Richard Pitman v Ready Workforce (A Division of Chandler MacLeod) Pty Ltd T/A Chandler MacLeod
[2022] FWC 2905
•31 OCTOBER 2022
| [2022] FWC 2905 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Richard Pitman
v
Ready Workforce (A Division of Chandler MacLeod) Pty Ltd T/A Chandler MacLeod
(C2022/4134)
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 31 OCTOBER 2022 |
Application for the Commission to deal with a dispute under an enterprise agreement – calculation of entitlement to accident pay under enterprise agreement – meaning of base rate of pay under s 16(1) of the Fair Work Act 2009 (Cth)
Introduction
Mr Richard Pitman is in dispute with Ready Workforce (a division of Chandler Macleod) Pty Ltd (Chandler Macleod) in relation to the calculation of his entitlement to accident pay under clause 38 of the Chandler Macleod Northern District of NSW Black Coal Mining Agreement 2015 (Enterprise Agreement).
On 18 July 2022, the CFMMEU, on behalf of Mr Pitman, filed an application in the Fair Work Commission (Commission) pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act) and the dispute resolution procedure in clause 9 of the Enterprise Agreement for the Commission to deal with the dispute.
The dispute the subject of the Application clearly falls within the scope of disputes which may be dealt with in accordance with clause 9 of the Enterprise Agreement. I conciliated the dispute without success.
There is no dispute that the preliminary steps set out in the dispute settlement procedure have been met. Nor is there any dispute that I have jurisdiction to arbitrate the dispute under clause 9 of the Enterprise Agreement.
Mr Pitman gave evidence in support of his case. He was not required for cross examination. Chandler Macleod adduced evidence from Ms Margo Shand, General Manager ACT/NSW for Chandler Macleod Staffing Services.
Relevant provisions of the Enterprise Agreement and Act
Clause 38 of the Enterprise Agreement governs the subject of accident pay. It relevantly provides:
“38. Accident Pay
38.1 An employee in receipt of weekly payments under the provisions of applicable workers compensation legislation will be entitled to receive accident pay from the Company subject to the following conditions and limitations:
38.2 Payment to be made during incapacity
An Company must pay, or cause to be paid, accident pay during the incapacity of the employee, within the meaning of the applicable workers compensation legislation:
(a) until such incapacity ceases; or
(b) until the expiration of a period of 78 weeks from the date of injury;
whichever event will first occur, even if the Company terminates the employee's employment within the period.
38.3 Meaning of 'accident pay'
For the purposes of this clause accident pay means:
(a) For the initial period of 39 weeks from the date of injury, a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of this award had the employee been on paid personal leave at the date of the injury (provided the latter amount is greater than the former amount).
(b) For a further period of 39 weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the rate prescribed from time to time for the classification of the incapacitated employee at the date of the injury (provided the latter amount is greater than the former amount).”
There is no dispute between the parties that the reference to “this award” in clause 38.3(a) should be construed as “this Enterprise Agreement”.
Personal leave is governed by clause 33 of the Enterprise Agreement. Clause 33.1 provides:
“33. Personal/carer's leave
33.1 EntitlementPersonal/carer's leave entitlements are provided for in the NES. A full-time employee is entitled to 105 ordinary hours of personal/carer's leave (inclusive of the employee's NES entitlement). An employee's entitlement to personal/carer's leave accrues progressively during a year according to the employee's ordinary hours of work.
Casual Employees are not entitled to paid Personal/carer's leave.”
The National Employment Standards, insofar as they concern personal leave, are set out in Subdivision A, Division 7 of Part 2-2 of the Act. Relevantly, section 99 of the Act provides that an employee who takes a period of paid personal leave must be paid “at the employee’s base rate of pay for the employee’s ordinary hours of work in the period”. The expression “base rate of pay” is defined in s 16(1) of the Act in the following terms:
“16 Meaning of base rate of pay
General meaning
(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:
(a) incentive‑based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) any other separately identifiable amounts.
Meaning for pieceworkers in relation to entitlements under National Employment Standards”
In order to determine an employee’s base rate of pay in accordance with s 16(1) of the Act, it is necessary to ascertain the employee’s ordinary hours of work and the rate of pay payable for that work.[1]
Justice Wigney considered the meaning of s 16(1) of the Act in APESMA v Bulga Underground Operations Pty Ltd.[2] That case concerned the calculation of Mr Mayhew’s base rate of pay under s 16(1) of the Act in circumstances where he was a “salaried employee” and his employment contract stated that “the terms and conditions of [the contract] fully compensate you for fulfilling all of the requirements of your position”. Mr Mayhew’s contract also stated that his remuneration, known as the Total Employment Compensation, was “in lieu of all entitlements, Award, Agreement, over award or legislative”. Justice Wigney concluded that Mr Mayhew’s Total Employment Compensation was his base rate of pay under s 16(1) of the Act. His Honour reasoned as follows:
“70. The only allowance that was payable to Mr Mayhew under the terms of the Agreement and Contract was a “Shift/Roster Allowance”… That allowance was an additional payment that was a supplement to, and not included in, Mr Mayhew’s salary or Total Employment Compensation. It accordingly could not be included in, or considered part of, Mr Mayhew’s base rate of pay for the purposes of calculating his long service leave entitlements…
71. Aside from the Shift/Roster Allowance, under the terms of the Agreement and Contract there was no circumstance in which Mr Mayhew was entitled to receive remuneration exceeding the Total Employment Compensation…
73. It may be accepted that the point or purpose of the salary arrangement reflected in the Agreement and Contract would appear to have been to provide for a single sum to remunerate the employee for performing his or her duties and responsibilities and to move away from previous remuneration packages that involved remuneration based on hourly wages together with provision for the payment of loadings, allowances or penalty rates for working on particular shifts, or at particular times, or in particular circumstances. It does not follow, however, that when calculating an employee’s base rate of pay for the purposes of the Long Service Leave Act, the employee’s single salary package should be taken to relevantly include any loading, allowance or penalty rate that may otherwise have been paid or payable to the employee under the previous arrangements. The salary may have been intended to compensate the employee for what, under other arrangements, may have been compensated by the payment of additional loadings, allowances or rates, but that does not mean that the salary relevantly includes any such identified or identifiable loadings, allowances or rates. While the salary may have been “in lieu of” entitlements that may have been payable under other arrangements, it did not relevantly “include” any such entitlements.
74. The definition of “base rate of pay” in s 16(1) of the Fair Work Act makes it clear that the relevant incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates or other amounts that are excluded from the determination of the base rate of pay are those that are not otherwise part of, or are payable in addition to, the rate of pay payable to the employee for his or her ordinary hours of work. That is particularly apparent from the use of the words “separately identifiable amounts” in paragraph (e). That indicates that the incentive-based payments and bonuses, loadings, allowances and overtime or penalty rates that are referred to in paragraphs (a), (b), (c) and (d) must also be separately identifiable; that they are identified or identifiable as payments separate to, or in addition to, the rate of pay payable to the employee for his or her ordinary hours of work.
75. There is also much to be said for the proposition that the general words “separately identifiable amounts” in paragraph (e) should be read ejusdem generis with the specific types of payments or amounts referred to in paragraphs (a) to (d). It would follow that, to fall within paragraph (e), the separately identifiable amounts must be of the same genus or have the same character as the payments or amounts referred to in (a) to (d). That genus would appear to be payments or amounts payable to an employee to compensate them for working beyond or outside the ordinary hours of work, or to compensate them for working in specific circumstances, or for achieving specific outcomes, that otherwise warrant additional compensation or allowance. It would not include payments to an employee for performing his or her ordinary hours of work or ordinary duties.
…78. The payments and amounts which s 16(1) of the Fair Work Act excludes from the determination of an employee’s base rate of pay are actual identifiable amounts which are paid or payable to an employee and which are separate from, or payable in addition to, the rate of pay payable to the employee for his or her ordinary hours of work. They are not notional amounts or contractual constructs. Nothing in the Agreement or Contract suggests that Mr Mayhew was ever paid or entitled to be paid a separately identifiable amount comprising 20% of his salary or Total Employment Compensation. Rather, the proper construction of the Agreement and Contract was that Mr Mayhew was to be paid a total or single amount to fully compensate him for fulfilling all of the requirements of his position. Other than the separately identified Shift/Roster Allowance, he was to receive no other payment or amount separate to his pay for his ordinary hours of work. The “Notional Base Salary” as defined in the Agreement and Contract was a construct to be used to compute payments on termination of employment. It was not reflective of the actual payments made to Mr Mayhew for the ordinary hours of his work.
79. It may perhaps be accepted that the genesis of the Notional Base Salary construct was that the salary package or Total Employment Compensation payable to employees covered by the Agreement was higher than the amount that employees had or may previously have received when, under different contractual or industrial arrangements, an employee’s remuneration was calculated on the basis of hourly wages together with other entitlements under then applicable awards: see cl 9.1 of the Agreement. It may also be accepted that the salary package or Total Employment Compensation was in lieu of any entitlements that may have been payable to an employee under previous arrangements: see cll 9.2 and 10.1 of the Agreement and, in Mr Mayhew’s case, cl 3.1 of the Contract. It does not follow, however, that the 20% difference between the Total Employment Compensation and the Notional Base Salary can be said to be a loading, monetary allowance, an overtime or penalty rate or some other “separately identifiable amount” for the purposes of the s 16 Fair Work Act definition of “base rate of pay”. Neither the Agreement nor, in Mr Mayhew’s case, the Contract so provide.
80. … neither the Agreement nor the Contract can properly be construed as providing that Mr Mayhew was to be paid the Notional Base Salary for his ordinary hours of work, and then entitled to receive, in certain circumstances, an additional separately identifiable amount, or additional separately identifiable amounts, for or representing loadings, monetary allowances, overtime or penalty rates, or any other form of additional compensation or allowance. There were no circumstances, under the terms of the Agreement and Contract, in which Mr Mayhew could be paid only the Notional Base Salary.
…86. There is very little authority in relation to the statutory definition of “base rate of pay”. Such authority as there is tends to support the proposition that Mr Mayhew’s base rate of pay was his salary or Total Employment Compensation (less the superannuation component) and not the Notional Base Salary referred to in the Agreement and Contract.
87. In Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94; 222 FCR 1, an employee who had originally worked for five days a week commencing at 8.00 am agreed to work pursuant to a new arrangement whereby he worked on a longer afternoon shift four days a week. His employment contract which included the new arrangement recorded his annual salary and noted that it included an 18% “penalty rate” for the afternoon shift. The employer subsequently decided to do away with the afternoon shift and the employee was offered to work on the dayshift at a salary which was reduced by the removal of the penalty rate. The employee refused that offer and considered himself to have been made redundant. An industrial magistrate subsequently held that the employee’s base rate of pay for the purposes of calculating his redundancy pay under s 119(2) of the Fair Work Act was his salary upon termination, which included the 18% penalty rate. That finding was overturned on appeal to the Full Court.
88. Katzmann J, with whom Greenwood and Besanko JJ agreed, found that the employee’s base rate of pay was his salary less the amount referred to in his employment contract as the 18% penalty rate. Her Honour concluded that this amount was a “separately identifiable amount” and therefore fell within the terms of s 16(1) of the Fair Work Act. Her Honour no doubt meant that the 18% penalty rate fell within s 16(1)(e) of the definition and was therefore excluded from the calculation of the base rate of pay. Her Honour reasoned as follows (at [23]-[24]):
‘Mr Cooper submitted that the 18% referred to in his contract was not a premium (or penalty). Rather, he said it was part of the agreed variation to the contract that occurred in 2008 and he was entitled to the increase “for all purposes”. He contended that it was illogical to exclude the 18% from the calculation of the base rate of pay. As he became redundant at the time he was working the afternoon shift and his pay at that point included the 18%, he submitted that it was the inclusive amount that represented his base rate. He also submitted, in effect, that because the 18% was included in his contract and was not paid pursuant to the award it could be ignored because the definition of “base rate of pay” in s 16(1) of the FW Act only excluded penalty rates fixed by an award.
I reject these submissions. The contract provided for a separately identifiable “penalty rate” for working the afternoon shift. In that respect it reflected the terms of the award. Presumably, that was its intention. I accept that merely because it is described as a “penalty rate” does not mean that it is. It might equally have been called a shift loading or allowance. But whatever it is called, it is a “separately identifiable” amount. Contrary to Mr Cooper’s argument, it does not matter that the salary is stated in the contract to be inclusive of the 18% “penalty rate”; what matters is that the rate falls within the terms of s 16(1) of the FW Act. The position would doubtless be different if the contract had been silent as to a shift allowance or had simply stated that the remuneration was inclusive of any or all penalties or allowances. The argument that s 16(1) was designed only to exclude award-derived penalty rates does not withstand scrutiny. There is no reason to read the section down in this way. On the contrary, the section is broad in its scope and, as Mr Cooper conceded, bonus payments, which are also mentioned in the subsection, are not typically creatures of awards.’
89. It may be noted that Katzmann J acknowledged that the position would doubtless have been different if the contract had simply stated that the remuneration was inclusive of any or all penalties or allowances. That is essentially what the Agreement and Contract provided in Mr Mayhew’s case. Unlike the contract in Maughan, neither the Agreement nor the Contract provided that the salary or Total Employment Compensation payable to Mr Mayhew was inclusive of a separately identifiable amount, either in percentage or dollar terms. While the defined Notional Base Salary was 20% less than the Total Employment Compensation, it does not follow that the Agreement or Contract can, or should, be construed as providing that the Total Employment Compensation included a separately identifiable amount of 20%, let alone that any such amount was, or was akin to, a loading, monetary allowance or overtime or penalty rate.
90. The circumstances in Maughan are also distinguishable from Mr Mayhew’s case. In Maughan, it was clear that, if the employee was not required to work the longer afternoon shift, he would not have received the 18% penalty rate. In Mr Mayhew’s case, he was entitled, under the terms of the Contract and Agreement, to receive the Total Employment Compensation notwithstanding the hours he worked, or the shifts he was required to work on, or the circumstances in which he was required to perform his work. There was no circumstance in which he would only receive the Notional Base Salary or only 80% of the Total Employment Compensation.”
Because s 16(1) of the Act refers to the “rate payable to the employee”, it is necessary to have regard to the relevant payment provisions of the Enterprise Agreement and Mr Pitman’s contract of employment. Clauses 21 and 22 of the Enterprise Agreement deal with “minimum wages and allowances” and “method of payment” respectively. They provide:
“21. Minimum wages and allowances
21.1 Remuneration is based on 35 ordinary hours per week. Minimum wages and allowances are specified in:
(a) Schedule A for employees engaged to work in the Gunnedah Basin; and
(b) Schedule B for employees engaged to work in the Northern District of NSW.
21.2 During the nominal period of this Agreement, rates of pay and allowances will be adjusted by 3.5% on:
(a) the first full pay period on or after 1st July for employees engaged to work in the Gunnedah Basin; and
(b) the first full pay period on or after 5th January for employees engaged to work in the Northern District of NSW.21.3 Employees employed by the Company and working on a current assignment at Mount Arthur Coal Mine on the date this Agreement commences operation and who were employed by the Company and working at Mount Arthur Coal Mine before the date this Agreement commences operation will each be paid a lump sum payment in the first full pay period after the Agreement commences equivalent to $3 per hour for all hours worked by the employee from 28 September 2014 to 3 January 2015 inclusive.
21.4 The rates specified in this Agreement are minimum rates of pay.
22. Method of Payment
22.1 Employees will be paid on a weekly basis on receipt of the Company's time sheet correctly completed and with appropriate authorisation by an approved customer supervisor, or by some other reasonable method defined by the company.
22.2 If an employee or the company becomes aware of errors in payments, such errors will be notified to the other party as soon as is practicable. Such errors in payment shall be rectified as soon as possible.
22.3 The company may pay employees a flat hourly rate by applying the appropriate wage rates and penalties to a complete roster cycle and dividing by the number of hours in that roster cycle.”
Clause 26 of the Enterprise Agreement governs an employee’s ordinary hours of work. It provides:
“26. Ordinary hours of work
26.1 The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
26.2 All ordinary hours worked by an employee on the following days will be paid for at the following rates:
Day of week Rate of pay
Monday to Friday Single time up to 7 hours per
day, overtime to be paid for
all additional hours.
Saturday All hours at double time
Sunday All hours at Double time”
Shiftwork is dealt with in clause 27 of the Enterprise Agreement. It provides:
“27. Shiftwork
27.1 Definitions
(a) Afternoon shift means any shift, the ordinary hours of which finish after 6.00 pm and at or before midnight.
(b) Night shift means any shift, the ordinary hours of which finish after midnight and at or before 8.00 am.
(c) For the purposes of clarity all time worked after midnight on Friday-and until midnight Sunday will be paid at overtime rates.
(d) Permanent night shift employee is an employee who:
(i) works night shift only; or
(ii) stays on night shift for a longer period than four consecutive weeks; or
(iii) works on a roster that does not give at least one-third of the employee's working time off night shift in each roster cycle.
27.2 Shiftwork rates
Rates for shiftwork are payable as follows:
Type of shift Shift rates Day shift Ordinary time rate.
Overtime at overtime rate for time worked.Afternoon Shift Ordinary time rate plus 15% loading.
Overtime at overtime rate for time worked.Rotating or permanent night shifts Ordinary rate plus 25% loading.
Overtime at overtime rate for time worked.”
Overtime is addressed in clause 31 of the Enterprise Agreement. It provides:
“31. Overtime
31.1 For the purposes of the following penalty rates, a Monday to Friday employee may commence the week on Sunday night or finish on Saturday morning, i.e. Maximum coverage of 5 x24 hours.
(a) Monday to Friday Employees
All time worked in excess of or outside ordinary hours shall be paid at the rate of double time.
(b) 6 Day or 7 Day Roster Employees
All time worked by 6 day or 7 day roster employees in excess of or outside the ordinary hours of work shall be paid at the rate of double time.”
Schedule B of the Enterprise Agreement sets out the rates of pay for employees in the “Hunter & Northern District of NSW”. Mr Pitman works in that district. Schedule B relevantly provides:
“Schedule B – Rates of Pay (Hunter & Northern District of NSW)
RATES OF PAY
on commencement of variationType of employment Ordinary Hours Rate Overtime Rate (double time) Level 1 Perm/Max Duration $21.49 $42.98 Casual (25%) $26.86 Level 2A Perm/Max Duration $23.42 $46.84 Casual (25%) $29.28 Level 2B Perm/Max Duration $24.05 $48.10 Casual (25%) $30.06 Level 3 Perm/Max Duration $24.55 $49.10 Casual (25%) $30.69 Level 4 Perm/Max Duration $27.08 $54.16 Casual (25%) $33.85
RATES OF PAY
5 January 2016Type of employment Ordinary Hours Rate Overtime Rate (double time) Level 1 Perm/Max Duration $22.24 $44.48 Casual (25%) $27.80 Level 2A Perm/Max Duration $24.24 $48.48 Casual (25%) $30.30 Level 2B Perm/Max Duration $24.89 $49.78 Casual (25%) $31.11 Level 3 Perm/Max Duration $25.41 $50.82 Casual (25%) $31.76 Level 4 Perm/Max Duration $28.03 $56.06 Casual (25%) $35.04
RATES OF PAY
5 January 2017Type of employment Ordinary Hours Rate Overtime Rate (double time) Level 1 Perm/Max Duration $23.02 $46.04 Casual (25%) $28.78 Level 2A Perm/Max Duration $25.09 $50.18 Casual (25%) $31.36 Level 2B Perm/Max Duration $25.76 $51.52 Casual (25%) $32.20 Level 3 Perm/Max Duration $26.30 $52.60 Casual (25%) $32.88 Level 4 Perm/Max Duration $29.01 $58.02 Casual (25%) $36.26
The parties agree that the rate of pay for unrostered overtime will remain $50 per hour for all level 2B employees until4 January 2017. Following the increase on 5 January 2017 the rates specified in the table above will apply
8 hour roster;14 shifts/cycle; Monday – Sunday; Rotating Day/Night shift
| 8 hour roster Casual Flat Rate and Calculation Method 4 week cycle; Rotating Day/ Night shift | ||||||||
| Type of employment | M-F Day Shift (Ord) | M-F Night Shift (Ord) | OT 200% | Sat/Sun | Public Hol | Public Hol (OT) | Allowances | Total hours |
| Level 1 | ||||||||
| Perm/Max Duration | $21.49 | |||||||
| Casual (25%) | $26.86 | $32.24 | $42.98 | $48.35 | $48.35 | $64.47 | $31.50 | |
| Hours | 33.54 | 35.00 | 13.00 | 28.00 | 2.15 | 0.31 | 112.00 | |
| Flat Rate | TOTAL | $36.58 | ||||||
| Level 2A | ||||||||
| Perm/Max Duration | $22.42 | |||||||
| Casual (25%) | $28.03 | $33.63 | $44.84 | $50.45 | $50.45 | $67.26 | $31.50 | |
| Hours | 33.54 | 35.00 | 13.00 | 28.00 | 2.15 | 0.31 | 112.00 | |
| Flat Rate | TOTAL | $38.16 | ||||||
| Level 2B | ||||||||
| Perm/Max Duration | $24.05 | |||||||
| Casual (25%) | $30.06 | $36.08 | $48.10 | 54.11 | $54.11 | $72.15 | $31.50 | |
| Hours | 33.54 | 35.00 | 13.00 | 28.00 | 2.15 | 0.31 | 112.00 | |
| Flat Rate | TOTAL | $40.91 | ||||||
| Level 3 | ||||||||
| Perm/Max Duration | $24.55 | |||||||
| Casual (25%) | $30.69 | $36.83 | $49.10 | $55.24 | $55.24 | $73.65 | $31.50 | |
| Hours | 33.54 | 35.00 | 13.00 | 28.00 | 2.15 | 0.31 | 112.00 | |
| Flat Rate | TOTAL | $41.75 | ||||||
| 12.67 hr roster 4 week cycle; Rotating Day/ Night shift 169.4hrs p/cycle; 7 ORD hrs p/shift; Rostered 200% = 5.67hr p/shift | ||||||||
| Type of employment | M-F Day Shift (Ord) | M-F Night Shift (Ord) | OT 200% | Sat/Sun | Public Hol | Public Hol (OT) | Allowances | Total hours |
| Level 1 | ||||||||
| Perm/Max Duration | $21.49 | $26.86 | $42.98 | $42.98 | $42.98 | $64.47 | ||
| Casual (25%) | $26.86 | $32.24 | $42.98 | $48.35 | $48.35 | $64.47 | $31.50 | |
| Hours | 28.00 | 42.00 | 75.48 | 28.00 | 2.15 | 1.75 | 177.38 | |
| Flat Rate | TOTAL | $39.20 | ||||||
| Level 2A | ||||||||
| Perm/Max Duration | $22.42 | $28.03 | $44.84 | $44.84 | $44.84 | $67.26 | ||
| Casual (25%) | $28.03 | $33.63 | $44.84 | $50.45 | $50.45 | $67.26 | $31.50 | |
| Hours | 28.00 | 42.00 | 75.48 | 28.00 | 2.15 | 1.75 | 177.38 | |
| Flat Rate | TOTAL | $40.88 | ||||||
| Level 2B | ||||||||
| Perm/Max Duration | $24.05 | $30.06 | $48.10 | $48.10 | $48.10 | $72.15 | ||
| Casual (25%) | $30.06 | $36.08 | $48.10 | 54.11 | $54.11 | $72.15 | $31.50 | |
| Hours | 28.00 | 42.00 | 75.48 | 28.00 | 2.15 | 1.75 | 177.38 | |
| Flat Rate | TOTAL | $43.84 | ||||||
| Level 3 | ||||||||
| Perm/Max Duration | $24.55 | $30.69 | $49.10 | $49.10 | $49.10 | $73.65 | ||
| Casual (25%) | $30.69 | $36.83 | $49.10 | $55.24 | $55.24 | $73.65 | $31.50 | |
| Hours | 28.00 | 42.00 | 75.48 | 28.00 | 2.15 | 1.75 | 177.38 | |
| Flat Rate | TOTAL | $44.75 | ||||||
Mr Pitman entered into a new written contract of employment with Chandler Macleod in November 2019 when he converted from casual employment to full time employment (Contract). The Contract continued to apply to Mr Pitman when he was injured and claimed his entitlement to accident pay under clause 38 of the Enterprise Agreement. The Contract includes the following relevant terms:
| “Contract of Employment for Maximum Term (On-hire) Employment – (Industrial) | ||
| 1. EMPLOYMENT DETAILS | Name of Employee: | Richard Pitman |
| Address: | 26 Lorne Street, Muswellbrook, NSW, 2333 | |
| Client Name and Position: | Mt Arthur Coal – Experienced Dozer Operator | |
| Commencement Date: | 24th November 2019 | |
| Place of Work: | Mt Arthur Coal, Thomas Mitchell Drive, Muswellbrook NSW 2333 | |
| Employment Type: | Full time | |
| Maximum Term: | 12 Months | |
| Part Time hours (if applicable): | N/A | |
| Wage Rate: | $46.89 per hour excluding superannuation as applicable | |
| Additional Benefits (List): (if applicable) | 6 weeks annual leave (21 shifts) 105 hours of sick leave | |
…
2. DEFINITIONS
…
“Industrial Instrument” means the modern award or enterprise agreement applicable to the Employment (if any);
…“NES” means the National Employment Standards as defined in the Act;
…“Remuneration” means the Wages (made up of the Wage Rate set out in the Employment Details) and superannuation; and
“Wages” means the wage rate paid to you during the Employment as set out in the Employment Details.”
…
6. REMUNERATION AND OTHER BENEFITS
6.1 You will be paid the Remuneration by the Company.
...7. HOURS OF WORK
7.1During the course of the Employment it is expected that you will work an average of 38 hours per week, or agreed part time hours (as set out in the Employment Details). From time to time you may be required to work reasonable additional hours.
7.2You may be required to perform shift work or day work in accordance with Client rosters, and you agree to do so.
7.3The Remuneration includes full compensation for all hours worked, including reasonable additional hours worked in addition to or outside your ordinary hours, which are required to fulfil the duties of the Position. Unless specifically advised in writing by the Company, you are not entitled to any additional payment for overtime, or for any other work performed in addition to your ordinary hours worked.
…
17. SET OFF
17.1By accepting this Contract you agree that the terms and conditions of the Employment are fair and equitable in all the circumstances. You also agree that the Remuneration includes all payments and benefits that the Company is legally obliged to provide to you, or on your behalf. The Remuneration is specifically off-set against, applied to and absorbs any existing or newly-introduced payments or benefits to which you are or may become legally entitled (including but not limited to any requirement under the Act to pay a minimum hourly rate of pay for each hour worked, allowances, annual leave loading, overtime, penalty rates and shift loadings) under any legislation or Industrial Instrument, unless specified otherwise in this Contract.
17.2Should you owe money or be indebted to the Company on any account (including, without limitation, any amount paid to you in advance or by mistake), the Company may offset the amount owing or indebted (or any part of it) against future earnings, or otherwise deduct the amount (or any part of it) from your Wages or any other sums that may be due to you, provided the Company notifies you of the amount to be offset or deducted and when this will occur. You consent to these deductions and acknowledge the intention to execute any further authority or consent that the Company requests to process the deductions once the precise amount and date are known. You acknowledge and accept that any such deductions are both reasonable and principally for your benefit, taking into account that the deduction facility forms part of the broader set of generous remuneration terms afforded by this Contract and simplifies the repayment process for you.
18. OTHER INDUSTRIAL INSTRUMENTS
18.1 The provisions of any applicable Industrial Instrument apply to the Employmentindependently of and do not form part of this Contract or any other terms and conditions of the Employment agreed between the Company and yourself.
…
23. MISCELLANEOUS
...
23.4 This Contract:
(a) constitutes the entire agreement between the parties as to its subject matter and supersedes all prior representations and agreements in connection with that subject matter; and
(b) may only be altered in writing executed by the parties.”
Relevant facts
Mr Pitman commenced employment with Chandler Macleod in the pay week commencing 17 May 2016. He was initially employed as a casual employee, working at the Mt Arthur coal mine in the Hunter Valley (Mine). At the commencement of his employment, Mr Pitman was provided with a Chandler Macleod standard contract of employment for a casual employee and a copy of the Enterprise Agreement. Mr Pitman’s standard contract of employment did not state that he was being paid a “flat hourly rate” in accordance with the Enterprise Agreement.
In about late October or early November 2019, Mr Pitman informed Chandler Macleod that he wanted to become a permanent employee. At that time Mr Pitman was being paid an hourly rate of $47.61 as a casual employee. Mr Pitman was told that he could become a full-time employee but he would have to sign a new contract. Mr Pitman signed the Contract on 21 November 2019. The Contract did not state that Mr Pitman was being paid a “flat hourly rate” in accordance with the Enterprise Agreement.
On 24 November 2019, Mr Pitman commenced as a full-time employee of Chandler Macleod. As a full-time employee Mr Pitman continued to work at the Mine. He worked a seven day, rotating, 12 hour and 10 minute, four panel roster at the Mine. Mr Pitman’s payslips showed that his employment position had changed from “casual” to “overburden operator maximum term 12.5hr”.
Mr Pitman was paid $46.89 for each rostered hour he worked as a full-time employee. If he worked non-rostered overtime, he was paid at the rate of double time, calculated on the “ordinary hours rate” in Schedule B of the Enterprise Agreement for a level 2B employee.
When Mr Pitman took personal leave as a full-time employee, he was paid for his rostered hours of work at the rate of $46.89 per hour. Chandler Macleod made an “administrative decision” to pay personal leave at this rate to dissuade employees from leaving to work with competitors who paid personal leave at a higher rate.[3]
On 7 March 2022, while working for Chandler Macleod at the Mine, Mr Pitman was injured. Mr Pitman made a workers’ compensation claim and Chandler Macleod’s insurer, Coal Mine’s Insurance, accepted liability. Mr Pitman has not yet returned to work following his injury.
Following the resolution of some disputes concerning Mr Pitman’s entitlement to accident pay during the first 39 weeks of his injury, Mr Pitman has been paid a weekly amount of $998.50, which equates to an hourly rate of $28.53 (on the basis of a 35 ordinary hour week). Mr Pitman has never been paid $28.53 per hour as a full-time employee of Chandler Macleod.
Negotiations for a new enterprise agreement to replace the Enterprise Agreement commenced in 2018. The CFMMEU’s log of claims included a claim for personal leave to be paid “as if at work” and accident pay to be “as per Coal Mining Industry Standard”. Initially that claim was not accepted by Chandler Macleod. In a later proposal put to employees in about September 2021, Chandler Macleod proposed to pay personal leave as if an employee worked their normal hours and this change to personal leave would flow on to the payment of the first 39 weeks of accident pay. However, Chandler Macleod lost the contract to supply labour to the Mine, with the result that the proposed vote for a new enterprise agreement to replace the Enterprise Agreement was abandoned.
Contentions
Mr Pitman says that, during the first 39 weeks of his injury, he is entitled to be paid “a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of … [the Enterprise Agreement] had the employee been on paid personal leave at the date of the injury” (clause 38.3 of the Enterprise Agreement). Mr Pitman contends that his entitlement to paid personal leave under the Enterprise Agreement is governed by the National Employment Standards, which entitle him to payment of personal leave at his “base rate of pay for … [his] ordinary hours of work in the period” (section 99 of the Act). Mr Pitman’s ordinary hours per week are 35 (clause 26.1 of the Enterprise Agreement). The expression “base rate of pay” in s 99 of the Act is defined in s 16(1) of the Act. There is no dispute between the parties in relation to each of these propositions.
The parties have a different view in relation to what constitutes Mr Pitman’s “base rate of pay” within the meaning of s 16(1) of the Act.
Mr Pitman contends that his base rate of pay is $46.89 per hour, being the wage rate stipulated in his Contract.
Chandler Macleod contends that Mr Pitman’s base rate of pay was $27.28 per hour at the time of the injury and is now $28.56 per hour. These rates are the “ordinary hours rate” stipulated in Schedule B of the Enterprise Agreement for a level 2B employee, adjusted under s 206 of the Act to take account of the fact that minimum rates of pay under the Enterprise Agreement have fallen below the minimum rates of pay in the Black Coal Mining Industry Award 2020.
Chandler Macleod contends that Mr Pitman has, at all times during his employment, been paid a “flat hourly rate” of pay under the Enterprise Agreement. Using the same methodology as the two examples of a “flat hourly rate” of pay shown in Schedule B (pages 36-37) of the Enterprise Agreement, Chandler Macleod has undertaken a “full reconciliation of all the components” of the hourly rates of pay paid to Mr Pitman at different times during his employment with Chandler Macleod. Those “full reconciliations” are set out in the following part of Chandler Macleod’s written submissions:
“24. By way of example, below is a full reconciliation of all the components of Mr Pitman’s Flat Rate of Pay paid to him from the time he commenced employment with the Respondent until 5 January 2017: (Fig 1):
Fig 1
25. As can be seen in this example, Mr Pitman’s Base Rate of Pay can only be $24.89. All other components of his Flat Rate of Pay are:
(a) loadings;
(b) monetary allowances; and
(c) overtime or penalty rates
Which are specifically excluded from the Base Rate of Pay by section 16 (a) to (e) of the FW Act.26. As a further example, below is a full reconciliation of all the components of Mr Pitman’s Flat Rate of Pay paid to him from 5 January 2017 to 19 July 2019 (Fig 2):
Fig 2
27. Similarly, in this example, Mr Pitman’s Base Rate of Pay can only be $25.76. All other components of his Flat Rate of Pay are:
(a) loadings;
(b) monetary allowances; and
(c) overtime or penalty rates
Which are specifically excluded from the Base Rate of Pay by section 16 (a) to (e) of the FW Act.
28. Around April 2018, the Respondent took a decision to honour the (at the time) Flat Rate of Pay for casual employees of $46.89 should they take up an offer of permanent or maximum-duration (non-casual) employment. This was to avoid a casual employee having to suffer a significant reduction in their Flat Rate of Pay by way of losing their casual loading. As these offers were on non-casual contracts, employees would also have the benefit of paid leave entitlements such as annual leave and personal leave.
29. On 21 November 2019, Mr Pitman was offered and accepted a non-casual contract, and the Respondent honoured its commitment to offer the Flat Rate of Pay of $46.89. This was the most recent Flat Rate of Pay paid to Mr Pitman. This Flat Rate of Pay was still calculated by reference to a Base Rate of Pay and entitlements over a roster cycle, with the addition of a bonus payment or other separately identifiable component, notably a payment in respect of the loss of the casual loading.
30. As an example of how this Flat Rate of Pay was still calculated by reference to the Base Rate of Pay, as Mr Pitman’s flat rate only takes into account his rostered hours, when Mr Pitman works hours in excess of his rostered hours, he is paid an overtime rate. This overtime rate is calculated by reference to the Base Rate of Pay; specifically, at double the Base Rate of Pay, in accordance with the Enterprise Agreement.
31. As an example, on 12 January 2021, Mr Pitman worked 12.1667 hours in addition to his rostered hours. He was paid at the rate of $54.56, being double his Base Rate of Pay at the time, which was $27.28.
32. Thus a full reconciliation of all the components of Mr Pitman’s Flat Rate of Pay paid to him at the time of his injury is as follows (Fig 3):
Fig 3
33. Mr Pitman’s Base Rate of Pay at the time of his injury can only be $27.28. All other components of his Flat Rate of Pay are:
(a) loadings;
(b) monetary allowances;
(c) overtime or penalty rates; and
(d) other separately identifiable amounts
Which are specifically excluded from the Base Rate of Pay by section 16 (a) to (e) of the FW Act.”
There is no dispute that Chandler Macleod’s “full reconciliations of all the components” of Mr Pitman’s rate of pay have never been communicated or disclosed to him, save for during the course of these proceedings. The “full reconciliations” are based on a 12.5 hour, seven day per week roster.
Mr Pitman’s unchallenged evidence, which I accept, is that he worked shifts of 12 hours and 10 minutes duration.
Consideration
Mr Pitman’s ordinary hours of work, as a full-time employee of Chandler Macleod, have always been 35 per week (clause 26.1 of the Enterprise Agreement). The rate of pay payable to Mr Pitman for his ordinary hours of work, as a full-time employee of Chandler Macleod, is $46.89 per hour. So much is clear from clauses 6 and 7 of the Contract, read together with the definitions of “Remuneration” and “Wages” and the “Employment Details” table at the start of the Contract. Under no circumstances does the Contract permit Mr Pitman to be paid less than $46.89 per hour.
The question which arises for determination under s 16(1) of the Act is whether the rate of $46.89 per hour includes “any of the following:
(a) incentive-based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) any other separately identifiable amounts.”
The Contract does not state that the “Remuneration” paid under it ($46.89 per hour) is a “flat hourly rate” in accordance with the Enterprise Agreement. In fact, the express terms of the Contract are inconsistent with such a notion. Clause 7.3 of the Contract provides that “the Remuneration includes full compensation for all hours worked”. Furthermore, it is apparent from clause 17.1 of the Contract that “the Remuneration includes all payments and benefits that the Company is legally obliged to provide to you … [and] is specifically off-set against, applied to and absorbs any existing or newly-introduced payments or benefits to which you are or may become legally entitled (including but not limited to any requirement under the Act to pay a minimum hourly rate of pay for each hour worked, allowances, annual leave loading, overtime, penalty rates and shift loadings) under any legislation or Industrial Instrument, unless specified otherwise in this Contract”. So, for example, if Chandler Macleod introduced a contractually binding bonus plan, share plan, healthcare plan, motor vehicle policy or other benefit which it was contractually obliged to provide to Mr Pitman, the “Remuneration” paid to Mr Pitman under the Contract included compensation for such a benefit. Similarly, if Chandler Macleod was or became legally obliged to make a payment or provide a benefit to Mr Pitman under any legislation or applicable industrial instrument, the Remuneration paid to Mr Pitman under the Contract could be off-set against, applied to or absorbed by such an entitlement. Accordingly, the concept of “Remuneration” under the Contract is far broader than the components of a “flat hourly rate” under the Enterprise Agreement.
Because the hourly rate of $46.89 payable under the Contract could be off-set against, applied to or absorbed by entitlements of the kind I have described in the previous paragraph, I do not consider that it could be said to include a separately identifiable amount in respect of loadings, monetary allowances, overtime or penalty rates.
In APESMA v Bulga Underground Operations Pty Ltd and Maughan Thiem Auto Sales Pty Ltd v Cooper it was acknowledged that the position would doubtless have been different if the contract had simply stated that the remuneration was inclusive of any or all penalties or allowances. That is essentially what the Contract provides in Mr Pitman’s case. Unlike the contract in Maughan, the Contract does not state that the “Remuneration” payable to Mr Pitman is inclusive of any separately identifiable amounts, either in percentage or dollar terms.
In addition, the Contract does not permit Chandler Macleod to pay Mr Pitman at the rate of $27.28 or $28.56 per hour for the ordinary hours worked by him; the Contract requires the payment of $46.89 per hour for all rostered work (including all ordinary hours) undertaken by Mr Pitman. Accordingly, the rates of $27.28 and $28.56 per hour cannot be Mr Pitman’s “base rate of pay” under s 16(1) of the Act because they are not payable to him for his ordinary hours of work.
I do not consider that anything said during negotiations for a new enterprise agreement to replace the Enterprise Agreement could have any bearing on the outcome of this dispute. First, any such communications took place well after the Enterprise Agreement was made in 2015. Secondly, the issue to be determined in the present arbitration turns on the proper construction of the expression “base rate of pay” in s 16(1) of the Act. Nothing said in negotiations for a new enterprise agreement could impact that issue.
Conclusion
For the reasons given, I determine by arbitration that Mr Pitman’s “base rate of pay” within the meaning of s 16(1) of the Act is $46.89 per hour. As a result, he is entitled under clause 38 of the Enterprise Agreement to receive accident pay from Chandler Macleod, during the first 39 weeks from the date of his injury, in a weekly amount “representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of … [the Enterprise Agreement] had” Mr Pitman been on paid personal leave at the date of the injury, at which time he would have been entitled to receive $1,641.15 per week (35 ordinary hours x $46.89 = $1,641.15).
DEPUTY PRESIDENT
Appearances:
Mr K Endacott, for the Applicant
Mr S Willett, solicitor, for the Respondent
Hearing details:
2022.
Newcastle (by videoconference)
24 October.
[1] Mondelez Australia Pty Ltd v AMWU [2020] HCA 29 at [20]
[2] [2019] FCA 1960
[3] Ex R1 at [20]
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