(1) provides that subject to the Ordinance, an employee is entitled to an annual holiday at the end of every year of his employment. The duration of the holiday is four weeks; sub-section 5(1). An employee who takes a holiday to which he is entitled under sub-sec. 4(1) is entitled to receive from his employer payment of an amount equal to the ordinary remuneration the employee would have received in respect of the period of the holiday if he had not taken the holiday; sub-sec. 6(1). Sub-section 11(2) provides that where the employment of a person is terminated at a time at which that person is entitled under the Ordinance to an annual holiday, that person is entitled to receive from the employer an amount equal to the amount that would have been payable to him under the Ordinance if he had been taking that annual holiday from the date on which his employment is terminated. Sub-section 11(3) provides that where the employment of a person is terminated at a time at which the person has been employed by his employer for a period less than 12 months but not less than one month or for a period not less than one month during a year of employment, the person is entitled to receive from the employer an amount equal to one twelfth of the ordinary remuneration paid or payable to the person during the period of his employment or during the current year of employment as the case may be. Section 14 of the Ordinance is as follows:-

"14. (1) Subject to sub-section (2), this Ordinance has effect notwithstanding any award or agreement to the contrary.

(2) Nothing in this Ordinance affects the operation of an award or agreement to the extent that the award or agreement confers upon an employee rights that are more advantageous to the employee than the rights conferred upon the employee by this Ordinance."

It is to be observed that no provision of the Ordinance provides for the payment of any loading; it is concerned only with the provision of leave or payments in lieu of leave. By reason of the operation of s. 14 of the Ordinance the Award or the Ordinance may apply to a given situation. If there is conflict between the two, the provision which is the more advantageous to the employee will prevail.

The appellant's period of service with the respondent was in excess of 12 months. The ordinary hours which she was obliged to work under the Award were 40 hours per week. It was agreed that her entitlement was to 175 hours of recreation leave. Her entitlement for 12 months service would have been 160 hours.

Counsel for the appellant approached the question to be decided in two ways. Upon his first approach the second paragraph of Clause 33(g) of the Award was said not to apply. This was because of the use of the word "proportionate" which, in his submission, denoted only a fractional part of the entitlement to leave which accrues upon completion of 12 months' service. The paragraph was compared with Clause 33(d) which provides for payment on a pro rata basis for each completed month of service where an employee does not complete 12 months' service and his employment is terminated. I would pause to say that, if the premise in the first approach be correct, namely, that "proportionate" has the meaning which this approach assumes, it would seem that such approach can yield the appellant no more than so much of the loading as is payable in respect of 12 months' service. Her claim for the loading in respect of the additional service for which she was entitled to 15 hours leave (that is, the leave over and above the 160 hours leave to which she was entitled for her 12 months' service) would of necessity depend on the meaning and effect to be given the second paragraph of Clause 33(g). Be that as it may, I propose to proceed, for the moment, upon the assumption that the appellant's contention as to the meaning of "proportionate" is correct. If that be so, then one may leave out of account the second paragraph of Clause 33(g). If that be done, the question arises whether she has made out a case for payment of the loading.

In passing it may be noticed that no express provision of Clause 33 of the Award provides for payment in lieu of leave not taken. Such an entitlement is not conferred by paragraph (a) because it confers a right to leave on full pay but not a right to pay in lieu of leave. Paragraph (d) deals only with cases where there has been less than 12 months' service. Paragraphs (e), (f) and (g) have nothing to say about this matter. Nevertheless an employee is entitled to payment in lieu of leave, if leave be not taken after 12 months service, because of the explicit provisions of the Ordinance to which I have earlier referred. But it contains no provision whatever about the payment of any loading.

The essence of counsel's first approach to the problem is that after 12 months' service, there accrues to an employee a right, not only to a holiday or pay in lieu thereof, but a right also to the 17.5 per cent loading on the holiday pay which is due. The outcome of the submission must, of course, depend upon the language which Clause 33 of the Award uses. It is to be observed that the first paragraph of Clause 33(g) opens with the words, "During a period of annual leave". This seems to me to suggest that the draftsman had it in mind that the entitlement would arise during the period of leave. If that be right, the clause cannot apply where no leave is taken because the entitlement will only arise when leave is taken. Seeing the difficulty which the word "During" confronted him, counsel for the appellant sought to say that it should be construed as meaning, "In respect of". He supported that submission by reference to Clause 33(e) which obliges the employer to pay any moneys due to the employee in respect of the annual leave being taken by him before the employee proceeds on leave. It was plainly intended that the loading would be paid in advance of the leave. Yet if the entitlement to it did not arise until the leave was actually embarked upon. Clause 33(e) would prevent this payment at the time the employee was about to take his leave. Counsel referred to Clause 33(f) of the Award which provides that payment in lieu of annual leave is not to be made except in accordance "with all requirements of this clause".

One difficulty with counsel's submission is that it refers only to the first part of Clause 33(e). The clause not only provides that an employee is to be paid moneys then due to him in respect of the annual leave being taken; he must also be paid all moneys which may accrue due to him during his period of leave. In my opinion the latter words of the clause require the payment of the loading in advance of leave being taken, notwithstanding that the entitlement to it does not actually arise until the leave is taken. For that reason there is no warrant for giving the word "During" any but its natural meaning.

In any event it would seem difficult ever to read it as "In respect of". We were referred to no dictionary nor any authority which would justify attributing such a meaning to it. If it be given its ordinary meaning, it becomes apparent that, except in the cases provided for in the second paragraph of Clause 33(g) of the Award, the loading will only be payable in cases where leave is actually taken.

It follows, in my opinion, that if one is to ignore the second paragraph of Clause 33(g), the appellant has not made out a case for entitlement to the loading because the loading would only be payable during a period of annual leave, notwithstanding that it had to be paid before the employee proceeded on leave. Since it is common ground that no leave was taken, the loading was not payable.

The second approach was to give to the word "proportionate" in the second paragraph of Clause 33(g) a meaning which would apply it to a case such as this as well as to cases where the service was for less than 12 months. As a matter of language it is capable of having such a meaning. An assumption underlying this approach is that the second paragraph of Clause 33(g) deals with cases where the loading is payable, notwithstanding that leave is not taken. For the purposes of dealing with this submission I am prepared to make that assumption, but I make it clear that I have not myself formed any view as to whether or not it is correct.

Counsel for the appellant advanced a construction of the second paragraph of the clause which, so far as I understood it, involved him in saying that it should be read as if it had said, "The loading prescribed by this sub-clause shall apply to proportionate leave on termination of employment except where the employment is terminated by the employer for misconduct or wilful disobedience". In other words the loading was said to be payable whenever the employment was terminated, whether by the employer or by the employee, except in cases of misconduct or disobedience. The trouble about this submission is that the language used in the paragraph will not permit it. In my opinion, the words, "where employment is terminated by the employer", contemplate only situations where the employment is terminated by the employer and not by the employee. In some minds this may lead to an anomalous situation. On the other hand, those responsible for the Award may have thought that it was fair that a proportionate part of the loading should be payable where the employment was terminated without cause by the employer, but not where an employee voluntarily left his employment perhaps to go to another position.

One would only take account of an anomaly, if one thought an anomaly did exist, if there were an ambiguity in the language used. In my opinion there is no ambiguity. The words clearly provide only for the payment of a proportionate part of the loading where the employment is terminated by the employer and not by the employee. It follows that the appellant's second approach should also be rejected.

Before concluding, I should say that I have considered a number of references provided to us concerning the history of provisions of awards similar to that in question here. Whilst these form a relevant background against which the problem of construction should be approached, they do not, in my opinion, provide any direct assistance on the questions at issue. All I would say about them is that in none is to be found any support whatever for either of the alternative submissions advanced by counsel for the appellant.

In the result I would dismiss the appeal.

JUDGE3

The appellant was employed from 25 May 1982 to 2 July 1983 by the respondent as a shop assistant. That employment was governed by the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1968 as varied ("the Award"). The period of employment ended when the appellant voluntarily retired from her service with the respondent and her services terminated by agreement. Upon retirement she was paid the award rate in respect of the annual holidays entitlement which had accrued during the period of her employment. But she was not paid the 17 1/2% annual leave loading for which the Award provided in the case of persons taking annual leave.

The question upon this appeal is whether she was entitled to such a payment or whether, as Neaves J. held, neither the Annual Holidays Ordinance 1973 nor the Award entitled her to any such payment upon her voluntary retirement.

The Annual Holidays Ordinance 1973 provides, by section 4(1):

"Subject to this Ordinance, an employee is entitled to an annual holiday at the end of every year of his employment by a person."

By section 5(1) the duration of the holiday is fixed at four weeks except for a shift worker who is entitled to five weeks. By section 6 provision is made in respect of holiday pay, but it is to be noted that this provision does not include anything in the nature of a loading of 17 1/2%. By section 7 provision is made for the period within which the annual holiday must be taken, being ordinarily "before the expiration of the period of six months after the date on which the employee becomes entitled to the holiday". By section 8 it is provided:

"An amount to which an employee is entitled by virtue of section 6 is payable to the employee on the last day on which the employee is required to work before the commencement of the annual holiday to which the payment relates."

By section 11 provision is made for payment of an amount in lieu of holidays upon termination of employment, both in the case where an entitlement to an annual holiday had accrued and also in the case where the employee had been employed for a period less than twelve months but not less than one month, or for a period not less than one month during a year of employment. By section 14 provision is made the effect of which is that an award may confer more advantageous rights upon employees, but may not derogate from the rights under the ordinance. An "award" means, by section 2, an award made under the Conciliation and Arbitration Act 1904-1972, or a determination.

The Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1983 contains, in Clause 33, provisions dealing with annual leave as follows:

"(a) In addition to the public holidays specified in this award all employees not otherwise entitled to recreation leave under this award, shall be entitled to leave of absence on full pay for a period equal to four working weeks exclusive of public holidays where any such employee has been in the continuous employment of the same employer during the preceding twelve months.

(b) Continuous employment as specified in subclause (a) of this clause means constant weekly employment until the termination of an engagement. Absences up to one month owing to illness covered by a medical certificate under two days' absence, or an absence with a medical certificate extending beyond one month in the case of an employee with an accumulation of sick leave to the extent of such accumulation; three months owing to injury received in the course of his employment; or one month owing to other causes for which leave has been granted by the employer concerned, shall not be deemed to break the continuity of employment.

(c) Annual leave shall be taken at a time mutually agreed upon by the employer and the employee, and in the absence of agreement at a time fixed by the employer, within a period not exceeding six months from the date when the right to annual leave accrued due and after not less than six weeks' notice to the employee.

Annual leave shall be taken in a continuous period, or in the event of an agreement between the employer and an employee, in two separate periods and not otherwise.

In cases where the employer and employee have agreed on two separate periods of leave, one of the periods shall be not less than two consecutive weeks exclusive of any public holiday or holidays which may occur during such period of leave. Any two such periods of leave shall be granted to an employee within six months from the date when the right to annual leave occurred.

(d) Should an employee not complete twelve months' service he shall on the termination of his employment provided that he has been employed continuously for one month or more, be entitled to pay on a pro rata basis for each completed month of service.

(e) Before an employee proceeds on annual leave he shall be paid any monies then due to him in respect of the annual leave being taken or which may accrue due to him during his period of leave.

(f) Payment in lieu of annual leave shall not be made by an employer and not accepted by an employee except in accordance with all requirements of this clause. An employee shall not offer his services to any other employer during the period he is on paid annual leave and an employer shall not engage an employee who is on paid annual leave.

(g) During a period of annual leave an employee shall receive a loading of 17 1/2 per cent calculated on the appropriate rate of wage prescribed by clause 5 or clause 6 of this award.

The loading prescribed by this subclause shall apply to proportionate leave on termination of employment where employment is terminated by the employer but it shall not apply where the reason for termination is misconduct or wilful disobedience.

(h) In the event of any dispute arising in connection with any part of this clause, such dispute shall be referred to the Commission within fourteen days of such dispute occurring for determination."

It was contended by the appellant that the first sentence of paragraph (g) of this Clause should be interpreted by reading the word "during" as if there were substituted for it the words "in respect of". It was said that, so construed, the provision would confer an entitlement to a loading irrespective of whether annual leave should in fact be taken by the employee. But such a construction cannot stand with the provisions of paragraph (e). That paragraph clearly distinguishes between the monies due to the employee prior to his actually proceeding on leave, and the monies which may accrue to him during his period of leave. The use of the word "during" to express such a distinction, in a neighbouring paragraph of the same Clause, strongly suggests that the draftsman was using the word in what is in any case its ordinary English sense. Reading the two paragraphs in conjunction with each other, it seems quite clear that the intention was that the loading should be available, as an additional amount calculated upon his annual leave pay entitlement, to an employee upon his actually proceeding on annual leave.

Accordingly, to obtain a foothold for an entitlement to receipt of an amount calculated by reference to a 17 1/2% loading, not upon the taking of an annual holiday, but upon termination of employment, it is necessary to turn to that provision of the Award which refers to this subject matter. The provision is the second sentence of paragraph (g). But that sentence makes it clear that the loading is only to apply to "proportionate leave on termination of employment where employment is terminated by the employer". There is of course a further provision that it shall not apply where the reason for termination is misconduct or wilful disobedience. If there be any ambiguity in the expression "where employment is terminated by the employer", the meaning of the expression is made crystal clear by Clause 29 which distinguishes between termination by the employer and termination by the employee.

It was suggested in argument that there is an ambiguity about the other expression in this sentence "proportionate leave on termination of employment". That expression is to be construed having regard to paragraph (d), concerned with the case of an employee whose employment is terminated before the completion of a period of twelve months' service, who is "entitled to pay on a pro rata basis for each completed month of service", provided he had been employed continuously for one month or more. It may be inferred that the draftsman deliberately chose in paragraph (g) to use a different expression, "proportionate leave on termination of employment", rather than repeat the expression "on a pro rata basis", because he was referring to a different concept; paragraph (g) applies in respect of all leave entitlements up to the date of termination, whether in respect of an incomplete year of employment, or in respect also of an earlier year of employment entitling the employee to holidays which have not been taken and are still due. The words "proportionate leave" indicate that the entitlement is proportionate to the period of employment, whether more or less than one year, available at the date of termination to be taken into account for the purposes of annual leave. Unless this be so, the result would follow that the Award would provide for a loading, in some termination cases, in respect of holidays earned by an incomplete year's service, but would not provide in any termination case at all for a loading in respect of holidays earned by a full year's employment. It is true that there is no express provision in Clause 33 in respect of the basic entitlement to a payment upon termination in respect of annual holidays which have accrued due upon the completion of a year's service, and at first sight this would appear to have been left to be covered by the provisions of the Ordinance to which reference has been made. However, if "proportionate leave on termination of employment" has the meaning suggested in this judgment, there is clearly an implied provision in the Award covering this matter also, since the provision applying the loading to an entitlement clearly implies the entitlement itself. A construction which avoids the conclusion that the Award contains such a startling lacuna, has much to commend it.

It follows that, the matter in dispute being wholly governed by paragraph (g) of Clause 33, the appeal must fail. However, even if the proper construction of the expression "proportionate leave on termination of employment" would limit its application to the incomplete year, the same result would follow in a slightly more complicated fashion. Paragraph (g) would then deny the entitlement in relation to proportionate leave understood in the sense of the leave accrued during the incomplete year, while as to the previous complete year, there would simply be no provision at all for the payment of a loading in any circumstance of termination of employment prior to the taking of the annual holiday.

It need hardly be added that the reasoning in this judgment depends upon the language of the provisions of the award in question read in the context of this award. A different award may use different language, or may even use the same language to convey a different meaning, having regard to a changed context. For example, in Fuller v. Engineering Testing and Research Services (W.A.) Pty. Ltd. (1984) 65 WAIG 78 Mr. Commissioner G.L. Fielding held that the Draftsmen's, Tracers', Planners' and Technical Officers' Award No. 11 of 1979 of Western Australia provided for payment, on termination, of a 17 1/2% loading in respect of annual leave accrued and not taken, but not in respect of "proportionate leave on termination", an expression which he understood as referring only to leave that had not been fully accrued because it related to a period of service of less than one year. This case was not referred to by either party, doubtless because of the differences between the provisions of the Award there in question and those of the Award with which the Court is presently concerned.

At the conclusion of the argument of this appeal, the Court directed the parties to bring in written submissions concerning the history of the provision, now so commonly encountered in Awards, for a 17 1/2% loading on annual leave. The Court considered that it should examine the development of award provisions of this kind, in order to ensure that no proper consideration arising out of that development was left out of account which might affect the textual construction which the Award otherwise seems to bear.

What follows derives from the decisions of arbitration tribunals to which the Court has now been referred, and certain further decisions. In An Application in the Matter of the Clothing Trades Award 1964, heard in the Commonwealth Conciliation and Arbitration Commission in 1973, reported in 152 CAR 249, the joint decision of the Commission (Moore J., Chambers D.P. and Evatt D.P.) referred to the fact that many awards by then included an annual leave loading. The Commission added:

"However . . . these provisions came about almost wholly by consent and arbitrations on the subject are limited either to extension of agreed provisions to closely related awards or rejection on the ground that the 1971 test case establishes a principle to be followed." (A reference to an earlier decision not to award such loadings).

The Commission concluded:

"It is our opinion that a case has not been made out for a review of the 1971 decision as to matters of principle and that the variations of awards, substantially by consent, to superimpose an annual leave loading in addition to the general prescription do not provide a warrant at this time for departure from the current provisions of this award."

It was not long before this conclusion was overturned. In Federated Liquor and Allied Industries Employees Union of Australia v. Ansett Airlines of Australia & Ors. re the Airports and Overseas Passenger Terminals Employees Award 1973 reported (1974) 166 CAR 610, the Commission (Moore P., Evatt J. and Heagney C.) drew attention to the words in the final sentence quoted from the previous decision "at this time", and added:

"Since October 1973 there have been rapid changes in this area. By a decision of 9 November 1973 the Industrial Conciliation and Arbitration Commission of Queensland awarded a loading of 17 1/2 per cent for annual leave in a declaration of a common ruling. On 21 December 1973 a determination was made by the Public Service Arbitrator by consent varying many determinations by inserting a 17 1/2 per cent loading - with a monetary ceiling which could not be relevant to this award. In February 1974 New South Wales Government employees were granted by the State Government a loading of 17 1/2 per cent - again with a ceiling which is not relevant. In proceedings before the Industrial Commission of New South Wales reference was made to the agreement between the Labour Council of New South Wales and the major employer organisations for a 17 1/2 per cent loading, a standard which was applied by Sir Alexander Beattie, President of that Commission, to various awards applying to rural industries in the face of opposition by the employers . . .".

They referred to yet further awards. They concluded:

"This demonstrates a significant change since the Commission's Clothing Trades Decision and that 'at this time' it can be said that within the last year or so, a new standard has emerged, namely, a 17 1/2 per cent loading."

It is noteworthy that this decision does not contain any particular rationale for the loading, but applies it on the basis that it had become a standard provision.

The Queensland Annual Leave Loading Decision referred to in the last mentioned matter is reported in the Queensland Government Industrial Gazette Volume 84, No. 43 of 28 November 1973 at p. 1217. At p. 1218 the decision includes the following:

"(A)nnual leave loadings, based on 17 1/2 per centum of ordinary award wages, have been introduced by agreement and (in a few instances) by arbitration, in one form or another, under many Federal and State Awards. The main purpose of such loadings - in those arbitrated cases where reasons have been published - appears to be the desire to avoid a reduction of earnings when proceeding on annual leave, a time when (it is claimed) employees' needs are greatest. However, in many instances the benefits appear to be on a more generous scale."

Later in the decision it was said:

"Whilst annual leave loadings are now widespread, there is a complete lack of consistency or uniformity as to their terms."

A general rule was made which, however, did not include any reference to payment in lieu of an annual holiday upon termination of employment.

In the New South Wales decision, Re Annual Holidays Loading Case (1974) 74 AR(NSW) 130, Beattie P. said at p. 134 that he regarded as persuasive an agreement upon a common form for an annual holidays loading in a number of significant awards. He also referred to "a policy statement by the Premier that all New South Wales Government employees, when proceeding on annual leave, would receive a special loading". The standard clause to which his Honour referred is set out in an appendix to his reasons at pp. 136 and 137 of the report. In view of its importance as a standard clause agreed upon between the Labour Council of N.S.W. and the four largest employer organisations in that State, and its place in the history of such provisions in awards as indicated both in Beattie P.'s judgment and in the Federal award referred to earlier, reference should be made to expressions in it relevant to the nature of the loading for which it provides. In paragraph (iii) it is stated:

"Before an employee is given and takes his annual holiday . . . the employer shall pay his employee a loading determined in accordance with this clause."

In paragraph (iv) it is stated:

"The loading is payable in addition to pay for the period of holiday given and taken and due to the employee under the Act."

By paragraph (vi) the amount is specified as 17 1/2% of the appropriate ordinary weekly time rate of pay. In paragraph (ix) it is stated:

"(a) When the employment of an employee is terminated by his employer . . . for a cause other than misconduct and at the time of the termination the employee has not been given and has not taken the whole of an annual holiday to which he became entitled after 31 December 1973 he shall be paid a loading calculated in accordance with sub-clause (vi) for the period not taken.

(b) Except as provided by paragraph (a) of this sub-clause no loading is payable on the termination of an employee's employment."

It is again noteworthy that the decision of Beattie P. depends upon the agreed provisions which had come into existence prior to his decision, and not upon any particular rationale.

In the South Australian Annual Leave Case reported in 41 SAIR 300, which was a test case (see p. 303), in which the decision was given on 27 June 1974 it was stated at p. 306 that it had been argued "that the 17 1/2% loading should be regarded as a bonus to be paid to employees to enable them the better to enjoy the leave . . . in order that the employees could return from leave better refreshed to face the rigours of their renewed employment", but the decision rejects this view. At p. 307 it was stated "There is no very cogent evidence before us as to how the figure of 17 1/2 per cent was arrived at. However there is some justification for saying that that figure has received acceptance in a considerable number of cases." Again this decision throws little light on the rationale for the loading.

In In the Matter of An Application by the Food Preservers Union of Australia (1976) 177 CAR 292 the Australian Conciliation and Arbitration Commission (Gaudron and Staples JJ. and Paine C.) dealt with an application to vary an award to provide for "proportionate payment of annual leave loading where an employer terminates the services of an employee." The Commission, in joint reasons, said:

"Weekly employees in the industry receive a 17 1/2 per cent loading when proceeding on annual leave if they have completed a full year's service. Hitherto seasonal employees have not attracted the loading at all.

It was argued that both groups, on termination by the employer for reasons other than misconduct, should receive the loading pro rata.

An annual leave loading of 17 1/2 per cent payable at the time of taking annual leave is now standard in the awards of the Commission. Some awards, few in number, such as the National Building Trades Construction Award, provide for proportionate payment of the loading on termination, but, in our view, the circumstances of the building industry as it is now regulated provide no adequate guide in the present case. In respect of weekly employees in this industry, we are not moved by anything that had been put to us to depart from the standard to be found widely throughout all employment, public and private, whereby the loading is paid during annual leave, but not otherwise."

They took a different view where seasonal employees were concerned and ordered a variation to the award "so as to provide for the payment of an annual leave loading pro rata to seasonal employees where their employment is terminated by the employer for reasons other than misconduct."

In Re Food Preservers Award (1982) 3 IR 264 a majority judgment of the Australian Conciliation and Arbitration Commission (Ludeke J. and McKenzie C.) referred to a consent variation of the award and commented:

"This variation will confirm the intention of the parties that an employee shall be entitled to proportionate leave on termination of employment in a year after the first year of employment."

They also referred to an application to reverse the earlier decision to confine payment of an annual leave loading, calculated on proportionate leave on termination under this award, to seasonal employees whose employment was terminated by the employer for reasons other than misconduct. They said of the earlier decision:

"The annual leave clause provided for a loading of 17 1/2%, but this did not apply to proportionate leave on termination; the Full Bench ordered that the annual leave loading be paid pro rata to seasonal employees where their employment is terminated by the employer for reasons other than misconduct."

They held that nothing had occurred since to cause them to set aside that Full Bench decision. There was a dissenting judgment of Staples J. which is interesting for the statement at p. 265:

"The union does not claim in cases of dismissal for misconduct or early voluntary resignation by the employee." (Emphasis added.)

In a still more recent decision, reported in the Australian Industrial Law Review, Volume 25, at paragraph 368, the Industrial Commission of Western Australia refused an application for a general order to vary private sector awards in Western Australia to delete payment of an annual leave loading. Cort S.C. recited the history of the loading consistently with what is set out above. He added:

"However, in the context of minimum conditions of employment, I would confess to some difficulty in categorising any amount paid in addition to the 'ordinary wage' whilst on leave. The capacity of industry may well justify the payment of such an amount over and above the minimum by way of a bonus and it is to the point I think that the 17 1/2% loading had its genesis in agreements between unions and employers. That was at a time when a so-called 'wage explosion' was occurring - a wage explosion that led to the introduction of wage indexation in 1975 - and a bonus when on annual leave would seem to be an ideal method by which any 'excess' in the product of industry could be distributed. To follow the reasoning of Beattie J. in the N.S.W. Annual Holidays Loading case the intrinsic merit of the loading may well rest on the fact that by and large it was agreed between unions and employers, with their more intimate knowledge of the capacity of industry, in the face of decisions by the Australian Conciliation and Arbitration Commission and to such a degree that, in time, that Commission and this Commission came to recognise it as a community standard."

Fielding C. referred to the loading as "a unique and quaint idiosyncrasy of the Australian workplace". He thought it must be considered a bonus "paid to mark the taking of annual leave".

Something very clear and cogent, in the history of wage provisions to the effect of Clause 33, would have been required to overcome the plain meaning of its language. The decisions demonstrate that nothing of the kind can be found. On the contrary, certain passages which have been cited tend to confirm the meaning which Clause 33, read alone, would in any case bear.

Bearing in mind particularly the passage cited from the reasons of Staples J. in Re Food Preservers Award (supra), and the terms of the paragraphs cited above from what in this area must be regarded as a seminal standard clause, which is an appendix to the reasons of Beattie P. in the N.S.W. Annual Holidays Loading case, there certainly seems no reason to think that the draftsman of Clause 33 of the Award with which the present case is concerned had in mind any concept that the loading would be available upon voluntary retirement of an employee who had not taken annual leave.

Furthermore, the history discloses no reason to think that, so far as the payment of a loading is available in the case of an employee upon termination of employment, there should be any distinction between an employee whose annual holiday has accrued and is due, but has not yet been taken at the time of termination, and an employee whose date of termination interrupts a period of accrual - certainly not a distinction in favour of the latter. While the meaning of Clause 33 must remain a matter for its interpretation in its context, the cases at least confirm that the expression "proportionate leave" has been used, in the language of awards and decisions in pari materia, in a sense corresponding to the concept of payment "pro rata" in respect of leave earned by a period of service. The passages cited above contain several examples.

In the circumstances the appeal should be dismissed.