MacKillop Family Services Limited v Australian Municipal, Administrative, Clerical and Services Union
[2024] FWCFB 306
•11 JULY 2024
| [2024] FWCFB 306 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604—Appeal of decision
MacKillop Family Services Limited
v
Australian Municipal, Administrative, Clerical and Services Union
(C2024/3)
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 11 JULY 2024 |
Appeal against decision [2023] FWC 2604 of Commissioner Johns at Melbourne on 11 December 2023 in matter number C2023/3904
On 11 December 2023 Commissioner Johns determined a dispute between some of the parties covered by the MacKillop Family Services Enterprise Agreement 2016 (the Agreement). The dispute concerned the application of overtime provisions to full-time employees. MacKillop Family Services Limited, the Respondent to the proceeding below, has appealed the Commissioner’s decision.
The Commissioner published the reasons for his determination: Australian Municipal, Administrative, Clerical and Services Union v MacKillop Family Services Limited T/A MacKillop Family Services[2023] FWC 2604 (the Decision). The question posed by the parties and the Commissioner’s determination are found at [57] of the Decision:
“Therefore, in answer to the Agreed Question:
‘Where a full-time shift worker employee covered by the 2016 Agreement works in excess of 76 hours in a fortnight, for the purposes of clause 11.2 of the 2016 Agreement and the calculation of any overtime payment, are the hours in excess of 76 hours in the fortnight to be calculated upon:
a) the day on which the employee worked in excess of any rostered hours? or
b) the day upon which the employee is calculated to work any time in excess of the 76 hours in the roster period’?
the answer is (a), i.e. on the day on which the employee worked in excess of any rostered hours. That is how it should now be applied by the Respondent.”
The Appellant claimed that the Commissioner erred in his determination. In the proceeding below the Appellant advanced a contrary methodology for calculating overtime and contended on appeal that the Commissioner erred in failing to apply the Appellant’s methodology.
The Appellant’s fortnightly roster and pay cycle ends on Sundays. On the Appellant’s construction, overtime hours apply only after 76 hours have been worked in the pay cycle fortnight, which means that if hours are worked on the last Sunday of the fortnight those hours are likely to be counted as overtime. The overtime rates and the ordinary time weekend penalty rates for Sunday work in the Agreement are the same and are not cumulative.
Principles on appeal
Appeals under s.604 of the Fair Work Act 2009 (Cth) can only proceed with the Commission’s permission. Where an Appellant can demonstrate an arguable case of appealable error, the Commission has a broad discretion in determining whether permission to appeal should be granted. However, the Commission is required to grant permission where it is in the public interest to do so: s.604(2). Irrespective of the nature of the decision under appeal, the Full Bench is only able to exercise its powers where it identifies some error on the part of the primary decision-maker: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47, 203 CLR 194.
The Decision concerned the proper construction of the Agreement. The Decision did not involve the exercise of discretion. The answer given by the Commissioner to the proper construction of the Agreement is either correct or incorrect. In this regard the appeal is to be determined by the ‘correctness standard’: Minister for Immigration and Border Protection v SZVFW [2018] HCA 30, 264 CLR 541 at [48]-[49] and [150]-[154]; Rail Commissioner v Rogers[2021] FWCFB 371 at [61]; Australian Workers’ Union v Orica Australia Pty Ltd[2022] FWCFB 90 at [12]; Ambulance Victoria v Fyfe[2023] FWCFB 104 at [66]; AMA (Victoria) Ltd v Monash Health[2022] FWCFB 82 at [25].
The facts
The Commissioner’s summary of the relevant underlying facts is not controversial:
“[5] The facts relating to the dispute were as follows:
a) Mr Kevin Micallef has been employed by Mackillop as a Residential House Supervisor from 16 July 2018. He has been on a full-time basis with the requirement of working 76 hours per fortnight as per the roster.
b) The dispute was brought in relation to a specific pay period, namely, the pay period from 20 March 2023 to 2 April 2023. During this pay period, the agreed ongoing fortnightly roster of Mr Micallef was as follows:
‘Week 1
a. Monday 7:30 am –4:00 pm (8.5 hours)
b. Tuesday 7:30 am –3:00 pm (7.5 hours)
c. Thursday 9:00 am –4:00 pm (7 hours)
d. Friday 7:00 am –3:00 pm (8 hours)Week 2
e. Tuesday 7:30 am –3:00 pm (7.5 hours)
f. Wednesday 7:30 am –4:00 pm (8.5 hours)
g. Thursday 2:00 pm –11:00 pm (9 hours)
h. Saturday 7:30 am –5:30 pm (10 hours)
i. Sunday 7:30 am –5:30 pm (10 hours)’
c) On 22 March 2023, Mr Micallef attended work outside of his rostered timetable, for three (3) hours to complete the mandatory CPR training between 9:30am –12:30pm (the excess hours). Therefore, Mr Micallef’s total hours for the fortnight totalled 79 hours.
d) On receipt of his payslip, Mr Micallef observed that he was paid his ordinary shift rate of pay for the excess hours and instead paid overtime on the last three (3) hours of his Sunday shift identified in item ‘i’ above. The Sunday rates and the overtime rates are identical. Therefore, Mr Micallef in effect did not receive the benefit of the overtime clause.
…”
[Footnotes omitted]
The Decision
The Commissioner:
(a)recorded background facts (at [5]);
(b)recited the procedural history (at [6]-[30]);
(c)framed the nature of the dispute and the question to be determined by reference to the relevant provisions in the Agreement (at [31]-[33]);
(d)reproduced the relevant portions of the Applicant’s submissions (at [34] and [36]) and the Respondent’s submissions (at [35]);
(e)referred to and applied (at [37] onwards) the principles derived from the Full Bench decision in AMWU v Berri Pty Limited[2017] FWCFB 3005, 268 IR 285;
(f)found that the relevant terms of the Agreement are not ambiguous or susceptible to more than one meaning (at [40]);
(g)found that a plain reading of the terms of the Agreement “means that the overtime is payable (under cause 11.2(b)) on a shift basis … because the overtime is payable ‘regardless of when the overtime falls’” (at [47]);
(h)rejected the Respondent’s interpretation, finding that “to assess the entitlement to overtime at the end of the fortnightly period misconstrues the meaning of clause 11.2” (at [48]);
also found that “the construction advanced by the Respondent could lead to a situation where the Respondent would be motivated to roster hours that, in total exceed 76 hours, but, because of when they are rostered by the Respondent, would enable the Respondent to not pay overtime rates of pay” (at [44]); and
(j)found in respect of the fortnight in contest that the overtime rates should have been applied to the 3 additional hours Mr Micallef worked on a Wednesday rather than apportioning overtime to his rostered ordinary hours worked on the last Sunday of the fortnight, finding that “the additional hours did not fall on a Sunday” (at [50]).
In rejecting the Appellant’s construction, the Commissioner reasoned:
“[51] Applying the overtime rates at the end of the pay cycle, as the Respondent has done, deprives clause 11.2(a) of the necessary work it must do in the 2016 Agreement. That cannot have been the objective intention of the parties to the 2016 Agreement. I reject the Respondent’s contention that there is something like a rolling assessment of hours worked during the relevant pay period. The rosters are set in advance. Hours are averaged over the fortnight. If an employee works more than 76 hours, they are to be paid overtime. The additional hours worked outside the set roster are not, as the Respondent has done, counted at the end of the fortnight (and if they fall on a Sunday not paid as overtime). The additional hours are counted when they are worked. There is nothing in the 2016 Agreement that supports the Respondent’s construction that the hours are counted only at the end of the roster period.
[52] Mr Micallef worked 3 more hours than his rostered shifts in the fortnight. He did so on Wednesday, 22 March 2023. He should be paid overtime in respect of the same.
[53] Actual excess hours that employees work (that are greater than 76 hours averaged in a fortnight), must attract overtime rates of pay. In circumstances where Mr Micallef worked 79 hours in the relevant period, it is only a non-sensical construction of the 2016 Agreement that would deprive him of payment. Payment for working the additional hours is something that must flow from the beneficial nature of the 2016 Agreement. ‘Regardless of when the overtime falls’ the employees must be paid. The inconvenience of working additional hours must be compensated for.
[54] True it is that clause 11.2(b) determines the entitlement. But subparagraph (b) cannot be read in isolation. It must be considered in the context of the 2016 Agreement as a whole. It is necessarily informed by the proper construction of clause 11.2(a).
[55] ‘Ordinary hours’ are advised on the commencement of employment or when the roster is published. Hours outside of ‘ordinary hours’ are to be paid as overtime.”
Analysis
The dispute and the determination were principally about the overtime rate provisions in clause 11.2 of the Agreement:
“11.2 Overtime Rates
(a) When calculating overtime consideration is given to:
(i) Excess hours worked on a shift basis.
(ii) Anything over 76 hours per fortnight. Regardless of where the overtime falls, overtime is paid on anything over 76 hours per fortnight that hasn't already had overtime applied to it and isn't a Saturday or Sunday ordinary shift.
(iii) Overtime is not payable for ordinary hours worked on Saturday or Sundays.
(b) Full-time Employees: A full-time Employee will be paid the following payments for all work which exceeds 10 ordinary hours per shift and anything over 76 hours per fortnight that hasn't already had overtime applied to it and isn't a Saturday or Sunday ordinary shift:
(i) disability services - for all authorised overtime on Monday to Saturday, payment will be made at the rate of time and a half for the first two hours and double time thereafter;
(ii) all other Employees, not delivering disability services, - for all authorised overtime on Monday to Saturday, payment will be made at the rate of time and a half for the first three hours and double time thereafter;
(iii) for all authorised overtime on a Sunday, payment will be made at the rate of double time;
(iv) for all authorised overtime on a public holiday, payment will be made at the rate of double time and a half; and
overtime rates under this clause will be in substitution for, and not cumulative upon, the shift premiums prescribed in clause 12, and Saturday and Sunday work premiums prescribed in clause 9.9.”
The other relevant terms of the Agreement are reproduced at [33] of the Decision. For present purposes we only need to note the following:
(a)ordinary hours are advised on commencement of employment or when there is a change to shift/work patterns: clause 6;
(b)ordinary hours of work for a full-time employee shall be 38 hours per week, or an average of 38 hours per week in a four week period, subject to no more than 76 hours being worked in any two consecutive weeks and no more than 48 ordinary hours being worked in any one week. By agreement, the ordinary hours may be worked up to 10 hours per shift: clause 9.1;
(c)a roster must be posted by the employer “of at least fourteen days duration setting out Employees' daily working hours, commencing and finishing times”: clause 9.2(c); and
(d)an entitlement to overtime will only arise where the Employee is requested by the Appellant to work such overtime, or the overtime is validly authorised by the Appellant in advance of being worked and recorded: clause 11.1(c).
The Appellant’s argument at first instance and on appeal can be summarised as follows: see also the Decision at [35]:
(a)clause 11.2(b) contains the formula for calculating overtime, which is also “informed” by the “considerations” in clause 11.2(a);
(b)clause 11.2(b) requires that overtime be paid in two instances: (1) for “all work which exceeds 10 ordinary hours per shift” and (2) for “anything over 76 hours per fortnight that hasn’t already had overtime applied to it and isn’t a Saturday or Sunday shift”;
(c)clause 11.2 is inelegantly drafted but the combined effect of clauses 11.2(a) and 11.2(b) is that the relevant work must exceed 10 ordinary hours and contribute to ‘anything over 76 hours per fortnight that hasn’t already had overtime applied’ in order to attract overtime payments;
(d)Mr Micallef did not ever work in excess of 10 hours but did work ‘over 76 hours’ in the roster period;
(e)the definition of ‘ordinary hours’ in clause 6, read with clause 11.2 of the Agreement, does not support a finding that hours outside of ‘ordinary hours’ are to be paid as overtime;
(f)the period worked over 76 hours fell on the last day worked in the fortnight, which was a shift that had not had overtime applied to it; and
(g)clause 11.2(a)(iii) expressly excludes payment of an additional overtime rate of pay for ordinary hours worked on a Sunday – it is already paid at 200%.
The proceedings focused on a particular fortnight in which Mr Micallef worked three additional hours on the first Wednesday of the two-week roster period and worked 79 hours in total over the roster fortnight.
On the Appellant’s construction the last 3 hours worked in the fortnight were overtime because it was not until the last working day of the fortnight that Mr Micallef worked ‘over 76 hours’.
If the Appellant is correct that the overtime premium in clause 11.2(b) is not paid until after an employee has worked 76 hours in a fortnight, clause 9.1 of the Agreement limits ordinary hours to “no more than 76 hours being worked in any two consecutive weeks.” The reference to “any two consecutive weeks” likely means that the hours worked in any particular week need to be considered in conjunction with the hours worked in the previous week as well as the following week – regardless of when the roster cycle starts and finishes. The Appellant did not agree with this understanding of the provisions of the Agreement, and relied on the fact that its fortnightly pay period coincided with its fortnightly roster period and said that there was no need to consider any other fortnightly periods. On the facts at hand, Mr Micallef worked a total of 79 hours in the week he worked the additional hours on the Wednesday and the week before combined. The last three hours worked in those “two consecutive weeks” were worked on the Friday of that second week (being week 1 of the fortnightly roster) and were, applying the appellant’s reasoning, subject to an additional overtime penalty.
In any event, we do not accept the Appellant’s construction. By the terms of the Agreement the Appellant must set and publish rosters in advance of the work performed. The ordinary hours of work must be rostered under the Agreement within certain parameters: clauses 9.1 - 9.3. Where such requirements apply, the employer is not able to wait until the end of the fortnight and retrospectively designate some hours to be ordinary hours and some hours to be overtime. For full time employees, once the roster setting out ordinary hours of work is posted: clause 9.2(c), the overtime premium is payable on “anything over 76 hours per fortnight”: clauses 11.2(a)(ii) and (b). The hours Mr Micallef worked on Wednesday 22 March 2023 between 9:30am to 12:30pm were hours that were “over” the 76 ordinary hours per fortnight posted in the roster.
There was some debate at the appeal hearing about whether the employer could issue a two-week roster in advance that sets more than 76 hours for a fulltime employee but does not differentiate between ordinary hours and overtime hours. We do not need to decide that point because the published roster for the fortnight in question referred to the three additional hours worked on the Wednesday as “Extra Shift 9:30am 12:30pm” and showed Mr Micallef’s total hours for the fortnight to be 79. The reference to “extra” hours can only be understood to be hours that are extra to the ordinary hours and so are hours “over” 76 ordinary hours per fortnight posted in the roster.
The Appellant submitted that the Commissioner made the following errors in the reasoning pathway:
(a)the Commissioner’s reasoning that the Appellant could be motivated to roster hours in excess of 76 hours that permit an avoidance of the overtime provisions (see the Decision at [44]) was “informed and animated by a diverting and extraneous hypothetical, concerned with the question of an industrial fair outcome”;
(b)the Commissioner “started his analysis with this eye on an extreme possibility” which “disclosed a lens through which the reasoning process can be understood”. As such the Commissioner’s reasoning process was “pregnant with an assumption of bad faith”; and
(c)the Commissioner erroneously construed (and perhaps re-wrote) the terms of the Agreement with the aim of ensuring fairness.
These arguments are not persuasive. A proper reading of the Commissioner’s decision shows that his reasoning was consistent with the meaning and effect of the hours of work and overtime provisions of the Agreement read as a whole and his answer to the agreed question was correct. We do not consider the Commissioner’s reasoning discloses that he was erroneously diverted by questions of industrial fairness nor does any part of his reasoning appear to assume bad faith on the Appellant’s part.
Our analysis is concerned with the proper construction of the Agreement. We should not be taken to have expressed a general principle about whether hours worked inside a rostering period should be paid as overtime or ordinary hours.
The parties agreed that the questions raised on appeal have broader consequences for the Appellant’s workforce. However, for the reasons stated above, to the extent that the answer given by the Commissioner to the proper construction of the Agreement is either correct or incorrect, the answer was correct. We therefore do not see that it is in the public interest to grant permission to appeal nor are we persuaded to grant permission on discretionary grounds.
Accordingly, permission to appeal is refused.
DEPUTY PRESIDENT
Appearances:
N Harrington of Counsel instructed by E Cole from DLA Piper for the Appellant
A Mackenzie of Counsel instructed by D Predic for the Respondent
Hearing details:
2024.
Melbourne
April 15.
Printed by authority of the Commonwealth Government Printer
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