Penleigh and Essendon Grammar School

[2013] FWCA 2989

[2013] FWCA 2989

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Penleigh and Essendon Grammar School
(AG2013/5915)

PENLEIGH AND ESSENDON GRAMMAR SCHOOL (TEACHER, KINDERGARTEN TEACHER, KINDERGARTEN ASSISTANT AND SCHOOL ASSISTANT STAFF) AGREEMENT 2012

Educational services
COMMISSIONER BISSETT	MELBOURNE, 17 MAY 2013

Application for approval of the Penleigh and Essendon Grammar School (Teacher, Kindergarten Teacher, Kindergarten Assistant and School Assistant Staff) Agreement 2012 .

[1] Penleigh and Essendon Grammar School (the Applicant) has made an application for the approval of the Penleigh and Essendon Grammar School (Teacher, Kindergarten Teacher, Kindergarten Assistant and School Assistant Staff) Agreement 2012 (the Agreement). The Agreement was made on 26 March 2013 and lodged with the Fair Work Commission (the Commission) in accordance with s.185 of the Fair Work Act 2009 (the Act) on 8 April 2013.

[2] The application for approval was accompanied by an employer statutory declaration (Form F17).

[3] The Independent Education Union of Australia (IEU) completed and lodged a ‘Declaration of employee organisation to an application for approval of enterprise Agreement’ (Form F18) in which it indicated that it supported the approval of the Agreement subject to it passing the better off overall test and that, should the Agreement be approved, it wished to covered by the Agreement pursuant to s.183 of the Act.

[4] On response to the question as to whether the IEU agreed or otherwise with the Employer’s statutory declaration, the IEU indicated that it disagreed with the employer’s response that the Agreement did not contain any terms of employment that are less beneficial than the NES.

[5] In particular the IEU takes issue with clause 30 of the Agreement. Clause 30 provides for the payment of annual leave loading. Clause 30 states:

30.1 An Employee who has given service for which salary has been received throughout the School Year is entitled to a leave loading of 17.5% on a maximum of four weeks’ annual leave.

30.2 An Employee who is employed for part only of a School Year is entitled to be paid leave loading as follows:

30.3 An Employee who ceases employment with the Employer prior to the commencement of third term in (sic) not entitled to leave loading from the Employer.

30.4 An Employer may pay leave loading to the Employee with the first salary payment in December of that year at the rate of pay applicable on 1 December or to the Employee with each salary payment throughout the School Year by increasing the annual rate of pay as at 1 February of that year, or as subsequently varied, by 1.346 per cent.

[6] The IEU say that clause 30.3 is contrary to s.90(2) of the NES. It submits that the formula at clause 30.2 of the Agreement makes it clear that the calculation of annual leave loading occurs on a progressive basis based on the number of weeks worked. Further it submits that s.90(2) of the Act provides that when the employment ends the employer is required to pay to the employee the amount that would have been payable had the employee taken that period of leave.

[7] The IEU therefore seek that, to the extent that clause 30.3 is contrary to the NES that it not operate.

[8] On receipt of the IEU’s declaration I sought further submissions from both the Applicant and the IEU on this issue.

Submissions

Penleigh and Essendon Grammar School

[9] The Applicant says that the NES requires that an employee be paid their base rate of pay for a period of annual leave. If employment ends and the employee has a period of untaken leave the employer is required to pay to the employee the amount that would have been payable had the employee taken the period of leave. That amount does not include any leave loading. Section 90 of the Act, on its plain reading, has no provision for the payment of annual leave loading in the payment of annual leave on termination.

[10] The Applicant submits that the Educational Services (Teachers) Award 2010 (the Teachers Award) provides for annual leave loading at clause 23. That clause states (in part):

23.1 This clause of the award provides for industry specific detail and supplements the NES which deals with annual leave.

23.2 An employee who has served throughout the school year is entitled to a leave loading of 17.5% on four weeks’ annual leave. The loading will normally be paid:

(a) at the time that the employee is paid annual leave or pro rata annual leave; or

(b) on the termination of employment by either party.

[11] Clause 23.2 of the Teachers Award provides for the payment of leave loading where an employee works the full school year. It does not provide for the payment of annual leave loading on termination of employment where the full year has not been worked.

[12] The Applicant submits that the Agreement cannot breach the NES in circumstances where the NES does not deal with the matter. The Agreement provides a benefit to employees that they would otherwise not have.

IEU

[13] The IEU submits that the plain reading of s.90(2) of the Act puts a person whose employment is terminated, regardless of any condition surrounding the termination, in the position they would have been with respect to the payment of annual leave had the employment not been terminated and the annual leave taken.

[14] The IEU rely, in support of its proposition, on a Memorandum of Advice (the Advice) provided by Jeffrey Phillips SC to the Fair Work Ombudsman (FWO) on the operation of s.90(2) of the Act. That advice concludes that annual leave loading is payable pursuant to s.90(2) of the Act ‘if that annual leave loading is payable pursuant to an award, agreement or contract for any annual leave period taken [...]’. That advice, the IEU says, has been adopted by the FWO.

[15] The IEU refers me to a decision of McKenna C in the application for approval of the Ingams Enterprises (Byron Bay) Processing Enterprise Agreement 2012 1 in which the Commissioner sought an undertaking from the employer that a clause that operated to exclude the payment of annual leave loading on termination of employment would not operate to the extent that it was contrary to the NES.

[16] The IEU also refers me to a decision of Hampton C in the application for approval of the Goodstart Early Learning Enterprise Agreement 2012 2. In that case whilst annual leave loading was payable for leave taken, it was not payable for leave paid out in termination of employment. Hampton C found that the agreement provision was not contrary to the NES, although he found the ‘alternative position is strongly arguable.’

[17] The IEU submits that the Teachers Award provides for annual leave loading to supplement the NES. Clause 23.2 provides that annual leave loading is paid when an employee is paid annual leave or pro rata annual leave when employment is terminated. The other relevant Award, Educational Services (Schools) General Staff Award 2010 (the General Staff Award) is silent on the payment of annual leave loading in termination of employment. In any event it is submitted that the Award provisions are not strictly relevant to the matter at hand.

Consideration

[18] Section 90 of the NES states:

90 Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay forthe employee’s ordinary hours of work in the period.

(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

[19] I note the advice of Jeffrey Phillips SC on this matter. In particular:

annual leave loading pursuant to s.90(2), if that annual leave loading is payable pursuant to an award, agreement or contract for any annual leave period taken, [it] is also payable on accrued annual leave on termination of employment.

[Emphasis original]

[20] The first question to determine is if annual leave loading is payable pursuant to the Agreement.

[21] The Agreement provides for the payment of annual leave loading to an employee who has worked the full school year (clause 30.1). A formula sets out how annual leave loading is calculated if an employee does not complete the entire school year (clause 30.2).

[22] The entitlement to annual leave loading is then qualified for employees who cease employment prior to the commencement of third term (clause 30.3).

[23] If an employee ceases employment at the end of the school year or sometime between the commencement of third term and the end of the school year that employee is entitled to receive annual leave loading. As long as the school pays annual leave loading on any leave paid out in such circumstances it seems to me that there is no conflict with s.90(2) of the Act as postulated by the IEU.

[24] The Agreement does not provide an entitlement to annual leave loading for any leave that accumulates and is paid out on termination of employment prior to the commencement of third term. The wording of the Agreement does not suggest that there is some entitlement to annual leave loading if employment does not extent to third term beyond that which is withheld if employment ceases.

[25] This Agreement is different to that considered by Hampton C and McKenna C. In each of those cases there was an absolute, unrestricted, right to annual leave loading. This absolute right was removed by virtue of the cessation of employment. In this case the right to annual leave loading is restricted by the operation of the Agreement itself.

[26] The IEU suggest that clause 30.2 of the Agreement makes it clear that annual leave loading accrues on a progressive basis. I cannot agree with this view. Clause 30.2 provides a formula for calculating the payment of annual leave loading where only part of the year is worked but it must be read in conjunction with the rest of the clause, including the restriction in clause 30.3.

[27] Clause 30 of the Agreement does not operate to restrict access to annual leave loading that would otherwise be payable had the leave been taken. If an employee does access annual leave during the school year (say in second term) as long as they return from leave and their employment goes beyond the commencement of third term they will receive annual leave loading.

[28] Even if I accept the IEU submission on the operation of s.90(2) of the Act, I do not, for the reasons given above, consider that clause 30.3 of the Agreement is a term of the employment that is less beneficial that the NES.

Conclusion

[29] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

[30] The IEU has given notice under s.183 of the Act that it wants the Agreement to cover it. As required by s.201(2), I note that the Agreement covers the IEU.

[31] The Agreement is approved. In accordance with s.54(1) it will operate from 24 May 2013. The nominal expiry date of the Agreement is 17 May 2017.

COMMISSIONER

 1   [2012] FWA 8668.

 2   [2012] FWA 2408.

Printed by authority of the Commonwealth Government Printer

<Price code G, AE401232  PR536595>