The Australian Workers' Union v US Group T/A CMR

[2013] FWC 7854

[2013] FWC 7854

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

The Australian Workers’ Union
v
US Group T/A CMR
(C2013/4545)

COMMISSIONER RYAN MELBOURNE, 9 OCTOBER 2013

Alleged dispute concerning casual entitlements.

[1] On 29 May 2013 the AWU filed an application for the Commission to deal with a dispute in accordance with the dispute settlement procedure in the US Group Pty Ltd and the Australian Workers’ Union Regional Rail Link Work Package C Alliance Agreement 2012 (the Agreement). The dispute concerned the proper application by US Group T/A CMR (CMR) of the terms of the agreement relating to hours of work of, and hours accrued for RDO’s by, casual employees. The matter in dispute was not able to be resolved through conciliation and the matter in dispute was dealt with by arbitration at a hearing on 19 July 2013.

[2] Determination of the issue in dispute requires an interpretation of the terms of the Agreement. The principles for interpreting enterprise agreements are well established and I have applied those principles in this matter. 1

[3] Neither the AWU nor CMR sought to lead witness evidence as both were content to rely upon submissions made to the Commission.

[4] The primary contention of the AWU was that CMR had misapplied the Agreement by paying casuals for each engagement the full amount of ordinary hours worked whereas CMR should have retained .8 hours for each 8 ordinary hours worked as an accrual towards an RDO entitlement.

[5] The relief sought by the AWU is for an order to require CMR to pay the overtime rate for the .8 hours each day where accruals had not occurred.

[6] The primary contention of CMR is that the accrual of time for RDO’s was applied in accordance with the Agreement but that in the early stages of the operation of the Agreement casual employees were paid out the accruals on each engagement as there was a high turnover of staff and also because some employees insisted that they would not be available for further work unless CMR paid them in full and did not retain any amount on account of the RDO accrual.

[7] The relevant clauses of the Agreement are as follows:

“7. CONTRACT OF EMPLOYMENT

a) Employees may be employed on a full-time or casual basis. Casual employees will be engaged for purposes including the supplementing or topping up of regular employees on normal operations or to perform specialised work.

b) A casual employee is one who is engaged on a daily basis. A casual loading of 25% of the applicable Ordinary time rate shall be paid. The casual loading is paid in lieu of annual leave, personal leave, parental leave, and public holidays as contained in this Agreement. In calculating overtime payments for casuals the following should apply; hourly rate and 25% loading then the relevant penalty rate.

c) On each occasion a casual employee is required to attend work the employee shall be entitled to payment for a minimum of eight (8) hours work, plus the relevant fares and travel allowance.

d) Termination of all casual engagements shall require eight (8) hours' notice on either side or the payment or forfeiture of eight (8) hours pay, as the case may be.

9. HOURS OF WORK

9.1 Hours of work

The parties are committed to keeping the Project operating whilst giving individual employees a balance of work and leisure. This will be achieved by a roster for work on the Project as required to meet the objectives of the program, whilst giving individual employees a balance of work and recreation.

9.2 Standard Ordinary Hours

9.2.1 The ordinary hours of work shall generally be 36 hours per week, 8 hours per day to be worked Monday to Friday between the hours of 6.00am and 6.00pm or as varied in accordance with subclause 9.2.2 or subclause 9.3.

9.2.2 The standard ordinary hours of work for different work areas, once established, may be varied by agreement between the Company and the majority of the directly affected employees in the work area or, in the absence of agreement, by the giving of 7 days' notice by the Company to the employees concerned. The Parties will consult on the standard ordinary hours of work and the Company will take into consideration an employee's family commitments prior to implementing changes.

9.2.3 All work performed outside standard ordinary hours will attract the relevant penalty rates as set out in this agreement.

9.2.4 Work on Fridays

The company and the employees will endeavour to ensure that wherever possible normal productive work shall cease at 3.30pm on Fridays. This does not mean that no productive work can continue past this time and the company and the employees will ensure that a sensible approach to this clause is maintained. That is, work can continue past 3.30pm on Fridays if the work is necessary for the production schedule to be maintained or to ensure that the other Employees can be productively employed.

9.3 Special Ordinary Hours

9.3.1 For some parts of the Project the standard ordinary hours of work may be scheduled between Monday to Sunday. Such scheduling will be undertaken by agreement between the Company and the majority of the directly affected employees in the work area or, in the absence of agreement, by the giving of 7 days' notice by the Company to the employees concerned. The Company will take into consideration an employee's family commitments prior to implementing changes.

9.3.2 Examples of the type of work for which the hours of work may be scheduled to include a Saturday and/or Sunday include critical shutdown activities such as rail crossings, occupations and shutdowns, traffic switches, beam erections, utility relocations plant maintenance, concrete pours, road construction, piling and other activities to meet the specific requirements of the Project of which cannot be done on any other day.

9.3.3 Where work is scheduled on Saturdays and Sundays as part of an employee's ordinary hours of work, such ordinary hours worked on a weekend will attract on Saturday the rate of one and a half times the Ordinary time rate for the first 2 hours and double) the Ordinary time rate for remaining hours and on Sunday double the Ordinary time rate of pay.

9.4 Overtime and Weekend Work

9.4.1 Employees will be required to work reasonable weekend and non-· weekend overtime when requested as determined by the Company to meet the needs of the Company's contractual requirements for completion of work on the Project.

9.4.2 All time worked outside or in excess of an employee's ordinary hours of work (inclusive of time worked for accrual purposes as prescribed herein) shall be deemed overtime. Overtime worked Monday to Saturday will be paid at one and a half times the Ordinary time rate for the first two hours and at double the Ordinary time rate for all time thereafter. Overtime on Sunday will attract double the Ordinary time rate.

9.4.3 An employee recalled to work overtime after leaving the Project (whether notified before or after leaving the Project) will be paid for a minimum of four hours' work at the appropriate overtime time rate for each time the employee is so recalled. Except in the case of unforeseen circumstances arising, the employee will not be required to work the full four hours if the job the employee was recalled to perform is completed within a shorter period. This subclause 9.4.3 will not apply in cases where it is customary for an employee to return to the Project to perform a specific job outside ordinary working hours or where the overtime is continuous (subject to a reasonable meal break) with the completion or commencement of ordinary working time.

9. 6 Rostered Days Off (RDOs)

From the commencement of the Project, 8 hours ordinary time may be worked with 0.8 hours per day accruing for a paid Rostered Day Off (RDO). Employees will be entitled to 26 RDOs when they work a full calendar year. RDO's will be administered under the following principles:

a) Requirements of the Project and the program will determine the Work Roster.

b) There will be requirements to adjust RDO's during the life of the Project to meet Project needs and program.

c) RDO's may be adjusted for part, or all, of a workcrew(s) to ensure emergency work or critical program work is undertaken.

d) The parties are committed to encouraging all employees to take their accrued RDOs on a regular basis during the Project to maintain a satisfactory work/life balance.

e) It is the intent of the parties to have regular communication regarding the Project and calendar.

f) Refer to the projects RDO calendar for information on the fixed and flexible roster. See attached 2012 and 2013 dates.

g) Work Schedules will determine the annual RDO calendar. The annual RDO calendar will be set 3 months prior to the commencement of the new year based on the industry calendar.

9.6.1 The treatment of RDOs will be as follows:

(a) An Employee will accrue 0.8 hours towards a RDO for each day of 8 hour's ordinary time.

(b) 7.2 hours will be deducted from the accrual for each RDO that is taken.

(c) Accrued RDOs must be used before any annual leave day(s) are approved.

(d) Any accrued RDOs remaining at the conclusion of the Project or termination of employment will be converted to annual leave. Under no circumstances will RDOs be paid out to an employee prior to the person's termination.

(e) A new Employee will be eligible for an RDO after accruing 7.2 hours.

(f) A new Employee who does not have hours accrued to cover for scheduled RDO's shall be paid the RDO's up to a maximum of 5 RDO's. Any RDO debit balance at the time of termination will be deducted from the employee's termination payment ..

(g) When an Employee is required to reschedule their RDO, they will be paid at their ordinary time rate for that day that is worked.

9.6.2 Scheduling of RDO's

RDO's will be scheduled and identified within the Project calendar of which there are 7 fixed RDO's, during a full calendar year. The parties agree that there are circumstances where the Company will schedule equipment maintenance, emergency, and Critical Program Work and other activities to meet the specific requirements of the program on days that have been identified as RDO's. When such work is being scheduled, consultation will take place between the Company and the affected work group/selected individuals.

Employee's/workgroups not affected by occupations, critical program works, scheduled maintenance, emergency and other activities to meet specific requirements of the program on days that have been identified as RDO's, will take the scheduled RDO.

When such work is required on an RDO or Leisure Saturday, the Company will reschedule the RDO/Leisure Saturday for the work group or selected individuals, to an agreed alternative date. The rescheduled day is to be taken within 4 weeks.

Where an employee has worked on an RDO during the Xmas and Easter period, the company will endeavour to reschedule the RDO to the next available public holiday i.e. Australia Day and Anzac Day, subject to meeting the client's requirements for scheduled works and aligning with the RDO project calendar.

Where the work is cancelled by the Company on the rescheduled RDO day the RDO will revert to the Project calendar.”

[8] The AWU contended that the intention in making the Agreement, which is in identical terms to other greenfields agreements made by the AWU for Package C of the Regional Rail Link Project, was to ensure that casual employees received the benefit of paid RDO’s on the same basis as full time employees.

[9] This intention is reflected in some of the provisions of the Agreement. For example:

• the weekly ordinary hours are 36 or 7.2 per day - clause 9.2.1



• the actual minimum work time is 8 hours - clause 9.2.1, clause 9.6 and clause 7(d).



• employees work an extra .8 hours a day thus leading to workers working a 72 hour fortnight in 9 days. This then provides employees with the tenth day off work or 26 RDO’s per year - clause 9.6 and 9.6.1.

[10] CMR currently operates its business in accord with the AWU’s intended operation of the Agreement.

[11] Whilst there is some support for the AWU’s contention within the wording of the Agreement, that contention is not recognised by an explicit and unequivocal statement within the Agreement.

[12] There are other clauses which are not consistent with the contention of the AWU.

[13] The Regional Rail Link Project creates significant disruption at times to the ordinary train timetables and services. To minimise this disruption work on the Regional Rail Link Project occurs at weekends as well as during the ordinary working week.

[14] CMR contended that a significant number of casual employees have been employed to work weekends. The AWU contended that all casuals even those employed for regular weekend work should be accruing RDO entitlements.

[15] The Agreement is based upon a normal working week being Monday to Friday with the hours worked between 6.00am and 6.00pm - clause 9.2.1.

[16] Clause 9.3 specifically provides for a mechanism which permits weekend work to be included in the ordinary hours of work. However, weekend work can only be considered to be ordinary hours of work if there is agreement between CMR and the majority of affected employees. If CMR wants to have weekend work count as part of ordinary hours but the respective employees will not agree, then CMR is entitled to introduce weekend work as ordinary hours by giving employees 7 days notice. If the employees or the AWU want to have weekend work count as part of ordinary hours but CMR will not agree, then the employees are effectively denied what they want as CMR exercises an effective right of veto by simply withholding its agreement.

[17] CMR made clear to the Commission that it had never sought to use clause 9.3 of the Agreement.

[18] The very fact that clause 9.3 has not been used or sought to be used by CMR, the employees or the AWU means that weekend work has always been and continues to be overtime. Hours worked as overtime do not count towards and cannot be used to accrue time for the purposes of an RDO. The opening words of clause 9.6 make this very clear.

[19] To the extent that any of the dispute relates to work performed by casual employees on weekends then that part of the dispute must be resolved against the AWU.

[20] The other consequence that flows from the non-use of clause 9.3 is that where a full time employee does not perform at least 36 hours work within the span of hours Monday to Friday the employee must nevertheless be paid a minimum of 36 hours for that period of time. An example illustrates this point.

Full Time Employee A works 5 days Wednesday to Sunday inclusive with each day being a shift of 12 hours. Of the 60 hours worked only 24 hours are ordinary hours (8 hours on each of Wed, Thurs and Friday) with the remaining 36 hours being overtime. However, as Full Time Employee A is a full time employee he/she is entitled to be paid 36 ordinary hours per week. This means that the effect of the working arrangements for Full Time Employee A is that CMR would have to pay Full Time Employee A 36 ordinary hours and 36 overtime hours for the hours worked.

[21] A key justification argued by CMR for paying casuals for all of their hours worked rather than retaining any accruals for an RDO was that the casual employees demanded payment in full and threatened CMR that if CMR didn’t pay them in full then they would not work for CMR again. CMR contended that in the face of such demands from casual employees that CMR needed to pay the casuals in full.

[22] This argument seems quite implausible.

[23] The reality is that CMR simply should have called the casual employees’ bluff.

[24] If a casual employee wanted further work with CMR then the casual would have accepted having CMR comply with the Agreement by withholding small portion of the casuals pay for the purpose of accruing an RDO entitlement.

[25] The very nature of the threat from some casual employees shows that the employees wanted further work with CMR. In such circumstances they were not in a position to dictate the terms for any such further work.

[26] CMR’s submission as to the threat from some casual employees appears to be no more than a convenience for CMR in that it did not need to maintain accruals for employees for RDO purposes.

[27] I accept the position put by CMR that when it first commenced supplying labour to the Package C part of the Regional Rail Link Project that the need for labour was sporadic. In such circumstances some employees engaged as casuals had no expectation of further work with CMR and CMR had no expectation of re-engaging the employee.

[28] At all times the critical decision was that of CMR. If CMR did not intend to re-engage a casual then properly the casual employee’s employment had ended and the casual employee was entitled to be paid for all hours worked with nothing being retained by the employer for RDO accrual purposes.

[29] However, where CMR intended to offer the casual employee further work under this Agreement then the employment relationship had not ended and CMR was obliged to retain .8 of an hour for each day worked by the casual employee as an accrual towards a paid RDO.

[30] The AWU contended that whenever a casual employee does not have .8 hours deducted from their pay and accrued for an RDO entitlement for each 8 hours worked then the .8 hours must be paid at the overtime rate.

[31] The AWU contended that clauses 9.4.2 and 9.2.1 in combination support this.

[32] Relevantly, clauses 7(c), 9.2.1, 9.2.3, 9.4.2, 9.6 and 9.6.1 need to be considered.

“7(c) On each occasion a casual employee is required to attend work the employee shall be entitled to payment for a minimum of eight (8) hours work, plus the relevant fares and travel allowance.

9.2.1 The ordinary hours of work shall generally be 36 hours per week, 8 hours per day to be worked Monday to Friday between the hours of 6.00am and 6.00pm or as varied in accordance with subclause 9.2.2 or subclause 9.3.

9.2.3 All work performed outside standard ordinary hours will attract the relevant penalty rates as set out in this agreement.

9.4.2 All time worked outside or in excess of an employee's ordinary hours of work (inclusive of time worked for accrual purposes as prescribed herein) shall be deemed overtime. Overtime worked Monday to Saturday will be paid at one and a half times the Ordinary time rate for the first two hours and at double the Ordinary time rate for all time thereafter. Overtime on Sunday will attract double the Ordinary time rate.

9.6 From the commencement of the Project, 8 hours ordinary time may be worked with 0.8 hours per day accruing for a paid Rostered Day Off (RDO). Employees will be entitled to 26 RDOs when they work a full calendar year. RDO's will be administered under the following principles: (not reproduced here)

9.6.1 The treatment of RDOs will be as follows:

(a) An Employee will accrue 0.8 hours towards a RDO for each day of 8 hour's ordinary time.

(b) 7.2 hours will be deducted from the accrual for each RDO that is taken.

(c) Accrued RDOs must be used before any annual leave day(s) are approved.

(d) Any accrued RDOs remaining at the conclusion of the Project or termination of employment will be converted to annual leave. Under no circumstances will RDOs be paid out to an employee prior to the person's termination.

(e) A new Employee will be eligible for an RDO after accruing 7.2 hours.

(f) A new Employee who does not have hours accrued to cover for scheduled RDO's shall be paid the RDO's up to a maximum of 5 RDO's. Any RDO debit balance at the time of termination will be deducted from the employee's termination payment ..”

[33] Clause 9.2.1 identifies that the maximum ordinary hours to be worked in a week is 36. This means that the notional number of ordinary hours each day is 7.2. The notional ordinary hour day of 7.2 hours is recognised in clause 9.6.1(b) and (e). However, both clauses 9.2.1 and 7(c) make clear that the actual minimum number of ordinary hours to be worked each day is 8. Whilst clause 9.6 uses the word “may” in the first sentence which suggests that the provision of RDO’s is discretionary, the next sentence clearly provides for an entitlement to RDO’s. Thus the word “may” should not be read as being discretionary.

[34] The relationship between the notional 7.2 ordinary hour day and the 8 hour actual ordinary hour day is dealt with in both clause 9.4.2 and clause 9.6.1.

[35] Clause 9.6.1(a) makes clear that each 8 ordinary hour day must include .8 hours accrued towards an RDO entitlement and clause 9.6.1(d) makes clear that the hours accrued for the purposes of an RDO entitlement cannot be cashed out before termination of the employment relationship. The language of the two provisions couldn’t be clearer!

[36] Clause 9.4.2 provides that the 8 hour day is considered to be all ordinary hours where it includes time worked for purposes of accruing an RDO entitlement. The logic of clause 9.4.2 is that where an 8 hour day is worked but no time is accrued for RDO purposes then the time worked in excess of 36 hours per week is overtime. This means that where an employee works 8 hours per day on each of 5 days in a week but does not accrue any entitlement to an RDO then .8 hours each day is overtime. The employee would then have an entitlement to be paid 4 hours overtime in that week.

[37] There is a clear clash between clause 9.4.2 and 9.6.1 if both are applied to an employee who is a continuing employee. In such circumstances 9.4.2 gives way to 9.6 and 9.6.1.

[38] However there is no clash between 9.4.2 and 9.6 and 9.6.1 when either the employment relationship has come to an end for a full time employee or when the employer has failed to comply with clause 9.6 in relation to any employee.

[39] If the employment relationship ends between a full time employee and CMR, and CMR has complied with clause 9.6.1, then there can be no clash between 9.4.2 and 9.6. This is so because of clause 9.6.1(d) which specifically provides for the treatment of unused RDO’s as at the time of termination. The effect of treating unused RDO’s as annual leave means that on termination unused RDO’s are paid out at the ordinary hourly rate of pay. The very fact that clause 9.6.1(d) treats unused RDO’s as annual leave means that this provision could only apply to full time employees as casual employees have no entitlement to annual leave.

[40] If the employment relationship ends between a casual employee and CMR, and CMR has complied with clause 9.6.1, then there is still a clash between 9.4.2 and 9.6. This is so because clause 9.6 does not provide for any specific mechanism to pay out unused RDO accruals to a casual employee. The very structure of the Agreement leads to the conclusion that in such circumstances clause 9.4.2 provides the only specific mechanism for paying for hours in excess of ordinary hours.

[41] If CMR has not complied with clause 9.6 by retaining .8 hours for each 8 ordinary hour day worked by an employee then there simply cannot be a clash between clause 9.4.2 and 9.6 and clause 9.4.2 will apply of its own accord.

[42] In the circumstances of the present matter where CMR has acknowledged that clause 9.6 was not complied with in relation to some casuals who bluffed CMR into not complying with clause 9.6 then the remaining question is: How does clause 9.4.2 apply to such casual employees?

[43] The AWU contended that for each day that a casual employee worked 8 hours and for which CMR did not retain .8 hours towards an RDO accrual then CMR was obliged to pay the casual employee the .8 hours at the overtime rate.

[44] The superficial attraction of this contention is not supported by any explicit provision of the Agreement. It may very well have been the intention of the AWU to have the Agreement operate in the way that the AWU contended, but there is nothing in the Agreement which specifically provides the obligation to pay each 8 hour day as 7.2 ordinary hours and .8 overtime hours.

[45] I have no hesitation in concluding that where CMR has not complied with clause 9.6 and has not retained .8 hours out of each 8 ordinary hour day towards an RDO accrual for an employee then if the employee works 5 ordinary hour days of 8 hours a day then the employee must be paid for 36 ordinary hours and 4 overtime hours. The combined operation of clauses 9.2.1, 9.2.3 and 9.4.2 make this clear.

[46] Where an employee has, in a Monday to Friday week, worked 8 ordinary hours on each day and no more than 36 ordinary hours in total then it does not appear that the employee is entitled to overtime payments even though the employee has worked more than 7.2 ordinary hours per day. This is so because the ordinary working day is 8 hours and the ordinary working week is 36 hours and until the employee has either worked more than 36 hours or has worked more than 8 hours per day no overtime is payable. Clause 9.2.3 strongly supports this conclusion.

[47] An example illustrates this point.

Casual Employee B works 5 days Wednesday to Sunday inclusive with each day being a shift of 12 hours. Of the 60 hours worked only 24 hours are ordinary hours (8 hours on each of Wed, Thurs and Friday) with the remaining 36 hours being overtime. CMR has not retained .8 hours from each of the Wednesday, Thursday or Friday for RDO accrual purposes. Casual Employee B is not reengaged by CMR. Casual Employee B would be entitled to be paid for 24 ordinary hours and 36 overtime hours and not 21.6 ordinary hours and 38.4 overtime hours as contended for by the AWU.

[48] It would have been relatively easy for the parties to this Agreement to have specified that where a casual employee does not work enough hours to actually receive an RDO entitlement then on termination all hours over 7.2 ordinary hours per day would be paid at the overtime rate.

[49] The very fact that the Agreement does not contain such a provision provides a powerful argument for not reading such words into the Agreement.

[50] There is one last complicating factor in this matter.

[51] Clause 9.6.1(f) provides as follows:

“(f) A new Employee who does not have hours accrued to cover for scheduled RDO's shall be paid the RDO's up to a maximum of 5 RDO's. Any RDO debit balance at the time of termination will be deducted from the employee's termination payment.”

[52] The effect of clause 9.6.1 is that all new employees, casual or full time, will be paid for the first 5 RDO’s which occur during their period of employment regardless of whether the employee has accrued a full entitlement to the RDO’s. Reconciliation only occurs as at the time of termination of the employee. There is a real likelihood that some employees who continue working for CMR until the end of the project may only become aware that they are in RDO debt to CMR when their final pay is calculated. It is not clear from the terms of the Agreement as to what practices are in place to allow employees to monitor any RDO debt they may have to CMR.

Conclusion

[53] From the foregoing consideration of the terms of the Agreement the following conclusions in relation to the present matter can be drawn.

1. Casual employees only engaged for weekend work do not have and have never had an entitlement to accrue hours for RDO’s.

2. All hours worked by any employee on weekends is overtime and not ordinary hours.

3. Full time employees who do not work at least 36 ordinary hours between 6.00am to 6.00pm Monday to Friday must be paid a minimum of 36 ordinary hours.

4. Every full time and continuing casual employee is entitled to be paid for the first 5 RDO’s in their period of employment even if the employee has not accrued enough hours for the RDO’s.

5. Casual employees who work 36 or less ordinary hours per week and 8 or less ordinary hours per day are not entitled to overtime payments for time worked over 7.2 ordinary hours on an ordinary hour day.

6. CMR is not entitled to treat a casual employee as being terminated when CMR has not made a specific decision that CMR will not be offering further work to the casual employee.

[54] The foregoing decision only relates to the proper construction of the Agreement. I decline to make any orders as sought by the AWU. This decision should provide both CMR and the AWU with the proper basis for calculating the wage entitlements of each individual employee. Should there be continuing disputation over the entitlement of any individual employee then either of the parties can request that the Commission determine those entitlements in light of this decision.

COMMISSIONER

Appearances:

S. Wood for The Australian Workers’ Union

G. Fanning for US Group T/A CMR.

Hearing details:

2013.

Melbourne:

19 July

 1   ASU v ATO[2013] FWCFB 4752

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