Patrick Gomes v Bindaree Beef Pty Ltd
[2021] FWC 2632
•10 MAY 2021
| [2021] FWC 2632 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Jason McCosker; Tony Johnston; Tennescee Berry; Alexander Brown; Patrick Gomes
v
Bindaree Beef Pty Ltd
(C2020/7875)
DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 10 MAY 2021 |
Application to deal with a dispute in accordance with a dispute settlement procedure in an enterprise agreement – alleged entitlement to superannuation contributions on attendance bonus payments.
Introduction and background
[1] Mr Jason McCosker, Mr Tony Johnston, Ms Tennescee Berry, Mr Alexander Brown, and Mr Patrick Gomes (Applicants) are in dispute with Bindaree Beef Pty Ltd (Bindaree Beef) in relation to their alleged entitlement under clause 33 of the Bindaree Beef & AMIEU Enterprise Agreement 2019-2022 (Agreement) to superannuation contributions on attendance bonus payments made to them under clause 26 of the Agreement (Dispute).
[2] The Applicants are members of the Australian Workers’ Union (AWU) and were represented by the AWU throughout the Dispute. Bindaree Beef was represented by Mr Andrew Herbert of counsel.
[3] On about 22 October 2020 the AWU filed an application pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act) in the Fair Work Commission (Commission) for the Commission to deal with the Dispute pursuant to clause 10 of the Agreement. That clause sets out the procedure to resolve a dispute relating to “a matter arising under the Agreement or the National Employment Standards”.
[4] I conciliated the Dispute but could not resolve it. The Applicants then asked for the Dispute to be arbitrated pursuant to clause 10.5.2.1 of the Agreement.
[5] The arbitration hearing took place, by video conference, on 8 March 2021. The parties tendered a Statement of Agreed Facts dated 25 January 2021, a copy of which is set out in annexure A to this decision (excluding the attachments thereto, which form part of it and have been considered). No other evidence was adduced.
Question for determination
[6] The question for determination in this Dispute is as follows:
Is Bindaree Beef required to pay superannuation on the attendance bonus payable under clause 26 of the Agreement by reason of the operation of clause 33 (as part of the percentage amount required by the Superannuation Guarantee Levy” as set out in clause 33.4 and/or as a payment which is not “over and above ordinary time payments” within the meaning of clause 33.5)?
Relevant provisions of the Agreement
[7] The following provisions of the Agreement are relevant to the Dispute:
11. Employment Categories
11 .1. The Company has on offer a number of employment options. All categories are subject to the conditions stated in this Agreement. Based on this the intention is to ensure job security.
11.2. All new Company employees will be placed on an initial six months probationary period during which time employment may be terminated for any valid reason with no notice period required by either party. Extension of the probationary period may be required for reasons of sickness/attendance, Worker's compensation, change of duties, but not limited to these reasons only.
11.3. New employees will be placed on New Start Labourers wage rate. Regular reviews will be conducted by the parties to assess the employee's suitability to progress off New Start Labourers wage rate.
11.4. An employee may be engaged on full-time, part-time, casual, daily hire, part time daily hire or job share employment. At the point of an offer of employment, the Company shall inform the employee which category of employment is being offered. The Company, the Union and employee may agree to the transfer of the employee from one category to another.
11.5. Notwithstanding anything contained in this Agreement, if the parties are unable to agree upon a transfer from one category to another, the Company may require the employee to transfer from;-
- full time to daily hire, or
- daily hire to full time hire, or
- part time to part time daily hire, or
- part time daily hire to part time
upon giving to the employee 7 days' notice of such transfer.
11.6. If the Company decides to convert weekly and part time employees to regular daily hire or part time regular daily hire after the 7 day notice period the Company will ensure all employees affected by this conversion will not be disadvantaged in relation to comparisons with the applicable award regular daily hire arrangements relating to guaranteed daily income with the 10% loading.
11.7. Full Time Employees
11.7.1 All employees other than part-time, casual, job-sharing or trainees, who are employed to work a maximum of 38 ordinary hours per week plus reasonable additional hours.
11.8. Part Time Employees
11.8.1 A part time employee can be employed up to 10 hours per day of ordinary time but must work less than 38 ordinary hours per week.
11.9. Casual Employee
11.9.1 A casual employee shall be employed by the day or shift and employment will terminate at the end of each such day or shift.
11.9.2 They will be employed for a minimum of four (4) ordinary hours within or outside the ordinary hours of work otherwise prescribed by this Agreement.
11.9.3 A casual employee shall be paid at the Award hourly base rate for the classification they are employed, plus a 25% loading for each ordinary time hour. Such loading shall be in lieu of payment for Annual Leave, Personal Leave, Public Holidays, Compassionate Leave, Carers Leave and Parental Leave.
11.9.4 A casual employee who terminates their employment prior to the end of their ordinary working hours on any day or shift will not be entitled to payment in respect of any time actually worked on that day or shift.
11.10 Job Sharing
11.10.1 Job Sharing is an arrangement entered into by two (2) employees who guarantee to cover and share all the duties and responsibilities of a particular classification
11.10.2 The use of job-sharing will be at the sole discretion of the Company. Each member of the job sharing team must individually meet selection criteria for employment.
11.10.3 Job-share employees will remain on a casual basis of payment to avoid confusion with the payment of entitlements. They will be entitled to incentive payments related to production if so assessed.
11 .11 Trainees
11.11.1 Subject to the relevant apprenticeship and traineeship legislation, all full time and part time trainees will be signed up on the Company's training program.
11.11.2 Payment for on the job training will be as contained in this Agreement.
11.12 Juniors
11.12.1 Juniors are all employees under the age of 20 years of age.
11.12.2 A junior may be employed in any of the classifications in this Agreement and shall be paid at the following percentage rate for their base rate:
[table omitted]
11.12.3 There may be some tasks throughout the plant that when assessed and agreed by both parties a junior in full time employment with the Company may be paid at the appropriate adult rate when deemed competent for the classification they are regularly performing.
11.12.4 Examples of tasks able to be performed by Junior employees is detailed in Appendix 2
11.13 Changes between employment classifications.
11.13.1 There is no automatic progression from one classification to another. This also applies in instances where employees have received training and been assessed as competent
11.13.2 Should an employee be transferred to a lower classification at their request there will be no notice required for such a change in classification
11.13.3 Existing staff will be notified when a position becomes vacant on plant and have the opportunity to apply for that position. External advertising may also take place. The final decision will be made on the individual merits of the applicants
11.14 Slicers Ratio
11.14.1 The Company shall endeavour to provide the optimal ratio of slicers to boners to obtain maximum production levels.
11.14.2 The Company shall endeavour to increase the number of slicers and labourers needed in the team to cope with particular special orders and cattle types so as to maintain the flow of production through the room.
17. Hours of Work
17 .1. Ordinary hours shall not exceed an average of 38 per week and not exceed 152 in 28 days unless agreed by both parties.
17.2. Subject to the provisions of this clause, ordinary hours may be worked on any day, or all of the days of the week Monday to Friday except as outlined in clauses 17.14.1 below.
17.3. Standard ordinary hours are Monday to Friday - between 5.00 a.m. and 8.00 p.m. when working a standard 5 day roster.
17.4. The spread of hours (i.e. between 5.00 a.m. and 8.00 p.m.) may be altered by up to one hour at either end of the spread by Agreement between the Company, the Union and the majority of employees concerned or in appropriate circumstances, between the Company and an individual employee.
17.5. Ordinary hours will be continuous except for meal breaks.
17.6. Starting and finishing times of the ordinary hours of work may be altered either by Agreement with the Union, the employee, the majority of employees in the Plant or department or section and/or the Consultative Committee or if no such Agreement is forthcoming by the Company with a minimum of thirty-six (36) hours' notice.
17.7. Any work performed by an employee prior to the spread of hours which is continuous with ordinary hours, for the purpose, for example, of getting the Plant ready for production work, may be regarded as part of the 38 ordinary hours of work.
17.8. Standard ordinary hours for a 5 day roster shall be a maximum of 7.6 hours per day (5 x 7.6).
17.9. Standard ordinary hours for a fixed or rotating 4 day roster shall be a maximum of 9.5 hours per day (4 x 9.5).
17.10. Management with the giving of five weeks' notice to the parties bound may adopt to work any or a combination of 9.5 hour day rosters to get to seven days of operation. This notice may be less with the Agreement of the parties to this Agreement.
17.11. When the Plant is operating 7 days per week current employees (prior to 1st July, 2007) will have the option to work the static 4 day Monday to Thursday shift unless they have signed up for upskilling to work the Thursday to Sunday or Friday to Monday shifts.
17.12. Where an employee's hours of work commence on one day and conclude on the next day, the hours of work of that employee shall be deemed to have all been worked on the day that the employee's hours of work commenced.
17.13. Night Cleaners
17.13.1 Night Cleaners may be employed on ordinary hours between 2.00 pm and 4.30 am.. Applicable penalty rates are as per Clause 19.
17.14. Saturday and Sunday- Ordinary Hours Penalty
17.14.1. Subject to the other provisions of this Agreement, all ordinary hours worked on Saturdays and Sundays shall attract a stand-alone loading of 50% and 100% respectively which shall not be taken into account when calculating any entitlement under this Agreement.
18. Overtime
18.1. All time worked outside the standard ordinary working hours on any shift shall be deemed to be overtime and shall be paid for at time and one half for the first three hours and double time thereafter. An overs payment will be substituted for time and a half for Boners/Slicers/Slaughterers who work in excess of the specified standard ordinary hours for the shift, provided that the overs payment for the period of the overtime exceeds the time and a half rate for the period. If the overs payment applicable to the overtime period is less than the rate of time and a half (for example if there was a breakdown and throughput is reduced) the employees will be entitled to be paid for that period at the higher rate of time and a half.
18.2. The Company may require an employee to work reasonable overtime, at overtime rates, and such employee shall work overtime in accordance with such requirement.
18.3. A total of up to 30 minutes extra production time per shift may be required to be worked in the Boning Room/Slaughter Floor when working 9.5 standard ordinary working hour shifts.
18.4. A total of up to 60 minutes extra production time per shift may be required to be worked in the Boning Room/Slaughter Floor when working 7 .6 standard ordinary working hour shifts. The total of 5 hours extra production time per week can be worked in various amounts each day during the week with Agreement between the parties.
18.5. For employees employed in the boning room, if Friday overtime is required to be worked by the Company, employees may be required to work 30 minutes. Should the Company request a further 30 minutes overtime this opportunity to work offered is on a voluntary basis. This clause is applicable when a 5 day x 7.6 hour per day roster is operational.
18.6. Overtime is at the Company's discretion and direction, taking into consideration operational requirements, with notice given to employees as soon as is practicable.
18.7. Fixed rates for Boning, Slicing and Slaughtering for Saturday overtime:
18.7.1. Rates are in payment for up to six (6) hours overtime worked on a Saturday whether 6 hours are worked or not.
18.7.2. Fixed rates apply to Boners, Slicers and Slaughterers and are set out in the pay rates for these classifications.
18.7.3. For other classifications the minimum payment is three (3) hours at time and a half and three (3) hours at double time.
19. Shiftwork
19.1. Shifts may be worked on any work covered by this Agreement.
19.2. The Company shall not, unless with the agreement of the parties, transfer an employee from day work to shift work, or from shift work to day work. Should agreement not be reached the Company may transfer an employee from day work to shift work, or from shift work to day work on the giving of 7 days' notice.
19.3. Shifts may be worked on a one-shift, two-shift or three-shift system.
19.4. For the purposes of this clause:
19.4.1 Afternoon shift means any shift commencing after 2.00 p.m. and finishing before midnight.
19.4.2 Night shift means any shift finishing after midnight and before 9.00 a.m.
19.4.3 Fixed night shift means a night shift (as defined) on which an employee is not allowed to rotate so as to give the employee at least one week each three consecutive weeks on some other shift or shifts.
19.4.4 Day shift in a three-shift system means any shift finishing before 5.00 p.m.
19.5 The hours covered by a shift for production workers shall be dictated by the hours worked by Boners or Slaughterers on that shift i.e. production hours only (does not include overtime).
19.6 Shift allowances
19.6.1 An employee on afternoon shift shall be paid the appropriate rate for the classification in which the employee is employed under this Agreement, plus 15% of the base rate of pay.
19.6.2 An employee on night shift shall be paid the appropriate rate for the classification in which the employee is employed under this Agreement, plus 25% of the base rate of pay.
19.6.3 An employee on a fixed night shift shall be paid the appropriate rate for the classification in which the employee is employed under this Agreement, plus 30% of the base rate of pay.
19.6.4 A casual employee employed in shift work shall receive the appropriate percentage loading as prescribed in clause 19.6.1 to 19.6.3 and in addition thereto 25% of the base rate excluding shift allowance (i.e. casual loading as prescribed by clause 11 .9.3, of this Agreement)
19.7 Meal intervals - shift workers
19.7.1 A shift worker except when engaged on a three-shift system, may either be allowed a meal interval of no less than 30 minutes in accordance with clauses 20.1 and 20.5 of this Agreement, or
19.7.2 Shift workers engaged on a three-shift system and shift workers not engaged on a three-shift system who are not allowed the meal intervals as prescribed in clause 19.7.1 shall be allowed a crib time of 30 minutes which shall be counted as time worked to be taken at a time agreed between the Company and a majority of employees having regard to the provision of clause 20.4 of this Agreement.
19.8 Where employees are engaged on a three-shift system such employees shall rotate weekly between day, afternoon and/or night shift, provided that the Company shall determine if operational requirements require an employee remaining permanently on any of the three shifts.
26 Attendance Bonus
26.1 A permanent employee will be entitled to be paid an Attendance Bonus for each week which the employee has worked all of the hours of work requested of that employee by the employer for the week (including all overtime reasonably requested of the employee).
26.2 An Attendance Bonus will be paid for the following provided the employee has worked all of the hours of work requested of that employee by the employer for the week (including all overtime reasonably requested of the employee):
26.2.1 If working under any 4 day roster an employee may be granted approval to swap a rostered work day with an employee of the same classification and skills;
26.2.2 On approved days taken "in lieu" of work previously completed on public holiday.
26.3 An Attendance Bonus will not be paid for Public Holidays that are not worked. The Attendance Bonus will be paid proportionately provided the employee has worked all of the hours of work requested of that employee by the employer for the week (including all overtime reasonably requested of the employee).
26.4 An Attendance Bonus will not be paid on Annual Leave for production workers but will be payable on Annual Leave for Night Cleaners and General Hands.
33 Superannuation
33.1 Bindaree Beef will offer all employees the choice of one (1) superannuation fund conforming to the operating standards set out by the Commonwealth Government.
33.2 If the employee does not elect a fund within one month the Company will pay the Company contribution to Australasian Meat Industry Superannuation Trust.
33.3 If the employee provides incorrect superannuation member information superannuation contributions will be sent to the default fund until such time as correct information is provided and changes made by the Company.
33.4 The Company shall contribute to the elected fund the percentage amount required by the Superannuation Guarantee Levy.
33.5 No overtime, penalty allowances, or any payments that are over and above ordinary time payments will be included in the Company's superannuation contribution calculations.
33.6 An employee's eligibility for superannuation contributions will cease on the last day of employment and as such no claim will be made for any period beyond the last day.
33.7 The Company offers all employees the opportunity to salary sacrifice. This must be done for a set period of twelve (12) months at a set rate. Each employee has the opportunity to adjust these rates, and choice of funds at the beginning of the financial year - 1st July.
Agreed matters
[8] There is no dispute between the parties that:
• the Applicants were, at the time the application was filed in the Commission, all permanent full-time employees of Bindaree Beef. Mr McCosker, Ms Berry and Mr Brown remain employed by Bindaree Beef. Mr Gomes ceased employment with Bindaree Beef on 13 November 2020. Mr Johnston ceased employment with Bindaree Beef on 15 January 2021;
• the Agreement applied to the Applicants during their employment with Bindaree Beef;
• I have jurisdiction to arbitrate the Dispute;
• clause 26 of the Agreement imposes an obligation on Bindaree Beef to pay an attendance bonus to an Applicant “for each week [in] which the employee has worked all of the hours of work requested of that employee by the employer for the week (including all overtime reasonably requested of the employee)”;
• clause 33 of the Agreement imposes an obligation on Bindaree Beef to contribute to a superannuation fund selected by an employee or, if no such fund is selected, the Australasian Meat Industry Superannuation Trust the “percentage amount required by the Superannuation Guarantee Levy”;
• the “percentage amount required by the Superannuation Guarantee Levy” is the sum of money, which, if paid quarterly by Bindaree Beef to the superannuation fund of the employee (in an amount calculated in accordance with s 23 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act), will relieve the employer (by operation of s 23(2) of the SGA Act) from the payment to the Commonwealth of a Superannuation Guarantee charge calculated under s 19(2) of the SGA Act, as provided under ss 5 and 6 of the Superannuation Guarantee Charge Act 1992 (Cth) (SG Charge Act);
• sections 5 and 6 of the SG Charge Act impose a quarterly superannuation guarantee charge (SG charge) on an employer equal to the amount of the superannuation guarantee shortfall (SG shortfall) for that quarter. The formula to calculate the SG shortfall is set out in s 19(1) of the SGA Act:
Quarterly salary or wages base, for the employer in respect of the employee, for the quarter | x | Charge percentage for the employer for the quarter |
• the “quarterly salary or wages base”is calculated by reference to the defined term “salary or wages”, which is “an all-encompassing expression concerned with hours actually worked” 1 and is much broader than “ordinary time earnings”;
• importantly, s 23 of the SGA Act provides that the “charge percentage”used in calculating the shortfall is reduced by a number worked out according to the following formula:
Contribution | x | 100 |
• the effect of this provision is that, if the employer makes payments to an employee’s superannuation fund equal to the employee’s “ordinary time earnings” multiplied by the current charge percentage, the SG shortfall will reduce to nil, with the result that the SG charge for the quarter will be nil;
• the legislative scheme provides an incentive for compliance because, where an employer underpays an employee superannuation (i.e. pays less than the charge percentage on the employee’s “ordinary time earnings” for the quarter), the employer is required to pay a greater SG charge to the Commonwealth – because it is calculated by reference to “salary or wages”, which includes components excluded from “ordinary time earnings”; 2
• section 6 of the SGA Act defines “ordinary time earnings” as follows:
“ordinary time earnings, in relation to an employee, means:
(a) the total of:
(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
(A) a payment in lieu of unused sick leave;
(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and
(ii) earnings consisting of over-award payments, shift-loading or commission; or
(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter – the maximum contribution base.”
• an attendance bonus payment in accordance with clause 26 of the Agreement does not constitute “earnings consisting of over-award payments, shift-loading or commission” within the meaning of s 6(a)(ii) of the SGA Act.
Issue in dispute
[9] The critical question for determination in this Dispute is whether an attendance bonus paid in accordance with clause 26 of the Agreement is part of an employee’s “ordinary time earnings” within the meaning of s 6 of the SGA Act. The answer to that question depends on whether the payment of such an attendance bonus constitutes part of an employee’s “earnings in respect of ordinary hours of work” within the meaning of s 6(a)(i) of the SGA Act. If so, Bindaree Beef is obliged to make superannuation contributions in respect of attendance bonus payments. If not, no such obligation arises.
Submissions
AWU’s submissions on behalf of the Applicants
[10] The AWU submits that the terms “ordinary hours” and “ordinary time” appear on a number of occasions throughout the Agreement. However, the critical provision appears to be clause 17 – Hours of Work. Clause 17.1 provides that “Ordinary hours shall not exceed an average of 38 per week and not exceed 152 in 28 days unless agreed by both parties.” Clause 11 further defines the categories of employees – according to which full-time employees work an average of 38 hours per week (averaged across a maximum of four weeks) and part-time employees must work less than 38 hours per week. Clause 18 relevantly defines overtime to mean “All time worked outside the standard ordinary working hours on any shift” and states that the respondent may require an employee to work reasonable overtime.
[11] The AWU contends that it follows from the foregoing, and the meaning of “ordinary time earnings” in the statute, that the Applicants’ “ordinary time earnings” are earnings in respect of their 38 ordinary hours per week (or, if averaging is applied under clause 17.1, 76 ordinary hours of work per fortnight or 152 ordinary hours of work per four-week cycle).
[12] The AWU submits that the attendance bonus forms part of an employee’s “ordinary time earnings” for the following reasons:
(a) The attendance bonus is payable if an employee works their ordinary hours of work and no more. As stated in the Agreed Statement of Facts (at 13(a)), “Overtime is available to be worked from time to time” – it is not an essential part of the patterns of work of employees at Bindaree Beef’s enterprise.
(b) As the Full Court held in Bluescope, in determining the ordinary time hours of an employee for the purposes of the superannuation legislation, the critical question is not the customary or usual hours of employees, but the ordinary hours of work as fixed by the relevant industrial instrument – in this case the Agreement. As such, the regularity or otherwise of the overtime worked by the employees is not relevant to the ascertainment of ordinary time hours.
(c) The conjunction of points (a) and (b) above leads to the conclusion that the attendance bonus – as a payment due to employees merely for working their ordinary hours of work (in a week in which they are not requested to work overtime), must form part of their “ordinary time earnings”.
[13] The AWU contends that this construction finds support in the Australian Taxation Office Superannuation Guarantee Ruling SGR 2009/2 (ATO Ruling), which is not binding but ought, so the AWU contends, be given due consideration as the statement of the regulator issued after extensive consultation and consideration of applicable case law. The ATO Ruling states at [25] and [225]:
“25. All amounts of earnings in respect of employment are in respect of the employee’s ordinary hours of work unless they are remuneration for working overtime hours, or are otherwise referable only to overtime or to other hours that are not ordinary hours of work. There is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work.
…
225. All amounts of earnings in respect of employment are in respect of an employee’s ordinary hours of work unless they are remuneration for working overtime hours, or are otherwise referable only to overtime or to other hours that are not ordinary hours of work.”
[14] The AWU submits that if the ATO Ruling is correct, the Applicants must succeed: the attendance bonus is not “remuneration for working overtime hours” and nor is it “referable only to overtime or to other hours that are not ordinary hours of work”.
[15] As to Bindaree Beef’s attempt to characterise the attendance bonus as an “on call” or “availability” allowance, the AWU submits that the ATO Ruling provides (at [44]) that an on-call allowance may not be “ordinary time earnings”. In that paragraph, the ATO Ruling describes an on-call allowance as “a payment to an employee for making himself or herself available at certain times to be called into work if needed.” The AWU contends that the attendance bonus cannot be understood as such a payment, either in point of law (having regard to the clear words of clause 26) or, to the extent it may be relevant, in point of fact (noting the overtime arrangements set out at paragraphs [11] to [15] of the Agreed Statement of Facts). Further, as the ATO Ruling makes clear, the AWU submits that an on-call allowance will not be “ordinary time earnings” if it is paid for being available in respect of hours that the employee is not otherwise working. It is contended that the attendance bonus is plainly not such a payment: an employee is not paid simply for holding themselves available for recall to duty, even in circumstances where they are not so recalled. The payment is made for the completion of all hours of work requested for the week – inclusive of ordinary hours of work and, where reasonably requested, overtime.
[16] The AWU contends that the Commission should determine the Dispute by answering “yes” to the question posed for determination.
Bindaree Beef’s submissions
[17] Bindaree Beef submits that the terms of clause 26 of the Agreement provide significant guidance as to the objectives of the provision of the attendance bonus to various classes of employees, and the purpose intended to be served by its inclusion in the Agreement. In particular, it is submitted that:
(a) the clause is entitled “Attendance Bonus”, a description which is itself significant in understanding the intent of its provision, in that it focuses on the activity of “attendance”;
(b) limited classifications of employees are entitled to be paid the attendance bonus “for each week (in) which the employee has worked all of the hours requested of that employee for the week (including all overtime reasonably requested of the employee)”;
(c) subject to clause 26.2, an entitlement accrues by reference to the employee having cooperated with all the employer’s requests to perform work in a week, entirely irrespective of whether that requested work is ordinary hours or overtime or other forms of time;
(d) an employee is deemed by clause 26.2 to have cooperated to the necessary extent to accrue the attendance bonus in any week, if the employee has otherwise worked all hours (including overtime) requested during a week, and
• they are not working their requested day but have been granted approval to swap a rostered workday (a “deemed day”), or
• they are not working for one or more days during the week but are on approved leave days taken “in lieu” of work previously completed on public holidays (a “deemed day”), or
• they are not working for one or more days by reason of a standdown because of a matter beyond the control of the employer, such as shortage of cattle or serious adverse weather, and are therefore requested not to work; (a “deemed day”), or
• if a public holiday (which is not worked) falls within the week (a “waived day”);
(e) the attendance bonus is a fixed amount (either in full or proportionately reduced by a public holiday) and is not expressed as an hourly or daily rate and is not differentiated by reference to the amount of ordinary time, overtime, deemed time or waived time that is involved in its calculation; and
(f) the amount of the attendance bonus is payable irrespective of the actual number of hours worked, deemed or waived and without reference to the “type” of hours taken into account, other than that it must be all of the hours requested (including ordinary time, overtime, and taking into account hours not requested but which are deemed or waived in accordance with (d) above). The sole exception to this position is that the attendance bonus is paid proportionately, but paid nonetheless, for the balance of days in weeks in which a non-working public holiday occurs.
[18] Bindaree Beef submits that the attendance bonus is paid to eligible employees by reason of their level of cooperation with Bindaree Beef, which is exhibited by their 100% actual attendance (or their deemed or waived attendance) as requested, to perform all such work of whatever designation as is offered by the employer in any particular week. The attendance bonus is not paid for working ordinary hours or overtime hours, or any combination thereof. It is paid by way of an incentive to reward conscientious attendance, that is, to reward an employee for making themselves available to work (or to not work if working is deemed or waived for these purposes) in accordance with all of the employer’s requirements of that employee for the period.
[19] By way of example, Bindaree Beef submits that any eligible employee may:
(a) work 38 ordinary hours and one hour overtime in one week and receive the attendance bonus if that is all that has been asked of the employee during that week; or
(b) work 38 ordinary hours and four hours overtime during the next week and receive no attendance bonus, if that employee was reasonably requested to work five hours overtime and declined the fifth hour; or
(c) work only three days at 7.6 ordinary hours per day and no overtime in the following week and receive the attendance bonus, if those three days are all that was asked of them, and are combined with two days not worked and taken “in lieu”; or
(d) work three days at 7.6 ordinary hours per day and two hours overtime per day, and then be stood down for the remaining two days of the week by reason of shortage of cattle or adverse weather. In such a case the attendance bonus would be received because they had worked all of the days asked of them, although no work at all was performed on two of the five days of that week, and 38 hours ordinary time was not worked.
[20] In these examples, the attendance bonus in (a), (c) and (d) is the same amount although the hours and the ordinary hours actually worked are significantly different. Similarly, the hours worked in (b) are more than either (a), (c) or (d), yet no attendance bonus is earned. Bindaree Beef contends that entitlement to the attendance bonus, or lack thereof, in each case depends entirely upon the specific requirements of the employer that week, the circumstances of the employee in that week, and the degree of cooperation (by way of attendance) exhibited by the employee.
[21] Importantly, Bindaree Beef submits that the entitlement is not assessed by reference to the number of ordinary hours or overtime hours worked, but by reference to whether the hours worked or deemed to be worked consisted of a set of hours comprising the whole of the employer’s actual or deemed requests or waivers in that regard, irrespective of the content of those requests in any week in terms of hours or time. Accordingly, it is contended that the amount of time actually worked by an employee, and when it is worked during the week, has little or no bearing on the entitlement to the attendance bonus, or the quantum of payment received. For the same reason, the actual number of ordinary time hours or overtime or deemed or waived hours which is factored into an entitlement cannot be predicted in advance, and is irrelevant to the entitlement and the quantum of payment. Bindaree Beef also makes the point that a minimal number of ordinary hours and hours that are not worked can attract an entitlement to the attendance bonus, whereas 38 ordinary hours plus a substantial number of overtime hours in one week may not entitle an employee to any payment.
[22] In light of the foregoing, Bindaree Beef submits that the attendance bonus should be found to have been agreed, and is paid, for the purposes of fostering cooperation and conscientious compliance with the employer’s requirements of the employee, in terms of attendance. As such, it is contended that the attendance bonus is, or is analogous to, a “standby” payment or allowance in reward for an employee making themselves available for the purpose of performing particular kinds of work, such as call-backs or unscheduled out of hours work, in circumstances where the work itself is separately remunerated in accordance with the time and circumstances in which it is actually performed. The attendance bonus is not payment for the hours which are counted in assessing an employee’s eligibility, as those hours are separately paid for, and the attendance bonus does not form part of the rate that they are paid for that work. Bindaree Beef submits that the attendance bonus is an incentive to discourage absenteeism and encourage compliance with the employer’s operational requirements, whatever they may be.
[23] Bindaree Beef contends that this interpretation of clause 26 is supported by the agreed annexures attached to the statement of agreed facts. The explanations provided to the negotiating parties (which did not include the AWU) and the explanation set out in the Form F17 are consistent with the notion that the attendance bonus was, and was intended by the negotiating parties to be, in respect of the employee having successfully completed all hours requested of them in any week, without regard to the composition of those hours by reference to any other descriptors such as ordinary time or overtime. This material is admitted in the proceedings by agreement and is admissible, so Bindaree Beef contends, to assist in interpreting the Agreement by reference to the Berri principles.
[24] Bindaree Beef also contends that its submissions are supported by the history of the Agreement by reference to the 2014 – 2018 Agreement, referred to in the statement of agreed facts (at [19]-[24]). For most classifications covered by the two enterprise agreements, the previous attendance allowance was fully converted into a non-contingent increase in the base rate applicable to those classifications, and therefore forms part of the ordinary rate of pay for those employees and is not dependent upon working a full set of requested hours of any designation. By contrast, in relation to the employees eligible under clause 26 of the Agreement (including the Applicants), Bindaree Beef submits that the conversion of the previous attendance payment under the earlier agreement was only partial, and part of the former attendance payment was retained in the form of the attendance bonus as a contingent attendance payment which was dependent upon the cooperation and conscientious attendance of the employees for all requested hours. This payment and these employees are in a very different situation from that which now applies to the other classifications under the Agreement. Bindaree Beef contends that it was plainly intended by the negotiating parties by including the attendance bonus in its existing form in the Agreement, to differentiate the entirely contingent entitlement to receive the attendance bonus, from the case in which such benefits were included in the base rate so that, in respect of that payment or part payment, employees were relieved of the need to comply with the qualifying contingency that now only applies to employees eligible under clause 26.
[25] Bindaree Beef submits that in Bluescope (at [56]-[57]) Allsop CJ decided that the term “ordinary time earnings” means “earnings in respect of ordinary or standard hours of work at ordinary rates of pay as provided for in a relevant industrial instrument, or contract of employment.” It is contended that his Honour rejected any suggestion that the term, in circumstances such as the present (in which the employment is regulated by an enterprise agreement which distinguishes between ordinary hours and overtime hours and provides specific rates of pay for those hours), meant hours agreed to be worked or the hours normally worked. Accordingly, Bindaree Beef submits that the application of this definition to the present circumstances requires an assessment as to whether the attendance bonus comprises a part of an eligible employee’s “earnings in respect of ordinary or standard hours of work at ordinary rates of pay”. It is submitted for the reasons that follow that the attendance bonus does not fall within this definition and is therefore not an amount which, if paid in any week, is required to be taken into account in the calculation of superannuation payments required by clause 33.4 of the Agreement.
[26] Bindaree Beef accepts that if an employee is paid an attendance bonus, the amount is received by way of “earnings”. However, in order to qualify as being “ordinary time earnings”, as the name suggests, it is necessary that the earnings also be “in respect of” ordinary or standard hours of work at ordinary rates of pay. Bindaree Beef submits that the phrase “in respect of” is of wide effect, but it is not without limitations; it is necessary that there be a relationship which is significantly more than a vague and indefinite nexus between the qualifications for, and purpose of, the attendance bonus, and “ordinary or standard hours of work”. Whether the nexus is sufficient is a matter to be determined by reference to the context in which it appears.
[27] In Commissioner of Taxation v Scully (Scully), 3the High Court was required to consider whether a lump sum payment made to a person from a superannuation fund on the occurrence of the total and permanent disablement of the person, was an eligible termination payment under the Income Tax Assessment Act. That question turned on whether the payment was excluded from assessment because it was “consideration of a capital nature for, or in respect of, personal injury to the taxpayer”. The High Court held that it was not excluded. In so doing, the majority quoted with approval the observations of the plurality in Workers Compensation Board (Q) v Technical Products Pty Ltd4in which it was said:
“Undoubtedly the words “in respect of” have a wide meaning, although it is going somewhat too far to say, as did Mann CJ in Trustees Executors and Agency Co Ltd v Reilley that “they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer”. The phrase gathers meaning from the context in which it appears, and it is the context which will determine the matters to which it extends.” (Emphasis added)
[28] Bindaree Beef submits that the majority in Scully also accepted that there was a connection between the payment and the personal injuries, however as the notion of “consideration” in that case involved a form of recompense, it was necessary to establish whether the payment was able to be seen as compensation for, or in respect of, the personal injury. In that case it was held at [29]- [30]:
“29. …. Given that “consideration” in this paragraph involves the notion of recompense, it is not enough that there is a “consideration” which can be said to have a connection with the personal injury. The payment must be compensation for or in respect of the particular injury.
30. However, the payment in this case cannot be said to be compensation for or in respect of the personal injury. Clauses 2.4.1 and 3.5.1, pursuant to which the respondent’s payment was calculated, made no attempt to place a monetary value on a member’s injury. They did not even provide for a formula, roughly comparable to the manner in which a court or tribunal might assist damages in a claim for personal injury, to quantify the amount of the payment. Indeed, the very similarity of the benefits for death, retirement, resignation, retrenchment and dismissal to those for total and permanent disablement deny that the purpose of a payment pursuant to clauses 2.4.1 and 3.5.1 is concerned with the value of any injury sustained by an employee.” (emphasis added)
[29] Bindaree Beef submits that in Scully, although the disablement for which the sum was paid had a connection with the personal injury sustained by an employee, the payment was not made for or in respect of the personal injury, but rather for, or in respect of, disablement. It is clear in the passages quoted above, so Bindaree Beef contends, that the High Court has indicated that the words “for or in respect of” in that legislation can be assessed by reference to the purpose of the payment. If that purpose is directed to an injury sustained by an employee, a payment made on account of consequent disability is for a different purpose and therefore is not covered by the provision.
[30] It is submitted that a significant part of the reasoning of the High Court in Scully rested on the fact that the source of the entitlement (in that case the clauses of the superannuation policy) was, by its terms, structure and content, clearly not directed towards quantification of, and reimbursement for, a personal injury and therefore the payment itself was not for, or in respect of, a personal injury, despite the obvious likely connection between the disablement and the personal injury. By parity of reasoning, Bindaree Beef submits that it is clear that it is not sufficient to say that there is some imprecise or tangential connection between the attendance bonus payment which is paid on account of 100% actual or deemed attendance during a week and the ordinary time periods that may constitute some or all of the period taken into account for the attendance bonus. Bindaree Beef submits that the purpose of a payment pursuant to clause 26 is clearly relevant in establishing context, and in this case the attendance bonus is concerned with the adherence by the employee to a standard of actual or deemed perfect attendance.
[31] Bindaree Beef contends that the attendance bonus payment must be identifiably “in respect of” working ordinary hours, in the sense of being for the purpose of, direct compensation for working those hours, as distinct from some other purpose. It is submitted that the bonus itself is a fixed sum irrespective of the number of ordinary overtime or other hours which may be counted in its accrual. It is not confined in any way to the number of ordinary hours worked, or even the number of overtime or other hours worked. It has none of the attributes of a payment intended to be made in respect of the working of ordinary time at ordinary rates.
[32] It is submitted that the words “in respect of” also draw clear meaning from the context in which they appear in the superannuation legislation. That legislation appears to suggest in strong terms that it is concerned to limit the employer’s obligation in relation to the payment of superannuation to those payments to an employee which can be unequivocally identified as being a reward or compensation for the working of ordinary hours. Any other form of payment, such as the attendance bonus, is excluded from the definition, and it is not necessary for the purposes of these proceedings to categorise such a payment any further.
[33] Further, Bindaree Beef submits that in Bluescope, Allsop CJ based much of his consideration of the meaning of the expression in section 6 of the SGA Act on the presumed intention on the part of the legislature to create a certain and secure line for the calculation of superannuation, which was easy to identify, and which was susceptible of simple administration on the part of employers. Bindaree Beef contends that it would be to contradict all of these considerations to determine that a lump sum payment such as the attendance bonus, which on its face and in the manner in which it was explained when the Agreement was made, is not intended to achieve a purpose of compensation for the working of ordinary hours, but another purpose altogether.
[34] Bindaree Beef submits that the fact it was agreed that the attendance bonus under the earlier agreement was to be folded into the base rate pay for particular classifications of employees, and was thereby clearly intended to be paid as a non-contingent form of compensation for working ordinary hours, provides a clear contrast to the employees to whom clause 26 applies. The difference between the two circumstances is, so Bindaree Beef contends, referable to an intention that one group be paid this amount as remuneration in respect of working ordinary hours irrespective of their attendance record, whereas the other group, namely the clause 26 employees, were not, in respect of the contingent clause 26 attendance bonus payment.
[35] It is submitted that it is difficult however to characterise the attendance bonus as one that is “in respect of” ordinary hours of work when the entitlement may be determined by reference to criteria that are often unrelated to whether or not an employee has worked 38 ordinary hours. The bonus may be routinely earned or lost by reference to whether or not an employee works requested overtime of an indefinite and unpredictable amount.
[36] It is clear from this context, so Bindaree Beef submits, that it was not intended that such a fixed sum payment, which may or may not have any definite or real connection to the working of ordinary hours, is of a character such that it can be characterised as “ordinary time earnings” for the purposes of section 6 of the SGA Act.
[37] Bindaree Beef also submits that the following considerations require that the Commission answer the question submitted for arbitration in the negative:
(a) there is no attempt made to qualify the entitlement to the attendance bonus payment by reference to working of ordinary hours at ordinary rates or any other kind of hours at any other rates;
(b) there is no attempt made to quantify the entitlement to payment of the attendance bonus by reference to an hourly or daily rate or by reference to any number of hours (ordinary or otherwise) worked or deemed to be worked in any one week, other than “all requested hours”;
(c) the qualifying time periods for the attendance bonus entitlement will usually consist of ordinary hours, deemed hours, waived hours, and/or overtime hours in different combinations, depending upon the circumstances of the week in question;
(d) the degree of connection between the attendance bonus as earned under clause 26, by reference to the ratio of ordinary hours, overtime hours and other hours which may be taken into account, will vary significantly from week to week, depending upon the circumstances that applied during that week;
(e) the qualification criteria for the attendance bonus include all such periods and types of hours, many of which are not ordinary hours, and therefore the attendance bonus is a payment “in respect of” none of those types of hours specifically, or alternatively, is a payment “in respect of” all of those types of hours to varying degrees at varying times;
(f) if the attendance bonus is payable “in respect of” all of the hours that make up the qualifying period, compliance would be extremely difficult if not impossible. As Allsop CJ opined in Bluescope, an outcome of that kind would suggest that such an interpretation was not intended by the legislature;
(g) an insurmountable difficulty which arises from the Applicants’ submissions is that an employee may work all of their rostered ordinary hours and one hour of overtime but decline to work a requested second hour of overtime in a given week. In that case, it is a period of declined additional overtime that would disqualify the employee from an attendance bonus payment, and conversely, it is the working of an additional hour of requested overtime that would qualify the employee for payment of the entire attendance bonus; and
(h) accordingly, the attendance bonus cannot be said to be “in respect of”, in the sense of being for the purpose of compensation or reward for, the working of ordinary hours, as it is clearly not intended to be so, and further, there are many circumstances in which the fact of working ordinary hours is largely irrelevant to whether or not the employee qualifies for, or receives, the payment.
[38] In the circumstances, Bindaree Beef contends that a fixed lump sum contingent payment of this kind does not have a sufficiently certain, secure and operative connection to the working of ordinary hours for the attendance bonus to be considered to be a payment “in respect of ordinary hours of work”.
[39] As to the ATO Ruling, Bindaree Beef makes the point that it is merely advisory and is not, and cannot be, binding on the Commission. The ATO Ruling provides that an on-call allowance may not be ordinary time earnings. Such an allowance is described as “a payment to an employee for making himself or herself available at certain times to be called into work if needed”. It is submitted that the defining characteristic of such an allowance, which removes it from the concept of ordinary time earnings, is that it is not paid in respect of the hours actually worked, which are separately remunerated depending upon whether they are ordinary time or overtime, but is paid in respect of another contingency or performance or event altogether. Bindaree Beef submits that the attendance bonus has precisely that same characteristic, and it does not matter whether it is paid in advance, contemporaneously, or in arrears of the period during which the employee engages in the qualifying conduct or event. The usual position for an “on-call” allowance is that there is a prior agreement that particular calls to work will be responded to, and any time actually worked under those conditions is separately paid for. An employee is then trusted to subsequently comply with the arrangements and would be found to be non-compliant with their contractual obligations if they were to accept that payment but failed to later respond. In conceptual terms, Bindaree Beef submits that the attendance bonus is precisely to the same effect, however the evidence of the employee’s compliance must be provided in advance of the payment, in default of which the payment will not be made, so that questions of non-compliance with prior contractual arrangements do not arise. This interpretation, so Bindaree Beef contends, is entirely consistent with the earlier submissions to the effect that the payment is not made in respect of ordinary time or overtime or employment in general. It is paid for effectively the same type of cooperation as underpins an “on-call” allowance.
[40] Bindaree Beef notes that the ATO Ruling does not refer in terms to an allowance structured in the manner of the attendance bonus, and it is therefore necessary, in order to gain any assistance at all from the ATO Ruling, to assess and understand the basis or characteristic upon which the ruling is made. Once that occurs, Bindaree Beef contends that it is evident that the ATO Ruling favours its interpretation rather than the case of the Applicants.
[41] In that context, Bindaree Beef submits that it is not true to say, as the Applicants do, that the attendance bonus is a bonus payable in respect of ordinary time earnings and is not contingent on a particular “performance or event” beyond the working of those hours. Bindaree Beef contends that the attendance bonus is contingent on far more than the working of ordinary time earnings, and it cannot be said that it is ordinary time earnings in one week, but because it is dependent on other contingencies in other weeks, it has a different characteristic and is not ordinary time earnings. Bindaree Beef contends it is the consistency of the payment irrespective of the inconsistency in the qualifying performance or event, that marks the attendance bonus as being not in respect of the working of ordinary hours and therefore not ordinary time earnings.
[42] It is submitted that the correct interpretation of the attendance bonus is that it is not on account of the hours which happen to be counted, and paid for independently of the attendance bonus, subject to deemed and waived days which are sometimes not paid but which are nonetheless counted, but on account of the performance of an employee in attending to all of the work requested during the week in question. Bindaree Beef therefore submits that the answer to the question posed for arbitration should be “no”.
Relevant principles
[43] There is no real dispute between the parties as to the proper construction of the Agreement. The parties are at issue as to the proper construction of the expression “earnings in respect of ordinary hours of work” in s 6(a)(i) of the SGA Act, and whether an attendance bonus paid in accordance with clause 26 of the Agreement constitutes such “earnings”.
[44] The starting point in construing legislation such as the SGA Act is to construe the words of the statute according to their ordinary meaning having regard to their context and legislative purpose. Context includes the existing state of the law and the mischief the legislative provisions was intended to remedy and the legislative history. 5
[45] The plurality in SZTAL v Minister for Immigration and Border Protection 6 (SZTAL) succinctly described the contemporary approach to statutory construction:
“The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.” 7 (footnotes omitted)
[46] Insofar as the Agreement needs to be construed, I will apply the principles summarised in the following two paragraphs.
[47] In AMWU v Berri Pty Ltd 8 (Berri), a Full Bench of the Commission summarised the relevant principlesas follows:
“1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”
[48] More recently, the Full Court of the Federal Court of Australia stated the principles applicable to the interpretation of an enterprise agreements in James Cook University v Ridd: 9
“(i) The starting point is the ordinary meaning of the words, read as a whole and in context.
(ii) A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind”. The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose”.
(iii) Context is not confined to the words of the instrument surrounding the expression to be construed. It may extend to “... the entire document of which it is a part, or to other documents with which there is an association”.
(iv) Context may include “... ideas that gave rise to an expression in a document from which it has been taken”.
(v) Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form...”
(vi) A generous construction is preferred over a strictly literal approach, but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties”.
(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry.” [references omitted]
Consideration
[49] The words “in respect of” are capable of having a very wide meaning. 10 The expression has been said to “have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer”.11 However, the expression “in respect of” involves “more than a mere connection between two things”.12 It may be appropriate to consider whether there was a “discernible and rational link” between the two subject matters.13 As Justices Brennan, Deane and Gaudron observed in Technical Products Pty Ltd v State Government Insurance Office (Q) (at 47):
“The words "in respect of" have a very wide meaning. Indeed, they have a chameleon-like quality in that they commonly reflect the context in which they appear. The nexus between legal liability and motor vehicle which their use introduces in s.3(1) is a broad one which is not susceptible of precise definition. That nexus will not, however, exist unless there be some discernible and rational link between the basis of legal liability and the particular motor vehicle. The point is well made in the judgment of Connolly J. (with whom Andrews C.J. and Thomas J. concurred) in the Full Court of the Supreme Court in the present case:
‘If the liability of the respondent in this case is to be described as being in respect of the trailer, there must, in my opinion, be more than the mere presence of the trailer at the scene. As McPherson J. observed, Tonga v. John Holland (Construction) Pty Ltd, Stevens v. Nudd and Boath v. Central Queensland Meat Export Co. Pty Ltd may be taken as establishing that it is not sufficient, in order to satisfy the requirement that the person entitled to the benefit of the cover be 'legally liable ... in respect of such motor vehicle', that there be no more than a connexion or relation in time or sequence between the motor vehicle and events which in law give rise to the liability. What is required is that there be a relationship between the motor vehicle and the very act or omission which gives rise to that liability.'" [References omitted]
[50] The meaning of the words “in respect of”, in any given case, is ultimately to be derived substantially from the context in which they appear. 14
[51] The statutory scheme pertaining to superannuation contributions by employers and in which the expression “earnings in respect of ordinary hours of work” is used was examined in a comprehensive manner by Allsop CJ in Bluescope. The following points made by Allsop CJ in Bluescope are relevant:
(a) The SG Charge Act and the SGA Act are pieces of legislation at the heart of the national economy, of the national arrangements for the financial welfare and financial security of Australian employees and retirees, and Australians generally. 15
(b) An employer is under no statutory obligation to make superannuation contributions for the benefit of any employee. The extent to which it does so will affect whether it pays a charge or tax, and if so in what amount. 16
(c) As to the text of the relevant provision, the expression “ordinary hours of work” in s 6(a)(i) of the SGA Act is referrable to an objective standards, and not an individual factual enquiry about hours ordinarily or usually worked. 17
(d) As to context, the relevant provision is not directed to compensating an individual for the time of his or her labour, or for loss sustained in not being able to work his or her normal hours; rather it is part of a regime implemented by legislation using the taxation power to encourage and facilitate national savings. 18
(e) Further, the context is the payment of salaries and wages in the workplace. In that context, the word “ordinary” and the phrase “ordinary hours” have assumed different meanings depending on context and circumstance. There are circumstances and contexts where the word and phrase can be seen to refer to regular, normal, customary or usual hours; and there are circumstances or contexts where the word and phrase can be seen to refer to the hours of work referred to in applicable industrial instruments as standard hours to be paid at ordinary rates, as opposed to additional hours (even if required, usual, regular, normal or customary) and paid at a special or higher rate. As such, the word and phrase can be seen to reflect the long-recognised distinction between ordinary hours of work and overtime. 19
(f) The statutory purpose of the superannuation legislation is to secure for workers a minimum level of superannuation by the incentive of the charge, through an efficient mechanism based on self-assessment by employers and administration by employers and the Australian Tax Office. That simplicity and efficiency of administration is threatened if the necessary calculation for each employee, for each quarter is based on an individual factual enquiry and is not calculated by reference to the standard hours at ordinary rates in relevant industrial instruments. Usual or ordinary hours may well vary from employee to employee, and, over time, for the same employee. What is customary or usual would be a factual assessment over the relevant period (each quarter), referable to individuals, and open to factual and individual debate. The statutory purpose of simplicity and efficiency for a minimum level of superannuation would be undermined by the need to find, factually, usual or normal hours for each employee in each quarter; the purpose would, on the other hand, be supported by an interpretation that looked to the relevant industrial instrument for standard hours at ordinary rates of pay. It is overly simplistic to say that the legislation was intended to benefit employees therefore should be construed beneficially in their favour. The legislation has a broader social and economic purpose, and whilst for the benefit of Australian employees generally, should be construed with a view to practical efficiency and overall fairness. 20
(g) The enactment history assists in understanding “ordinary time earnings” as earnings referable to standard hours at ordinary rates of pay. It is not just the number of hours, but also their character as paid at an ordinary rate. 21
(h) The text, context, purpose and enactment history do not direct one to a meaning constituted solely by hours (factually) usually worked. They tend to a meaning that provides for an objective standard that aids in simplicity and lack of complexity. The use, from 1992, of the relevant phraseology in a context of industrial awards and instruments; the well-known conception contained within industrial awards and instruments of standards hours at ordinary rates of pay, and of overtime; the need for the phraseology to be practical, general and flexible to pick up all circumstances of employment; and the need for the task set for the employer to administer and the ATO to audit, quarter by quarter, individual by individual, to be as simple or non-complex as possible all direct one to a meaning that reflects those considerations. The meaning that best reflects these considerations and the text, context, purpose and history of the provision is earnings in respects of ordinary or standard hours of work at ordinary rates of pay as provided for in a relevant industrial instrument, or contract of employment, but if such does not exist (and there is no distinction between ordinary or standard hours and other hours by reference to rates of pay) earnings in respect of the hours that the employee has agreed to work or, if different, the hours usually or ordinarily worked. 22
(i) This meaning adopts as central (to the extent that it is present) the distinction long familiar in the industrial and employment context, and widely understood, between earnings for ordinary time and earnings for an additional or greater number of hours beyond ordinary or standard hours. If in a particular context such distinction does not exist in the remuneration for the labour provided, the required comprehensiveness and flexibility of the meaning will fix upon the hours agreed to be worked, or the hours normally worked if different. This is not to give a variable meaning to the expression, it is to recognise that the context and particular circumstances will provide by way of factual application, the answer to the reach of the phrase which has a simple meaning by reference to real life. 23
(j) It is necessary to turn to the various industrial instruments and agreements to identify the “ordinary time earnings” for a particular employee. 24
(k) The definition and the phrase “earnings in respect of ordinary hours of work” in it is not directed to additional hours, at a higher rate, whether required or not. 25
(l) The superannuation legislation is not intended to give superannuation benefits for the total salary. It was and is a system to encourage national savings for retirement based on standard hours at ordinary rates. Greater superannuation than this minimum amount encouraged by the superannuation guarantee levy can be bargained for. 26
[52] In Bluescope, Justice Collier concurred with Chief Justice Allsop on the most significant issues in the appeal, but disagreed as to the outcome of grounds 5, 6, 7 and 8 of the notice of appeal. Justice Rangiah agreed with Allsop CJ. In her consideration of the expression “earnings in respect of ordinary hours of work” in s 6(a)(i) of the SGA Act, Collier J found that the words “earnings in respect of” cannot be concerned with simply the hours customarily or typically worked; those words are concerned with earnings referable to ordinary hours. 27
[53] According to clause 11.7 of the Agreement, full-time employees (such as the Applicants) are “employed to work a maximum of 38 ordinary hours per week plus reasonable additional hours”. Ordinary hours must “not exceed an average of 38 per week and not exceed 152 in 28 days unless agreed” otherwise. 28 Standard ordinary hours for an employee working a five day roster are “a maximum of 7.6 hours per day”.29 Standard ordinary hours for an employee working a fixed or rotating four day roster are “a maximum of 9.5 hours per day”.30 Ordinary hours are paid at the “ordinary hourly rate” prescribed in Appendix 1 of the Agreement.31
[54] The Agreement permits Bindaree Beef to “require an employee to work reasonable overtime, at overtime rates”. 32 Overtime is payable under the Agreement for “All time worked outside the standard ordinary working hours on any shift”.33
[55] It follows that, in the context of the Agreement, an employee’s “earnings in respect of ordinary hours of work” are their earnings in respect of their 38 ordinary hours of work per week (or, if averaging is applied under the terms of the Agreement, 76 ordinary hours per fortnight or 152 ordinary hours per four week cycle). Payment for overtime worked by an employee under the Agreement does not form part of the employee’s “earnings in respect of ordinary hours of work”. Such overtime is paid at the higher rate specified in the Agreement, not the ordinary rate for ordinary hours of work.
[56] The attendance bonus under clause 26 of the Agreement is not paid to an employee simply to reward or compensate the employee for cooperating with the employer by making themselves available to work the hours requested by Bindaree Beef. The employee must actually complete all the hours of work requested of them by Bindaree Beef (provided that any requests to work overtime must be reasonable) to become entitled to the attendance bonus, subject to limited exceptions such as approved days taken in lieu of work previously completed on public holidays and approved “swap” days. So much is clear from the expression “has worked” in clauses 26.1 and 26.2 of the Agreement. It follows that one of the preconditions to an entitlement to an attendance bonus is the employee completing all the ordinary hours of work requested of them by Bindaree Beef in a given week, subject to the limited exceptions set out in clause 26. It would obviously be rare for Bindaree Beef not to require a full-time employee to work any ordinary hours of work in a particular week (outside of annual or other leave).
[57] Because one of the pre-conditions to an employee becoming entitled to an attendance bonus under clause 26 of the Agreement is the employee completing all the ordinary hours of work requested of them by Bindaree Beef in a given week, there is a discernible and rational link between the earnings in question (an attendance bonus) and the employee’s ordinary hours of work. Put another way, there is a close relationship between the ordinary hours of work and the very act or omission which gives rise to the earnings in question (an attendance bonus). The relationship between the two subject matters is the completion of all ordinary hours requested by Bindaree Beef in a given week, which entitles the employee, assuming all other requirements are met, to the earnings in question (an attendance bonus). The fact that an employee may cease to become entitled to an attendance bonus in a particular week in circumstances where they have worked all the ordinary hours of work requested of them but failed to work part, or all, the overtime reasonably required of them in the week does not result in the clear connection between ordinary hours of work and the entitlement to an attendance bonus ceasing to be a relevant connection. In my opinion, there is clearly an ongoing and operative connection or relatedness between the attendance bonus and ordinary hours of work such as to render the attendance bonus as earnings in respect of those hours of work.
[58] Further and relatedly, the purpose of the attendance bonus is to reward an employee for working all the hours requested of them, including ordinary hours and subject to the requirement that any overtime requested must be reasonable. Having regard to that purpose, an attendance bonus paid in accordance with clause 26 of the Agreement fits comfortably within the meaning of the expression “earnings in respect of ordinary hours of work”.
[59] In my view, none of the arguments put forward by Bindaree Beef point to any contextual consideration which would limit the construction of the broad words used by Parliament in s 6(a)(i) of the SGA Act in the manner contended for by Bindaree Beef.
[60] I do not accept Bindaree Beef’s contention that the legislation suggests in strong terms that it is concerned to limit the employer’s obligation in relation to the payment of superannuation to those payments to an employee which can be unequivocally identified as being a reward or compensation for the working of ordinary hours. As Allsop CJ made clear in Bluescope, the purpose of the relevant statutory provision is not to compensate an individual for the time of his or her labour; rather it is part of a regime implemented by legislation using the taxation power to encourage and facilitate national savings. Further, the text does not support Bindaree Beef’s narrow construction of the phrase “in respect of ordinary hours” to mean “for the purpose of direct compensation for working ordinary hours”. Parliament did not use an expression such as “earnings for ordinary hours” or “earnings as direct compensation for working ordinary hours”. Instead, Parliament used the broad expression “in respect of” to describe the necessary connection required between the earnings and ordinary hours of work in order to satisfy the definition of “ordinary time earnings”. In addition, if Bindaree Beef’s construction of “ordinary time earnings” were correct, payments such as annual leave and sick leave made to an employee during their employment would not form part of the employee’s “ordinary time earnings” because such payments are not made for the purpose of direct compensation for working ordinary hours. Such an outcome would be at odds with the ATO Ruling. 34
[61] As to the statutory purpose of simplicity and efficiency for a minimum level of superannuation to be paid, I do not accept Bindaree Beef’s contention that it would be to contradict these considerations to determine that a lump sum payment such as the attendance bonus was subject to a requirement to make superannuation contributions. There is no need to undertake an individual factual enquiry to determine the usual or normal hours of work for a particular employee in a quarter in order to determine whether an attendance bonus paid to an employee falls within the meaning of the employee’s “ordinary time earnings”. Either an attendance bonus was paid to an employee in a particular week, or it was not. Bindaree Beef does not need to enquire beyond whether attendance bonus payments were made to an employee in a particular quarter. If they were paid, it is simply a question of whether such payments, properly characterised, fall within the meaning of “ordinary time earnings” in s 6(a)(i) of the SGA Act. That is a legal question, not a question of fact.
[62] Further as to the requirement to construe the superannuation legislation with a view to practical efficiency and overall fairness, Bindaree Beef contends that if the AWU’s construction is correct, then it would be necessary to separate out what proportion of the attendance bonus payment is made in respect of ordinary hours and what proportion of the attendance bonus payment is made in respect of overtime hours in a particular week in order to determine the amount of superannuation which must be contributed to an employee’s superannuation fund. I reject this argument. The fact that, in a particular week, an employee must work, say, two hours of overtime reasonably requested of them, in addition to their ordinary hours of work for the week, to become entitled to the flat weekly attendance bonus does not mean that the whole of the attendance bonus, or any portion of it, ceases to be properly characterised as earnings in respect of ordinary hours of work. The whole attendance bonus constitutes earnings in respect of ordinary hours of work because the bonus has the necessary degree of connection, as described above, with the employee’s ordinary hours of work. In my view, Bindaree Beef’s argument on this point amounts to an impermissible attempt to interpret s 6(a)(i) of the SGA Act as though it read “earnings only in respect of ordinary hours”.
[63] I do not accept Bindaree Beef’s argument that the payment of an attendance bonus to an employee covered by the Agreement is analogous to the payment of an on-call allowance. The payment of an on-call allowance is made to an employee to compensate the employee for being available to work, if required to do so by the employer, at particular times outside of the employee’s normal (ordinary) hours of work. In contrast, the attendance bonus is paid to an employee as a reward for working all of the hours requested of them, including ordinary hours and overtime reasonably requested by the employer.
[64] Bindaree Beef relies on the history of the Agreement and the fact that, for most classifications of employees covered by the Agreement, the attendance allowance paid under the previous enterprise agreement was converted into a non-contingent increase in their base rate of pay under the Agreement, whereas for other classifications the attendance bonus remains payable if certain conditions are met. Whilst I accept this history, I am not persuaded that it shines any light on the proper construction of the expression “ordinary time earnings” or the application of that construction to the payment of an attendance bonus under clause 26 of the Agreement to particular classifications of employees. Assessed objectively, the history demonstrates that the makers of the Agreement bargained to convert a contingent benefit for some employees into a guaranteed payment, while for other employees the benefit remains contingent on the satisfaction of particular criteria. The history does not indicate, one way or the other, whether there was an objective intention for the attendance bonus to be subject to superannuation contribution obligations on the part of Bindaree Beef.
[65] Bindaree Beef submits that the explanations provided to the negotiating parties to the Agreement (which did not include the AWU) and the explanation to employees in the document attached to the Form F17 are consistent with the notion that the attendance bonus was, and was intended by the negotiating parties to be, in respect of the employee having successfully completed all hours requested of them in any week, without regard to the composition of those hours by reference to any other descriptors such as ordinary time or overtime. I reject Bindaree Beef’s contention that this material may be used to assist, or that it does assist in the context of the Dispute, in interpreting the Agreement. First, there is no contest between the parties, or other ambiguity, as to the proper construction of clause 26 of the Agreement. Whether one looks just at the text of clause 26 or also has regard to the explanations provided to negotiating parties and/or employees, there is no doubt that clause 26 obliges Bindaree Beef to pay an attendance bonus to an employee (in the relevant classifications) if the employee has worked all the hours of work requested of them by Bindaree Beef for the week, provided that any overtime requested of the employee must be reasonable. Secondly, at issue in the Dispute is the proper construction of the expression “ordinary time earnings” in s 6(a)(i) of the SGA Act and the application of that meaning to an attendance bonus paid pursuant to clause 26 of the Agreement. The explanations provided to the negotiating parties and employees in relation to the reason or purpose of the attendance bonus do not, and could not, assist in answering those questions.
[66] For the reasons given, I am of the opinion that an attendance bonus paid to an employee pursuant to clause 26 of the Agreement constitutes “earnings in respect of ordinary hours of work” within the meaning of s 6(a)(i) of the SGA Act.
Conclusion
[67] I determine that the answer to the question for arbitration is “yes”. That is, Bindaree Beef is required to pay superannuation on the attendance bonus payable under clause 26 of the Agreement by reason of the operation of clause 33.4 of the Agreement, which obliges Bindaree Beef to “contribute to the elected fund the percentage amount required by the Superannuation Guarantee Levy”.
DEPUTY PRESIDENT
Appearances:
Mr A Sage, solicitor of the AWU, for the Applicants
Mr A Herbert, of counsel, for the Respondent
Hearing details:
2021.
Newcastle (by video conference):
8 March.
Printed by authority of the Commonwealth Government Printer
<PR729684>
Annexure A
1 Bluescope Steel (AIS) Pty Ltd & Anor v AWU [2019] FCAFC 84 (Bluescope) at [35]
2 Bluescope at [35]
3 (2000) 201 CLR 148
4 (1998) 165 CLR 642 at 653-4
5 Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at [59]; Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union[2014] FWCFB 2042 at [26]-[37]
6 [2017] HCA 34 (Kiefel CJ, Nettle and Gordon JJ)
7 Ibid at [14]; also see Australian Mines and Metals Association Inc v CFMMEU [2018] FCAFC 223 at [76] – [86]
8 [2017] FWCFB 3005
9 [2020] FCAFC 123 at [65]
10 Ocean Marine Insurance Co Ltd v CSR Ltd [2012] NSWSC 1229 at [145]
11 Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at 111, cited in State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 at 416
12 J & G Knowles & Associates Pty Ltd v Commissioner of Taxation [1999] FCA 1060 at [10]
13 J & G Knowles & Associates Pty Ltd v Commissioner of Taxation [1999] FCA 1060 at [14]; Technical Products Pty Ltd v State Government Insurance Office (Q)(1989) 167 CLR 45 at 47-48
14 Workers Compensation Board of Qld v Technical Products Pty Ltd (1988) 165 CLR 642 at 653-654; State Government Insurance Office (Qld) v Rees [1979] HCA 52; (1979) 144 CLR 549 at 561; Technical Products Pty Ltd v State Government Insurance Office (Qld) [1989] HCA 24; (1989) 167 CLR 45 at 47
15 Bluescope at [25]
16 Ibid
17 Ibid at [34]
18 Ibid at [37]
19 Ibid at [38]
20 Ibid at [43]
21 Ibid at [44]
22 Ibid at [56]
23 Ibid at [57]
24 Ibid at [78]
25 Ibid at [117]
26 Ibid at [121]-[122]
27 Ibid at [323]
28 Clause 17.1 of the Agreement
29 Clause 17.8 of the Agreement
30 Clause 17.9 of the Agreement
31 Clause 21.1 of the Agreement
32 Clause 18.2 of the Agreement
33 Clause 18.1 of the Agreement
34 ATO Ruling at [235]
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