National Tertiary Education Industry Union v Monash University

[2010] FWA 8152

[2010] FWA 8152

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739—Dispute resolution

National Tertiary Education Industry Union
v
Monash University
(C2010/4271)

Educational services
DEPUTY PRESIDENT HAMILTON	MELBOURNE, 1 NOVEMBER 2010

Management of Accrued Annual Leave - How to Calculate a 30 Day Accrual Cap for Part-Time or Fractional Employees - 30 full time days or 30 fractional days - Do employees have to apply for leave to eliminate excess annual leave, or have a leave plan actually in place by 31 December

[1] On 12 July 2010 National Tertiary Education Industry Union (NTEU) lodged an application with Fair Work Australia under the dispute settling procedure of the Monash University Enterprise Agreement (Academic and Professional Staff) 2009 (‘the Agreement’).

[2] After conciliation was unsuccessful, the NTEU sought to have the matter determined in arbitration under clause 12 Dispute resolution procedure of the Agreement.

[3] Written submissions and witness statements were filed, and the matter was heard on 8 October 2010. I have had regard to the written submissions and witness evidence.

NTEU Submissions

[4] The NTEU submitted that the dispute has been referred to FWA under Clause 12.5 of the Monash University (Academic and Professional Staff) Enterprise Agreement 2009 (‘the agreement’). This is the dispute settlement procedure in the agreement. The dispute arose after a global email was sent on or about 26 May 2010 to all staff, that described the way the employer was going to deal with Excess Annual Leave (EAL). Individual emails were also sent at the same time to each individual member of staff who met the particular criteria set out in the global email. The NTEU submitted in summary:

1) The emails were sent without the consultation with the NTEU, which contravenes the Consultation about Change clause 13 of the agreement and given the history of events around annual leave management, the employer cannot reasonably claim not to have known that this is a matter that falls under the scope of clause 13 of the agreement.

2) The emails contained a significant error in the interpretation of clause 36.3 because the employer has applied to individuals working part-time, an EAL-triggering amount based upon a pro rata application of their time fraction to the triggering accrual amount of 30 days, when the agreement at clause 36.3, makes no reference to “pro-rata” or reducing the size of this amount from 30 days.

• Whilst the employer has rebutted this by referring to clause 16.2 which deals with the rate of accrual of leave being proportionate to the employee’s time fractions, NTEU’s view is that clause 16.2 is solely about the calculation of entitlements for a part-time employee. The ability of the employer to direct an employee in taking their leave is not an entitlement and thus NTEU rejects the view that employer can reduce the 30-day quantum on a pro rata basis.

• NTEU submits that clause 36.3 lacks any reference to proportionality and that this is because it was never intended, especially as the clause was contentious between parties when it was subject to negotiation during 2009. (Attachment 11 provides reference to where the term “pro rata” and “proportionate” appear throughout the agreement)

3) Monash has misinformed staff members of clause 36.3(d) by saying that in order to avoid the deeming action, a staff member must apply by 31 December to eliminate the EAL. NTEU’s interpretation of clause 36.3 is that it does not require staff to eliminate the EAL by 31 December and merely requires staff to have applied by that date.

4) Monash has failed to advise staff of alternatives at clause 33 in the individual flexibility arrangement to deal with aspects in the application of clause 36.3.

5) Monash has also failed to advise staff of the option under 36.1 of appealing against a decision to not approve an application for taking annual leave.

6) Monash continues to offer inconsistent advice as seen in payslips which refers employees to the previous enterprise agreement of 2005 which has no content when one views it on the Monash University website. Also in the sample payslip it states that the employee works at 25.02% time fraction yet, the advice about leave refers to 30 days.

[5] The NTEU submitted that a determination should be made which:

• corrects Monash emails;



• directs Monash to consult with the NTEU regarding the properly worded information and directions to staff on clause 36.3;



• other matters.

Monash Submissions

[6] Monash submitted that:

1) The tribunal does not have jurisdiction to award the relief sought by NTEU. This is because:

• The agreement does not purport to proscribe the communications that the University can have with its staff and does not enable the NTEU veto or edit communications that the University might wish to have with its staff.

• The obligation of the University to consult with NTEU under clause 13 of the agreement, is confined to situations where the University has proposed “significant or substantial change” on matters which substantially impact on staff terms and conditions of employment. A determination by the University to give force to the provisions of the agreement cannot constitute “significant or substantial change”.

• Under s739(5) of the Fair Work Act 2009, “FWA must not make a decision that is inconsistent with ... a fair work instrument”. Thus to the extent that relief sought by NTEU is inconsistent with the 2009 agreement, the relief falls outside s 739.

• Authorities under s170LW set out principles which make the Tribunal’s jurisdiction clear.

2) NTEU has misconstrued the effect of clause 16.20 and 36.3 of the agreement:

• An industrial agreement must always be construed in context - the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352).

• Also, it is clear from Victoria University v NTEU [2010] FWAFB that it is permissible for the Tribunal to have regard to the context of material known to both parties when the Agreement was made and explanatory material circulated as part of the approval process.

• From the context in this matter, it is apparent that whilst the log of claims filed by NTEU sought the abolition of the provision mandating a maximum accrual of 30 days annual leave, at 14 November 2009, NTEU had conceded this issue if the University agreed to issue directions to staff to take leave before the 30 day caps exceeded.

• Also, prior to voting on the agreement, staff were informed about the provisions concerning excessive annual leave through a combination of presentations and documentations distributed through the University website. Such material specified that once three warning emails were issued, any staff member who failed to eliminate his/her excessive annual leave by 31 December would be deemed to be on annual leave commencing the first working day in the new year until the balance was reduced to 20 days. The presentation was attended by NTEU without objection.

• Clause 16.20 reflects the fact that the agreement is to operate in respect of fractional employees in a way which reflects the fact that they have a fractional appointment and are not to be advantaged over full time employees. If clause 36 was not to operate in a proportionate way, it could have easily said so in the agreement.

• Clause 36.3 only operates where the issue of excessive annual leave has not been addressed.

• In relation to attachment 11 of the NTEU submission on the uses of “pro rata”, the references to clauses 16, 14,24, 27,30,36,38,43,60.4,79 and schedule 4 of the agreement shed no light on the operation of clause 36.

3) The tribunal should not, as a matter of discretion, grant relief in the terms sought by the NTEU.

4) If the Tribunal forms a view that the construction contended by NTEU is open, the University submits that clause 36.3 should be varied to remove such ambiguity or uncertainty, as outlined in clause 12.6 of the dispute resolution procedure.

The Agreement

[7] Clause 16.20 Fractional Employment provides:

‘16.20 In the case of continuing or fixed-term fractional contract, the salaries, allowances and other entitlements under this Agreement applicable to an equivalent full-time staff member apply to the part-time staff member on a proportionate basis according to the fraction of time worked. A staff member employed on a fractional-time basis, will not by reason of being a fractional-time staff member be required to serve a longer period of service to qualify for any leave entitlements or be granted any lesser period of leave but will be paid pro rata for any such leave.’

[8] Clause 36 Application of Annual Leave provides:

...

‘36.3 The process by which annual leave will be managed is as follows:

(a) A staff member will receive an automated email when his/her leave balance is 20 or more days but less than 25 days and again when the balance is greater than 25 or more days but less than 30 days. These emails will serve the purpose of advising the staff member that he/she is close to reaching the maximum permissible limit of 30 days and that to avoid this the staff member should negotiate a leave plan with his/her supervisor.

(b) If the staff member does not respond and/or negotiate a reduction in his/her leave credits that would otherwise cause those annual leave credits to exceed 30 days, a third email will be sent to the staff member. This email will advise the staff member that he/she has reached the maximum permissible limit of 30 days and that any accrual of leave beyond this limit will constitute “excess annual leave” (EAL).

(c) Should the staff member not submit an application for annual leave within two weeks of receipt of the third email, his/her supervisor may direct the staff member, in writing, to submit a leave proposal that will eliminate the EAL including any additional leave accrued during any notice period.

(d) Should the staff member not apply by 31 December in the year in which the EAL has accrued for annual leave to eliminate the EAL, he/she will by operation of this clause be rostered and deemed to be on leave from the first working day in the following January.

The duration of such leave will be for the number of days that, after taking the leave, will bring the staff member’s leave balance down to 20 days and the staff member’s annual leave will be reduced accordingly.’

Authorities

[9] The issue of the jurisdiction of the tribunal to make a determination pursuant to dispute settling procedures has been considered on many occasions, including most recently in for example Deakin University v. Rametta 1. In that decision the Bench upheld the finding of the Commissioner that Deakin had breached the consultation provision of the agreement, but found that the dispute settlement procedure and Act did not support a determination that compensation should be paid, and an apology given, nor was that reasonably incidental to the power in the disputes procedure. I have relied on that decision, and the authorities reviewed in that decision, and other authorities put to me during proceedings. I have had regard to all the submissions and evidence.

Decision

[10] The application in this matter refers to the application of clauses 12 and 36 of the agreement. I am satisfied that the dispute is one about which I may arbitrate under the disputes procedure in the agreement set out in clause 12.1.

The Email of 26 May 2010

[11] The email issued by Monash on 26 May 2010 to some part-time employees provides:

To: [employee name - individual’s name removed]

From: [email protected]

Date: 5/26/2010 05:43PM

Subject: Annual Leave Management

Dear [employee name]

The recent approval of the Monash University Enterprise Agreement (Academic and Professional Staff) 2009 has necessitated changes to the way in which annual leave will be managed in the future.

Consistent with those new arrangements, you are advised that your annual leave balance as at 24 May 2010 (including any previously capped annual leave that was reinstated in 2009) was 26.21 days. This balance does not include any deduction of annual leave that may have already been approved to be taken in the future.

You are further advised that on your current 25.02% time fraction, your current leave balance exceeds your maximum permissible limit of 7.51 days and that all accrued annual leave in excess of 7.51 days constitutes “excess annual leave” (EAl).

If you do not have future annual leave booked that, after taking into account future accruals, restores your leave balance to your maximum permissible limit [my underlining] of 7.51 days or less by 31 December 2010, you are directed to submit an approved leave plan to do so. Such leave plan is to be submitted through ESS (employee Self Service) within two weeks of the date of this email. When preparing your leave plan you should also take into account annual leave that will accrue up until the time the EAL is exhausted through your leave plan, to ensure your leave balance is reduced to less than 7.51 days.

If you do not have an approved annual leave plan in place by 31 December 2010 to eliminate your EAL by 31 December 2010, you will (by operation of the Enterprise Agreement) be rostered and deemed to be on leave from the first working day in January next year until such time as your annual leave balance has been reduced to 5 days. You will not receive any further notice of this. [my underlining]

Please note that any change to your current time fraction will affect your maximum permissible leave balance limit.

This email has been generated by the HR Division. Any replies or enquiries should be directed to the HR Enquiries on 9902 0400 or via email at [email protected] .

[12] As Monash submitted 2, the heads of agreement before the agreement was reached, and the explanation given to staff, are consistent with the email. The summary of key features and changes of the new agreement put on the Monash website, for example, states:

‘Revised arrangements for excess annual leave balance (EAL) management - after three warning emails, if a staff member fails to eliminate his/her EAL by the following 31 December, he/she will be rostered and deemed to be on annual leave from the first working day in the new year until the staff member’s annual leave balance is reduced to 20 days.’ 3

[13] A similar explanation was given to employees 4.

[14] The email is not however consistent with the clause finally agreed, but is for example consistent with the heads of agreement reached on 24 August 2010 and signed by the NTEU and Monash, which provides that ‘annual leave balances are reduced to below 30 days by 31 December 2010 5, but it is not consistent with other actual draft agreements6. It is to be expected that negotiations would include various preliminary agreed proposals, and drafts, and that explanations given might not always keep up with the final drafts agreed.

[15] The clause in the agreement simply provides that an employee must ‘apply by 31 December in the year in which the EAL has accrued for annual leave to eliminate EAL’, without a need for the plan to actually be in place to eliminate EAL. The parties considered at times different wording and different obligations, and their written explanations of the agreement may not have changed with the changing document, but that is not enough to amend the ordinary meaning of the words in the way sought by Monash: Nylex Industrial Products Pty Ltd v TCFUA [2007] FMCA 2084, City ofWanneroo v Holmes (1989) 30 IR 362 at 378, Kucks v CSR Ltd (1996) 66 IR 182, Watson & Ors and ACT Department of Disability Housing and Community Services [2008] AIRC 291.

[16] The circumstances are different to for example those in Victorian University v. NTEU [2010] FWAB 4195 where a Full Bench had regard to external material such as the explanation given to employees in order to understand what was meant by references in an agreement to the ‘existing workload model’. The circumstances in that matter were that competing interpretations had some basis on the ordinary meaning of the language. In this case the written explanations are best understood as themselves an understandable error, in that they were based on earlier negotiations that were not followed through into an agreed clause, and were therefore superseded.

[17] Monash raised what appear to be legitimate practical concerns 7. The parties do not appear to communicate well on all occasions. For example the evidence of Mr.Picouleau8, Human resources at Monash, was that:

‘At no stage did the NTEU take issue with the material distributed by the University which described the operation of the annual leave management clause.’

[18] This appears to be the subject of some debate. For example the NTEU notified a dispute on 3 June 2010, relating to the pro rata issue, and discussions eventually appear to have also dealt with the issue of whether a leave plan actually has to be in place 9.

[19] There would appear to be a responsibility on both Monash and the NTEU and its members to ensure that their agreement, and the management of annual leave provisions in the agreement, operate effectively. If either side wishes to behave in an unreasonable manner, then the various protections drafted by the parties and included in the agreement may be resorted to.

Management of Annual Leave Amounts

[20] The parties disagree as to the meaning of the term ‘30 days’ as it occurs in clause 36.3, and similar references to other amounts of ‘days’. NTEU considers that the term should be interpreted as 30 full time working days. Monash considers that the term should be interpreted in accordance with clause 16.20, as the relevant fraction of 30 days.

[21] Schedule 5 sets out an employee’s entitlement to annual leave, which relevantly provides an employee to an entitlement to:

‘Twenty paid days for each completed year of service.’

[22] By operation of clause 16.20 this provides a fractional employee with the relevant fraction of twenty paid days. In my view a similar approach must be taken to the term ‘30 days’. The word ‘entitlement’ to in clause 16.20 must also extend to the manner in which it may be taken. An ‘entitlement’ is a bundle of rights that includes the circumstances in which the entitlement can be taken, in order to give the entitlement some meaning in practice. If this was not the case there could be an entitlement in name only, that exists, but for which the qualifications for exercise were so restrictive that it could not be taken.

[23] A fractional interpretation of ‘30 days’ is also consistent with the context of the agreement. Throughout the agreement part-time employees are treated in a manner which gives them parity with full-time employees. This is not surprising; indeed the reverse would be surprising and considered to be unacceptable and discriminatory.

[24] Full-time employees have their annual leave managed when it accumulates to the leave that 18 months service produces under Schedule, namely 30 days. They must apply to take leave when it reaches that level otherwise certain consequences occur. However, I am asked to determine that a different approach should be taken to the management of the annual leave of part-time employees. I am asked to determine that their annual leave can accumulate to the amount that for example 3 years or more service would produce before annual leave is subject to a management process requiring it to be taken. They are not to be given parity, or the fractional entitlement provided in clause 16.20. They are to be given an additional benefit compared to full-time employees, namely the entitlement to accumulate and retain more leave for each hour worked than a full-time employee may do before annual leave managements requires them to take the leave. The parties may discriminate or differentiate in this way but there is little or no indication in this agreement that they have done so. Such an interpretation is not supported by the ordinary meaning of the language in the relevant clauses and the agreement, and the context of the agreement.

[25] The NTEU quite properly raised the issue of payslips issued by Monash 10. However, again like other documents such as the explanation given to employees about the agreement, it had not been updated. It still referred to the 2005 agreement, and the reference to the employee having a balance which ‘is approaching 30 days’ does not in my view give much support to the NTEU. It is best understood by reference to the 2005 agreement, as Monash submitted in evidence11.

[26] In the alternative, I would accede to Monash University’s submission that I exercise the power in clause 12.6 and vary the agreement to expressly provide that clause 16.20 applied to the phrase ‘30 days’. This is the most appropriate means of rectifying the ambiguity or uncertainty, and would provide parity between fractional and other employees.

Consultation Requirements

[27] The NTEU submits that Monash breached clause 13 by failing to consult it about two emails 12. These are a global email to staff dealing with the issue of annual leave management, which requires for example a staff member to ‘have an approved leave plan in place by 31 December to restore his/her annual leave balance’, and another email to part-time employees to similar effect13.

[28] However, those emails purported to implement a provision of the agreement, clause 36.3. Monash is entitled to implement the provisions of the agreement. It has not done so in one respect, that is, the direction that an employee is to have an approved annual leave plan in place by 31 December 2010. Since the email of 26 May 2010 and other directions did not actually implement the agreement, for the reasons given above, clause 13 might have had application.

[29] Did it have application? On the material before me the introduction of annual leave management for fractional employees of this kind is a significant or substantial change, that will impact on staff terms and conditions of employment. Firstly, such management requires an employee to actually apply to take leave, when an employee may prefer to instead retain the entitlement for a range of personal reasons. Secondly, annual leave is a significant entitlement for employees. It constitutes a significant monetary amount, comparable to four weeks wages or salary. This cannot be an insignificant issue, and the taking of leave constitutes the end of a significant entitlement. Thirdly, it is on the submissions of both sides a matter of significance in the employment relationship between an employee and Monash, and in the industrial relationship between groups of employees represented by the NTEU and Monash. To the extent necessary, the course of negotiations between the parties over the issue shows that the parties themselves treated the issue as significant in their relationship 14. The obligations in clause 13 were brought into operation.

[30] Did Monash University comply with those obligations before the email of 26 May 2010 and other directions were issued? The NTEU submitted that there it did not, despite for example a meeting between the NTEU and Monash University on 17 May 2010, where ‘the topic was not raised by employer representatives ...’ 15 On the material before the obligations in clause 13 were not complied with.

[31] What remedy should apply? While the NTEU sought remedies such as an order that Monash issue global emails, global emails are not regulated by clause 36.3. In the circumstances in my view it is also as matter of discretion sufficient remedy to make a finding that the obligations in clause 13 were not complied with. In my respectful view Monash University can be relied on to appropriately implement its obligations once those obligations are clarified. There was a course of negotiations which did encompass a different approach than that eventually adopted in the agreement, and I am not convinced that there was a lack of good faith on the part of Monash University. Fair Work Australia is available to resolve any further dispute, but that should not prove to be necessary.

Conclusion

[32] In my view I have the jurisdiction to make a decision or determination as to the correct application to the parties of clause 36.3, and in the circumstances this would be the most appropriate remedy. I decide or determine that:

1. The obligation on a part-time employee under clause 36.3(d) of the agreement is to ‘apply by 31 December in the year in which the EAL has accrued for annual leave to eliminate the EAL’. The obligation does not extend to actually having an approved annual leave plan in place by that date. Monash University directions that approved annual leave plans be ‘in place’ by 31 December were issued without the consultation required by clause 13 of the agreement.

2. Monash University correctly applied the terms of clause 36.3 of the agreement in applying the term ‘30 days’ to fractional employees as the relevant fraction of ‘30 days’, consistent with clause 16.20 of the agreement. The same approach must be taken to other periods of days referred to in the clause.

DEPUTY PRESIDENT

Appearances:

Mr S Rosenthal and Ms L Gale of the National Tertiary Education Industry Union

Mr C O’Grady of Counsel for Monash University

Hearing details:

2010

Melbourne

October 8

 1 [2010] FWAFB 4387, Acton SDP, Hamilton DP, Smith C, 15 June 2010

 2   PN392-439

 3   Exhibit M1, Attachment AP5, p.3, clause 36

 4   Exhibit M1, Attachment AP6, paragraph 4.1

 5   Exhibit M1, Attachment AP3, p.5

 6   Eg. see Exhibit M1, Attachment AP4, clause 36.3 provides that ‘should the staff member not apply by 31 December for sufficient annual leave to eliminate the EAL ...’

 7   Exhibit M1, paragraphs 30-33

 8   Exhibit M1, paragraph 14

 9   Exhibit NTEU 1, paragraph 23

 10   Exhibit NTEU 1, Attachment 12

 11   PN90-92, evidence of Mr.Picouleau

 12   Exhibit NTEU 1, paragraph 22

 13   Exhibit NTEU 1, attachments 5 and 6

 14   Eg. see Exhibit NTEU 1, paragraph 11-12; Exhibit M2, negotiations over the issue of annual leave and a cap.

 15   Exhibit NTEU 1, paragraph 16

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