Skene v WorkPac Pty Ltd
[2018] FCCA 3628
•7 December 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SKENE v WORKPAC PTY LTD | [2018] FCCA 3628 |
| Catchwords: INDUSTRIAL LAW – Mischaracterisation of employee as a casual rather than a permanent employee – assessment of compensation – whether compensation payable pursuant to Workplace Agreement or pursuant to s.87 of the Fair Work Act – payment to be made pursuant to provisions of Workplace Agreement – low range penalty based on particular circumstances of case. |
| Legislation: Fair Work Act 2009 (Cth), ss.12, 15, 44(1), 87, 90, 545, 546 Fair Work Transitional Provisions and Consequential Amendments Act 2009 (Cth), sch 16 item 2(2) |
| Cases cited: Centennial Northern Mining Services Pty Ltd v CFMEU (2015) 231 FCR 298 Project Blue Sky v ABA (1998) 194 CLR 355 Workpac Pty Ltd v Skene [2018] FCAFC 131 |
| Applicant: | PAUL ALEXANDER SKENE |
| Respondent: | WORKPAC PTY LTD |
| File Number: | BRG 457 of 2014 |
| Judgment of: | Judge Egan |
| Hearing date: | 6 December 2018 |
| Date of Last Submission: | 6 December 2018 |
| Delivered at: | Brisbane |
| Delivered on: | 7 December 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Crawshaw SC with Mr Reed |
| Solicitors for the Applicant: | Slater & Gordon Lawyers |
| Counsel for the Respondent: | Mr Chin |
| Solicitors for the Respondent: | Ashurst Australia |
THE COURT DECLARES THAT:
The respondent contravened the provisions of s.44(1) of the Fair Work Act 2009 (Cth) and item 2(2) of Schedule 16 to Fair Work Transitional Provisions and Consequential Amendments Act 2009 (Cth) by failing to pay to the applicant his full annual leave entitlements pursuant to clause 19.1.1 of the Workpac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007.
AND IT IS ORDERED THAT:
That the respondent pay to the applicant by way of compensation the sum of $5,954.48 within twenty-eight (28) days of the making of this order.
That the respondent pay a pecuniary penalty pursuant to s. 546(1) of the Fair Work Act for its contravention as set out in the declaration above fixed in the amount of $1,650.00.
That the amount of the pecuniary penalty be paid to the applicant pursuant to s.546(3) of the Fair Work Act2009 (Cth).
That the respondent pay the applicant’s costs of and incidental to this application as agreed or as assessed pursuant to the applicable Federal Court Scale of Costs.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 457 of 2014
| PAUL ALEXANDERS SKENE |
Applicant
And
| WORKPAC PTY LTD |
Respondent
REASONS FOR JUDGMENT
This matter was originally heard as a trial in a differently constituted Federal Circuit Court at Brisbane. Proceedings had been commenced by the applicant in 2014. The applicant sought, as final relief, the following orders in the Amended Statement of Claim filed on his behalf:
a)an order pursuant to s.546 of the Fair Work Act 2009 (Cth) (“the Act”) that the respondent pay a pecuniary penalty for its contravention of s.44(1) of the Act;
b)an order pursuant to s.546 of the Act that the respondent pay a pecuniary penalty for its contravention of s.44(1) of the Act and item 2(2) of Schedule 16 to the Fair Work Transitional Provisions and Consequential Amendments Act 2009 (Cth) (“Transitional Act”).
c)orders pursuant to s.546(3) of the Act that any pecuniary penalties be paid to the applicant;
d)an order pursuant to s.545 of the Act that the respondent pay compensation to the applicant for loss caused by its contraventions of ss.44 and 15 of the Act and item 2(2) of Schedule 16 to the Transitional Act;
e)orders pursuant to s.547 of the Act or, alternatively, s.51A of the Federal Court of Australia Act 1976 (Cth), that the respondent pay interest on the compensation awarded.
At trial, the learned trial judge found that:
a)the applicant was not a casual employee for the purposes of s.86 of the Act, but that the applicant was entitled to be paid annual leave pursuant to the provisions of Division 6 of Chapter 2 (Part 2-2) of the Act, and more particularly, pursuant to the provisions of s.87 and s.90(2) of the Act.
b)the applicant was a casual employee for the purposes of the Workpac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (“the Agreement”) which was at all material times a transitional instrument under the Transitional Act.
After judgment was handed down, the respondent paid to the applicant, in accordance with the orders made, the sum of $27,789.92 (being $21,054.69 by way of principal compensation and $6,735.03 by way of interest). That sum was based upon a finding that the applicant was entitled to be paid accrued unpaid annual leave for a 5 week period as provided for pursuant to the provisions of s.87 of the Act.
On appeal, the Full Court of the Federal Court (Tracey, Bromberg and Rangiah JJ) in Workpac Pty Ltd v Skene [2018] FCAFC 131:
a)Dismissed Workpac’s appeal against the trial judge’s finding that the applicant was not a casual employee, the court finding that the trial judge ought to have found that the applicant was a “permanent Field Team Member (“FTM”)”.
b)Allowed the applicant’s appeal:
i)In Ground 1 of his Notice of Appeal, against the finding that the primary judge was in error in holding that the respondent was a casual employee for the purposes of the Agreement; and
ii)In Ground 3 of his Notice of Appeal, against the trial judge’s finding that the imposition of a pecuniary penalty was not warranted in the circumstances as found by the trial judge. At [233] of its reasons, the Full Court said:
“In his reasons on penalty the primary judge said (at [45]) that for the purposes of the contravention of s 44(1) of the FW Act, the relevant point in time was April 2012 when Mr Skene’s employment was terminated. … Given that Mr Powell’s employment post-dated the termination of Mr Skene’s employment, if follows that, contrary to the finding made by the primary judge, WorkPac had not taken the advice of Mr Powell and that (absent any other evidence) there was no basis for the primary judge to find that WorkPac had closely considered the legal implications of the arrangements it made with Mr Skene prior to (or at any time during) Mr Skene’s employment. That Mr Powell was in the employment of WorkPac throughout the life of Mr Skene’s legal proceedings, as WorkPac contended, is beside the point and provides no answer to the error which Mr Skene’s appeal establishes.”
At [239] the Full Court said:
[239]: It is appropriate for the matter to be remitted to the Federal Circuit Court of Australia for the re-determination, in accordance with these reasons, of the compensation payable to Mr Skene for WorkPac’s failure to meet his entitlements to annual leave and any pecuniary penalties that should be imposed on WorkPac in respect of its failure to meet those entitlements. Our view that Mr Skene was entitled to receive annual leave or be paid monies in lieu thereof in accordance with Div 6 of Pt 2-2 of the FW Act and cl 19.1.1 of the Agreement is sufficiently apparent from these reasons.
In respect of the applicant’s appeal, it was ordered:
3. The proceeding be remitted to the Federal Circuit Court of Australia for the determination, in accordance with the reasons of the Court, of:
a. the compensation payable to the appellant; and
b. any pecuniary penalties to be imposed on the respondent.
Issues for Determination on Remitter
What Was the Applicant’s Entitlement to Annual Leave?
The trial judge assessed the amount of compensation payable to the applicant pursuant to s.87(1)(b) of the Act based upon the applicant’s applicable rate of pay for a five week period over 1.75 years, that being the applicant’s period of employment with Workpac. Of note is the finding by the Full Court of the Federal Court that the applicant ought to have been entitled to take annual leave in his capacity as a permanent employee.
At this hearing, Senior Counsel for the applicant, Mr Crawshaw SC, submitted that the applicant ought to have had compensation assessed on the applicable rate of pay for a six week period over 1.75 years. That submission was made on the basis that the applicant, having been found by the Full Court to be a permanent employee, came within the terms of Clause 19.1.1(c)(i) of the Agreement, which agreement relevantly provided as follows:
19.1.1 Entitlement
The amount of annual leave entitlement depends upon the FTM’ roster. The amounts are:
FTM’s Roster
Annual Leave Entitlement
Monday to Friday only
5 weeks
6 day roster to 5 day weekend roster
5 weeks
7 days roster of 7 ordinary hour shifts
30 ordinary working days
Rosters which require work on public holidays and at least 34 Sundays per year
6 weeks
Other rosters
As agreed between the relevant parties or, in the absence of agreement, to be dealt with in accordance with Clause 19.1.3.
(b) Where an FTM changes roster during the course of the year, the FTM’s entitlement to annual leave will be calculated on a pro rata basis.
(c) A guide for establishing the amount of annual leave for other rosters is:
(i)Six weeks per year for:
1. Seven days rosters; or
2. Rosters requiring work on public holidays and at least 34 Sundays per year; and
3. Five weeks per year otherwise.
It was submitted on behalf of the applicant that Clause 19.1.1(c)(i) of the Agreement ought to be read in conjunction with Clause 5.6.7 of the Agreement, which clause relevantly provided as follows:
“5.6.7 When an FTM’s employment is terminated, the Company shall pay any wages due as soon as practicable, and in any case with the next pay run.”
It was submitted on behalf of the applicant that at the time of the termination of his employment, the applicant had accrued 6 weeks x 1.75 years unpaid annual leave under the Agreement as a permanent employee, and that, therefore, the trial judge ought to have awarded compensation based upon an extra 1 week leave entitlement x 1.75 years assessed on the applicant’s applicable rate of pay. It was submitted on behalf of the applicant that the applicant’s proper entitlement was based upon a 6 week annual leave calculation under the Agreement, as opposed to a 5 week statutory entitlement pursuant to the provisions of s.87 of the Act.
In support of the proposition that “wages” as referred to in Clause 5.6.7 included accrued but unpaid annual leave, the Court was referred to Nette v Howarth [1935] 53 CLR 55 at [60] where Rich J said:
“’Salary’, I think must mean a definite payment for personal services arising under some contract, and … computed by time.”
The Court was further referred to CEPU v Excelior Pty Ltd [2013] FCA 638 at [63] and [66] per Katzmann J where it was said:
[63]: In its terms cl E.6.3 provides that time spent by a trainee in attending training is to be regarded as time worked for the purposes of calculating the trainee’s wages and determining the trainee’s employment conditions. It does not provide that attending training is to be regarded as attending work. While some employment conditions may be regarded as “wages” (see the discussion below), I am satisfied that the purpose of this clause is to ensure that time spent in training counts towards both the calculation of ordinary wages and the determination of those employment conditions which depend on time worked. The most obvious examples of such a condition are long service leave (where continuity of service is important) and annual leave (which is given by the s 87(1) of the Fair Work Act as four weeks paid annual leave or five in the case of certain shiftworkers for each year of service).
[66]: … In my opinion, “wages” in cl E.6.2 has its ordinary meaning of a payment for services rendered. See Visscher at [73], [75] where the relevant dictionary definitions appear. “Wages” would readily encompass overtime and penalty rates (and probably also annual leave) as they are paid for services rendered. …
It was submitted on behalf of Workpac, that as a matter of construction, “wages” did not include unpaid but accrued annual leave, and that the court ought not to countenance the applicant’s propounded construction of the agreement. That submission is rejected.
The submissions made on behalf of the applicant accord with what is the most reasonable construction open in the circumstances. The payment for accrued annual leave pursuant to a worker’s entitlements has for a very long time formed part of this nation’s ethos of due payment being expected for the due provision of a worker’s services during the course of their employment. A construction of the Agreement as propounded by Workpac runs counter to well-accepted practice. It is also a construction which does not give effect to a reading of the language of the Agreement as a whole, or one which gives effect to harmonious goals.[1]
[1] See Project Blue Sky v ABA (1998) 194 CLR 355 at [69] and [70].
The absence of a specific provision in the Agreement dealing with how accrued but unpaid annual leave was to be dealt should not lead to an irrational, capricious and unjust result in circumstances where, but for the mis-characterisation of the applicant as a casual employee, and but for the termination of his employment by Workpac, he otherwise would have been entitled to take an extra 1.75 weeks of annual leave on ordinary pay, over and above the 5 week statutory entitlement the subject of the compensation order made by the trial judge.
In the alternative, it was submitted on behalf of the applicant that, based upon the proper literal construction of s.90(2) of the Act, that the applicant would be entitled to payment of the extra 1.75 weeks of ordinary pay, because Clause 19.1.1 of the Agreement made provision for 6 weeks annual leave for a permanent employee, rather than the period of 5 weeks under s.87 of the Act. S.90 of the Act provides as follows:
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 for the 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.
Workpac, on the other hand, submitted that, as a matter of construction, due regard had to be had to the meaning of the words “untaken paid annual leave”, as those words appear in s.90(2). It was submitted that the words “paid annual leave”, as defined in s.12 of the Act, meant “paid annual leave to which a national system employee is entitled under s.87”, and that, therefore, the applicant’s claim to annual leave entitlements was limited to 5 weeks. As already discussed, the entitlement to the payment of annual leave pursuant to s.87, at best for the applicant, contemplated a payment based upon a 5 week entitlement, not the 6 week entitlement as countenanced under the Agreement.
A similar question was the subject of consideration in Centennial Northern Mining Services Pty Ltd v CFMEU (2015) 231 FCR 298. In that case the Full Court (Tracey, Flick and Katzmann JJ) held as follows:
Section 90(1) of the Act creates the minimum standard, being payment at the base rate for ordinary hours worked. The effect of s 90(2) of the Act is that if that is the rate at which the employee is paid when he or she takes annual leave, then that is the minimum amount that must be paid for any accrued untaken annual leave. If, on the other hand, there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then s 90(2) stipulates that that is the rate which is payable where annual leave has accrued but has not been taken.
At [12] – [17] of Centennial, the court said:
[12]: The primary judge noted that there was no dispute about the principles to be applied, referring to Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[71]. At [69] McHugh, Gummow, Kirby and Hayne JJ explained:
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole” [picking up what was said by Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320]. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that “the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed”. Thus, the process of construction must always begin by examining the context of the provision that is being construed.
(Footnotes omitted.)
[13]: At [71] their Honours noted that a court construing a statutory provision must strive to give meaning to every word in it.
[14]: In this case the primary judge observed that a construction to the effect that s 90(2) protects the whole entitlement to annual leave could certainly not be excluded. His Honour then turned for assistance to the Explanatory Memorandum to the Fair Work Bill 2008 (Cth), which states:
Clause 90 — Payment for annual leave
370. Subclause 90(1) entitles an employee to be paid at their base rate of pay (as defined in clause 16) for the employee’s ordinary hours of work for the period of their absence on leave.
(The meaning of ordinary hours of work and base rate of pay are outlined at the beginning of this Part.)
371. This is a minimum entitlement and would not prevent an employer and employee from agreeing to, or an award or enterprise agreement providing for, more generous payment terms.
372. Subclause 90(2) provides that, on termination of employment, an employee is entitled to receive a payment in respect of any untaken paid annual leave. The payment will be equivalent to the amount that the employee would have been paid if the employee had taken the annual leave.
[15]: His Honour said that:
this lends support to the argument that s 90(2) (unlike s 90(1)) is not confined to a statement of a minimum obligation, but is a statement to the effect that an employee should not suffer a reduction in the value of unpaid annual leave if employment comes to an end while paid annual leave remains untaken.
[16]: He therefore rejected the construction for which Centennial was contending, saying that he was “not prepared, in effect, to read down s 90(2) in the face of the expectation stated in the Explanatory Memorandum when that construction is plainly open on the terms of s 90(2) itself”.
[17]: On his Honour’s construction, clause 19.5 purports to confer an entitlement that is less than the minimum entitlement for which s 90(2) of the FW Act provides. He stated that “cl 19.5 [operates] on its face (‘an employee is paid’) in a way which excludes the operation of s 90(2)”. Having regard to the terms of s 55(1) of the FW Act, which, it will be recalled, prohibits an enterprise agreement from excluding any provision of the National Employment Standards, his Honour held, that clause 19.5 had no effect.
The Full Court in Centennial upheld the reasoning of the trial Judge. It is appropriate to set out the court’s reasoning in doing so by quoting the judgment of the court at [26] – [48] as follows:
[26]: We are not satisfied that the primary judge erred in his construction of s 90(2).
[27]: In determining the meaning of words in a statute one begins with the text (Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at [47]), albeit that the text must be read in context (Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304 (Gibbs CJ), 319-320 (Mason and Wilson JJ)). The primary judge began in this way.
[28]: When one starts with the text — “the amount that would have been payable to the employee had the employee taken that period of leave” — Centennial correctly points out that that raises the question: pursuant to what obligation? According to Centennial, the answer is: pursuant to the obligation found in s 90(1) and that necessarily means that the amount payable is the base rate for the ordinary hours worked for the period in question. Centennial argued that this does not involve any reading down of the words in the subsection and the primary judge effectively leaned against adopting its construction, by which we understood it to mean that his Honour was predisposed against it or that he somehow misunderstood its argument. Neither inference is open.
[29]: Centennial contended that the “notes” to s 55(4) and (6) support its interpretation of the text.
[30]: Despite s 13(1) of the Acts Interpretation Act 1901 (Cth), which provides that all material in an Act is part of the Act, the effect of s 40A of the FW Act is that “[n]o marginal note, footnote or endnote … shall be taken to be part of the Act.” Centennial submitted, however, that the notes can be taken into account as part of the text (relying on One.Tel Ltd (in liq) v Rich (2005) 190 FLR 443 at [54] per Bergin J) or, in the alternative, as part of the extrinsic material. We assume without deciding that this is so. Be that as it may, the notes do not provide any assistance.
[31]: Section 55(4) states:
A modern award or enterprise agreement may also include the following kinds of terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards; but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.
[32]: There are three notes to the subsection. Centennial’s submission related to the first two:
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).
[33]: Centennial relied on the references to s 90, pointing to the lack of any distinction in these notes between s 90(1) and (2). In Centennial’s submission, there is an implicit assumption (and presumably therefore a legislative intention) that the rate in s 90(2) is the same as the rate in s 90(1). We do not agree.
[34]: Properly understood, the references to s 90 in the notes to s 55(4) are references to s 90(1). They each deal with the taking of leave during employment and are not directed to what is to occur upon termination. That issue is dealt with discretely in s 90(2).
[35]: Section 55(6) states:
To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.
[36]: The note reads as follows:
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave apply, as a minimum standard to 4 weeks of that leave.
[37]: Centennial submitted that this demonstrates that the National Employment Standard is “the minimum, it’s the floor, separate from the award or agreement entitlement”.
[38]: It is undoubtedly true that the National Employment Standards are minimum standards. Centennial was also right when it argued that s 90 must be read as a whole and in the context of the National Employment Standards. But there is no reason to conclude that the primary judge did not do this. Nor does it necessarily advance Centennial’s case to read the section in this way. Section 90(1) creates the minimum standard: payment at the base rate for ordinary hours worked. The effect of s 90(2) is that if that is the rate at which the employee is paid when he or she takes annual leave, then that is the minimum amount that must be paid for any accrued untaken annual leave. If, on the other hand, there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then s 90(2) stipulates that that is the rate which is payable where annual leave has accrued but has not been taken. This is the natural way to read the section and there is nothing in the legislative context which would require a different interpretation.
[39]: The context in which s 90(2) must be construed includes the existing state of the law, that is to say, the state of the law at the time of the enactment: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.
[40]: The precursor to s 90 of the FW Act was s 235 of the Workplace Relations Act 1996 (Cth) (“WR Act”), which was part of the Australian Fair Pay and Conditions Standard in Pt 7 of the Act. It read as follows:
235 Annual leave — payment rules
(1) If an employee takes annual leave during a period, the employee must be paid a rate for each hour (pro-rated for part hours) of annual leave taken that is no less than the rate that, immediately before the period begins, is the employee’s basic periodic rate of pay (expressed as an hourly rate).
(2) If the employment of an employee who has not taken an amount of accrued annual leave ends at a particular time, the employee must be paid a rate for each hour (pro-rated for part hours) of the employee’s untaken accrued annual leave that is no less than the rate that, immediately before that time is the employee’s basic periodic rate of pay (expressed as an hourly rate).
[41]: Centennial argued that there is nothing in the FW Act or the extrinsic materials to suggest that the Parliament intended to change the payment rules as laid down in the WR Act. This argument must be rejected. One cannot ignore the fact that the references to “basic periodic rate of pay” appearing in both subsections of s 235 of the WR Act have re-emerged as “base rate of pay” only in s 90(1) of the FW Act. That manifests a legislative intention not to confine “the amount that would have been payable” to the base rate of pay. If the intention were otherwise, one would expect to see “base rate of pay” in both subsections of s 90 or, at least a reference in s 90(2) to the rate prescribed by s 90(1).
[42]: Centennial also submitted, in effect, that the construction preferred by the primary judge is unlikely to be correct because it would give rise to uncertainty. It argued that the words “would have been payable” refer to a liability for a future event and, if the liability is to include such matters as rostered overtime, shift allowances, weekend penalty rates and bonuses, these will vary from time to time. Centennial maintained that only its construction offers certainty because it ignores all these variable components. In our view, this argument is a furphy. The intention of the legislation is that untaken annual leave is payable at the rate at which it would have been paid had the employee taken it at the time the employee was eligible for it. If the intention were to require untaken annual leave to be paid at the base rate, then, as we have observed, in the light of the legislative history one would expect a statement to this effect in the subsection.
[43]: Centennial’s reliance on the terms of the other leave provisions in the National Employment Standards is misplaced. Rather than supporting its argument, the express reference to “base rate of pay” in each of them supports the primary judge’s interpretation. In any case, as the CFMEU pointed out, the provisions in question deal only with the amounts payable when the leave is taken and in this respect are comparable to s 90(1), not s 90(2). The primary judge’s construction is not out of harmony with the text, nature and purpose of the provisions dealing with the National Employment Standards.
[44]: Centennial drew attention to the provisions for cashing out annual leave in ss 93(2)(c) and 94(4), each of which requires employers to pay employees “at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone”. These provisions enable an employer and an employee to agree to the employee cashing out a particular amount of the employee’s accrued paid annual leave over and above four weeks. A similar provision appears in s 101(2)(c) in relation to personal/carer’s leave.
[45]: Contrary to Centennial’s submission, we do not consider the absence of the adjective “full” before “amount” in s 90(2) (in contrast to ss 93(2) and 94(4)) to be of any consequence. Both ss 93(2)(c) and 94(4) are concerned with cashing out of accrued leave entitlements. They assume that an employee has accrued more than four weeks leave and may wish to cash out some or all of the excess entitlement. Read in that context, “full” is employed to prevent an agreement under which the employee may be willing to accept a part payment in respect of an excess accrued period of leave. No such issue arises on termination when all accrued entitlements must be paid to wipe the slate clean.
[46]: Finally, there is no justification for the submission that his Honour fell into appealable error by placing too much weight on what was said in [372] of the Explanatory Memorandum. All his Honour said was that it supports the interpretation which is “plainly open” from the text itself.
[47]: Centennial relied on the Explanatory Memorandum, too, but confined its submission in this regard to the statements made in the regulatory analysis offered in its opening pages. According to the regulatory analysis, which is concerned with the implications of the legislative changes for employers, employees and the wider community, “[a] key change under the NES is a simpler manner of accrual and the concept of ‘service’ for calculating the entitlement. Paid annual leave will accrue and then be taken on the basis of an employee’s ordinary hours of work”. Centennial made much of the statements that “[t]he NES will not change the coverage or quantum of the annual leave entitlement” (in r 57) and that “the major regulation change under the NES is to simplify complex rules around annual leave accrual” (in r 58). Its point was that these passages indicate that there was never any intention to change the status quo. But none of this assists Centennial. The term “quantum” is ambiguous. Read in context, it appears to relate to hours of work, rather than the amount payable. In any event, the Court is not concerned with what the Government might subjectively have intended. The legislative intention is “the ‘intention manifested’ by the legislation”: Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [31] (emphasis in original), referring to Wik Peoples v Queensland (1996) 187 CLR 1 at 168-169 per Gummow J. As French CJ, Gummow, Hayne, Crennan and Kiefel JJ went on to observe in Saeed:
Statements as to legislative intention made in explanatory memoranda or by Ministers, however, clear or emphatic, cannot overcome the need to carefully consider the words of the statute to ascertain its meaning.
[48]: Furthermore, “through oversight or inadvertence”, the intention of the Parliament might not be reflected in the legislation. If that happens, the Court must “give effect to the will of the Parliament as expressed in the law”. See Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518 (Mason CJ, Wilson and Dawson JJ) cited in Saeed at [32].
Adoption of the reasoning of the Centennial Full Court to the circumstances of this case mandates that this court finds that the applicant would also be entitled to an award of compensation for the additional 1.75 weeks on the applicant’s alternative argument. That argument was advanced on behalf of the applicant in reliance upon a literal reading of s.90(2) of the Act in circumstances where, by oversight or inadvertence, the intention of the Parliament to ensure that the payment of all entitlements under a Workplace Agreement, such as the subject Agreement, was enforceable against an employer. It could not have been the intention of Parliament to override the provisions of the Agreement in circumstances such as the present. Such an approach accords with the findings of the Full Court in Skene where, at [227], the Court held:
“That being so and consistently with the way in which the case was run before the primary Judge, His Honour should have found that Mr Skene was a “permanent FTM” and entitled to the benefit of clause 19.1 of the Agreement.”
Though the respondent’s argument that “untaken paid annual leave” should be calculated under s.87 of the Act (because the term “paid annual leave” as defined in s.12 of the Act so provides) was at first blush appealing, upon the proper construction of s.90(2) of the Act, and considering that Parliament would not have intended an unjust outcome by reason of the enactment of the Act in this respect, the respondent’s arguments are without merit.
The parties have agreed that in the event that the Court finds that the applicant is entitled to be paid for an extra 1.75 weeks accrued but unpaid annual leave based on the applicant’s applicable rate of pay, the total amount payable for both principal and interest is the amount of $5,954.48. Accordingly, that is the applicable amount which additionally ought to be paid by the respondent to the applicant – having regard to the 5 week payment already made – for the remaining component of the applicant’s as yet unpaid accrued annual leave.
Penalty
The Full Court in Skene found that Workpac Pty Ltd had contravened the provisions of s.44(1) of the Act.
At [233] – [235] inclusive of the judgment of the Full Court in Skene, the Court found that the trial Judge was in error in mistakenly finding that Workpac Pty Ltd had taken appropriate advice and had closely considered the legal implications of its conduct. It was found that such error warranted appellate correction.[2]
[2] Comcare v Post Logistics Australasia Pty Limited (2012) 207 FCR 178 at [38] – [39].
Notwithstanding such finding by the Full Court in Skene, the actions of Workpac Pty Ltd relative to its consideration of its obligations due to the applicant must be looked at in the context of contemporary considerations.
Prior to the Full Court decision in Skene, the law was unclear as to whether an employee categorised as a casual employee in a Workplace Agreement could, in circumstances such as the present, nevertheless be properly treated as a permanent employee for the purposes of annual leave entitlements. Workpac ought not to be criticised for following a formula which had not only been followed by it, but by many other labour hire companies, over a long period of time.
The question of lack of contrition on the part of Workpac does not arise in this case because of the above considerations. Even if an apology had been advanced, such apology might have been seen as hollow in circumstances where the work practice adopted by Workpac in respect of the applicant was one which had been widely regarded as lawful under the Act prior to the judgment of the Full Court in Skene.
Such considerations also bear upon the question as to what, if any, penalty should be imposed in circumstances where Workpac readily paid that which it was ordered to pay after the orders of the trial Judge were handed down. There is no suggestion that Workpac is other than a law abiding corporate citizen, notwithstanding the finding of the Full Court in Skene that the applicant had been mischaracterised as to the status of his employment.
It cannot be said that Workpac had deliberately set out to evade the law or otherwise short-change the applicant. Workpac has not been unco-operative, but rather has asserted its legal rights as it was entitled to do.
There is no suggestion that Workpac was an intentional repeat offender in respect of the mischaracterisation of the applicant’s employment status, or of any other employee.
Nevertheless, as found by the Full Court in Skene, there has been a contravention of s.44(1) of the Act. Due recognition of that contravention is required both as a recognition that the law is not to be breached without impunity, and also for reasons of deterrence. The penalty imposed, however, ought to be at the lower end of the scale. Accordingly, the appropriate penalty, based on the agreement of the parties that a single penalty is to be imposed for the contravention of two infringements (s.44(1) and item 2(2) of Schedule 16 to Transactional Act), is as per the table below.
Penalty
Provision Contravention Maximum Penalty Penalty s.44 Contravention of the national employment standards $33,000 $1,650.00
(5%)
Workpac has substantially lost on the application before the Court. It should pay the applicant’s costs of and incidental to the application to be agreed or as assessed pursuant to the applicable Federal Court Scale of Costs.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Egan
Associate:
Date: 7 December 2018
0
14
4