RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union
[2015] FWCFB 8554
•18 December 2015
| [2015] FWCFB 8554 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Australian Municipal, Administrative, Clerical and Services Union
(C2014/7606)
VICE PRESIDENT HATCHER | SYDNEY,18 DECEMBER 2015 |
Appeal against decision [[2014] FWC 7241] of Commissioner Roe at Melbourne on 16 October 2014 in matter number B2013/1567.
Introduction
[1] This decision concerns an ongoing dispute involving RACV Road Service Pty Ltd (RACV) and its employees represented by the Australian Municipal, Administrative, Clerical and Services Union (ASU) concerning the correct method of deducting annual leave and personal/carer’s leave entitlements under the RACV Roadside Assistance Centre Enterprise Agreement 2014-2017 (Agreement) that have been taken by employees. The leave entitlements in the Agreement are expressed in hours rather than days. The existing longstanding practice was to deduct 7.6 hours for each day upon which leave was taken, regardless of the number of hours actually taken on the day. RACV contended that this practice was inconsistent with the relevant provisions of the Agreement, and that the proper approach was to deduct the actual hours of leave taken. The ASU maintained that the existing practice should continue. In a decision issued on 16 October 2014 which dealt with this issue as well as a range of other issues, Commissioner Roe determined that the existing practice was not inconsistent with the Agreement and should remain.
[2] RACV appealed this aspect of the Commissioner’s decision. In a decision issued on 11 May 2015 1 (initial decision), we determined that the existing practice was inconsistent with the Agreement, and the Commissioner erred in finding otherwise. However we identified the problem that because the NES entitlements to annual leave and personal/carer’s leave were expressed in weeks (in the case of annual leave) and days (in the case of personal/carer’s leave), the operation of the leave provisions in the Agreement upon RACV’s shiftworker roster system might result in employees in some circumstances receiving less than their NES leave entitlements. That had the potential consequence that the leave provisions of the Agreement had no effect by virtue of s.56 of the Fair Work Act 2009 (FW Act). In paragraph [90] of the initial decision we said:
“[90] The potential consequence of our analysis is that clause 15.1(a)-(c) and clause 16.1(a)-(b) of the Agreement, properly construed, exclude the provisions of the NES concerning annual leave and personal/carer’s leave entitlements contrary to s.55(1) of the FW Act, and therefore have no effect by virtue of s.56. The further potential consequence is that the issue which the Commissioner was required to determine, namely the deduction from an employee’s accrued leave balance that is to occur when annual or personal/carer’s leave is taken, is to be resolved by reference to our interpretation of the NES provisions. However because these issues did not arise in the submissions of the parties or during the hearing, we will not express any final conclusion about them at this stage. We have decided to give the parties an opportunity to make further submissions on this issue in the light of the conclusions concerning the proper interpretation of the NES provisions and the Agreement which we have stated. If the parties however consider that further conciliation of the matter would be appropriate at this stage before the appeal proceeds further, we will make a member of the Full Bench available for that purpose.”
[3] We granted permission to appeal on this basis. Further conciliation having failed to resolve the matter, we received further written submissions from the parties and conducted a further hearing of the matter on 21 September 2015. This decision determines the issues left outstanding in the initial decision.
Preliminary issue - do shiftworkers have an NES entitlement to five weeks’ annual leave?
[4] In our analysis of the operation of the annual leave provisions in the Agreement in our initial decision, we assumed that shiftworkers under the Agreement had an NES entitlement to five weeks’ annual leave. 2 However a question arose in the second hearing as to whether that was in fact the case. It is necessary to resolve that question first before we turn to our consideration of the issues outstanding from the initial decision.
[5] The NES entitlement to annual leave is provided for in s.87(1) of the FW Act as follows:
Amount of leave
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
(i) a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
(iii) the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).
Note: Section 196 affects whether the FWC may approve an enterprise agreement covering an employee, if the employee is covered by a modern award that is in operation and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
[6] The effect of s.187(4) of the FW Act is that satisfaction of s.196, which is referred to in the note to s.87(1), is a pre-requisite for the approval of an enterprise agreement. Section 196 provides:
196 Shiftworkers
Application of this section
(1) This section applies if:
(a) an employee is covered by an enterprise agreement; and
(b) a modern award that is in operation and covers the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
Shiftworkers and the National Employment Standards
(2) The FWC must be satisfied that the agreement defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
Note: Section 87 provides an employee with an entitlement to 5 weeks of paid annual leave if an enterprise agreement that applies to the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
[7] The position may therefore be summarised as follows:
- An employee covered by an enterprise agreement will only have an NES entitlement to five weeks’ annual leave if the enterprise agreement defines the employee to be a shiftworker for the purposes of the NES.
- If an operative modern award covers an employee and defines the employee as a shiftworker for the purposes of the NES, any enterprise agreement which also covers that employee must also define the employee as a shiftworker for the purposes of the NES.
- If an enterprise agreement does not define the employee as a shiftworker for the purposes of the NES in circumstances where the modern award covering the employee does, then the enterprise agreement cannot be approved (unless the matter is dealt with by acceptance of a suitable undertaking under s.190).
[8] At the hearing, a member of this bench drew the parties’ attention to the fact that the Agreement contained no express provision which defined any employees as shiftworkers for the purpose of the NES, with the potential consequence that employees performing shift work under the Agreement only had an NES entitlement to four weeks’ annual leave. Additionally, because clause 29.2 of the Clerks - Private Sector Award 2010 3(Award) defined “a seven day shiftworker who is regularly rostered to work on Sundays and public holidays in a business in which shifts are continuously rostered 24 hours a day for seven days a week” as a shiftworker for the purpose of the additional week’s annual leave in the NES, and that award appeared to cover employees covered by the Agreement, the possibility that the Agreement was not validly approved was also raised.
[9] The parties acknowledged that there was no express provision contained in the text of the Agreement defining any employees as shiftworkers for the purpose of the NES. However they pointed to clause 4 of the Agreement, which provides as follows:
“Clause 4. Explanatory Note
The Agreement provides for minimum conditions and is divided into Parts A, B and C.
Part A contains the Common Conditions that apply to all employees of RACV.
Part B contains provisions that apply to all employees employed at the RACV Roadside Assistance Centre Noble Park, provided that Part B does not apply to any managers at the RACV Roadside Assistance Centre Noble Park or any other work site engaged in Roadside Assistance Duties.
Part C only applies to employees employed at the RACV Roadside Assistance Centre and contains the Clerks - Private Sector Award 2010 subject to the exclusion of any terms which would be unlawful terms under sections 194 and 195 of the Fair Work Act 2009.
The Award is part of this Agreement and does not apply to or have effect in respect of terms and conditions of employment set out in Parts A and B of this Agreement.
Part B of this Agreement shall override Part A to the extent of any inconsistency. Further to this some named Sections of Part A are specifically excluded from applying to the Roadside Assistance Centre or any other work site engaged in Roadside Assistance Duties, and these are spelled out in Part B.
Should both Part A and Part B be silent on terms or conditions then Part C shall prevail.
This Agreement operates in conjunction with the National Employment Standards (NES). Certain provisions of this Agreement may supplement the NES but nothing in this Agreement will operate such as to provide a detrimental outcome for employees as compared to an entitlement under the NES.”
[10] The parties submitted that the effect of clause 4 was to incorporate by reference, inter alia, clause 29.2 of the Award, so that the legal effect of the Agreement was that it did define employees performing the type of shift work referred to in that award provision as shiftworkers for the purpose of the NES.
[11] We accept as a general proposition that the effect of the fourth paragraph of clause 4 is to incorporate by reference the provisions of the Award as Part C of the Agreement. Part C is said only to apply with respect to “employees employed at the RACV Roadside Assistance Centre”, but clause 2 makes it clear that the Agreement does not apply to employees outside the RACV Roadside Assistance Centre in any case. The real issue is the relevant effect of the fifth and seventh paragraphs of clause 4. Clause 6 (in Part A) contains definitions of “shift work” and “shift workers”, clause 15.1(b) (also in Part A) deals with the annual leave entitlements of shiftworkers under the Agreement, and clause 39 (in Part A) and clauses 87-89 (in Part B) set out the terms and conditions applicable to shiftworkers under the Agreement. On one view, the terms and conditions concerning shift work are set out in Parts A and B, and therefore (by virtue of the fifth paragraph of clause 4) clause 29.2 of the Award, although notionally incorporated by reference, has no operative effect.
[12] Although that is a readily arguable proposition, we prefer the view that the subject matter of clause 29.2 is to be more narrowly defined. It is specifically concerned with the NES annual leave entitlements of shiftworkers, not their entitlements under the Agreement. No provision in Part A or B deals with this subject; they are silent on the subject matter. Under the seventh paragraph of clause 4 therefore, Part C “shall prevail” and clause 29.2 of the Award is an operative provision of the Agreement.
[13] The decision which approved the Agreement 4 contained a finding that, among other things, the requirements of s.187 had been satisfied. Implicitly that means s.196 was considered to have been satisfied. In circumstances where that implicit finding was clearly open on the language of clause 4, as discussed immediately above, there is no basis now to make a different finding. We would not depart from a previous decision of the Commission unless we were satisfied that it was clearly wrong. That cannot be said to be the case with the decision in which the Agreement was approved.
[14] Therefore we consider that 24 hour/7 day shiftworkers under the Agreement have an NES entitlement to five weeks’ annual leave. The employees the subject of the dispute are shiftworkers of this nature.
Submissions
[15] RACV submitted that there could be no inconsistency between the leave provisions of the Agreement and the NES because the last paragraph of clause 4 of the Agreement provided that the Agreement would not operate such as to provide a detrimental outcome for employees as compared to an entitlement under the NES. Clause 15 was to be read as subject to clause 4. That meant, it was submitted, that the Agreement was “self-correcting”, so that any shortfall from the NES entitlements to annual leave produced by clause 15 or personal/carer’s leave produced by clause 16 was required, by force of clause 4 of the Agreement, to be remedied. It was submitted that the appeal should be upheld on the basis of the conclusion in paragraph [85] of the initial decision that the deduction of a flat 7.6 hours for each day in which leave was taken was inconsistent with the Agreement, and beyond that it was a matter for RACV to implement systems which achieved compliance with the Agreement. In the alternative, RACV advanced detailed submissions as to how employees might be rostered and leave provided in a way which ensured compliance with the Agreement and the NES.
[16] The ASU submitted that, subject to one qualification, it embraced the propositions tentatively expressed in paragraph [90] of the initial decision to the effect that clauses 15.1(a)-(c) and 16.1(a)-(b) excluded the provisions of the NES concerning annual leave and personal/carer’s leave, and that the issue of deductions from employees’ leave balances were to be resolved by reference to the Full Bench’s interpretation of the NES provisions in the initial decision. The qualification was that s.56 did not operate to extinguish clauses 15.1(a)-(c) and 16.1(a)-(b) where those clauses in their operation did not derogate from the NES provisions. Therefore the answer to the question the Commission was required to determine was that the issue of the deduction to be made from an employee’s leave balance on account of leave taken was to be resolved by reference to the Full Bench’s interpretation of the Agreement provisions in the initial decision except where that interpretation resulted in an outcome which would offend the operation of the NES provisions, in which case the interpretation of the NES provisions in the initial decision was to apply. The practical result, the ASU submitted, was that RACV would be required to keep “two sets of books” in relation to annual leave and personal/carer’s leave in order to ensure that both the Agreement and the NES entitlements were afforded to employees.
Consideration
[17] We accept RACV’s submission that clauses 15.1(a)-(c) and 16.1(a)-(b) of the Agreement are to be interpreted as operating subject to the last paragraph of clause 4 of the Agreement. The effect of clause 4 is that no provision of the Agreement, in its operation, may lead to a result whereby any employee receives less than his or her entitlements under the NES. The practical effect of clause 4 is therefore that RACV must “top up” the entitlement of an employee in any case where there would otherwise be a detrimental outcome when compared to the NES. Therefore, on the annual leave example set out in paragraph [88] of the initial decision and the personal/carer’s leave examples set out in paragraph [89], no shortfall compared to the NES could occur because clause 4 of the Agreement requires RACV to make good any potential shortfall that might arise. There is no exclusion of the NES to which s.56 of the FW Act might apply because clause 4 ensures, as RACV submitted, that the Agreement is “self-correcting” vis-à-vis the NES.
[18] The practical effect of this conclusion is as follows:
(1) RACV shiftworkers who work shifts of the type described in clause 29.2 of the Award (as incorporated into the Agreement) must receive, for each year of service, 190 hours or five “weeks” of annual leave (in the sense discussed in paragraph [82] of the initial decision), whichever is the higher.
(2) All employees must receive the personal/carer’s leave entitlement provided for in clause 16.1(a)-(b) of the Agreement, or 10 “days” personal/carer’s leave (in the sense discussed in paragraph [82] of the initial decision), whichever is the higher.
[19] We are not inclined to attempt to prescribe the means by which RACV is to ensure that employees receive these entitlements, particularly as there is nothing before us to suggest that the potential for underpayment of the NES entitlements to annual leave and personal/carer’s leave which we identified in the initial decision has yet manifested itself in reality. It is up to RACV to take the necessary steps and put in place the systems to ensure that it complies with its obligations under the Agreement as it has been interpreted in the initial decision and this decision. Whether that involves “two sets of books” or not is a matter for RACV’s management to determine. If any employees come to the view that they have not received their full annual leave or personal/carer’s leave entitlements under the Agreement as we have identified them, they may agitate that matter under the disputes procedure in clause 52 of the Agreement or institute enforcement proceedings in a relevant court.
[20] RACV has been successful in its contention that the current method of deduction from leave entitlement balances to account for leave taken does not accord with the Agreement. Accordingly it is entitled to have its appeal upheld and the relevant part of the decision under appeal quashed. The dispute can otherwise be regarded as having been determined in accordance with the initial decision and this decision.
Orders
[21] We order as follows:
(1) The appeal is upheld.
(2) Paragraphs [58]-[120] of the decision of Commissioner Roe issued on 16 October 2014 ([2014] FWC 7241) are quashed.
(3) The dispute concerning the correct method of deduction from employees’ leave balances for annual leave and personal/carer’s leave to account for leave taken is determined in accordance with the Full Bench’s reasons in its decision of 11 May 2015 ([2015] FWCFB 2881) and this decision.
VICE PRESIDENT
Appearances:
B. Mueller solicitor for RACV Road Service Pty Ltd.
T. Borgeest of counsel for the Australian Municipal, Administrative, Clerical and Services Union.
Hearing details:
2015.
Melbourne:
21 September.
1 [2015] FWCFB 2881
2 See paragraph [88] of the initial decision. In the initial decision as it was published on 11 May 2015, the analysis in paragraph [88] erroneously proceeded on the basis that the shiftworkers the subject of the dispute were entitled to 152 hours annual leave under the Agreement and four weeks’ annual leave under the NES. At the hearing on 21 September 2015 the parties pointed out this error. We subsequently corrected paragraph [88] pursuant to s.602 of the FW Act to reflect an entitlement to 190 hours annual leave under the Agreement and five weeks’ annual leave under the NES in order to give effect to our intention that the analysis was to proceed on the basis of the shiftworkers’ legal entitlements, not on the basis of the entitlements of other employees. We indicated that we would take this course at the hearing on 21 September 2015 and neither party raised any objection (Transcript PNs 869-884).
3 MA000002
4 [2014] FWCA 2445
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