Transport Workers' Union of Australia v TNT Australia Pty Ltd

[2016] FWC 4029

[2016] FWC 4029

FAIR WORK COMMISSION

DECISION

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

Transport Workers' Union of Australia
v
TNT Australia Pty Ltd
(C2016/3065)

DEPUTY PRESIDENT BINET PERTH, 7 OCTOBER 2016

Dispute concerning annual leave - Employer's right to direct employees to take annual leave

[1] The Transport Workers Union of Australia (TWU) have applied (Application) pursuant to section 739 of the Fair Work Act 2009 (Cth) (FW Act) for the Fair Work Commission (FWC) to determine a dispute between the TWU and TNT Australia Pty Ltd (TNT) pursuant to clause 12 of the TNT-TWU Fair Work Agreement 2014-2017 (Agreement).

[2] The dispute concerns a direction given by TNT to two employees at the TNT Perth Depot to take annual leave (Dispute). The Dispute, however, has implications for all employees covered by the Agreement. The effect of the direction is that the employees concerned would be required to take more than one quarter of their accrued annual leave and, if the employees took the annual leave as directed, then the employees will have less than six weeks of accrued annual leave left.

[3] Clause 12 of the Agreement provides that:

“12. DISPUTE RESOLUTION PROCEDURE

Any dispute or grievance that arises at the workplace between;

(a) a Transport Worker/s and the Company, including but not limited to a dispute about any condition of employment or the NES; and/or

(b) between the TWU and the Company about the interpretation or application of this Agreement, including but not limited to a dispute about any Transport Worker's conditions of employment or the Company's compliance with the NES in relation to one or more Transport Workers.

with the exception of termination of employment, shall be dealt with in the following manner:

12.1. The matter must first be discussed by the aggrieved Transport Worker(s) directly with his or her or their immediate supervisor.

12.2. If the matter remains in dispute, it must next be discussed with the supervisor's immediate superior or another representative of the Company appointed for the purpose of this procedure. The TWU delegate for the worksite has the right to attend and participate in this discussion as a representative of a Transport Worker provided that the TWU delegate is the representative of the Transport Worker's choice;

12.3. 1fthe matter remains in dispute, it must next be discussed with the relevant manager of the Company. The TWU State Secretary (or his/her nominee) has the right to attend at and participate in this discussion as the representative of a Transport Worker provided that the relevant TWU State Secretary is the representative of the Transport Worker's choice;

12.4. 1fthe matter in dispute remains unresolved, the Company's Employee Relations Manager (or nominee) will meet the State Secretary of the TWU (or nominee) and discuss the matter.

12.5. 1fthe matter remains in dispute, it must next be submitted to the Fair Work Commission (FWC) for conciliation. For this purpose, it is agreed that the action FWC may take includes arranging conferences of the Parties or their representatives at which FWC is present; and arranging for the Parties or their representatives to confer among themselves as conferences at which FWC is not present.

12.6. 1f the matter is not resolved in conciliation conducted by the FWC, the Parties agree that the FWC shall proceed to arbitrate the dispute and/or otherwise determine the rights and/or obligations of the Parties to the dispute. In relation to such an arbitration, the Parties agree that:

(a) The FWC may give all such directions and do all such things as are necessary for the just resolution of the dispute, including but not limited to those things set out in Division 3 of Chapter 5 of the Fair Work Act 2009.

(b) Before making a determination the FWC will give the Parties an opportunity to be heard formally on the matter(s) in dispute.

(c) In making its determination the FWC will only have regard to the materials, including witness evidence and submissions, put before it at the hearing and will disregard any admissions, concessions, offers or claims made in conciliation.

12.7. The decision of the FWC will be binding on the Parties subject to the following agreed matters:

(a) There shall be a right of appeal to a Full Bench of FWC against the decision, which must be exercised within 21 days of the decision being issued or within such further time as the Full Bench may allow.

(b) The appeal will be conducted in accordance with the legal principles applying to an appeal in the strict sense.

(c) The Full Bench (or a nominated member of the Full Bench) shall have the power to stay the decision pending the hearing and determination of the appeal.

(d) The decision of the Full Bench in the appeal will be binding upon the Parties.

12.8. Until the matter is resolved by agreement, conciliation or arbitration, work will continue in accordance with the status quo. No party is to be prejudiced as to the final settlement by the continuance of work in accordance with this procedure.

12.9. The Parties to the dispute agree to be bound by any decision made by FWC in accordance with this term. The Parties undertake to resolve any disputes in a timely manner in accordance with the procedure set out in this clause and will co-operate to ensure that these procedures are carried out expeditiously.”

[4] The parties agree, and I am satisfied, that the Dispute is a dispute within the meaning of clause 12 of the Agreement and that the FWC has jurisdiction to determine the Application by way of arbitration.

[5] TNT sought to be represented by counsel based on a number of grounds including that the matter would be dealt with more efficiently due to the complexity involved. As per s.596(2)(a) of the FW Act, I was satisfied that leave should be granted on this basis. Mr Furlan appeared for TNT.

[6] The Agreement does not contain any express provisions dealing directly with annual leave. However clause 4 of the Agreement incorporates various other industrial instruments into the Agreement (which do contain provisions which deal with annual leave) and provides for a hierarchy between those instruments.

[7] Clause 4 of the Agreement states that:

“4. RELATIONSHIP TO PRE-EXISTING AGREEMENTS AND AWARDS

4.1. For the purposes of this clause only:

Award means any instrument originally made as an award, whether current, expired, displaced by force of legislation or otherwise.

4.2. Subject to sub-clause 4.7 below, the Existing Arrangements are included in and form part of the Agreement.

4.3. For the avoidance of doubt, such provisions will only apply in the location specified in the Existing Arrangement or if no location is specified, such provisions will only apply in the location in which the Existing Arrangement applied immediately prior to the approval of this Agreement.

4.4. If there is any inconsistency between the terms of this Agreement and the terms of an Existing Arrangement or between the terms of this Agreement and the terms of the RTD Award, the following order of precedence shall apply:

(a) this Agreement;
(b) Schedule 1;
(c) Schedule 2;
(d) Schedule 3;
(e) the RTD Award.

4.5. An inconsistency does not arise simply because an Existing Arrangement provides a more beneficial entitlement than that contained in this Agreement (not inclusive of the Existing Arrangements).

4.6. The term of any Award which is:

(a) incorporated into an Existing Arrangement; or
(b) read in conjunction with an Existing Arrangement; or
(c) otherwise referred to an Existing Arrangement;
(d) is incorporated into and forms part of the Existing Arrangement for the purposes of this Agreement.

4.7. Any terms of the Existing Arrangements which constitute non-permitted or unlawful content for enterprise agreements, as defined by sections 172(1) and 194 of the Act and the Regulations, are expressly excluded from the Agreement and do not form part of it and this shall not affect the incorporation into the Agreement of the remaining terms.”

[8] Pursuant to clause 4.2 of the Agreement ‘Existing Arrangements’ are included in and form part of the Agreement. ‘Existing Arrangements’ are defined in the definition provisions of the Agreement as: “… any Award, Local Workplace Agreement, agreement or other arrangement listed in Schedules 1-3.”

[9] Schedules 1 to 3 of the Agreement contain a number of different instruments which apply in different localities and to different workgroups. The parties agreed that for the purposes of the Application the only relevant instrument in the Schedules of the Agreement is the TNT Australia Pty Ltd – TWU (Perth Depot) Heads of Agreement 2008-2011 listed in Schedule One of the Agreement (Schedule 1 Agreement).

[10] The Schedule 1 Agreement is therefore an Existing Arrangement for the purposes of the Agreement and forms part of the Agreement.

[11] The Schedule 1 Agreement does not contain any provisions dealing with annual leave.

[12] Clause 5(2) of the Schedule 1 Agreement does however provide that it is to be: “… read in conjunction with the Parent Award and any applicable Local Workplace Agreements”. The ‘Parent Award’ is defined as: “… the Transport Workers Award 1998, as varied from time to time” (Pre-Modern Award).

[13] Clause 4.6 of the Agreement provides that the term of any ‘Award’ which is read in conjunction with an Existing Arrangement is incorporated into and forms part of the Existing Arrangement for the purposes of the Agreement. The term ‘Award’ is defined in clause 4.1 of the Agreement as: “… any instrument originally made as an award, whether current, expired, displaced by force of legislation or otherwise.” Therefore, by virtue of clause 4.6 of the Agreement, the terms of the Pre-Modern Award are incorporated into the Schedule 1 Agreement.

[14] Pursuant to clause 4.2 of the Agreement, as an Existing Arrangement, the Schedule 1 Agreement, which incorporates the Pre-Modern Award, is included in and forms part of the Agreement.

[15] The Pre-Modern Award contains terms dealing with an employer’s right to direct employees to take annual leave.

[16] The parties acknowledge that the modern award known as the ‘Road Transport and Distribution Award 2010’ (Modern Award) covers the classifications of employees the subject of the Application. The Modern Award is referred to in the Agreement as the RTD Award. Clause 4.4 of the Agreement arguably contemplates, and the parties proceeded on this basis at hearing, that the parties would comply with the Modern Award to the extent that it is not inconsistent with any of the industrial instruments listed higher in the order of precedence in the clause 4 of the Agreement.

[17] The Modern Award contains terms dealing with an employer’s right to direct employees to take annual leave.

[18] In relation to TNT’s right to direct employees to take annual leave the Pre-Modern Award provides, in clause 38.3.1:

“38.3.1 Notice of leave to be taken

At least 28 days’ notice shall be given to an employee of the requirement to commence leave. If such notice is withdrawn by the employer and the employee consequently postpones the taking of annual leave, the employee shall be compensated by the employer for any reasonable out-of-pocket loss occasioned by the postponement.”

[19] In relation to TNT’s right to direct employees to take annual leave the Modern Award provides, in clause 29.4:

“29.4 Excessive leave

If an employer has genuinely tried to reach agreement with an employee as to the timing of taking annual leave, the employer can require the employee to take annual leave by giving not less than four weeks notice of the time when such leave is to be taken if:

(a) at the time the direction is given, the employee has eight weeks or more annual leave accrued; and

(b) the amount of annual leave the employee is directed to take is less than or equal to a quarter of the amount of leave accrued.”

[20] TNT assert that clause 4.4 of the Agreement, which provides for a hierarchy between the various industrial instruments which apply to the parties, is enlivened in the current circumstances. TNT say that, by virtue of clause 4.4 of the Agreement, clause 38.3.1 of the Pre-Modern Award prevails over and displaces clause 29.4 of the Modern Award, thereby permitting TNT to direct employees to take annual leave without the restrictions imposed by the Modern Award.

[21] The TWU assert that clause 38.3.1 of the Pre-Modern Award is not permitted to be included in the Agreement because section 93(3) of the FW Act permits a term which allows an employer to direct an employee to take annual leave to be included in an enterprise agreement only if the clause requires the employer to act reasonably. TWU say therefore that clause 38.3.1 of the Pre-Modern Award cannot oust clause 29.4 of the Modern Award and therefore TNT can only direct employees to take leave subject to the restrictions contained in clause 29.4 of the Modern Award.

[22] Clause 4.4 of the Agreement provides that:

“4.4. If there is any inconsistency between the terms of this Agreement and the terms of an Existing Arrangement or between the terms of this Agreement and the terms of the RTD Award, the following order of precedence shall apply:

(a) this Agreement;
(b) Schedule 1;
(c) Schedule 2;
(d) Schedule 3;
(e) the RTD Award.”

[23] Applying clause 4.4 of the Agreement in the current dispute, if an inconsistency arises between the Agreement and the terms of an Existing Arrangement (in this case the Schedule 1 Agreement) then the Agreement will override the Schedule 1 Agreement which will override the Modern Award. Similarly, if an inconsistency arises between the Agreement and the Modern Award then the Agreement will override the Schedule 1 Agreement which will override the Modern Award.

[24] If ‘Agreement’ for the purposes of clause 4.4 of the Agreement means the Agreement without the incorporation of the Schedule 1 Agreement pursuant to clause 4.2 (and subsequently the Pre-Modern Award pursuant to clause 4.6), then no inconsistency arises between:

(a) the Agreement and the Schedule 1 Agreement; or
(b) the Agreement and the Modern Award,

because the Agreement without the incorporation of the Schedule 1 Agreement (and subsequently the Pre-Modern Award) does not contain any provisions dealing with annual leave. If this is the case then clause 4.4 of the Agreement is not enlivened.

[25] TNT submit that clause 4.4 is poorly drafted and the intention of the clause was to provide that:

(a) if an inconsistency arises between the Agreement (without incorporations) and the Existing Arrangements (in this case the Schedule 1 Agreement) then inconsistent clauses prevail in the order specified in clause 4.4(b)-(d) of the Agreement; and

(b) if an inconsistency arises between the Agreement (incorporating the Existing Arrangements – in this case the Schedule 1 Agreement and the Pre-Modern Award) and the Modern Award then inconsistent clauses in the Agreement, with all its incorporations, would prevail in the order specified in clauses 4.4(b)-(d) of the Agreement over the Modern Award.

[26] The TNT interpretation of clause 4.4 requires the term ‘Agreement’ to have different meanings in different parts of clause 4.4.

[27] I am not convinced that this amount of manipulation of the meaning of the term ‘Agreement’ is open based on normal principles of interpretation of industrial instruments. 1 However, in the event I am mistaken and clause 4.4 of the Agreement was intended to be applied in this manner, it is necessary to ascertain whether an inconsistency arises between clause 29.4 of the Modern Award and clause 38.3.1 of the Pre-Modern Award.

[28] Clause 38.3.1 of the Pre-Modern Award provides that the employer must give at least 28 days’ notice of the requirement to take leave.

[29] Clause 29.4 of the Modern Award permits an employer to require an employee to take leave on 4 weeks’ notice if the following three requirements are satisfied:

(a) TNT must have genuinely tried to reach agreement with the employee as to the timing of the taking of annual leave; and
(b) at the time the direction is given the employee must have a minimum of eight weeks of annual leave accrued; and
(c) the amount of annual leave the employee is directed to take must be less than or equal to a quarter of the amount of leave accrued.

[30] Clause 38.3.1 of the Pre-Modern Award and clause 29.4 of Modern Award are not on their face directly inconsistent. Both clauses require the employer to provide the same minimum amount of notice if the employer wishes to direct an employee to take annual leave. It is possible to comply with both clause 38.3.1 of the Pre-Modern Award and clause 29.4 of the Modern Award simultaneously.

[31] TNT submitted that clause 29.4 of the Modern Award is inconsistent with clause 38.3.1 of the Pre-Modern Award because it alters, impairs or detracts from TNT’s right to direct employees to take annual leave by restricting the circumstances in which that right can be exercised.

[32] However, this submission is in direct conflict to the submissions that TNT made at the hearing in response to the TWU’s submission that clause 38.3.1 of the Pre-Modern Award is non-permitted content in the Agreement.

[33] In relation to the TWU’s argument that clause 38.3.1 of the Pre-Modern Award is non-permitted content because it affords TNT an absolute discretion to direct an employee to take annual leave, TNT’s counsel submitted that:

“It is a well-established principle of contractual construction and I would say an established principle of industrial instrument construction, that a discretionary power in an employer to do something like direct an employee to take leave or not to take leave, is not something that can be exercised unreasonably or without inbuilt controls…
…
And so the argument is that the submission that this [clause 38.3.1 of the Pre-Modern Award] confers an absolute power with no restrictions whatsoever on the company, is not quite correct.” 2

[34] When questioned as to how this submission sat alongside TNT’s submission that clause 38.3.1 of the Pre-Modern Award was inconsistent with clause 29.4 of the Modern Award because it impaired an absolute discretion to direct an employee to take leave, counsel for TNT conceded that no inconsistency arose and that it was possible to comply with both provisions:

“The answer is yes, and that was exactly the result that was arrived at by Deputy President Bartel in the AGL Torrens decision of 2014 in a very similar situation. So despite the parties having agreed that there is an inconsistency between the two provisions, if it is read in the way in which we submit orthodox construction principles require it to be read, then yes, there is room for both clauses to operate side by side.” 3

[35] I find that clause 29.4 of the Modern Award is not inconsistent with clause 38.3.1 of the Pre-Modern Award for the purposes of clause 4.4 of the Agreement, such that clause 38.3.1 of the Pre-Modern Award cannot be relied on by TNT to excuse compliance with clause 29.4 of the Modern Award.

[36] The TWU assert that clause 38.3.1 of the Pre-Modern Award is not permitted to be included in the Agreement because section 93(3) of the FW Act permits a term which allows an employer to direct an employee to take annual leave to be included in an enterprise agreement only if the clause requires the employer to act reasonably.

[37] Section 93(3) of the FW Act provides that:

“Terms about requirements to take paid annual leave

(3) A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.”

[38] On TNT’s own written submissions there is no express limitation on the exercise of its power under clause 38.3.1 of the Pre-Modern Award to direct employees to take annual leave:

“25. Under the Pre-Modern Award, TNT may require an employee to take annual leave provided only that they are given 28 days’ notice.” 4

[39] TNT sought to argue that the common law principles of contractual construction articulated in the authorities cited by counsel for TNT 5 prevent TNT from exercising any unconstrained power to direct employees to take annual leave in reliance on clause 38.3.1 of the Pre-Modern Award. On the basis that some implied limitation on the exercise of its power under clause 38.3.1 of the Pre-Modern Award existed, TNT submitted that clause 38.3.1 of the Pre-Modern Award (incorporated into the Agreement pursuant to clause 4.6 of the Agreement) should not be deemed non permitted content.

[40] With respect, this argument is nonsensical. On this reasoning there would be no need to have section 93(3) in the FW Act if the protection contained in that section (that the power to direct employees to take annual leave cannot be exercised unreasonably) is automatically implied into annual leave provisions in agreements.

[41] Section 93(3) of the FW Act permits an enterprise agreement to include terms allowing an employee to be required to take annual leave in particular circumstances provided the requirement is reasonable. In considering whether a requirement is reasonable the term imposing the requirement must relate to the particular circumstances in which annual leave will be required to be taken and must, on its face, be reasonable or enable the consideration of relevant considerations before the requirement is imposed in relation to a particular employee. 6 Guidance as to what are relevant considerations can be gleaned from paragraph [382] of the Explanatory Memorandum to the Fair Work Bill 2009 and in authorities such as Australian Federation of Air Pilots v HNZ Australia Pty Ltd[2015] FWCFB 3124 at [25] – [26].

[42] I am satisfied that clause 38.3.1 of the Pre-Modern Award is not a term permitted by section 93(3) of the FW Act to be incorporated into an agreement. Clause 4.7 provides that any terms of Existing Arrangements which constitute non-permitted or unlawful content by the FW Act are expressly excluded from the Agreement. As clause 38.3.1 of the Pre-Modern Award is excluded from the Agreement and is not a term permitted by section 93(3) of the FW Act, it follows that it cannot be relied on by TNT to direct employees to take annual leave without any constraint on the exercise of that power by TNT (other than by the requirement to give notice) as TNT has sought to do so in the case of the two employees the subject of the Dispute.

DEPUTY PRESIDENT

Appearances:

J Collier for the applicant.

N Furlan of Counsel for the respondent.

Hearing details:

2016.

Perth:

August 15.

Final written submissions:

Applicant, 8 June 2016

Respondent, 13 May 2016

 1   Kucks v CSR Ltd (1996) 66 IR 182 at 184 per Madgwick J.

 2   Transcript at PN178.

 3   Transcript at PN183.

 4 TNT Written Submissions filed on 13 May 2016 at [25].

 5   Robbie v Dun & Bradstreet (Australia) Pty Ltd (1998) IRC 6041 of 1997 (NSW Industrial Relations Commission); Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357.

 6   Australian Federation of Air Pilots v HNZ Australia Pty Ltd[2015] FWCFB 3124 at [28].

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