Liistro v Cathay Pacific Airways Limited
[2014] FCCA 1848
•21 August 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LIISTRO v CATHAY PACIFIC AIRWAYS LIMITED | [2014] FCCA 1848 |
| Catchwords: INDUSTRIAL LAW – Small claims – claimed contravention of s.44 of Act and safety net contractual entitlement – whether applicant paid entitlement to personal/carers leave – meaning of base rate – application dismissed. |
| Legislation: Fair Work Act 2009, ss.44, 99, 548, 96, 99, 16, 19, 61 |
| Warren, Hall Moody Finishes Pty Ltd and Sidoti [2011] FWAFN 6709 at [30] City of Wanneroo v ASU (2006) 153 IR 426 at [53] |
| Applicant: | PAUL LIISTRO |
| Respondent: | CATHAY PACIFIC AIRWAYS LIMITED |
| File Number: | MLG 2161 of 2013 |
| Judgment of: | Judge Jones |
| Hearing date: | 11 July 2014 |
| Date of Last Submission: | 11 July 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 21 August 2014 |
REPRESENTATION
| Counsel for the Applicant: | Self represented |
| Solicitors for the Applicant: | Self represented |
| Counsel for the Respondent: | Mr Millar |
| Solicitors for the Respondent: | HWL Ebsworth Lawyers |
ORDERS:
The applicant’s amended applications are dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2161 of 2013
| PAUL LIISTRO |
Applicant
And
| CATHAY PACIFIC AIRWAYS LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction
Paul Anthony Liistro (“the applicant) filed on 14 April 2014, an amended application and amended Form 5 Small Claim claiming under the Fair Work Act 2009 (“the Act”) that Cathy Pacific Airways Limited (“the respondent’) contravened s.44 of the Act.
The applicant claims the respondent failed to pay him his entitlement to personal/carer’s leave under Division 7, Part 2-2 – National Employment Standards of the Act.
The applicant claims that from July 2010 to April 2014 he took paid sick leave on 83 days and the respondent failed to pay him, his ordinary time earnings in accordance with s.99 of the Act.
The applicant claims that the rate of pay he should have been paid includes the payment of Excess Flying Pay and Hourly Duty Pay provided for under the Cathay Pacific Airways Limited (Australia) Aircrew Conditions of Service (2008) (“the COS”) which, he says, governed his employment during the relevant period. He claims that whilst he was paid his salary under clause 7 of the COS, he was not paid his entitlements to Excess Flying Pay and Hourly Duty Pay under clause 9 of the COS.
The applicant claims that he has been underpaid a total amount of $5,186.00.
The applicant was given leave to amend his Amended Application to include in Part G of the Form 5, a claim that the respondent contravened a safety net contractual entitlement in that the respondent failed to pay him his entitlement under clause 27, Sickness Allowance of the COS. He claims that he was entitled pursuant to clause 27 to be paid his entitlements to Excess Flying Pay and Hourly Duty Pay under clause 9 of the COS.
The respondent agrees that the applicant’s conditions of employment were governed by the COS, as the COS formed part of the applicant’s contract of employment. It also agrees that the 83 days identified by the applicant were days on which the applicant took paid personal/carers leave. The respondent denies that it has underpaid the applicant. It submits that the entitlement of the applicant under s.99 of the Act and clause 27 of the COS does not include an entitlement to Excess Flying Pay and Hourly Duty Pay under clause 9 of the COS.
The respondent sought leave pursuant to s.548(5) of the Act to be represented by a lawyer. As the dispute involves a question of interpretation of the relevant provisions of the Act as well as the applicant’s contract of employment, leave was granted to the respondent to be represent by Counsel.
The small claims list
Section 548 of the Act provides:
“(1)Proceedings are to be dealt with as small claims proceedings under this section if:
(a)a person applies for an order (other than a pecuniary penalty order) under Division 2 from a Magistrates Court or the Federal Magistrates Court; and
(b)the order relates to an amount referred to in subsection (1A); and
(c)the person indicates, in a manner prescribed by the regulations or by the rules of the Court, that he or she wants the small claims procedure to apply to the proceedings.
(1A)The amounts are as follows:
(a)an amount that an employer was required to pay to, or on behalf of, an employee:
(i) under this Act or a fair work instrument; or
(ii) because of a safety net contractual entitlement; or
(iii) because of an entitlement of the employee arising under subsection 542(1);
(b)an amount that an outworker entity was required to pay to, or on behalf of, an outworker under a modern award.
Limits on award
(2)In small claims proceedings, the Court may not award more than:
(a)$20,000; or
(b)if a higher amount is prescribed by the regulations--that higher amount.”
S.548(3) of the Act deals with the procedure of the small claims list and provides that the Court is not bound by rules of evidence and procedure and may act in an informal manner and without regard to legal technicalities. The applicant nevertheless bears the responsibility of satisfying the Court that the contravention alleged has occurred and that the amounts claimed are the amounts the applicant was entitled to pursuant to a relevant statutory instrument or his or her contract of employment.
The applicant initially filed an application and a Small Claim Form 5 on 9 December 2013, together with an affidavit sworn on 24 March 2014. The parties attended a small claims list hearing on 28 March 2014. The Court made orders granting leave to the applicant to amend his application and form 5 and serve same within 14 days together with an affidavit of material facts he relied on and supporting documents within 28 days.
The applicant filed an Amended Application and Small Claim Form 5 on 4 April 2014 and an affidavit on 16 April 2014. The applicant stated that he relied on these documents and attested to the truth of them under oath. He also relied on 2 emails which were attached to his earlier affidavit. The emails were: an email exchange over February/ March 2014 between the applicant and Monica Pogula, Flight Crew Employee Relations Manager; and an email from Scott McEwan, Manager, Flight Crew Employee Relations to the applicant dated 25 July 2013.
The respondent relied on its amended response, the respondent’s outline of submissions filed on 26 June 2014 and an affidavit sworn by Scott Douglas McEwan on 8 July 2014 and filed on the same date.
Both the applicant and Mr McEwan gave evidence and were cross-examined.
Background
The applicant is employed by the respondent as a pilot at the rank of Senior First Officer A330, Melbourne base. He commenced employment with the respondent on 10 December 2007. His contractual entitlements are set out in the COS.
Clause 7 - Salary - of the COS relevantly provides:
7.1Salary will be paid monthly in arrears. Salary will be credited to an officers bank account in Australia nominated in writing by the officer.
7.2Salary scales are specified in schedule 1, as applicable, of these Conditions of Service and will be reviewed annually. For the avoidance of doubt, the specified Salary scales may not be reduced without the individual officers written consent.
Schedule 1 of the COS sets out the annual and monthly salary of the captain according to rank and year of service. The applicant’s annual salary as a Senior First Officer with 4 years’ service is $166,260. His monthly salary is $13,855. Excess Flying Pay (EFP) and Hourly Duty Pay (HDP) are paid in addition to the salary.
Clause 9 – Excess Flying Pay (EFP) and Hourly Duty Pay (HDP) – of the COS provides:
9.1 EFP and HDP will be calculated and paid one month in arrears.
9.1EFP and HDP are as specified in Schedule 2 of these Conditions of Service
Schedule 2 of the COS provides that credit hours are accrued by a crew member according to various factors; such as, the complement of crew members, whether the crew member is undertaking office duties, training or delivering instructions, or on annual leave. Schedule 2 provides that EFP will be paid for achieved credit hours in excess of specified thresholds in a calendar month, provided the crew member is available for flying duty at all times during the calendar months or is not undergoing remedial training. The first threshold is 84 credit hours in a calendar month.
Schedule 2 of the COS provides with respect to HDP:
Hourly Duty Pay (HDP)
1. Hourly Duty Pay will be paid on achieved credit hours, other than those Credit Hours for which EFP is paid.
2. Hourly Duty Pay will not be paid for Credit Hours accrued from sickness on the published roster.
3. Hourly Duty Pay will not be paid for Credit Hours over 84 in the case where crew member is unavailable for flying duty at all times during their entire calendar month.
4. The rate for each hour of HDP will be as the table below.
Clause 27 - Sickness Allowance - of the COS relevantly provides:
27.2 An Officer will be entitled to paid Sickness Allowance as follows:
a.Subject to that officers compliance with 27.7 and 27.8, and to the qualification set out in 27.6, such amount of salary, allowances and benefits which that officer would have earned under normal circumstances up to a maximum of one hundred and twenty six (126 ) calendar days.
Clauses in the COS, in addition to sickness allowance, which are described as allowances are:
· Clause 10 – Appointment Allowances;
· Clause 35 – Overnight Allowances.
The applicant’s employment is also governed by the provisions of the Act. For the purpose of these proceedings those provisions are found in Division 7, Part 2-2 – National Employment Standards - of the Act.
S.96 provides:
Entitlement to paid personal/carer’s leave
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.
Accrual of leave
(2) An employee’s entitlement to paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
S.99 provides:
Payment for paid personal/carer’s leave
If, in accordance with this Subdivision, an employee takes a period of paid personal/carer’s leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
S.16 of the Act:
Meaning of base rate of pay
General meaning
(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:
(a) incentive‑based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) any other separately identifiable amounts.
Evidence
The applicant deposes that he is claiming 83 days unpaid entitlement although he says his records disclose a total of 84 days. He says that he has been unable to access the respondent’s records in relation to his entitlements. The applicant attached to his affidavit filed 16 April 2014 (Annexure D) payslips provided by the respondent from July 2010 to March 2014.
The applicant agreed that the times when he took sick leave or personal carers leave he was paid the base salary that he was contractually entitled to. The applicant was taken to his payslips (Annexure D). He agreed that in the payslip for March 2014 under the heading “Allowances, Deductions and Contributions”, the following descriptions and values were used:
Description Value
Basic Salary B/Tax 13583.00
HDPA B/Tax 595.84
HDPB B/Tax 75.54
Qual Pay B/Tax 92.50
Bal 15.5% Cash-in B/Tax 728.20
Profit Share B/Tax 254.99
Overnight Allow Ded A/T -222.8.24
ASGARD ROLLOVER -500.00
ASGARD ROLLOVER 1481.23
The applicant stated that the two HDP payments were payments for the preceding month. He said that the amount of credits depended on his roster and this varied from month to month. He agreed that for the March 2014 payslip the amount of credits did not spill over into an EDP payment.
He agreed that the payslips for the months January and February 2014 included, in addition to HDPA and HDPB, an accrual of credits described as HDPC. He agreed that he did not receive an EDP payment for any of the months around that time except in December 2013. He agreed that the inclusion of these payments in the earnings received each month dependent on the amount of work and the nature of the work that he did which varied from month to month.
Mr McEwan deposed that the applicant’s “base salary is AUD $162,996 per annum and with all allowances was paid the amount of AUD $180,494.60 for the financial year ended 30 June 2014.” In his evidence, Mr McEwan said that the difference between the salary and earnings specified in his affidavit included HDP and EFP payments.
Mr McEwan described the respondent’s practice in applying an officer’s contractual entitlement to sickness allowance and the NES personal/carers leave as follows (at T14 to T15):
Okay. Can you explain – we can all read the email, but could you explain the relationship between our contract sickness and the NES provisions as you see it? --- Yes. We – we run 2 balances for personal carers leave and what we would call sickness under the conditions of service. Conditions of service gives the officer up 126 days of full pay, which then goes on to half pay. And at the same time we calculate a balance to the individual’s NES entitlement of 10 days per year on an accrued basis. Based on the length of time that they have been in an Australian base and on an Australian contract. When an officer is absent from work due to sickness, we treat sickness and the personal part of the personal carers leave as one and the same in that the – let’s assume that an officer was off for five days of sickness. We would deduct five days from the conditions of service balance of 126, and we would deduct five days on the NES balance, whatever that balance was at the point in time.
…
Do you allow carers leave against contract sickness? ----We don’t deduct carers leave from the contract’s 126 days. We deduct it from the NES allowance. So in the same scenario if an officer took 5 days carers leave, that would be deducted from the NES balance, not from the 126 days balance.
So when the NES balance comes to 0, then the carers leave is no longer applicable to that officer or not available to that officer? --- That would be correct. My understanding is he could ask for unpaid carers leave for 2 days, I think, but yes.
Submissions
The applicant submits in that each of the 83 days which form the basis of his claim he was taking personal leave or sick leave. He said that these days did not exhaust his entitlement under the NES personal carers leave.
The applicant submits that Mr McEwan referred in his affidavit (at [5]) to his base salary and “all allowances” and these included HDP and EFP payments. He further states that HDP and EFP payments should not be characterised as loadings as they are not like shift loadings that apply for all of the roster. He submits that the HDP and EFP payments are not separately identifiable amounts as they apply any time he works. He submits that they are essentially a measure of how he does his job and how much work he has done.
As to his claim that a safety net contractual amount has been contravened, he submits that, as all the 83 days were sick days, he was entitled to be paid in accordance with clause 27.2 of the COS. That clause refers to an officer being paid his/her salary, allowances and benefits. He submits that it is self-evident from Mr McEwan’s affidavit that the respondent treats the HDP and EFP payments as allowances. Hence, he was entitled to be paid the HDP and EFP payments for those 83 days. As he was not, the respondent contravened his safety net contractual entitlements under the Act.
The respondent submits that it has not had sufficient warning of the applicant’s alleged contravention of the safety net contractual entitlements. By inference it is claiming it should not be put to the task of defending this alleged contravention.
As to the alleged contravention of s.44 of the Act the respondent submits:
· the applicant’s entitlement to be paid personal/carers leave under section 99 of the Act is an entitlement to be paid his “base rate of pay”;
· the applicant’s evidence is that he has been paid the base rate of pay at all times when he has taken leave, which is subject to the National Employment Standards;
· Section 16 of the Act expressly excludes from the meaning of “base rate of pay” a number of components, including loadings, monetary allowances and any other separately identifiable amounts;
· it is clear that when there are additional payments on top of the base rate of pay, particularly if they vary from month to month and depend on the duties performed by the employee both as to the nature of those duties or the number of hours over which they are performed, those payments are excluded from the base rate of pay for the purpose of section 16;
· HDP and EFP payments provided for under the COS are separately identifiable amounts;
· Consequently, they do not form part of the base rate of pay to which the applicant was entitled under section 99 of the Act: Warren, Hull Moody Finishes Pty Lt and Sidotti [2011] FWAFB 6709 at [30].
Consideration
I am satisfied that the applicant’s “base rate of pay” for the purpose of section 16 of the Act is the salary in accordance with clause 7 and as specified in Schedule 1 of the COS. This amount is identified in the payslips issued by the respondent to the applicant as “Basic Salary” (Annexure D, applicant’s affidavit filed 16 April 2014).
The undisputed evidence of the parties is that the HDP and EFP payments depend on the applicant’s roster which varies from month to month. The actual payments in each month is dependent on the nature of the duties performed by the applicant and the hours over which these duties are performed. These payments are identified separately in the applicant’s payslips and vary considerably from month to month.
I find that the HDP and EFP are separately identifiable amounts within the meaning of section 16 of the Act. Consequently, they are not to be included for the purpose of calculating the applicant’s entitlement to paid personal/carers leave pursuant to section 96 of the Act.
I find that the applicant was at all material times paid his base rate of pay pursuant to section 96 of the act.
Accordingly, the applicant’s claim that the respondent contravened section 44 of the Act is dismissed.
The applicant also claims that the respondent contravened a safety net contractual entitlement by failing to pay him, for the 83 days of sick leave taken, in accordance with clause 27.2 of the COS.
Section 19 of the Acts which sets out the Definitions, defines a “safety net contractual entitlements” as:
safety net contractual entitlement means an entitlement under a contract between an employee and an employer that relates to any of the subject matters described in:
(a) subsection 61(2) (which deals with the National Employment Standards); or
(b) subsection 139(1) (which deals with modern awards).
Section 61 provides that the NES minimum standards includes personal/carers leave: s.61(2)(e).
As there is no dispute that the COS constituted the applicant’s contractual entitlements at the relevant time, I am satisfied that the COS constituted a safety net contractual entitlement.
The undisputed evidence is that the 83 days were days taken by the applicant for sick leave.
The respondent’s practice in applying an officer’s entitlement to the statutory minimum under the NES and the sick leave provision under clause 27 of the COS, is that for each day of sick leave taken, the employees’ accrued personal leave under s.96 of the Act and their accrued entitlement under clause 27 of the COS is reduced by one day. Until an employee has exhausted his entitlement to sick leave under s.96 he or she is paid in accordance with s.99. When an employee has exhausted his or her entitlement to personal leave under s.96 then his or her entitlement to sick leave continues under clause 27 of the COS.
The applicant did not dispute the veracity or appropriateness of the respondent’s approach to the interaction of the statutory minimum standards and his contractual entitlements. Moreover, the applicant did not give evidence nor cross-examine the respondent about the components of the payments made pursuant to clause 27.2 of the COS. The Court has no evidence before it about the components of the payments made to an employee on sick leave pursuant to clause 27.2 of the COS.
The applicant relies on Mr McEwan’s reference to “all other allowances” when describing the difference between his basic salary and his earnings each year. He submits that by inference the respondent treats the HDP and EFP as an allowance. He submits that as clause 27.2 provides that allowances must be included in the amount an officer is entitled to be paid, then for the 83 days he ought to have been paid the HDP and EFP.
The applicant did not dispute the respondent’s approach to the interaction between the NES minimum standards relating to personal leave and clause 27.2 of the COS. It is therefore difficult to understand the basis for his claimed contravention of his safety net contractual entitlement.
I will, nevertheless, address his submissions regarding the construction of clause 27.2.
In construing clause 27.2 of the COS I have respectively adopted the approach set out by out by Justice French (as he then was) in the Federal Court of Australia in City of Wanneroo v ASU,[1] where his Honour said:[2]
The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘... the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).
[1] (2006) 153 IR 426.
[2] at [53].
In ascertaining what is meant by the reference to “allowances” in clause 27.2 of the COS regard must be had to the context in which it appears including the whole of the document under consideration.
Clause 27.2 provides that an officer’s entitlement to the paid Sick Leave Allowance is “such amount of salary, allowances and benefits which that officer would have earned under normal circumstances”(my emphasis)
The use of the word “salary” is clearly intended to refer to the payments made under clause 7 of the COS.
Two factors mitigate against the construction of allowances urged by the applicant. First, the COS identifies in the headings for each clause, which payments are to be treated as allowance. These are Clause 10, Appointment Allowance and clause 35, Overnight Allowances. In contrast Clause 9 does not identify HDP And EDP as allowances.
Second, the context in which the components to be included in the payment of sick leave. This is what an officer would have earned in “normal circumstances.” The evidence disclose that estimating what HDP and EDP an officer would have been paid under normal circumstances would be fraught with difficulties if not impossible. The variation in the payments of HDP and EDP are at odds with the concept of “normal circumstances.” The English Oxford Dictionary (on-line) defines “normal” as:
Constituting or conforming to standard; regular, usual, typical, ordinary, conventional.
EFP and HDP payment are nor regular, usual or typical. It is, in my opinion, illogical to include HDP and EDP as a component of something earned in normal circumstances.
Consequently, I find that the reference to “allowances” in clause 27.2 of the COS does not include HDP and EDP payments made under clause 9 of the COS.
The applicant’s claim that his safety net contractual entitlement has been contravened is dismissed.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 21 August 2014
Key Legal Topics
Areas of Law
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Employment Law
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Civil Procedure
Legal Concepts
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Appeal
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Jurisdiction
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Procedural Fairness
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Natural Justice
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