Moloney v Beverage Engineering Pty Ltd

[2007] FMCA 1072

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MOLONEY v BEVERAGE ENGINEERING PTY LTD [2007] FMCA 1072

INDUSTRIAL RELATIONS – Termination of employment – notice of termination by employer – pay in lieu of notice – ordinary hours of work.

Workplace Relations Act 1996 (Cth) ss.661, 661(1), 661(2), 661(4), 661(5), 665(7)

Andrew James Fox v St Barbara Mines Ltd [1998] FCA 621
Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362
Scott v Sun Alliance Australia Ltd & Anor [1993] 178 CLR 1
Vickery v Assetta [2004] FCA 555
Shane Michael Hammond v Moore Business Systems Australia Ltd (950451)
Australian Communication Exchange Ltd v Deputy Commissioner of Taxation (2003) 201 ALR 271
Shop Distributive & Allied Employees Association v Woolworths Ltd [2006] FCA 616
Catlow v Accident Compensation Commission (1989) 167 CLR 542
Kucks v CSR Limited (1996) 66 IR 182
Quest Personnel Temping Pty Ltd v Commissioner of Taxation [2002] FCA 85

Applicant: IVAN MOLONEY

Respondent: BEVERAGE ENGINEERING PTY LTD

File number: MLG 206 of 2007

Judgment of: O’Sullivan FM

Hearing dates: 14 & 15 June 2007

Date of last submission: 15 June 2007

Delivered at: Melbourne

Delivered on: 12 July 2007

REPRESENTATION

Representative for the Applicant: Mr Barry Terzic

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU)

Counsel for the Respondent: Mr Stewart Wood

Solicitors for the Respondent: Piper Alderman

ORDERS

1. The application filed 23 February 2007 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 206 of 2007

IVAN MOLONEY

Applicant

And

BEVERAGE ENGINEERING PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. These proceedings concern a dispute over the amounts to be included in a payment made instead of notice of termination under s.661 of the Workplace Relations Act 1996 (“the WR Act”).

2. Beverage Engineering Pty Ltd (“the respondent”) was at all material times, a corporation capable of suing and being sued in its own name and an employer conducting business and employing employees in the state of Victoria.

3. The respondent employed Ivan Moloney (“the applicant”) on

   
   

   26 October 2006.

4. On 24 November 2006 the respondent terminated the applicant’s employment. On termination the applicant was paid in lieu of notice.

5. By application lodged on 1 December 2006 (pursuant to s.663 of the WR Act) with the Australian Industrial Relations Commission

   
   

   (“the Commission”) the applicant alleged that the respondent had terminated his employment in breach of section 661 of the WR Act.

6. On 7 February 2007 the Commission issued a certificate under section 650 of the WR Act that attempts to settle the matter by conciliation were unsuccessful.

7. The applicant commenced proceedings in this Court by application filed 23 February 2007.

8. By response filed 16 May 2007 the respondent sought that the application be dismissed and the applicant pay its costs.

Background

1. At the hearing on 14 June 2007, Mr Terzic appeared for the applicant (who is a member of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“AMWU”)) pursuant to section 854(10) of the WR Act and Mr Wood of Counsel appeared on behalf of the respondent.

2. The applicant relied on:

   ·his affidavit sworn 23 February 2007; and

   ·the contentions of fact and law filed 1 June 2007.

3. The respondent relied on:

   ·the affidavit of Mr Colin Milne sworn 10 May 2007; and

   ·the contentions of fact and law filed 1 June 2007.

4. Each of the above affidavits were accepted into evidence without objection and neither deponent was cross examined. Both parties relied on a Statement of Agreed Facts which I will return to below.

Relevant legislation

1. The application filed 23 February 2007 was brought pursuant to s.663 of the WR Act which provides:

“(1)  Subject to subsection (5), an employee may apply under this section to the Court for an order under section 665 in respect of an alleged contravention of one or more of sections 659 and 660 by his or her employer.

(2)  Subject to subsection (5), an employee may apply under this section to the Court or to an eligible Court as defined in section 717 for an order under section 665 in respect of an alleged contravention of section 661 by his or her employer.

(3)  Subject to subsection (5), a trade union that has made an application under section 643 on behalf of an employee on the ground of an alleged contravention of one or more of sections 659 and 661 may apply to a Court under this section for an order under section 665 in respect of that alleged contravention or each of those alleged contraventions.

(4)  Subject to subsection (5), an inspector, a trade union, or a trade union officer or employee who has made an application under section 643 in respect of an alleged contravention of section 660 may apply to the Court under this section for an order under section 665 in respect of that alleged contravention.

(5)  An application under subsection (1), (2), (3) or (4) in respect of an alleged contravention of section 659, 660 or 661 may not be made to a court unless the applicant:

(a)  has received a certificate under subsection 650(2) regarding conciliation of an application made wholly or partly on the ground of the alleged contravention; and

(b) has elected under section 651 to begin proceedings in that Court for an order under section 665 in respect of the alleged contravention.

(6)  The application must be made within 14 days after the lodgement of an election under subsection 651(6), or within such period as a Court allows on an application made during or after those 14 days. (emphasis added).”

1. Section 661 of the WR Act sets out the minimum standard for notice required in termination and sets out the ways in which that requirement may be met.

2. Section 661 provides:

   “(1)Subject to subsection (8), an employer must not terminate an employee’s employment unless:

   (a)the employee has been given the required period of notice (see subsection (2) and (3)); or

   (b)the employee has been paid the required amount of compensation instead of notice (see subsections (4) and (5)); or

   (c)the employee is guilty of serious misconduct, that is misconduct of such nature that it would be unreasonable to require the employer to continue the comment of the employee concerned during the required period of notice (see subsection (7)).

   (2)The required period of notice is to be worked out as follows:

   (a)first work out the period of notice using the table at the end of this sections; and

   (b)then increase the period of notice by 1 week if the employee:

   (i)     is over 45 years old; and

   (ii)     has completed at least 2 years of continuous service with the employer

   Employee’s period of continuous  Period of
   service with the employer  notice

   _____________________________________________________

   Not more than 1 year   At least 1 week

   _____________________________________________________

   More than 1 year but not more than 3                   At least 2 weeks

   years

   _____________________________________________________

   More than 3 years but not more than 5            At least 3 weeks

   years

   _____________________________________________________
                    More than 5 years   At least 4 weeks

   _____________________________________________________

   (3)For the purposes of subsection (2), the regulations may prescribe events or other matters that must be disregarded, or must in prescribed circumstances be disregarded, in ascertaining a period of continuous service.

   (4)The required amount of compensation instead of notice must be equal or exceed the total of all amounts that, if the employee’s employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period.

   (5)That total must be worked out on the basis of:

   (a)the employee’s ordinary hours of work (even if they are not standard hours); and

   (b)the amounts ordinarily payable to the employee in respect of those hours, including (for example) allowances, loading and penalties; and

   (c)any other amounts payable under the employee’s contract of employment.

   (6)The regulations may make provision for or in relation to amounts that are taken to be payable under a contract of employment for the purposes of paragraph (5)(c) in relation to an employee whose remuneration before the termination was determined wholly or partly on the basis of  commission or piece rates.

   (7)Without limiting the generality of the reference to serious misconduct in paragraph (1)(c), the regulations may identify:

   (a)     particular conduct; or

   (b)     conduct in particular circumstances;

   that falls within that reference.

   (8)The regulations may exclude from the operation of this section terminations of employment occurring in specified circumstances that relate to the succession, assignment or transmission of the business of the employer concerned.”

3. In summary, section 661 provides that an employer must not terminate an employee's employment unless the employee has been given the required period of notice (as set out in sub-s.(2)), or has been paid the required period of compensation instead of notice (unless the employee is guilty of serious misconduct). Section 661(3) is not presently relevant. Sections 661(4) and (5) of the WR Act set out how the required amount of compensation in lieu of notice is to be calculated.

4. Under s.665(7) of the WR Act the Court may, if it is satisfied that an employer has contravened s.661, make an order requiring an employer to pay to the employee an amount of damages equal to the amount the employee was entitled pursuant to s.661.

Agreed Statement of facts

1. Pursuant to directions made on 27 April 2007 the parties prepared an Agreed Statement of Facts which is reproduced in full at Annexure 1 to these reasons (“the Statement”). The following facts from the Statement are not in dispute:

   ·the applicant was employed by the respondent as a welder from
   26 October 2006 until 24 November 2006 (“ the Employment period”).

   ·during the Employment period the applicant worked as a tradesperson welder at Port Campbell, Victoria, on the construction of a new gas processing plant (“the Plant”).

   ·during the Employment period the National Metal and Engineering On-Site Construction Industry Award 2002 (“the Award”) applied to the applicant’s work at the Plant.[1]

   [1] The Award was Exhibit R2

   ·during the Employment period, the respondent was bound to apply the Otway Gas Plant Construction Project 2005 Site Agreement at the Plant (“the Site agreement”).

   ·the Site agreement provided for ordinary hours of work.

   ·the applicant’s ordinary hours of work were 36 per week, worked from 7.00 a.m. to 3.30 p.m, with a 30 minute unpaid meal break, Monday to Friday. The four ordinary hours worked in excess of
   36 were banked for the purposes of a rostered day off.

   ·on the Plant in the months preceding and following the Employment period, overtime was worked by employees of the respondent, however, overtime was not guaranteed.

   ·it was not mandatory that employees of the respondent work overtime.

   ·the amount of overtime offered by the respondent to the employees at the Plant was dependent on operational requirements.

   ·overtime at the Plant was often available to be worked by employees of the respondent.

   ·on 24 November 2006, while at work, the respondent dismissed the applicant for operational reasons, that is to say, reasons unconnected with the applicant’s performance or conduct.

   ·the respondent paid the applicant the sum of $1,615.55 with $408.00 being withheld as tax. This sum was made up of accrued annual leave entitlements, leave loading and 1 week’s pay in lieu of notice.

   ·

   the 1 week’s pay in lieu of notice was made up of

   
   

   36 hours pay at ordinary rates, that is to say, a sum of $1,299.24 (36 hours x $36.09).

   ·two further adjustments were made to the payment in lieu of notice to deal with rostered day off (“RDO”) accrual and allowances but this is not in issue between the parties to this matter.

Question to be considered

1. In this case it was not disputed the required period of notice was

   
   

   1 week. As set out earlier what was in dispute is the amount to be included in the compensation (or payment in lieu) for that week.

2. At the hearing the parties agreed on the following the questions for the Court:

   “(a)On the Statement of Agreed Facts, and such other facts as are proved, has the Respondent contravened section 661 of the WR Act by failing to pay the Applicant the required amount of compensation in lieu of notice because, in the sum already paid as compensation, there was no component that is attributable to overtime?

   (b)If the answer to (a) is “yes”, on what basis is the “required amount of compensation” for the purposes of section 661(4) worked out?” [2]

   [2] Statement of Agreed Facts

Evidence of the parties:

1. The applicant deposed that:

   ·he was employed by the respondent to work at the Plant as a pressure welder on 26 October 2006.

   ·his hours of work were between 7.00 am to 3.30 pm Monday to Friday with 30 minutes for an unpaid meal break.

   ·if overtime was available his hours of work would be:

   ·6.00 am to 5.10 pm Monday to Thursday;

   ·6.00 am to 2.30 pm Friday; and

   ·6.00 am to 1.30 pm Saturday and Sunday.

   ·the availability of overtime depended on certain instances and/or conditions such as weather, public meetings, public holidays and upon taking rostered days off.

   ·on 24 November 2006 he was told he was being made redundant due to the shortage of work.

2. Mr Milne (who was responsible for industrial relations at the Plant) deposed that:

   ·all employees of the respondent at the Plant were engaged under the Site agreement.

   ·clause 11.1 of the Site agreement set out the ordinary hours of work of employees of the respondent at the Plant.

   ·the ordinary hours of work at the Plant were 8 hours per day Monday to Friday and an average of 36 hours per week.

   ·variable amounts of overtime are worked on the Plant from time to time.

   ·overtime on the Plant is not guaranteed nor is it mandatory to work overtime if it is offered.

   ·clause 21 of the Site agreement states that employment may be terminated by notice or pay in lieu in accordance with the equivalent of what is now section 661of the WR Act.

Submissions of the applicant

1. In relation to the interpretation of the relevant sections of the WR Act the Applicant contended:

   “5.Sub-ss.661(4) and (5) prescribe how the amount of compensation instead of notice is to be computed. Of course reference should also be made to sub-s (2), which tabulates the required periods of notice, but there is no dispute that the required period of notice is 1 week.

   6.The applicant makes the following observations about the sections:

   (a)Sub-s(4) is couched in more general terms; sub-s (5) has an epexegetic function.

   (b)sub-s(4) lays out the temporal aspect of the required sum’s calculation. By this it is meant, in tandem with sub-s(2), the length of the period over which compensation is computed is determined (here, as said before, a week) and, as well, which particular week (or weeks) is to be used for the computation is specified, viz, the week (or weeks) that, it is submitted, immediately follow on from the notification of termination.

   (c)By the use of the word “if” in the passage, “if the employee’s employment had continued until the end of the required period of notice” there will necessarily be an element of supposition in sub-s (4). The application of the subsection will demand that a prediction be made, and sometimes the prediction will require some degree of speculation.

   …

   (e)The terms “ordinary hours of work”, “standard hours”, “loadings”, “penalties” etc have attained distinct meaning in Australasian industrial parlance and jurisprudence.

   (f)The predecessor to s.661, s.170CM, according to Miller CIM in Dempster v Commonwealth of Australia, “constitutes beneficial legislation …[and] the terms …should be construed as to give the fullest relief, which that fair meaning of the language will allow.” [3]

   [3] (unreported, NSW Chief Industrial Magistrate’s Court, 76346/03, 14 July 2004 at para 66.)

2. In relation to the provisions of s.661(4) of the WR Act the applicant contended:

   “20. At this point the connection between “liable to pay” in sub-s(4) and what is in sub-s(5) is explored. Sub-s(4) does not identify any sort of obligation for payment by an employer to an employee. It is contended that this accords with the concept of Part 12 of the Act, entitled, ‘Minimum entitlements of employees’, having an overarching effect that goes beyond the award network created by the Act-both as the Act now stands and when the section first appeared in 1993. In other words, the section must deal with employees whose emoluments both are and are not subject to awards or other industrial instruments created by the Act. With this in mind, the Act expresses broadly what goes into the liability to pay: it goes to “amounts ordinarily payable” (para(5)(b)) and there there is no mention of a contractual or other species of obligation to pay. It is just as well, because for employees whose “amounts ordinarily payable” are set by an award there may not be a contractual obligation to pay such employees’ wages at all: that is left to the award (cf Byrne). This then just leaves para 661(5)(c); and it is contended that it has a mop up function, picking up odds and sods and confirming that a broad and expansive operation is to be imputed to the section.

   Application of s.661 to the matter before the Court

   21.In the end, the foregoing analysis points to the task for the Court as being to compute what the Applicant would have received had he worked out a week’s notice. In so doing there remains the need for a forecast to be made on how much, if any, overtime would have been worked by the Applicant in this week.

   22.In taking on this function, it is submitted that the Court should be mindful of two issues: the first is that any rule promulgated by the Court on this question would have some presidential value: subsequently employers across Australia would need to have regard to this Court’s ruling when paying compensation in lieu of notice.

   23…in making the forecast is that the Court must merely come up with a figure that is, on the balance of probabilities, supportable. The Applicant thus puts for consideration the following:

   (a)At the place of work concerned, “overtime was often available to be worked” by employees such as the Applicant.

   (b) The Applicant regularly worked overtime.

   (c)There is nothing before the Court that would allow a finding to be made that had the Applicant worked out the week following the termination of his employment he would not have worked overtime in conformity with the pattern already established in the month prior – indeed, the contrary is entirely supportable.

   (d)It is defensible simply to average out the overtime worked in the entire period of the Applicant’s employment with the Respondent and use the average as the basis for determining the Applicant’s “ordinary hours”.

3. In relation to the interpretation of section 661(5) of the WR Act in this case the applicant contended that:

   “8.…the notion advanced in argument by the employer in Fox that “ordinary hours” as it appears in what is now s.661(5), “connotes the ordinary hours of work under an award or industrial agreement such as thirty eight or forty hours per week” was rejected. The Applicant concedes that while the employer’s approach in Fox would be correct in other contexts (Scott v Sun Alliance Australia (1993) 178 CLR 1; Catlow v Accident Compensation Commission (1989) 167 CLR 542; Kucks v CSR Limited (1996) 66 IR 182; Thompson v Roche Bros Pty Ltd [2004] WASCA 110), as pointed out in Fox by French J, in this context, the term “ordinary hours” takes on the construction given to that term in Kezich. In this regard, while it was not set out in Fox, what is probably the passage from Kezich his Honour relied on is below:

   The word “ordinary” means “regular, normal, customary, usual.” A man’s “ordinary hours” of work are the hours during which it is usual for him to work.

   In Fox French J noted the employee’s counsel’s submissions on sub-s(5), but he did not specifically endorse, nor question, the sentiments therein. Instead, his Honour went on to make broader comment; positing a purpose and intent for the section. However, it is submitted that there is something to be gained, and French J’s decision can be fortified again, by paying attention to the terms in sub-s (5) that were not fully considered in Fox. For a start, the parenthetically inserted term, “even if they are not standard hours”, it is submitted, puts French J’s interpretation beyond question: the juxtaposition in para (5) (a) of the terms “ordinary hours” and “standard hours”, with the words “even if” in between – acting in a comparative sense – gives the term “ordinary hours” the Kezich meaning.

   
   

   This is because the term “standard hours” in the subsection, it is contended, can in a logical and grammatical sense, only be held to have the meaning assigned to it in Scott: “the fixed standard hours as opposed to overtime or usual or customary time”. This argument delivers the proposition that “standard hours” stands subordinately to “ordinary hours” due to the comparator effect of “even if” and therefore “ordinary hours” must be assigned the amplitude given it in Kezich.

   9.And, it does not end there: s.661(5)(b) gives further support to the notion that “ordinary hours” in s.661 includes overtime (if it be ordinarily worked) by making reference to “penalties”….

   …

   11.The above then gives strong support to overtime payments being included in the computation of compensation in lieu of notice. But, then the ancillary question arises: how much overtime? In Fox there was a roster so the question was not too difficult to answer, but where the work is vagarious an estimate will be called for. In Vickery Finkelstein J did just that:

   It is likely that Mr Vickery would have worked additional hours had has employment continued until the expiry of the required period of notice. I have this conclusion on the fact that Mr Vickery worked additional hours during at least the three of the four weeks that he was employed by the respondent.
   The amount of additional hours he would have worked in his last week is a little speculative. A reasonable estimate is that he would have worked an additional three hours. The figure is not as high as the nine hours Mr Vickery worked in the first week because given the deteriorating relationship between the parties, it is unlikely that he would have been required to work such overtime. This figure consists of his standard
   45 hours plus three additional hours at a rate of $12.37 per hour.

   ...”

1. The applicant submitted:

   ·in this case a plain reading of the provisions of section 661 was required.

   ·Scott v Sun Alliance (1993) 178 CLR 1 (“Scott”) makes clear the context is important and in this case the WR Act is beneficial legislation.

   ·the use of the two words “ordinary” and “standard” in the same section meant there was the possibility that they had a different meaning.

   ·the use of the words “even if” between the words, “ordinary” and “standard” in s.661(5) indicated they must have a different meaning.

   ·given that “ordinary” and “standard” where both used in the same subsection the two could not be synonymous in the context in which they occurred.

   ·that ordinary hours can be, and are, hours that go beyond the ordinary hours in the Site agreement of 36 hours.

   ·in this case “ordinary” in s.661(5) meant actual and “standard” meant ordinary.

   ·in this case overtime worked by the applicant was customary, regular or usual and ought be included in ordinary hours.

   ·this approach was consistent with the approach in Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362 (“Kezich”) and was to be preferred.

   ·the meaning given to ordinary hours in Kezich is to be preferred given the beneficial nature of the legislation.

   ·whilst acknowledging the meaning of ordinary hours it contended for, did sit “ajar” from the various meanings given to it in the industrial relations context, that meaning did not defy logic in the context of ss.661(4) and (5).

   ·whilst Vickery v Assetta [2004] FCA 555 (“Vickery”) was uncontested the approach in that case recognised that there was an element of speculation in calculating the amount of pay in lieu of notice in accordance with sections 661(4) and (5).

   ·given this, the best arrangement to deal with the obligation to pay compensation in lieu of notice was to average the actual hours worked over the Employment period for the purposes of calculating ordinary hours under ss.661(4) and (5).

   ·whilst it was acknowledged that unlike Fox and Vickery here there was no roster nor was overtime mandatory, it was regular, normal, customary or usual.

Submissions of the respondent

1. The respondent denied any liability to the applicant.

2. The respondent noted that s.661(4) of the WR Act states that the employee’s compensation instead of notice must equal or exceed the total of all amounts that, if the employee had continued to work until the end of the required period of notice, the employer would have become liable to pay to the employee. The respondent contended that:

   “10.The Applicant’s approach to calculating a weeks pay in lieu of notice (by averaging his receipts over the period of his employment) has the effect of including:

   (a)The Applicant’s average overtime hours; and

   …

   11.The Respondent contends that these amounts do not fall within the scope of s.661.”

3. The respondent submitted:

   ·section 661(4) makes clear the test is whether the employer would have become liable to pay to the employee because of the employment continuing (emphasis added).

   ·all of the authorities relied by the applicant can be distinguished from the facts in this case as here on the agreed facts in the Statement there was:

   i.no requirement to work overtime unlike in Fox;

   ii.no roster for overtime unlike in Fox;

   iii.no guarantee of overtime; and

   iv.clear authority that did not follow Kezich in the more recent cases in Catlow and Scott.

   ·whilst s.661(4) does require a degree of supposition as to what would have happened had the employment continued during the notice period. It can not be assumed in this case the respondent would have become liable to pay amounts for working overtime where the site was in ‘ramp down’ phase.

   ·the WR Act required a determination of what “would” the respondent have “become liable to pay” not what the respondent may have become liable to pay.

   ·the applicant’s own evidence was he was told he was terminated due to shortage of work.

   ·given this it would be extraordinary that the respondent would have required overtime in the following week.

   ·as in the decision of Shane Michael Hammond v Moore Business System [4] it is reasonable to assume that in this case the respondent would act in its own interest and accordingly would not have required overtime to be worked where it had told the applicant he was being terminated due to a shortage of work.

   ·for these reasons the respondent would not have become liable to pay overtime had the employment continued during the notice period.

   [4] (950451)  JR Murphy; Industrial Relations Court of Australia, 8 September 1995

4. The Respondent contended in relation to how section 661 and the issue of the provisions in section 661(5) relating to applicant’s ordinary hours of work (even if they are not standard hours) ought be interpreted that:

   “13.The established principles of statutory interpretation is that weight be given to the natural and ordinary meaning of words used. The term “ordinary time” has long been understood and accepted as the standard hours prescribed in awards of the Commission.” CFMEU & Anor v John Holland Engineering Pty Ltd PR968157 C Harrison

   
   

   30 January 2006 @ 21.

   14.The High Court directly reviewed the construction of the words “ordinary time rate of pay” in Scott v Sun Alliance Australia Ltd and Anor [1993] 178 CLR 1. The Court stated at paragraph 6 that “Unless the context otherwise requires “ordinary time rate of pay” means the rate of pay for standard or ordinary hours of work in contrast to the overtime penalty rate of pay for hours of work other than the standard or ordinary hours.” And “when expressed by reference to a week, it refers to the product of multiplying that hourly rate by the standard 35, 38 or 4 hour week as the case may be, fixed by legislation, industrial awards or agreement.”

   15.The High Court also said at paragraph 12 “…the relevant expression “ordinary time rate of pay” has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in s.69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression “ordinary time” cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work. In s.69(1)(a)(ii), ordinary time” means the fixed standard hours as opposed to overtime or usual or customary time.”

   16.This view was most recently upheld by ACJ Gray in the Federal Court in Shop Distributive & Allied Employees Association v Woolworths Ltd [2006] FCA 616 @ 36 where it was stated “…the High Court made it clear that, where the expression “ordinary rate of pay” is used in relation to conditions of work fixed by an industrial award or collective agreement, it is a reference to the rate of pay for the “fixed standard hours as opposed to overtime or usual or customary time.”

   17.In CFMEU & Anor v John Holland Engineering Pty Ltd PR968157 30 January 2006 @ 22, Commissioner Harrison said “Despite the fact the Agreement provides for systematic and regular overtime, these hours are over and above ordinary time and should not be included in any calculation for payment in lieu of notice.”

   18.The Respondent therefore contends that this Court is bound to apply the interpretation that ordinary hours of work means the fixed standard hours of work which an employee is bound toward, exclusive of overtime. The ordinary hours of work are provided in the applicable industrial instrument and do not include overtime or other non-standard hours.

   19.Clause 11.1 of the Otway Gas Plant Construction Project 2005 Site Agreement (the Otway Agreement) (Marked “IM2”) fixes the ordinary hours of work for the site as

   
   

   36 per week. Consequently 36 hours are the ordinary hours of work for the purposes of determining compensation in lieu of notice, and overtime hours are excluded.”

5. The Respondent also submitted that:

   ·the plain words of s.661(5) referred to “ordinary hours of work”.

   ·in construing the plain meaning of those words it is appropriate to refer to their context.

   ·in this case the ordinary hours of work were fixed by means of an industrial instrument (i.e. the Site agreement).

   ·unlike Fox and Vickery (which had only referred to Kezich) in this case the correct approach to interpretation of the words ordinary hours of work in section 661 required that it be recognised those ordinary hours were fixed by an industrial instrument (i.e. the Site agreement).

   ·the approach it contended for was consistent with the most recent authorities, the plain meaning of the words and the accepted meaning in industrial relations parlance.

   ·in any event the applicant’s claim was not for the actual hours worked but the applicant was in fact seeking average actual hours of work when the words in s.661(5) referred to ordinary hours of work.

Consideration

1. Notwithstanding that these provisions of the WR Act had been in the same terms since 1993 the Court was not pointed to a decision where the contentions such as those made by the applicant here had been contested.

2. In this matter the applicant submitted the Court should adopt what was described in submissions on his behalf as the Kezich meaning to ‘ordinary hours of work’ in s.661(5). That is, that ordinary hours of work meant the number of hours usually worked and included hours worked at overtime rates.

3. The applicant relied on Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362 (“Kezich”) at [365]:

   “the word “ordinary” means “regular, normal, customary, usual.” A man’s “ordinary hours” of work are the hours during which it is usual for him to work. There is nothing in the expression “ordinary hours” that connotes payment at any particular rate, and to industrial the words as meaning “hours during which work is done for which overtime is not paid “would be to place upon them a meaning which they simply do not bear. The expression “the ordinary hours he would have worked” in my opinion mean the same as “the hours he would ordinarily have worked”…

4. The Applicant sought to distinguish the later decision of the High Court in Catlowv Accident Compensation Commission (1989) 167 CLR 542 (“Catlow”) on the basis that the words ‘standard’ and ‘ordinary’

   
   

   (at least as they appeared in s.661(5) of the WR Act) had to have different meanings.

5. In Catlow McHugh J at [563] said:

   “the ordinary meaning of the phase ‘normal number of hours per week’ read in its context, the industrial background of the legislation, the judicial exposition of similar phrases and the history of the legislation all point to the phrase meaning the ordinary or standard hours fixed by the terms of employment.”

6. In Catlow, His Honour dealt with Kezich and distinguished it at [565] noting that in the case before him “the context shows that the legislature assumed that the normal number of hours per week was fixed by industrial awards.[5]”

   [5] Catlow v Accident Compensation Commission (1989) 167 CLR 542 at 565

7. The decision in Scott[6] also involved construing a section in workers compensation legislation. The majority in the High Court held that in that case unlike the decision in Kezich the expression ‘ordinary time rate of pay’ has an established and special meaning in the context of employment and industrial relations.

   [6] Scott v Sun Alliance (1993) 178 CLR 1

8. In Scott the majority said:

   “Unless the context otherwise requires, “ordinary time rate of pay” means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours.”[7]

   [7] Scott at 5

9. In Scott at [7] the Court noted the decision in Kezich and said that:

   “In some contexts, “ordinary time” may mean “regular, normal, customary, usual” time. [(17) See Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362 at p 365.] Thus in Kezich v Leighton Contractors Pty Ltd [(18) (1974) 131 CLR 362] this Court held that the words “the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury” in cl 2 of the Schedule to the Workers' Compensation Act 1912 (W.A.) referred to the hours during which it was usual for the employee to work. In that case, Gibbs J considered that it was not legitimate to construe the statute by reference to the meaning which the words bore in industrial awards and agreements ((19) ibid, at p.364).”

10. The Court then went on at pages [7-8] to say:

    “However, in this case, unlike Kezich, the relevant expression “ordinary time rate of pay” has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in

    
    

    s.69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression “ordinary time” cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work. In s.69(1)(a)(ii), “ordinary time” means the fixed standard hours as opposed to overtime or usual or customary time.  However, just as individual employment contracts usually fail to distinguish between “ordinary time rates” of pay and other rates of pay, so do the majority of them fail to distinguish between the fixed standard hours and other working time. Consequently,

    
    

    s.69(1)(a)(ii) would seem to have little scope for operation in relation to private employment contracts. By itself, this factor could not be decisive, but it is strong confirmation of the construction which flows from the presence of s.69(3) in the Act.”

11. The applicant had also relied on the decision of the Federal Court in Andrew James Fox v St Barbara Mines Ltd [1998] 621 FCA (4 June 1998) (“Fox”). French J said:

    “In my opinion the purpose of payment in lieu of notice is to ensure that an employer is not suddenly and arbitrarily subjected to a loss of employment through no fault of his or her even without the security of a payment which will allow reasonable time to arrange his or her affairs including securing new employment. It is in effect, a short extension of the employee’s financial status quo.”

12. Finally, the applicant had also relied on Vickery v Assetta [2004] FCA 555 (4 May 2004) (“Vickery”). In that case, which proceeded undefended, Finkelstein J referred to the decision in Fox and said it was likely the applicant would have worked additional hours had his employment continued until the expiry of the required period of notice but the amount was a little speculative.

13. The decision Australian Communication ExchangeLtd v Deputy Commissioner of Taxation (2003) 201 ALR 271 (“Australian Communication Exchange”) dealt with the meaning of “ordinary time earnings” in a state award. The majority in that case upheld the approach of the employer who had calculated payments by reference to hours worked during ordinary hours in the award but not otherwise.

14. In Australian Communication Exchange Kirby J at [85] said:

    “The concept of overtime as hours worked in addition to ordinary hours worked is long established in this field of discourse.”

15. His Honour cited inter alia Quest at [27] to [29][8].

    [8] see para 49 below

16. In Questhttp:// - disp3#disp3 Personnel Temping Pty Ltd v Commissioner of Taxation [2002] FCA 85 (“Quest”), Gray J considered the meaning of the phrase "ordinary hours of work" used in legislation relating to superannuation.

17. In Quest at paragraph [18] Gray J said:

    “many employees work on terms and conditions that are specified by awards or industrial agreements. In such cases, it is common for the instrument governing the terms and conditions employment to specify what are the ordinary hours of work.”

18. His Honour having set out the background and the relevant legislation said at [20]:

    “20 The phrase "ordinary hours of work" in s.6 of the Act must be construed in the context of the Act and in a way which best promotes the underlying object or purpose of the Act.

    
    

    It is plain from the definition of "ordinary time earnings" in s.6 that, at least in some cases, ordinary hours of work are to be distinguished from actual hours worked. The Act does not require that the relevant percentage of an employee's total earnings for all hours worked must be paid to a superannuation fund in order to avoid the levy. On the other hand, there will be some cases in which the ordinary hours worked by an employee will be the actual hours worked, because no ground will exist for distinction between the two concepts. An example would be an employee whose terms and conditions of employment are covered by an award and who works the maximum standard hours but no overtime.

    21 The Act is not a piece of ordinary taxation legislation.

    
    

    Its primary purpose is not the collection of revenue. It is designed to provide a system under which employers are encouraged to make payments to superannuation funds for the benefit of their employees. An employer who fails to make such contributions will be forced to pay an amount equivalent to the shortfall in contributions to the respondent by way of superannuation guarantee charge. The underlying object of the legislation is to benefit employees.

    
    

    The construction that favours this underlying object should be preferred to any that does not. A strict construction, such as might be adopted for ordinary taxation legislation, is inappropriate.

    22 Some assistance can be gained from authority. In Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362, the High Court of Australia construed the expression "the ordinary hours he would have worked” in legislation dealing with workers compensation. At 364 - 365, Gibbs CJ said:

    "What has to be determined is the meaning that those words have in the Act and since the words `ordinary hours’ are common English words they should, in accordance with established principles of statutory construction, be understood in their natural meaning unless the context otherwise requires.

    The word `ordinary’ means `regular, normal, customary, usual.’ A man's `ordinary hours’ of work are the hours during which it is usual for him to work. There is nothing in the expression `ordinary hours' that connotes payment at any particular rate, and to understand the words as meaning `hours during which work is done for which overtime is not paid’ would be to place upon them a meaning which they simply do not bear. The expression `the ordinary hours he would have worked' in my opinion means the same as `the hours he would ordinarily have worked’ and it is of course no reason to depart from the proper meaning of the words because the same meaning could have been achieved by a different form of words; in the co locations to which I have just referred the use of the adjective instead of an adverb does not change the sense of the expression.”

    …

    25 In apparent contrast to Kezich is the judgment of the High Court of Australia in Catlow v Accident Compensation Commission (1989) 167 CLR 543. In that case, at issue was the construction of the phrase "worker's normal number of hours per week" in legislation relating to workers compensation. By majority, the Court held that the normal number of hours was the time fixed by the relevant award, industrial agreement or contract as the standard hours, and not the number of hours normally worked. At 560 - 561, McHugh J, with whom Deane and Dawson JJ agreed, said:

    "Industrial awards and agreements usually state the number of ordinary working hours in each day and week and provide for the payment of overtime and penalty rates of pay for hours worked outside those ordinary hours ... Thus, in the present case the industrial agreement under which the appellant was employed provided that the ordinary hours of work should be an average of thirty-six per week which were to be worked in the manner specified `without payment of overtime’: cl. 3.

    Against the industrial background of awards and agreements fixing a number of ordinary hours per week, it seems natural to read the expression `calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week’ as a reference to the ordinary time rate of pay for the worker's standard or ordinary hours per week as fixed by award, agreement or contract.”

    26 The distinction between these two cases appears to rest upon the proposition that the fixing by collective means of standard hours of work, coupled with a provision for remuneration at a higher rate of hours worked beyond those standard hours, will usually lead to the conclusion that the standard hours fixed are to be considered as "normal hours” or, perhaps, "ordinary hours”. As I have said, that is not the present case. The offers of employment accepted by the employees in the present case did not purport to fix standard hours, with remuneration at a higher rate for hours in excess of them. They fixed only minimum hours, with hours worked beyond the minimum paid at the same rate as those worked within it.

    27 As is demonstrated by Kezich, there may be cases in which the working of hours beyond fixed standard hours becomes so regular, normal, customary or usual that the additional hours are to be regarded as ordinary hours for a particular employee. This may be so notwithstanding that the additional hours are remunerated at overtime rates or penalty rates.

    30 On the basis of these authorities, the Tribunal was correct to conclude that the ordinary hours of work of an employee of the applicant, doing work for the Victoria Police, were the normal, regular, customary or usual hours worked by that employee. If the normal, regular, customary or usual hours of a particular employee were more than the minimum specified in that employee's offer of employment, then the actual hours worked were the "ordinary hours of work", for the purposes of the definition of "ordinary time earnings" in s.6 of the Act.

    …”

1. As His Honour noted in Quest at paragraph 26 of his decision, the distinction between Kezich and Catlow appeared:

   “…to rest upon the proposition that the fixing by collective means of standard hours of work, coupled with a provision for remuneration at a higher rate of hours worked beyond those standard hours, will usually lead to the conclusion that the standard hours fixed are to be considered as "normal hours" or, perhaps, "ordinary hours”.”

2. Finally, the most recent case to which the Court was referred was Shop Distribution and Allied Employees Association v Woolworths [2006] FCA 616 wherein Gray ACJ considered the meaning of ‘ordinary time rate of pay’ in a collective agreement under the WR Act.

3. His Honour noted that in Scott the High Court at [7]-[8] made clear that where the expression ‘ordinary time rate of pay’ is used in relation to conditions of work fixed by an industrial instrument it is a reference to the rate of pay for the fixed standard hours as opposed to overtime or usual or customary time.

4. As has been acknowledged in many of the authorities referred to above in particular in Catlow  and Scott the words “ordinary hours of work” or the “standard hours” need to be considered in context. Both those decisions, which occurred after Kezich, noted the role of industrial awards and agreements in setting the ordinary hours of work.

5. As noted at paragraph 33 above it was submitted on behalf of the applicant in this case that ‘ordinary hours of work’ for the purposes of s.661(5)(a) ought include overtime as it was submitted such overtime was included in the applicant’s regular, normal customary or usual hours in the Kezich sense.

6. In Scott the majority in the High Court had said at [7] – [8]:

   “… in this case, unlike Kezich the relevant expression `ordinary time rate of pay' has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in s 69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression `ordinary time' cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work.”

7. Both parties referred to the Court to decisions of the Commission in the TCR Case (1984) 9 IR 115 and the 2004 Redundancy Case (2004) 129 IR 155; (2005) 134 IR 57 in support of their respective contentions.

8. Although not raised by Counsel, or otherwise mentioned during argument; examining the decisions to which the Court was referred led to a decision of a Full Bench of the Commission in the ‘Reasonable Hours Test Care (Print PR072002)’ which dealt with a number of claims to vary awards to include clauses dealing with reasonable overtime. At paragraph [49] of that decision the Commission in dealing with whether awards could include such a term said:

   “the expression ‘ordinary time’ hours of work in s.89A(2)(b) is a conflation of two well established expressions in the industrial relations vocabulary  – ‘ordinary hours of work’ and ‘ordinary time.’ It is to be inferred that the composite term refers to hours which may be worked without the payment of overtime and to the regulation of those hours.”[9]

   [9] (Print PR072002) para 49

9. The Commission went onto to reject a submission (which had cited as authority for such a proposition the decision in Kezich) that the expression ‘ordinary time of hours of work’ should be construed to mean “regular, normal, customary or usual hours.”

10. The Commission stated:

    “…we doubt that this is so. The distinction between ordinary hours and overtime is one which is deeply embedded in the Commission’s awards and agreements.”[10]

    [10] Ibid

11. Finally, both parties tendered extracts from various dictionaries and other services which they submitted supported their position.[11]

    [11] Exhibits A3, A4 and R9

Consideration of question in light of authorities

1. It was common ground that section 661 of the WR Act is, and has been, in identical form since it was inserted by the Industrial Relations Reform Act 1993.

2. It was common ground that section 661(4) required:

   ·that the assumption be made that employment continued during the notice period; and

   ·the employer to pay the amounts they were required to pay during that period.

3. The provisions of what is now s.661(5)(a) make clear that the amount of compensation instead of notice is to be worked out on the basis of the employees “ordinary hours of work (even if they are not standard hours).”

4. In this case the Site agreement which applied contained the following clause:

   11.Hours of Work

   11. 1.Ordinary Hours

   “The ordinary hours of work shall be on the basis of 8 hours per day or shift, Monday to Friday, and an average of 36 hours per week.”

   11.2.     Overtime

   “Overtime worked Monday to Saturday shall be paid at the rate of time and a half for the first two hours and double time thereafter. All time worked on Sunday shall be paid at the rate of double time.”

5. In Fox, French J. proceeded on the basis that there was no reason to believe that hours worked by the employee in that case would have been less than sixty five per week. However, that was on the basis of the finding that the employee’s conditions of employment required him to work a roster of one hundred and thirty hours per fortnight.

6. In this case:

   ·the Site agreement applied to the applicant;

   ·ordinary hours of work were defined in the Site agreement;

   ·the Site agreement provided for a higher rate of remuneration for hours worked outside those ordinary hours;

   ·there was no requirement to work overtime;

   ·there was no roster for overtime;

   ·there was overtime worked but that overtime varied;

   ·the applicant’s actual hours varied during the Employment period;

   ·the applicant was told he was terminated due to the shortage of work; and

   ·there was no evidence regarding the hours worked at the site in the week after the Employment period.

7. In this case, unlike the situation in Quest, there was an industrial instrument that set ordinary hours not just minimum hours.

8. The decision in Fox (which was followed in Vickery) appeared to have considered only Kezich and not the more recent authorities in Catlow or Scott.

9. In this case, unlike the situation in Fox, there was no requirement or roster to work overtime. In this case, unlike the situation in Vickery the industrial instrument governing the applicant’s employment fixed the ordinary hours of work.

10. The submissions of the applicant that the required amount of compensation in lieu of notice ought to include overtime ignored that the amounts he received each week varied and he was not rostered or required to work overtime.

11. It is not possible to say what his regular customary or usual hours were as it varied each week. It is possible to find that his ordinary hours were fixed by industrial instruments which provided for different rates for ordinary hours and overtime.

12. Whilst acknowledging that ‘ordinary’ or ‘standard’ in s.661(5)(a) could have the same meaning the applicant submitted that:

    ·the context defies that the two have the same meaning; and

    ·the meaning he contended for accorded with the plain meaning of the words and the beneficial nature of the legislation.

13. Every statute must be read as a whole and the statutory words given their meaning in the entire context. When the words “ordinary hours of work (even if they are not standard hours)” are read in context “ordinary” and “standard” mean just that.

14. This interpretation is reinforced when regard is had to the use of the phrase “those hours” in s.661(5)(b).

15. As has been noted the context here is the WR Act and the distinction between ordinary hours and overtime is one which is deeply embedded in the Commission’s awards and agreements.

16. An interpretation such as that contended for by the Respondent is not unreasonable or bizarre, accords with how these words would be understood in everyday life and promotes the purpose which is to ensure the employee receives compensation equal to his or her ordinary hours of work (even if they are not standard hours) and all payments for those hours that the employer would have become liable to pay had the employment continued during that period.

17. Given this the meaning contended for by the respondent accords not only with the plain meaning of the words but the context and the purpose referred to in Fox as providing a short extension of the employee’s financial status quo.

18. The Court was referred to the decision of Kucksv CSR Limited (1996) 66 IR 182 (“Kucks”). Madgwick J in Kucks at 185-6 referred to the decisions in Kezich, Catlow and Scott. His Honour considered the decision in Scott at some length and said of the case then before him that:-

    "[T]he genesis of the main argument for the applicant is that, prima facie, "ordinary" means "usual", and usually Mr Kucks' rate of pay included his shift allowance. However terms like "ordinary rate of pay" and "standard hours" have well-known meanings in the sphere of industrial relations in this country, as is shown by what was said, admittedly in a different context, in Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1.”[12]

    [12] Kucks at 185

19. In Kucks, His Honour then went on at 185-186 to extract the salient sections of the decision of the majority in Scott. His Honour noted in particular in Scott that the majority had said at [5]:

    “‘The expression ordinary time rate of pay' is well known in the industrial relations field in Australia and New Zealand. It and similar terms have long been used in legislation.

    …

    Unless the context otherwise requires, "ordinary time rate of pay" means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours [Catlow v Accident Compensation Commission (1989) 167 CLR 543 at 555-556, 560)].” [13]

    [13] Kucks at 186

20. His Honour then went on to extract the section from the majority decision in Scott[14] referred to at paragraph 39-41 above at 186.

    
    

    His Honour emphasised in particular the following section from the majority decision in Scott:

    “In such an award or agreement, the expression `ordinary time' cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work.”

    [14] Scott at 7

21. His Honour then went on to note:

    “There can be no doubt that “standard hours” prescribed by this award referred to a 38-hour week.

    In Australia, the term “ordinary pay” has, according to the Macquarie Dictionary (2^nd ed) entered the language as meaning:

    “ordinary pay…remuneration for an employee’s normal weekly number of hours fixed under the terms of his employment but excluding any amount payable to him for shift work, overtime, or other penalty.”

    That meaning of ordinary is even more apt in the context of the present award.”

22. As in Kucks in this case the “genesis of the main argument for the applicant is that, prima facie, ‘ordinary’ means ‘usual’. In my view

    
    

    His Honour’s observations in Kucks are particularly apposite when regard is had to the Statement in this case and that the Site agreement prescribed the ordinary hours.

23. Given the agreed facts in this matter, the weight of the recent authorities and the plain meaning of the words I am not satisfied it is appropriate to read the words ‘ordinary hours of work’ in the Kezich sense.

24. As Grey J said in Quest:

    “The fixing by collective means of standard hours of work; coupled with a premium for remuneration at a higher rate of hours worked beyond those standard hours, will usually lead to the conclusion that the standard hours fixed are to be considered as “normal hours” or perhaps “ordinary hours.”

25. I am not satisfied, to paraphrase what was said in Kucks, that ordinary hours even if they are not standard hours means as that phrase is generally understood in the sphere of industrial relations in this country the overtime or usual or customary time or even in this case the average actual hours.

Conclusion

1. As set out in paragraph 20 of these reasons the first question that has been asked is:

   “On the Statement of Agreed Facts, and such other facts as are proved, has the Respondent contravened s.661 of the Workplace Relations Act 1996 by failing to pay the Applicant the required amount of compensation in lieu of notice because, in the sum already paid as compensation, there was no component that is attributable to overtime?”

2. Given the agreed facts in the Statement for the reasons set out above in this case I am satisfied the answer to that first question, is “No”.

3. In light of this answer it is not necessary to consider the second question set out at paragraph 20 above.

4. These are proceedings to which section 666 of the WR Act applies.

5. Whilst the respondent has sought costs the parties made no submissions on this issue.

6. In the circumstances I will hear the parties as to any submissions they wish to make in relation to costs.

I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM

Associate: James Naughton

Date:  12 July 2007

ANNEXURE 1

IN THE FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE  FILE NO: MLG206/2007

Between

Applicant
IVAN MOLONEY

Respondent
BEVERAGE ENGINEERING PTY LTD

Agreed statement of facts and
questions stated for the Court

Background facts

1. The Applicant is and was at material times:

   (a)a qualified tradesperson welder; and

   (b)a member of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“AMWU”).

2. The Respondent is and was at material times:

   (a)a corporation capable of suing and being sued in its own name; and

   (b)an employer of employees conducting business and employing employees in the State of Victoria.

3. The Respondent employed the Applicant as a tradesperson welder on and from 26 October 2006 until 24 November 2006 (“Employment period”).

4. During the Employment period the Applicant worked as a tradesperson welder at Port Campbell, Victoria, on the construction of a new gas processing plant (“Plant”).

_______________________________________________________________
Filed by the applicant
Address for service:
AMWU
Level 1, 251 Queensberry Street
Carlton South, Victoria 3053
Tel: [phone] Fax: [phone]

Email: [email protected]

1. Immediately before and after the Employment period, the Respondent was engaged as a sub-contractor to Technip Oceania Pty Ltd (“Technip”) to supply labour to build the Plant. The Applicant was employed under this arrangement, that is to say, the Applicant was directly employed by the Respondent but the Applicant’s work was on a project managed by Technip.

Industrial instruments etc

1. During the Employment period Division 4 of Part 12 of the Workplace Relations Act 1996 (“Act”) applied to the Respondent.

2. During the Employment period the National, Metal and Engineering On-Site Construction Industry Award 2002 (“Award”) applied to the work of the Applicant.

Particulars

(a)The Award covers the type of work the Applicant performed during the Employment period, that is to say, welding on a construction site (cll 6, 4.1,16 and Appendices C and D of the Award).

(b)On 23 December 2004, Commissioner Whelan, a member of the Australian Industrial Relations Commission (“Commission”) declared that the Award was to operate as a common rule in the State of Victoria (with conditions and qualifications irrelevant to this matter) on and from 1 January 2005 (PR954646).

(c)By virtue of Schedule 4, Part 2, item 4 of the Workplace Relations Amendment (Work Choices) Act 2005, the Award, subject to the restrictions in the Act as in force at material times (for example, Part 10 of the Act), applied to the Applicant’s employment

1. During the Employment period, and for the period that the employment would have continued had 1 week’s notice been given, the Respondent was bound to apply the Otway Gas Plant Construction Project 2005 Site Agreement (“Site agreement”). The Site agreement was an agreement made under the Act as it stood on 20 April 2005, s 170LL, and certified by Commissioner Eames under s 170LT.

The Applicant’s employment with the Respondent

1. During the Employment period there was a contract of employment (“Contract”) between the Applicant and Respondent.

2. The Applicant was employed as a weekly employee for an undefined period no longer than the completion of the project. The Applicant was not on probation (cl 12 of the Award and subss 638(1) and (11) of the Act).

3. The Applicant’s ordinary hours of work were 36 per week, worked from 7.00 a.m. to 3.30 p.m., with a 30 minute unpaid meal break, Mondays to Fridays. The 4 ordinary hours worked in excess of 36 in a particular week were banked for the purposes of a rostered day off (“RDO”, cll 11, 12 and 13 of the Site agreement).

4. Except in the Applicant’s last week of work with the Respondent, the Respondent calculated the Applicant’s remuneration in a weekly pay period (“PP”), commencing on Mondays and finishing on Sundays.

5. In the Applicant’s first week as an employee of the Respondent he was engaged for 4 days in the relevant PP. He worked a total of 36 hours in this PP, being a combination of 16 ordinary hours and 20 hours overtime (5 hours at time and a half and 15 hours at double time).

6. In the succeeding 3 weeks the Applicant was engaged for 7 days in each of the 7 day PPs. He worked overtime in each of these PPs, with total hours worked as follows:  

   §  PP Monday, 30 October 2006 to Sunday, 5 November 2006 – 51 hours worked, being a combination of 39 ordinary hours and 12 hours overtime (8 hours at time and a half and 4 hours at double time);

   §  PP Monday, 6 November 2006 to Sunday, 12 November 2006 – 23.5 hours worked being a combination of 8 ordinary hours and 15.5 hours overtime (2.5 hours at time and a half and 13 hours at double time) - plus 24 hours made up of an RDO on Monday 6 November, Melbourne Cup Day on Tuesday 7 November and another RDO on Wednesday 8 November). The Applicant did not attend work on Friday 10 November because of the existence of a community picket;

   §  PP  Monday, 13 November 2006 to Sunday, 19 November 2006 – 54.5 hours worked being a combination of 40 ordinary hours and 14.5 hours overtime (9.5 hours at time and a half and 6 hours at double time);

7. The Applicant’s final PP ran from Monday, 20 November 2006 until Friday. 24 November 2006, he worked 39 hours in this PP being a combination of 32 ordinary hours and 7 hours overtime (5 hours at time and a half and 2 hours at double time).

8. In total, the Applicant was paid by the Respondent for 228 hours either worked or paid in respect of two RDOs and Melbourne Cup day in the Employment period.

The Applicant’s remuneration

1. Relevantly for this application, payments made by the Respondent, to the Applicant during his employment were:

   §  An hourly rate of $36.09 for ordinary hours worked, thus $1,299.24 per 36 hour week (Applicant’s pay slips are found annexed to Ivan Moloney’s affidavit of 22 February 2007 (IM1));

   §  Overtime at time and a half for the first 2 hours, double time thereafter on Mondays to Saturdays and double time for Sundays (cl 11 of the Site agreement).

Overtime

1. Overtime was worked by the Applicant during the Employment period. However, the overtime work carried on by the employees of the Respondent, including the Applicant, in the Employment period on the Plant was not guaranteed, nor was it mandatory that employees do the overtime, and the amount of overtime offered by the Respondent would change according to operational requirements.

2. On the Plant, in the months preceding and following the Employment period, overtime work carried on by employees of the Respondent and employees of sub-contractors other than the Respondent, and not including the Applicant, was not guaranteed, nor was it mandatory that employees do the overtime, and the amount of overtime offered by the Respondent was dependent on operational requirements. However, overtime was often available to be worked by such employees.

The termination of the Applicant’s employment and subsequent events

1. On 24 November 2006, while at work, the Respondent dismissed the Applicant for operational reasons, that is to say, reasons unconnected with the Applicant’s performance or conduct.

2. No notice of the termination of employment was given to the Applicant by the Respondent prior to the termination.

3. After the Respondent terminated the Applicant, the Respondent paid the Applicant the sum of $1,615.55, with $408 being withheld as tax. This sum was made up of accrued annual leave entitlements, leave loading and 1 week’s pay in lieu of notice. The 1 week’s pay in lieu of notice was made up of 36 hours’ pay at ordinary rates, that is to say, a sum of $1,299.24 (36 hours x $36.09). An adjustment was further made to deal with RDO accrual, but this is not in issue between the parties.

4. On the Pay period ending 29 November 2006, the Respondent paid site allowance of $15.00 (4 hours x $3.75) and Travel Expense of $36.09. A further amount of $19.01 representing tool allowance was paid to the Applicant on 6 December 2006.

5. On 13 December 2006 the Applicant lodged an application for relief in relation to termination of employment under s 663 of the Act with the Australian Industrial Registry. The application alleged that the Respondent had contravened s 661 of the Act by failing to pay the “correct amount of compensation in lieu of notice”.

6. On 31 January 2007 Commissioner Smith of the Commission conciliated the matter but a settlement was not reached. On 7 February 2007, Smith C issued a certificate under s 650 of the Act certifying, among other things, that, “ … all reasonable attempts to settle the matter by conciliation have been, or are likely to be, unsuccessful …”.

AND THE QUESTIONS STATED FOR THE COURT ARE:

A.On the Statement of Agreed Facts, and such other facts as are proved, has the Respondent contravened s 661 of the Workplace Relations Act 1996 by failing to pay the Applicant the required amount of compensation in lieu of notice because, in the sum already paid as compensation, there was no component that is attributable to overtime?

B.If the answer to A is “yes”, on what basis is the “required amount of compensation” for the purposes of s 661(4) worked out?

(If an answer to question B is required, whatever sum is arrived at is relevant for the order the Court may make under s 665(7) of the Act.)

Signed on behalf of the Applicant________________________________
  Barry Terzic, Industrial Officer

On 15 June 2007.

AND

Signed on behalf of the Respondent________________________________
  David McLaughlin, Partner

On 15 June 2007