[2021] FWC 796

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Transport Workers' Union of Australia
v
Air Refuel Pty Ltd T/A Air BP

Mr Hugh Ekeberg
v
Air Refuel Pty Ltd

(C2019/3341; C2019/3197)

COMMISSIONER SIMPSON

BRISBANE, 24 FEBRUARY 2021

Alleged dispute about accrual and deduction of annual leave under enterprise agreement and National Employment Standards.

[1] The Transport Workers’ Union of Australia (the TWU/the Union) and Mr Hugh Ekeberg (jointly ‘the Applicants’) made applications in relation to a dispute arising under the Air Refuel Pty Ltd Enterprise Agreement 2016 (the Agreement) with Air Refuel Pty Ltd (the Respondent).

[2] The disputes concern the manner in which annual leave is accrued and deducted from employees’ annual leave balances. In its section 739 dispute application, the TWU sought as a remedy that the Respondent cease its current practices relating to the payment of annual leave and comply with sections 90(1) and 89 of the Fair Work Act (2009) (the Act) and National Employment Standards (NES).

[3] The applications were subject to conciliation but were not able to be resolved.

[4] In light of an appeal to the High Court in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (Mondelez), a case relating to the accrual and deduction of NES leave entitlements, these joint dispute matters were adjourned pending the High Court delivering its decision. The Respondent provided an undertaking that in the event the Applicants’ interpretation was favoured it would make good the difference for any employees who applied for and were granted leave before the resolution of this dispute. The High Court delivered its decision on 13 August 2020, further to which these matters were relisted for conference and formal directions issued.

[5] Directions were issued for filing of evidence and submissions, including an agreed question for arbitration and agreed Statement of Facts. These materials and the agreed questions and Statement of Facts were accordingly provided by the parties.

[6] The question for arbitration as agreed by the parties was as follows:

Do Air Refuel's practices in relation to the accrual, payment and deduction of annual leave comply with:

i. clause 9.1 of the Air Refuel Pty Ltd Enterprise Agreement 2016; and

ii. section 87 (entitlement to annual leave) and section 90 (payment for annual leave) of the Fair Work Act 2009?

[7] The agreed Statement of Facts provided the relevant background to the disputes as follows:

“1 Relevant provisions in the Air Refuel Pty Ltd Enterprise Agreement 2016

Key terms of the Air Refuel Pty Ltd Enterprise Agreement 2016 (2016 EA) are set out below (relating to wage rates, ordinary hours, accrual of annual leave and payment of annual leave).

Key terms in the 2016 EA relating to annual leave
Wage Rates	Clause 7.2 of the 2016 EA provides for an hourly rate of pay that includes a loading for (amongst other things) public holidays. This same rate of pay applies to additional hours worked 'in excess of the specified work cycle' (clause 8.3).
Ordinary hours	Clause 8.1 of the 2016 EA provides that the ordinary hours for full time employees 'shall be an average of 38 hours per week over a nominated work cycle'.
Payment of annual leave	Clause 9.1.1 of the 2016 EA sets out the rate of pay for annual leave. It states: - A fulltime employee shall be entitled to be paid annual leave at the rate of 4 weeks of ordinary time for each year of continuous service consistent with the Fair Work Act 2009 (Cth). The period of annual leave shall be exclusive of any public holiday that occurs during the period. - Notwithstanding the above, an employee defined as a shiftworker for the purposes of the National Employment Standards (NES) will be entitled to an additional week of annual leave as provided for in the NES. (emphasis added) The 2010 EA and the 2014 EA generally contained the same terms. The 2008 EA did not refer to public holidays.
Deduction and payment of annual leave	Clause 9.1.3 of the 2016 EA provides that: - 'a week for the purposes of annual leave will be 38 hours and a day for the purposes of annual leave will be 7.6 hours'; and - 'annual leave will be paid at the loaded hourly rate'.

In relation to the 2016 EA, the key terms set out above have been included in the enterprise agreements applicable to employees covered by the 2016 EA and its predecessor enterprise agreements since 2008 (with only some minor variations, identified below) (i.e. the Air Refuel Pty Ltd Collective Agreement 2008 (2008 EA), the Air Refuel Pty Ltd Enterprise Agreement 2010 (2010 EA) and the Air Refuel Pty Ltd Enterprise Agreement 2014 (2014 EA)).

2 Brisbane

2.1 Rosters

The Brisbane employees work a 24-hour 7-day roster. It is set out in Table 1 below. At any given point in time, the Brisbane employees will be at various stages rotating through this roster. In summary, the Brisbane employees work:

(a) a '4 on, 4 off' roster that repeats itself after 16 weeks (with two minor exceptions: during the 16-week cycle, there is one instance of a 3-day break (identified with an 'X' in the table below) and one instance of a 5-day break (identified with a 'Z' in the table below));

(b) variable shift lengths (ranging from 6 hours to 12 hours per shift) and variable total hours each week (ranging from 31 hours per week to 48 hours per week);

(d) 56 days over the 16-week cycle (which equates to an average of 3.5 days per week).

Table 1: Length of shifts worked on each day of the roster at the Brisbane airport

2.2 Fortnightly pay

(a) Ordinary hours

Air Refuel pays the Brisbane Employees fortnightly. The employees receive the same amount of pay each fortnight (unless the employee works additional hours – see paragraph (b) below).

This fortnightly pay reflects payment for an average of 38 ordinary hours worked per week, paid at the hourly rate provided for in clause 7.2 of the 2016 EA.

As set out in Table 1 above, there are some weeks in the 16-week cycle in which an employee will work less than a 38 hours a week (e.g. the weeks 2, 6, 7, 8, 9, 13, 14, 15 and 16 in the cycle). Despite this, for those weeks, the employees are paid for working 38 ordinary hours. Similarly, in the remaining weeks in the cycle, an employee will work more than 38 ordinary hours a week. Again, they are paid for 38 ordinary hours. Over the 16-week cycle, an employee will receive an amount that reflects the number of actual hours worked.

(b) Additional hours

If an employee works hours in addition to their rostered hours, the employee will be paid at the applicable hourly rate in accordance with clause 8.3 of the 2016 EA. For example, if an employee works 13 hours on the Monday in Week 1 of the roster, the employee will receive payment for one additional hour at the hourly rate specified in clause 8.3.

(c) Pay and annual leave

If an employee takes annual leave (or any other form of paid leave, such as sick leave) during any pay cycle, the employee continues to receive the same pay as the previous fortnight. Air Refuel does not adjust an employee's pay to reflect the number of hours of leave deducted from the employee's leave balance (e.g. if an employee is rostered to work a 12 hour day, Air Refuel will continue to pay that employee for the average hours worked on that day, and deduct 7.6 hours of annual leave from the employee's leave balance).

Employees continue to be paid for the average ordinary hours while they take annual leave. Whether the employee worked a particular day or took the day off on annual leave, the employee will receive the same pay.

3 Annual leave – accrual and deduction

(a) Accrual

Air Refuel regards the employees as shiftworkers.

In accordance with clause 9.1.3 of the 2016 EA, 'a week for the purpose of annual leave will be 38 hours and a day for the purposes of annual leave will be 7.6 hours'.

The shiftworkers therefore accrue 5 x 38 hours (190 hours), or 5 weeks (clause 9.1.1), of annual leave a year.

(b) Deductions

If, during the course of a week (between Monday and Sunday), an employee takes:

(i) a single day of leave, 7.6 hours of leave is deducted from the employee's leave balance;

(ii) two consecutive days of leave, 2 x 7.6 hours (15.2 hours) of leave is deducted from the employee's leave balance;

(iii) three consecutive days of leave, such that:

(A) the employee is not absent for the whole week between Monday to Sunday, 3 x 7.6 hours (22.8 hours) of leave is deducted from their annual leave balance;

(B) the employee is absent for the whole week between Monday to Sunday, 38 hours of leave is deducted from the employee's leave balance; or

(iv) four (or more) consecutive days, as this will result in the employee being absent from work for a whole week between Monday and Sunday, Air Refuel deducts 38 hours of leave from the employee's annual leave balance.

4 Perth

4.1 Rosters

The Perth employees work a different roster to the roster that is worked by the Brisbane employees. The Perth employees work a two-week rolling roster (see the table below) under which they:

(a) work an average of 38 hours per week (in accordance with clause 8.1 of the 2016 EA);

(b) are paid the same amount each fortnight, calculated by reference to their average of 38 ordinary hours of work per week (their pay is not reduced if they take annual leave); and

As the roster in Perth is a rolling one, the Perth employees do not have a set work pattern. Accordingly, a Perth employee may work 5 days straight and then have 5 consecutive days on which they are not rostered to work.

Table 2: Perth Roster

4.2 Leave Deduction – past practice

Prior to 6 May 2019, when the Perth Employees took annual leave, only days which the Perth employees would otherwise have been rostered to work were deducted from their annual leave balance. In other words, the days on which Perth employees were not rostered for work by virtue of the rostering system, were not counted for the purposes of the employees’ annual leave.

For example, where an employee was rostered to work two days only in a particular week, on Monday and Tuesday, and those two days were approved as annual leave days, then the employee had 15.2 hours deducted from his or her annual leave balance.

4.3 Leave Deduction – current practice

Since the respondent introduced its current policy regarding annual leave deduction, the respondent has deducted days from the annual leave balance on which the Perth employees are not rostered for work, by virtue of the rostering system, from those employees’ annual leave entitlement.

Taking the above example of a Perth Employee who is rostered to work two days in a particular week, Monday and Tuesday, and takes those two days as annual leave, then the respondent deducts 38 hours from the employee’s annual leave balance, as the employee is deemed to be absent from work for five consecutive days, even though they were only rostered to work on two days in that week.

4.4 Pay and Annual Leave

If an employee takes annual leave (or any other form of paid leave, such as sick leave) during any pay cycle, the employee continues to receive the same pay as the previous fortnight. Air Refuel Pty Ltd does not adjust an employee's pay to reflect the number of hours of leave deducted from the employee's leave balance (e.g. if an employee is rostered to work a 12 hour day, Air Refuel Pty Ltd will continue to pay that employee for the average hours worked on that day, and deduct 7.6 hours of annual leave from the employee's leave balance).

RELEVANT CLAUSES OF THE AGREEMENT

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

“7.2 Wage Rate

The wage prescribed in this clause is a loaded hourly rate will provide compensation for any shift payments, weekend penalties, public holidays, skills, disabilities, allowances, and any other penalty payments that may arise from a specified work cycle.

All employees will be trained as First Aid attendants and will act as the First Aid attendants while on shift. The payment has been contemplated in the loaded rate.

Classification	On Commencement Rate per hour
SO1	$37.19
SO2	$40.50
SO3	$45.61

These wage rates will increase by 2.5% on the following dates;

• 31st January 2018

• 31st January 2019

…

8.1 Ordinary Hours

The ordinary hours of work for classifications for fulltime employees shall be an average of 38 hours per week over a nominated work cycle.

The ordinary hours may be worked on any days of the week, Monday to Sunday.

The work cycles for individual employees may be altered by mutual agreement between the employer and employee. In the absence of agreement the work cycle may be changed by the employer giving 5 days’ notice.

The ordinary daily hours in a work cycle can be worked in two separate periods.

…

8.3 Additional Hours

It is a requirement that employees work a reasonable amount of additional hours in excess of the specified work cycle when required.

Any additional hours of work shall be paid at the applicable loaded hourly rate

…

9.1.1 Annual Leave Entitlement

A fulltime employee shall be entitled to be paid annual leave at the rate of 4 weeks of ordinary time for each year of continuous service consistent with the Fair Work Act 2009 (Cth). The period of annual leave shall be exclusive of any public holiday that occurs duringthe period.

Notwithstanding the above, an employee defined as a shift worker for the purposes of the National Employment Standards (NES) will be entitled to an additional week of annual leave as provided for in the NES.

…

9.1.3 Payment of Annual Leave

A week for the purposes of annual leave will be 38 hours and a day for the purposes of annual leave will be 7.6 hours. Annual leave will be paid at the loaded hourly rate.

The employee will be paid the annual leave payment prior to going on leave.

…

10 Dispute Resolution Procedure

The parties to this Agreement shall observe the following Industrial Dispute Resolution procedure in respect of disputes relating to the operation of this agreement and the application of the National Employment Standards;

The employer or employee may appoint a representative of their choosing, which may be a representative of a union, at any of the steps of the dispute process.

1. The employee concerned will first meet and confer with their immediate supervisor.

2. If the matter is not resolved at such a meeting the parties will arrange further discussions involving more senior management as appropriate.

3. If the matter remains unresolved, the employer or employee may refer it to a more senior level of management for consideration.

4. In the event of the matter remaining unresolved, either party may refer the matter to the Fair Work Commission for conciliation.

5. Where conciliation of the matter is unsuccessful, either party may refer the matter to the Fair Work Commission for arbitration

6. Except in situations where there is a perceived immediate and significant threat to employee health and safety, work will continue and consideration of the needs of the business will remain a priority.”

RELEVANT PROVISIONS OF THE ACT

[9] The jurisdiction of the Fair Work Commission (the Commission) to deal with a dispute pursuant to dispute settlement procedures in Agreements are found in s.595 and s.739 of the Act.

[10] Section 595 of the Act states:

“595 FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation (b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section”

[11] Section 739 of the Act provides as follows:

“739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[12] The Commission’s powers to deal with disputes derive, in the case of an Enterprise Agreement, from the terms of the dispute settlement procedure, contained in the Enterprise Agreement. As stated by the Full Bench in CFMEU v North Goonyella Coal Mines Pty Ltd 1 the Commission may deal with a dispute only on application of a party to the dispute (s.739(6)); is prohibited from exercising any powers limited by the dispute settlement procedure (s.739(3)); may arbitrate only if the agreed dispute settlement procedure permits it to do so (s.739(4)); and must not make a decision that is inconsistent with the Act, the Enterprise Agreement and any other applicable Fair Work instrument (s.739(5)).

[13] Under the Act and the NES, employees’ entitlement to annual leave is provided at s.87:

“87 Entitlement to annual leave

Amount of leave

(1) For each year of service with his or her employer, an employee is entitled to:

(a) 4 weeks of paid annual leave; or

(b) 5 weeks of paid annual leave, if:

(i) a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

(ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

(iii) the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).

Note: Section 196 affects whether the FWC may approve an enterprise agreement covering an employee, if the employee is covered by a modern award that is in operation and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.

Accrual of leave

(2) An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

Note: If an employee’s employment ends during what would otherwise have been a year of service, the employee accrues paid annual leave up to when the employment ends.

Award/agreement free employees who qualify for the shiftworker entitlement

(3) An award/agreement free employee qualifies for the shiftworker annual leave entitlement if:

(a) the employee:

(i) is employed in an enterprise in which shifts are continuously rostered 24 hours a day for 7 days a week; and

(ii) is regularly rostered to work those shifts; and

(iii) regularly works on Sundays and public holidays; or

(b) the employee is in a class of employees prescribed by the regulations as shiftworkers for the purposes of the National Employment Standards.

(4) However, an employee referred to in subsection (3) does not qualify for the shiftworker annual leave entitlement if the employee is in a class of employees prescribed by the regulations as not being qualified for that entitlement.

(5) Without limiting the way in which a class may be described for the purposes of paragraph (3)(b) or subsection (4), the class may be described by reference to one or more of the following:

(a) a particular industry or part of an industry;

(b) a particular kind of work;

[14] Payment for annual leave is provided under s.90 of the Act which states:

“90 Payment for annual leave

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

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

DEALING ON THE PAPERS

[15] After hearing the views of the parties, and on the basis no evidence was to be called and the parties intended to rely on submissions only, it was decided to determine this dispute on the papers.

SUBMISSIONS

Transport Workers’ Union submissions

[16] The TWU noted that the matter in dispute is the number of days the employer can debit from the annual leave balance of an Aircraft Refueler employed at the Perth Airport, when the Refueler takes annual leave in conjunction with several days on which they are not rostered to work.

[17] The TWU stated that it is not in dispute that Refuelers employed by the employer at the Perth Airport work a rotating roster where:

(a) The Refuelers may be rostered to work on every day of the week, and this can range from 2 days to 5 days in any given week;

(b) Each week Refuelers have several days on which they are not rostered for duty; and

(c) After having several days where they are not rostered for duty, the Refuelers then commence their next period of rostered work days.

[18] The Union noted that as the roster is variable, the number of days on which a Refueler is rostered to work in any given week varies. Therefore, the number of days a Refueler is not rostered for work in any given week also varies. The TWU confirmed that in accordance with the Agreed Facts that were submitted by the parties, there are occasions where a Refueler may be rostered to work on only two days in a given week, and not rostered to work on the remaining days.

[19] The TWU submitted that Refuelers employed at the Perth Airport have regularly taken a number of days of annual leave in conjunction with days where they are not rostered to work. It submitted as an example, a Refueler who is rostered to work on a Monday and Tuesday in a given week, may apply to take only the Monday and Tuesday off work as ‘annual leave days’, with the remainder as ‘not rostered to work’ days.

[20] The TWU submitted that before 6 May 2019, in the situation such as this example, the Respondent deducted two days from the Refueler’s annual leave balance with the rest of that week treated as days on which the Refueler was not rostered to work. This was in accordance with the Refueler having applied for and taken only two days’ annual leave.

[21] The Union submitted however since 6 May 2019, the Respondent has, in this same situation, now deducted a week (being 5 days) from the Refueler’s annual leave balance. The Union said that the Respondent appears to do this on the basis that the Refueler is off work for a whole week.

[22] The TWU’s position is that the approach adopted by the Respondent prior to 6 May 2019 was correct. The Union states that approach was consistent with clause 9.1 of the Agreement relating to annual leave. It noted that clause 9.1.1 provides a Refueler’s entitlement to annual leave which closely mirrors the NES as relevantly set out in s.87 of the Act.

[23] As to payment of annual leave, the TWU noted this is provided at clause 9.1.3 of the Agreement, and this section relevantly defines a “day” as 7.6 hours. The Union submitted that in providing a definition of a “day”, the Agreement contemplates annual leave being taken in periods of less than a whole week. It said accordingly, where a Refueler takes two days of annual leave, whether or not those days are in conjunction with days on which the Refueler is not rostered to work, under clause 9.1.3, the Respondent can only debit two days (being 15.2 hours) from the Refueler’s annual leave balance.

[24] The TWU submitted that in debiting a greater number of days from a Refueler’s annual leave balance than the actual number of annual leave days the Refueler has taken, the Respondent is acting contrary to clause 9.1.3 of the Agreement.

[25] The TWU submitted that there is no basis either in the Agreement or otherwise, for the employer to debit five days (being 38 hours) from a Refueler’s annual leave balance when the Refueler has only taken, for example, two or three days of annual leave, and the remaining days are days on which the Refueler was not rostered to work.

[26] The TWU referred to the Full Bench decision in RACV Road Service Pty Ltd v ASU (RACV), 2 where the Full Bench of the Commission stated:

[82] Accordingly we conclude that in the NES provisions of the FW Act, a “week” of annual leave is an authorised absence from work during the working days falling in a seven day period, and a “day” of leave … is an authorised absence from the working time in a 24 hour period. … We further conclude that the amount of leave deducted from an employee’s leave balance necessarily correlates with the amount of leave taken, so that if a week’s annual leave is taken, a week is deducted from the employee’s accrued annual leave balance, and if a day of annual leave … is taken, a day is deducted from the employee’s accrued annual leave … balance.

(The TWU’s emphasis)

[27] The TWU submitted that days on which Refuelers are not rostered to work are not ‘working days’, and therefore Refuelers cannot be taken to be on annual leave on those particular days. The TWU submitted that there is no basis on which the Respondent could treat days where a Refueler is not rostered to work as annual leave, in circumstances where the Refueler takes a number of days of annual leave in conjunction with days they are not rostered for duty, and debiting the days which the Refueler was not rostered to work on from their annual leave balance.

[28] The TWU submitted that this position is supported by the wording of the annual leave provisions in the Agreement, in particular clause 9.1.3, and the general principles regarding what constitutes annual leave as set out in RACV.

[29] The TWU submitted its position is also supported by the wording of clause 9.2.3 of the Agreement, which deals with the matter of deduction from personal leave credits and states as follows:

9.2.3 Personal/carer leave debits will be equivalent to the ordinary hours an employee would have worked had they not been on personal/careers leave.

[30] The Union concluded therefore, where a Refueler combines a number of annual leave days with days they are not rostered to work, then the days on which the Refueler would not have worked in any event, cannot be debited from the Refueler’s annual leave balance.

[31] In reply submissions the TWU emphasised its position that to adopt the Respondent’s interpretation would have the effect of counting a weekend day or rostered day off for a Monday to Friday worker as a work day and making deductions from the annual leave accruals of a Monday to Friday worker for weekends or rostered days that fell during such workers annual leave.

[32] The TWU also submitted in reply that in accordance with s 88(1) of the Act, the Respondent cannot treat days that a Refueler has not applied for annual leave, as annual leave. The TWU submitted that if a Refueler applies for annual leave on a Monday and Tuesday, and the Respondent agrees to the application, the Respondent cannot unilaterally treat rostered days off that run in conjunction with the two days annual leave, as also being annual leave, as there is no mutual agreement for the Refueler to take annual leave on those rostered days off.

Mr Ekeberg’s submissions

[33] Mr Hugh Ekeberg provided submissions on behalf of Refuelers employed by the Respondent in Darwin.

Clause 9.1.3 of the Agreement

[34] Regarding clause 9.1.3, Mr Ekeberg stated that the Darwin Refuelers made the following submissions.

[35] Mr Ekeberg stated that except for clause 9.1.3 of the Agreement, Air Refuel’s practices do comply with clause 9.1 of the Agreement. He stated that the Darwin Refuelers have no ‘strictly defined’ working week, and work 380 hours over 10 pay cycles, being five fortnights. He said this is an average of 7.6 hours each working day. As to rostered days off, he stated that these are determined and awarded by ‘averaging’ the total hours worked over the five fortnights.

[36] Mr Ekeberg submitted that clause 9.1.3 is used “selectively” by the Respondent in determining the rate of pay and the rostered days off over the period of the “rolling shift roster” and the accrual of annual leave. He stated that clause 9.1.3 is then used selectively to deduct hours from accrued leave.

[37] Mr Ekeberg’s evidence is that the roster is not an “even structure” and rostered days off are not distributed evenly across the roster, rather they are awarded where they will ‘fit’. He explained that rostered days off are the equivalent of an employee’s ‘weekend’, and where the rostered days off occur in abundance in some fortnights, they have often been “earned already from other, leaner fortnights”. He attached example rosters in support of this evidence.

[38] Mr Ekeberg said that a group of rostered days off “comprise two components”, the first being equivalent to an ordinary worker’s weekend, and the second component is days off awarded when the refueller works a number of shifts where their hours exceed 7.6 hours per day.

[39] He said that the Respondent designed the roster to award shift workers those ‘rostered days off’, however in awarding leave, the Respondent seeks to:

“nullify rostered days off already earned and awarded by defining a rolling shift workers’ leave entitlement as identical to that of an ordinary, non-shift worker, who, although they enjoy a weekend, do not earn days for extra hours worked”.

Section 87 of the Act

[40] As to the entitlement to annual leave under s.87 of the Act, Mr Ekeberg’s submission is that the Respondent is in compliance with this section.

Section 90 of the Act

[41] Regarding payment for annual leave under s.90 of the Act, Mr Ekeberg submitted that the Respondent is not in compliance with this section, as it seeks to ‘nullify’ certain rostered days off already earned and allocated to Refuelers from elsewhere in the roster. Mr Ekeberg submitted that the Darwin Refuelers are entitled to be paid annual leave at the base rate of pay for their ordinary hours of work in the relevant period, based on the structure of the rolling shift roster. He submitted that rostered days off, not being ordinary days worked, should be excluded from the calculation of annual leave.

[42] In reply submissions Mr Ekeberg emphasised that the Refuelers did not dispute the fact they are allotted five weeks off per annum as shift-workers, but that the Respondent refuses to recognise the rostered days off as equivalent to the weekends of a non-shiftworker or that a component of the rostered days off have been earned as a result of working long days in the roster.

Respondent’s submissions

[43] The Respondent submitted that in accordance with clause 8.1 of the Agreement, an employee’s ordinary hours of work are an ‘average of 38 ordinary hours per week’. It submitted accordingly, employees are paid the same amount each fortnight, irrespective of the ‘actual’ ordinary hours worked.

[44] The Respondent submitted that where an employee takes annual leave such that they are absent for a week (Monday to Sunday, being the period for which employees are paid for their average ordinary hours), the employee therefore has 38 hours deducted from their annual leave accrual and receives pay for that week for 38 ordinary hours.

[45] The Respondent’s position is that this practice is consistent with the terms of the Agreement, and sections 87 and 90 of the Act. It submitted that if less than 38 hours is deducted from the employee’s annual leave balance when an employee is absent from work on annual leave for a week (being Monday to Sunday), the employee becomes entitled to more than 5 weeks’ annual leave per year, “assuming the employee is a shiftworker”. The Respondent also submitted that in accordance with s.90 of the Act, when an employee takes annual leave they are paid at their base rate of pay for their ordinary hours of work in the period (that is, the employee’s average ordinary hours).

[46] The Respondent submitted that the position of the Applicants is inconsistent with:

(i) the entitlement in clause 9.1.1 of the 2016 EA (that an employee be 'entitled to be paid annual leave at the rate of [5 weeks – if a shiftworker] of ordinary time for each year of continuous service'); and

(ii) section 87(1)(b) of the FW Act (which provides shiftworkers with an entitlement to 5 weeks only of paid annual leave per year).

(Respondent’s emphasis)

[47] The Respondent submitted in the alternative, the Applicants have not established that any affected employees are ‘shiftworkers’ for the purposes of clause 9.1.1 of the Agreement, entitling them to an additional week of annual leave. The Respondent submitted that few employees qualify for this entitlement of an additional week of annual leave. It said regardless, it grants all employees with an additional week of leave under the Agreement. Air Refuel submitted that if an employee does not meet the definition of a shiftworker for the purposes of clause 9.1.1 of the Agreement, yet is granted an additional week of annual leave by Air Refuel, then Air Refuel is not constrained by the NES in how that week of leave accrues and is deducted from an employee’s annual leave balance. 3

Employees’ minimum entitlement to annual leave, and rate at which it should be deducted

[48] The Respondent submitted that section 87 of the Act establishes the entitlement to annual leave and the rate it accrues as follows:

Amount of leave

(1) For each year of service with his or her employer, an employee is entitled to:

(a) 4 weeks of paid annual leave; or

(b) 5 weeks of paid annual leave, if […]

(ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards …

Accrual of leave

(2) An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.'

[49] The Respondent submitted that reference to a ‘week’ is the equivalent of an employee’s ordinary hours of work in a 7-day period, or ‘1/52’ of their ordinary hours of work in a year.

[50] As to payment of leave, this is provided in s.90(1) of the Act as follows:

“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.”

[51] The Respondent submitted accordingly:

“The rate at which the leave is paid is the employee’s base rate of pay for their ordinary hours of work in the period”.

(the Respondent’s emphasis)

[52] It submitted that the term ‘base rate of pay’ is defined in s.16 of the Act, to be the “rate of pay payable to the employee for his or her ordinary hours of work”. As to sections 87 and 90 of the Act, the Respondent submitted they require ‘ascertainment of’:

- The employee’s ordinary hours of work in the period during which the leave was taken; and

- The rate of pay payable for that work in order for the employee to be paid for that leave.

[53] The Respondent referred to the Explanatory Memorandum to the Act, which it submitted makes clear that an employee’s ordinary hours is central to determining an employee’s entitlement to annual leave. The Explanatory Memorandum provides:

(a) "Annual leave: both the Standard and the NES provide the same coverage and quantum of annual leave entitlement. 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" (paragraph 26).

(b) "Various employee entitlements under the NES are based on the employee’s ordinary hours of work. … The ordinary hours of work for an employee to whom an enterprise agreement applies will be the hours identified in the enterprise agreement. (An agreement should identify ordinary hours, or a means of determining ordinary hours, in order for the agreement to pass the better off overall test)" (paragraph 235).

(c) "The concept of an employee’s ordinary hours of work is central to the accrual and payment rules for a number of entitlements under the NES" (paragraph 386).

(d) "The concept of an employee’s ordinary hours of work is central to the paid annual leave entitlement as it determines the rate at which the entitlement accrues and also entitlement to payment when leave is taken. For example:

(i) a full-time employee whose ordinary hours of work each week are 38 will accrue 2 weeks’ leave (76 hours ) over a 6 month period. If the employee then takes that leave, the employee will be paid for 2 weeks of leave (76 hours) at their base rate of pay; and

(ii) (ii) a part-time employee whose ordinary hours of work each week are 12 hours will also accrue 2 weeks’ leave (24 hours) over the same 6 month period. If the part-time employee then takes that leave, the employee will be paid for 2 weeks of leave (24 hours) at their base rate of pay.

If an employee changes the basis of their employment (e.g., from full-time to part-time), they would not lose accrued leave, although the future rate of accrual will be different (based on the employee’s new ordinary hours of work)" (paragraph 396).

[54] The Respondent also made reference to the High Court decision in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (Mondelez decision) 4, where the High Court of Australia found the following in relation to personal/carer’s leave:

(a) an entitlement to personal/carer's leave accrues progressively in the course of a year of service, for all employees, by reference to an employee's ordinary hours of work and not by reference to days or working patterns; and

(b) for each hour of accrued personal/carer's leave that is taken, the accrued entitlement is reduced by the actual number of hours taken, regardless of the employee's pattern of work.

[55] The Respondent acknowledges that annual leave was not directly considered in the Mondelez decision, however it notes that similar principles must apply in light of sections 96(2) and 99 of the Act being expressed in the same way as sections 87(2) and 90(2). In support of this submission, the Respondent provided the following comparative table:

Entitlement	Personal/carer's leave	Annual leave
Accrual of the leave	Section 96(2): 'An employee's entitlement to paid personal/carer's leave accrues progressively during a year of service according to the employee's ordinary hours of work, and accumulates from year to year.'	Section 87(2): 'An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.'
Pay for the leave	Section 99: 'If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's 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.'	Section 90(2): '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.

[56] The Respondent noted that annual leave accrues according to an employee’s ordinary hours. It submitted that the Applicants have not alleged that the Respondent has wrongly calculated employees’ annual leave entitlements, rather the issue in dispute is the rate at which the leave should be deducted.

[57] In this regard, the Respondent submitted that the Mondelez decision may suggest that the deduction for annual leave should correspond with the actual ordinary hours the employee would have worked during the period of annual leave taken. The Respondent submitted however that the Mondelez decision must be distinguished from the current dispute, as the Mondelez decision did not consider situations where an employee works fluctuating hours each week and is remunerated according to their ‘average’ ordinary hours over a roster cycle. The Mondelez decision considered only a situation where an employee’s shift length was constant, and therefore the employee’s actual ordinary hours were the same as the employee’s average ordinary hours. 5

[58] The Respondent submitted that in contrast in the current matter, employees are remunerated according to their average ordinary hours, as permitted under the Act at section 63.

[59] The Respondent submitted that given the parties have agreed to average an employee’s ordinary hours and pay the employee according to the employee’s average ordinary hours, as provided under the Agreement, then annual leave:

(a) accrues according to the employee's average ordinary hours of 38 hours per week; and

(b) is deducted according to the employee's average ordinary hours of 38 hours per week (Monday to Sunday – i.e. the same period for which employees are paid for their average ordinary hours).

The Applicants’ approach

[60] The Respondent submitted that if the Applicants contend that less than 38 hours per week should be deducted in some instances from an employees’ annual leave balance, then employees cannot continue to be paid for 38 average ordinary hours per week. It submitted instead, employees’ pay would need to be determined by reference to the ordinary hours actually worked (the Respondent’s emphasis).

[61] It submitted that under this approach, where an employee takes annual leave, the Respondent would need to deduct the actual number of rostered ordinary hours the employee would have worked had they not taken annual leave. It submitted that depending on when leave is taken during a roster cycle, this method may result in an employee’s leave balances being depleted more rapidly.

[62] The Respondent referred to the Perth roster as extracted in paragraph 4.1 of the Agreed Statement of Facts. It stated that where ‘Employee #1’ takes leave between 12 October and 18 October 2020, they will have 53.5 hours deducted from their annual leave balance, and will be paid for 53.5 ordinary hours. The Employer submitted that deducting leave in this way would mean that the employee could only take leave at the same point in the roster 3.55 times per year.

[63] The Respondent said that this is contrasted with its current practice, being that employees are paid each fortnight for their average ordinary hours each week. It said given how it deducts leave, the employees are entitled to be absent from work for at least five weeks per year, regardless of when in the roster the leave is taken.

[64] The Respondent noted that the Applicants do not ‘grapple’ with the Respondent’s practice of paying employees according to their average ordinary hours, and neither Applicant suggests that the rate at which employees are paid each week should change. It submitted further, the Applicants have not shown that the Respondent’s practices have resulted in employees not being entitled to be absent from work on annual leave for at least five weeks per annum “(assuming the employee is a shiftworker)”.

[65] The Respondent further submitted the Applicants have not made submissions as to the unfairness that results if less than 38 hours is deducted from an employee’s annual leave balance if an employee is absent on leave for a week (Monday to Sunday) when the employee is paid for 38 ordinary hours for that week. The Applicants likewise have not considered the rate at which annual leave is to be cashed out under clause 9.1.4 of the Agreement. The Respondent questioned:

“if less than 38 hours per week is deducted in some instances, does that mean that annual leave should be cashed out at a similar rate (i.e. one week of cashed out leave is paid out at the rate of less than 38 hours per week in some instances)?”.

[66] As to Mr Ekeberg’s submissions and the scenario involving ‘Alf’ taking leave between 5 October 2020 and 11 October 2020, the Respondent submitted:

(a) If Air Refuel applies the reasoning in Mondelez without having regard to employees being paid according to their average ordinary hours, it will deduct 40.5 hours of annual leave from Mr Ekeberg's annual leave accrual (representing the actual number of ordinary hours he would have worked had he not taken leave). This is unfair for Alf because he is paid 38 ordinary hours that week, but has more than 38 hours deducted from his leave accrual (disentitling the employee to receive 4 or 5 paid weeks of leave at the rate of the employee's ordinary time, as required by clause 9.1.1 of the 2016 EA). This approach would result in an employee depleting their annual leave entitlement more quickly than the approach adopted by Air Refuel (described in paragraph (c) below).

(b) If Air Refuel applies Mr Ekeberg's approach, 30.4 hours are deducted from Alf's leave balance, representing the amount Air Refuel deducts for one day of annual leave (7.6 ordinary hours) multiplied by three. This approach however leads to an unfairness for Air Refuel, because Alf is paid for 38 hours of work that week, and only has 30.4 hours deducted from his leave balance. If Alf always takes the same leave at this point in the roster, and only 30.4 hours are deducted on each occasion, he becomes entitled to 6.25 weeks of paid annual leave each year, which is far in excess of clause 9.1.1 of the 2016 EA and section 87(1)(b) of the FW Act.

(c) Rather, Air Refuel submits that it is fair to deduct 38 hours from Alf's leave balance, because this represents the amount Alf is paid that week (i.e. his average ordinary hours). This approach always entitles Alf to be absent from work on leave for at least 5 weeks each year (assuming he is a shiftworker).

[67] As to the scenario involving ‘Adam’ taking leave between 9 October 2020 and 11 October 2020, Air Refuel submitted:

If Air Refuel deducts 45 hours from Adam's leave balance (representing the actual ordinary hours Adam would have worked during the period), Adam is treated unfairly because he is only paid for 38 ordinary hours during the period of leave, yet has 45 hours of annual leave deducted from his leave balance.

Instead, Air Refuel Submits that it should deduct 38 hours from Adam's leave balance, calculated as follows:

(a) In the period Monday 5 October 2020 to Sunday 11 October 2020, Adam receives pay for an average of 38 ordinary hours. He is absent for work for 3 rostered days that week, but this did not result in an absence for the whole week (Monday to Sunday). Air Refuel therefore deducts 7.6 hours per day multiplied by three days (i.e. 22.8 hours) from his leave balance.

(b) In the period Monday 12 October 2020 to Sunday 18 October 2020, Adam receives pay for an average of 38 ordinary hours. He is absent on leave on 12 October 2020 and 13 October 2020, however this absence does not result in him being absent from work for the whole week (Monday to Sunday). Air Refuel therefore deducts 7.6 hours per day multiplied by two days (i.e. 15.2 hours).

Combining the above two figures (22.8 hours + 15.2 hours), 38 hours is deducted from Adam's annual leave balance.

[68] The Respondent restated the TWU’s position as being that where an employee is rostered for two shifts in one week (over a Monday to Sunday period), and the employee takes those two days as annual leave, only 15.2 hours (being 7.6 hours per day x 2) should be deducted from the employee’s annual leave balance and not 38 hours. The Respondent submitted that in accordance with its submissions as outlined here, this approach would result in an unfairness to the Respondent. It submitted that it would mean a shiftworker could take leave in this manner 12.5 times before one year of the employee’s annual leave entitlement (being 190 hours) is depleted. The Respondent submitted this therefore results in an entitlement that far exceeds clause 9.1.1 of the Agreement and section 87(1)(b) of the Act.

[69] The Respondent submitted that if it deducts the actual ordinary hours the employee would have worked during the period of leave, this would be unfair to the Respondent. It confirmed the employee is paid for 38 ordinary hours for the same period, but the employee would only have, for example, 21.5 hours deducted from their balance for the same period. The Respondent submitted that this would result in one year of an employee’s annual leave entitlement translating to an entitlement to be absent from work for 8.83 weeks (where the employee is paid for 38 ordinary hours for each of those weeks). It submitted this is not intended by clause 9.1.1 of the Agreement or ss.87(1)(b) and 90 of the Act.

[70] The Respondent’s position therefore is that the correct deduction is 38 hours, as this correlates with the amount the employee is paid for the week the employee is absent and results in an employee being entitled to be absent from work for at least five weeks per year (if the employee is a shiftworker).

Shiftworkers

[71] Further to the above matters, the Respondent submitted the Applicants have not established that any affected employee is a shiftworker.

[72] It submitted that when the Agreement was approved, the Respondent provided the following undertaking in relation to the definition of a 'shiftworker':

“The Applicant undertakes to apply that for the purposes of the additional week of annual leave provided for in the NES and the provisions of Clause 9.1.1 of the Agreement, a shiftworker shall mean a seven day shiftworker who is regularly rostered to work on Sundays and public holidays.”

[73] Where an employee meets this definition of a 'shiftworker', the Respondent noted that employee is entitled to an additional week of leave (i.e. five weeks of annual leave, as opposed to four weeks of annual leave).

[74] The phrase “regularly rostered to work on Sundays and public holidays” has an accepted industrial meaning – namely that the employee work a minimum of 34 Sunday shifts and six public holidays per year.

[75] The Respondent submitted that on the roster examples provided by the parties, only the Darwin employees may qualify as 'shiftworkers'. Despite this, the Respondent grants all employees covered by the Agreement an additional week of annual leave. It submitted however that if an employee is not a 'shiftworker' as defined, the Respondent is not constrained by the NES in relation to how that additional week of leave accrues and is deducted.

[76] In summary, the Respondent stated that the Applicants have not suggested that employees be paid according to their actual ordinary hours. Accordingly, with employees being paid according to their average ordinary hours, the Respondent’s current practices result in employees being entitled to be absent from work for at least five weeks per year irrespective of when the leave is taken in the roster. It also results in an employee receiving the correct amount of pay for the leave taken (and the hours the employee works over the course of a roster cycle and year). The Respondent submitted that this is consistent with clause 9.1 of the Agreement and sections 87 and 90 of the Act.

[77] The Respondent noted that if employees were paid according to their actual ordinary hours, leave would need to be deducted according to the actual ordinary hours an employee would have worked during the period of leave. In some instances, this may result in an employee being entitled to be absent from work for less than five weeks per year.

**EFFECT OF MONDELEZ DECISION**

[78] On 13 August 2020, the High Court handed down its decision in two matters; Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union 6 (Mondelez).

[79] The Mondelez decision concerned the entitlement to paid personal/carer’s leave and its quantification under the Act and whether the method of accounting being applied by Mondelez, as employer, was inconsistent with the NES (s.96(1)) in particular. In allowing each appeal, a majority of the Court declared:

"The expression '10 days' in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee's ordinary hours of work in a year. A 'day' for the purposes of s 96(1) refers to a 'notional day', consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period."

[80] In a recent decision of Commissioner Spencer in the matter of AWU v Cleanaway 7, issued after the decision of the High Court in Mondelez, the Commissioner gave consideration to the effect of Mondelez in dealing with a dispute before the Commissioner which, similarly to this matter, was concerned with accrual and deduction of annual leave for shiftworkers under an enterprise agreement and National Employment Standards. The Commissioner concluded as follows:

“[95] In this matter, it is my view that the reasoning of the High Court in Mondelez is so closely analogous to the provisions with which I am concerned that it is persuasive as to my determination. I have taken this view primarily because the scheme establishing the entitlement to paid leave is almost identical. It is identical in that:

• The “amount of leave” is expressed in nearly identical terms; 49

• The “accrual of leave” is expressed in identical terms by reference to “ordinary hours of work”; 50 and

• The “payment for” each type of leave is expressed in identical terms by reference to the “base rate of pay for the employee’s ordinary hours of work in the period”. 51

[96] This means that the legislative context and purpose for the provisions is also so comparable as to be almost identical. It must be accepted that, the origin and purpose of the two types of paid leave is different, but that history has merged into the overall scheme established by the history of legislative codification of an industrial safety net over the past 30 or 40 years, including the safety net of paid leave entitlements.

[97] The legislative history and continuation of entitlements between the Act and the WR Act is also relevantly identical. The statutory formula present in the WR Act has been abandoned and restated, in simpler terms. 52

[98] As a consequence of this, it is considered that the entitlement to “4 weeks” or “5 weeks” in s.87(1) of the Act means an amount of paid annual leave accruing for each year of service equivalent to an employee’s ordinary hours of work in a week over a 4 week or 5 week period.”

[81] Another decision important to consider is that of the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Limited Glendell 8(Glendell), which was an appeal from a decision of the Federal Circuit Court to the Federal Court. As with Mondelez, Glendell was decided by a majority of the Full Court of the Federal Court; Justices White and Bromwich constituting the majority, with Justice Siopis in dissent.

[82] Commissioner Spencer summarised Glendell in AWU v Cleanaway as follows:

“[86] Glendell concerned the operation of s.89 of the Act, which regulates when a public holiday occurs during a period in which an employee is on “paid annual leave”. The principal issue, in the majority’s view, concerned the application of s.89 of the Act to periods of leave under an Enterprise Agreement, where the Enterprise Agreement provided greater entitlements than the minimum provided in the NES. The majority rejected various components of the construction advocated for by the parties but in the end rejected the CFMEU’s primary contention.

[87] Primarily, the majority relied upon the definition of “paid annual leave” contained within the Act. That definition refers to leave arising from an entitlement under s.87. The entitlement under s.89 of the Act, therefore, only applied to the legislative minimum contained in the NES, and not to additional entitlement that might be conferred by Enterprise Agreements. The majority, however, made the following statement concerning the entitlement to four weeks paid annual leave in the circumstances then before them:

“Under the NES, the entitlement to four weeks paid annual leave means that employees may have 14 shifts away from work whereas the entitlement to six weeks paid annual leave of employees working a seven day shift roster means that they will be entitled to 21 shifts away from work.” 9

[88] The majority considered that this statement was consistent with the approach taken by the Full Bench in RACV 10. Taking the example further, the majority said:

“The ordinary hours can still be deducted from an employee’s leave balance as provided for in the EAs. At 10 ordinary hours per shift, 21 shifts equate to 210 hours (or six weeks of 35 hours each). Ten ordinary hours can be deducted for each shift for which the employee is absent on leave. At 8.75 ordinary hours per shift, 20 shifts equate to 175 hours (or five weeks of 35 hours per week). Eight and threequarter hours can be deducted for each shift for which the employee is absent on leave.”” 11

CONSIDERATION

[83] I adopt the approach of Commissioner Spencer that the decision of the High Court in Mondelez is closely analogous to the provisions with which I am concerned and is persuasive as to my determination.

[84] On the material before the Commission, and in light of the High Court’s Mondelez decision, I now turn to the questions for arbitration:

“Do Air Refuel's practices in relation to the accrual, payment and deduction of annual leave comply with:

i. clause 9.1 of the Air Refuel Pty Ltd Enterprise Agreement 2016; and

ii. section 87 (entitlement to annual leave) and section 90 (payment for annual leave) of the Fair Work Act 2009?”

[85] Clause 9.1.1 relevantly provides that employees are entitled to four weeks of annual leave, and any employee defined as a shiftworker for the purposes of the NES will be entitled to five weeks of annual leave. Clause 9.1.3 provides that for payment of annual leave, a ‘week’ will be 38 hours, and a day 7.6 hours, to be paid at the loaded hourly rate.

[86] Section 87 of the Act reflects the entitlement to annual leave in providing:

“(1) For each year of service with his or her employer, an employee is entitled to:

(a) 4 weeks of paid annual leave; or

(b) 5 weeks of paid annual leave, if:

…

(iii) the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).”

[87] Section 90 provides that an employer must pay the employee at the employee’s base rate of pay forthe employee’s ordinary hours of work in the period.

[88] The High Court in Mondelez said as follows:

“Rejection of the "working day" construction

41 The "working day" construction adopted by the majority in the Full Court (and urged by the Union parties in this Court) is not consistent with the purpose of s 96 or the stated objectives of the Fair Work Act of fairness, flexibility, certainty and stability. The "working day" construction would lead to inequalities between employees with different work patterns, and so would be unfair. An employee whose hours are spread over fewer days with longer shifts would be entitled to more paid personal/carer's leave than an employee working the same number of hours per week spread over more days. Thus, on the construction adopted by the majority in the Full Court, an employee working 36 ordinary hours in a week in three shifts of 12 hours (as Ms Triffitt and Mr McCormack do) would be entitled to ten 12-hour days of paid personal/carer's leave per annum, or 120 hours, whereas an employee working 36 ordinary hours in a week in five days of 7.2 hours would be entitled to ten 7.2-hour days of paid personal/carer's leave per annum, or 72 hours. And, as Mondelez submitted, it may be expected that the employee working 12-hour shifts three times a week takes fewer days of paid personal/carer's leave given they work on fewer days than the employee working 7.2 hours, five days a week, and is therefore less likely to need to take paid personal/carer's leave on a working day.

42 Similarly, on the "working day" construction, part-time employees would be entitled to the same amount of leave as, or more leave than, full-time employees. For example, a part-time employee working one day per week for 7.6 hours would be entitled to ten days of paid personal/carer's leave per annum (the same as an employee working 7.6 hours five days a week) and would accrue the leave at five times the rate of a full-time employee. And a part-time employee who works 12 ordinary hours per week as a single shift would accrue 120 hours of leave (ten absences of 12 hours) – almost double the 72 hours of leave a full-time employee working 36 ordinary hours per week over five 7.2-hour days would accrue in a year. Additionally, a person who was employed one day per week by a number of employers would be entitled to ten days of paid personal/carer's leave from each employer. Such results would be directly contrary to a stated object of the Fair Work Act of "providing workplace relations laws that are fair to working Australians, are flexible for businesses, [and] promote productivity and economic growth"54. Moreover, the "working day" construction would not encourage "flexible working arrangements", another object of the Fair Work Act55. It would discourage an employer from employing anyone other than one person working a five-day working week, rather than employing a number of people over the course of that week, thereby avoiding employing a number of employees each being entitled to ten days of paid personal/carer's leave per annum. And, of course, it would not be consistent with assisting employees to balance their work and family responsibilities if the only working arrangement on offer was a five-day working week56.

43 Further, the "working day" construction would create not only unfairness but also uncertainty. For example, if an employee takes a part day of paid personal/carer's leave, then on the "working day" construction, the Union parties submitted that an employee could take two hours' leave which would be measured as a fraction of a day, not necessarily in hours, though it could be measured in hours. The unfairness and uncertainty created would be that employees who take the same number of hours of paid personal/carer's leave, but who are working shifts of different hours, will have different portions of the day deducted from their accrued leave.

44 For all those reasons, the submission of the Union parties that the Fair Work Act effected a change to ensure that each employee could have ten absences from work per year from each employer, regardless of the hours worked, is rejected.”

[89] As to the current dispute, the entitlement to accrual and deduction of annual leave must similarly be determined in a manner that ensures “fairness, flexibility, certainty and stability”, and in a way that does not allow for a lesser, or greater entitlement to leave than is provided under the Agreement and the NES.

[90] The Respondent has stated that if less than 38 hours is deducted from the employee’s annual leave balance when an employee is absent from work on annual leave for a week (being Monday to Sunday), the employee would become entitled to more than 5 weeks’ annual leave per year, assuming the employee is a shiftworker.

[91] The problem with the Respondent’s approach is that it purports to treat certain days as annual leave which are not annual leave. The TWU raised as one of its arguments that the Respondent cannot unilaterally treat days as annual leave that a Refueler has not applied for as annual leave, as there is no mutual agreement for the Refueler to take annual leave on those rostered days off.

[92] The matter has proceeded on the basis that the parties decided not to call evidence and relied on submissions about the manner in which the Respondent calculates deductions from leave accruals. If a dispute exists as to whether the parties had reached an agreement about the taking of annual leave in a particular instance that will need to be dealt with on its own facts, however the Respondent made clear on its own submissions that where an employee applies for leave in a particular point of the work cycle where the employee’s rostered working days in a given week (calculated at a value of 7.6 hours per day) do not amount to 38 hours, it will treat an additional non-rostered day or days as annual leave days for the purpose of reaching the figure of 38 hours.

[93] That approach is inconsistent with s.90 of the Act which requires that 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. The Respondents approach deducts for time which is not the employees ordinary hours of work, but is non rostered time. It is also inconsistent with s.87 because it purports to deduct from employees annual leave balance, time which is not in fact paid annual leave.

[94] I am not persuaded by the Respondent’s argument that the facts in this case are distinguishable from Mondelez on the basis that the hours in the rosters fluctuated from week to week. In my view the principles are still applicable.

[95] I reject the Respondent’s submission that section 63 of the Act supports its position. Section 63 pertains to the averaging of hours of work, it does not address averaging of annual leave pay.

[96] I am also not persuaded by the Respondent’s submission that if the Applicants’ positions were adopted then employees could no longer have their pay averaged over the cycle. It is not clear why adjusting the method of deducting annual leave would require abandoning the averaging of pay in its entirety. In any event, this is not a matter the Commission needs to prescribe in order to deal with this dispute.

[97] In relation to the Respondent’s argument that deducting annual leave based on hours would result in leave balances depleting more rapidly, this outcome appears to be consistent with the determination of the High Court in Mondelez that 10 days personal leave meant nominal days based on hours and not actual days.

[98] The Respondent has submitted that the Applicants have not addressed the unfairness that would result from an employee having less than 38 hours deducted from their leave balance in a week where they work less than 38 hours and are still paid 38 hours for that week in accordance with the averaging arrangement.

[99] The answer to that submission is that the manner in which the roster operates currently will result in that same employee working more than 38 hours at different points of the work cycle and still being paid at the averaged rate of 38 hours per week across the cycle, despite working more than 38 hours in certain weeks, hence the peaks and troughs in the amount of non-rostered time across the cycle.

[100] The response of the Respondent to Mr Ekeberg’s example that “Alf” will be disadvantaged does not arise if the Respondent deducts annual leave at the rate of hours of leave taken.

[101] I have also not been persuaded by the Respondent’s argument in the alternative that employees receive five weeks annual leave as if they were shiftworkers when many have not established that they are shiftworkers, and on that basis the NES requirement is satisfied. Regardless of whether the submission (that employees who are not shiftworkers are being treated as such) is correct or not, it does not address the requirement that an employee be paid for their ordinary hours of work in the period of leave. The Respondent submits that it is not constrained as to how the fifth week of annual leave is paid if it is not an entitlement under the NES, however on the basis of the findings above the Respondent is not paying a proportion of the four weeks’ annual leave as annual leave and on that basis has not established how it is at can rely upon the fifth week in the manner it proposes.

[102] Whilst neither party squarely raised it in submissions it seems one of the catalysts for this dispute is the language in clause 9.1.3 which says “...a day for the purposes of annual leave will be 7.6 hours.” This language is problematic given the ordinary hours of employees on a day are generally not 7.6 hours. The questions for arbitration can be decided without reaching a final determination on this issue, however it would seem the language may give rise to an inconsistency with section 90 because of the NES requirement that 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.

[103] The averaging of hours as contemplated by either clause 8.1 of the Agreement, or s.63 of the Act are not directed to the averaging of a single day, but over a specified period such as the work cycle under the Agreement. Averaging hours over a cycle does not alter the fact that the ordinary hours for a given day within the cycle are the ordinary hours as rostered for that day.

[104] If it is correct that some of the language in clause 9.1.3 is inconsistent with the NES, then it has no effect to the extent of the inconsistency and may address the concerns referred to in the Respondents submissions that periods of actual time away from work will extend well beyond what was intended by the parties in the event that the Respondents current practices are found not to comply with the Agreement and/or the NES, and yet the Agreement must be interpreted such that 7.6 hours only, can be deducted from an employee’s annual leave balance for any single day or multiples of days of annual leave that are less than a week, despite the ordinary hours for a day or days being more than 7.6 hours.

CONCLUSION

[105] I find that the answer to the first question for arbitration as to whether the Respondent’s practices in relation to the accrual, payment and deduction of annual leave comply with clause 9.1 of the Air Refuel Pty Ltd Enterprise Agreement 2016 is no. The Respondent’s practice of counting days as annual leave which are not annual leave does not comply with the requirement in clause 9.1.1 that a fulltime employee shall be entitled to be paidannual leave at the rate of four weeks of ordinary time for each year of continuous service. It is also inconsistent with clause 9.1.3 because clause 9.1.3 requires that a week for the purposes of annual leave will be 38 hours. The 38 hours annual leave referred to in clause 9.1.3 cannot consist of a combination of accrued annual leave and non-rostered hours and must consist of accrued annual leave only.

[106] I find that the answer to the second question as to whether the Respondent’s practices in relation to the accrual, payment and deduction of annual leave comply with sections 87 and 90 is also no. It is clear the practice of deducting from employees leave balance, days that are not annual leave, is inconsistent with section 87(1) and section 90(1) because counting days as annual leave when those days are not annual leave does not satisfy the minimum entitlement in section 87(1), or the requirement in section 90(1) that 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.

[107] In RACV the Full Bench provided as follows:

“[19] We are not inclined to attempt to prescribe the means by which RACV is to ensure that employees receive these entitlements, particularly as there is nothing before us to suggest that the potential for underpayment of the NES entitlements to annual leave and personal/carer’s leave which we identified in the initial decision has yet manifested itself in reality. It is up to RACV to take the necessary steps and put in place the systems to ensure that it complies with its obligations under the Agreement as it has been interpreted in the initial decision and this decision…”

[108] I concur with the Full Bench in RACV that it is not for this Commission to “attempt to prescribe the means” by which the Respondent is to ensure compliance with these important minimum obligations however some observations made herein may assist in preventing potential further disputation over what flows from this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

1 [2015] FWCFB 5619.

2 [2015] FWCFB 2881.

3 Air Refuel cited Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Limited [2017] FCAFC 35.

4 [2020] HCA 29.

5 The Respondent cited via a footnote: Kiefel CJ, Nettle and Gordon JJ noted that employees worked an average of 36 hours per week and that the appeal proceeded on the assumption that the relevant employees worked an average of three shifts of 12 hours each week:

"Clause 32 of the EBA provides that the ordinary hours of work are 36 hours per week and that shift lengths may be eight or 12 hours. Ms Triffitt and Mr McCormack each work 36 hours per week averaged over a four-week cycle and work these ordinary hours in 12-hour shifts. The appeals proceeded on an assumption that they worked an average of three shifts per week."

6 [2020] HCA 29.

7 [2020] FWC 6907.

8 [2017] FCAFC35.

9 Ibid at [132].

10 RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union[2015] FWCFB 8554.

11 Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Limited [2017] FCAFC35 at [134].

Transport Workers' Union of Australia v Air Refuel Pty Ltd T/A Air BP Mr Hugh Ekeberg v Air Refuel Pty Ltd

[2021] FWC 796

24 FEBRUARY 2021

DECISION

RELEVANT CLAUSES OF THE AGREEMENT

RELEVANT PROVISIONS OF THE ACT

DEALING ON THE PAPERS

SUBMISSIONS

EFFECT OF MONDELEZ DECISION

**EFFECT OF MONDELEZ DECISION**