Transport Workers' Union of Australia v Toll Holdings Limited T/A Toll Express and NQX

[2016] FWC 4618

[2016] FWC 4618

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Transport Workers’ Union of Australia
v
Toll Holdings Limited T/A Toll Express and NQX
(C2015/8278)

COMMISSIONER GREGORY MELBOURNE, 27 OCTOBER 2016

Alleged dispute concerning the direction to take excessive annual leave.

Introduction

[1] On 23 December last year the Transport Workers’ Union of Australia (“the TWU”) notified a dispute arising from the Toll Group – TWU Enterprise Agreement 2013 – 2017 (“the Agreement”) 1 which covers the parties. The dispute concerns the circumstances in which Toll Holdings Ltd T/A Toll Express and NQX (“Toll”) can direct employees to take annual leave.

[2] The dispute was dealt with in conference on 7 January 2016, but was unable to be resolved. Both parties subsequently agreed that resolution of the dispute could be assisted by the Commission making a recommendation or expressing an opinion in accordance with s.592(4) of the Fair Work Act 2009 (Cth) (“the Act”). The Commission subsequently issued a Recommendation on 1 April 2016 indicating that, in doing so, it had not had the benefit of being informed by submissions and evidence from the parties, and had not sought to apply the principles that would normally be applied in arbitrating a dispute concerning the interpretation of an Agreement. It had instead sought to arrive at a position that could provide the basis of a workable outcome, given the respective interests of the parties.

[3] However, Toll subsequently advised that the Recommendation had not resolved the dispute, and asked that the matter be determined by arbitration in accordance with clause 15(e) of the Dispute Resolution procedure in the Agreement. Both parties also confirmed they had no objection to my continuing involvement, despite having previously issued the Recommendation.

[4] The matter was accordingly set down for hearing and directions issued for the filing and service of submissions and evidence. Mr Mark Gibian of Counsel was granted permission to appear on behalf of the TWU under s.596(2)(a) of the Act, as the matter involved a degree of complexity and his involvement might enable it to be dealt with more effectively. Ms Charissa McCutcheon, the Toll Group’s Group Employee and Industrial Relations Manager appeared on behalf of Toll.

The Issues to be Determined

[5] The dispute arises from Toll’s contention that it has the ability to direct employees to take accrued annual leave under clause 26.1 in the Agreement with 7 days’ notice. The TWU submits, in response, that directing employees to take accrued annual leave with only 7 days’ notice is not authorised by the Agreement, or by the terms of relevant Award, as incorporated.

[6] Clause 6 of the Agreement deals with the relationship between the Agreement and the Award. It states at 6(a):

“6. Relationship to the Award and the NES

(a) This Agreement incorporates the Award, provided that part A of this Agreement and the Local Agreement will prevail over the Award to the extent of any inconsistency. An inconsistency will not arise simply because the Award provides a more beneficial entitlement to a Transport Worker than that contained in Part A of this Agreement.” 2

[7] Clause 6(c) of the Agreement continues to state:

“For the avoidance of doubt Toll will ensure that no Transport Worker will lose any entitlements that they may currently have arising out of any instrument.” 3

[8] Clause 3 also makes clear that the relevant Award is the Road Transport and Distribution Award 2010 (“the Award”). 4

[9] The TWU also make reference to s.93(3) of the Act, which states:

“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.” 5

[10] The annual leave provisions in the Agreement are contained in clause 26. Sub clause 26.1 states:

“26.1 Toll may direct Transport Worker to take annual leave

Toll may direct a Transport Worker take annual leave, provided that:

(a) the direction is reasonable having regard to Toll’s business needs;

(b) the direction takes into account, to the extent reasonably practicable, the Transport Workers’ personal circumstances and wishes; and

(c) the direction does not result in the Transport Worker having a balance of accrued annual leave of less than the amount of annual leave that the Transport Worker would accrue in 1 year.” 6

[11] The annual leave provisions in the Award are set out in clause 29. At the time that the application was dealt with the relevant provisions in sub clause 29.4 stated:

“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 of 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.” 7

[12] However, it is also noted that those provisions have since been amended following a decision handed down on 11 June 2015 in [2015] FWCFB 3406, 8 as part of the 4 yearly review of modern awards. A further Determination handed down on 29 July 2016,9 as a consequence of that earlier decision, confirms that the Award has now been varied in regard to the annual leave provisions, with effect from 29 July 2016. The “Excessive Leave” provisions are now set out in sub clauses 29.4 and 29.5 of the Award in the following terms:

“29.4 Excessive leave accruals: general provision

Note: Clauses 29.4 to 29.6 contain provisions, additional to the National Employment Standards, about the taking of paid annual leave as a way of dealing with the accrual of excessive paid annual leave. See Part 2.2, Division 6 of the Fair Work Act.

(a) An employee has an excessive leave accrual if the employee has accrued more than 8 weeks’ paid annual leave (or 10 weeks’ paid annual leave for a shiftworker, as defined by clause 29.1(a)).

(b) If an employee has an excessive leave accrual, the employer or the employee may seek to confer with the other and genuinely try to reach agreement on how to reduce or eliminate the excessive leave accrual.

(c) Clause 29.5 sets out how an employer may direct an employee who has an excessive leave accrual to take paid annual leave.

(d) Clause 29.6 sets out how an employee who has an excessive leave accrual may require an employer to grant paid annual leave requested by the employee.

29.5 Excessive leave accruals: direction by employer that leave be taken

(a) If an employer has genuinely tried to reach agreement with an employee under clause 29.4(b) but agreement is not reached (including because the employee refuses to confer), the employer may direct the employee in writing to take one or more periods of paid annual leave.

(b) However, a direction by the employer under paragraph (a):

(i) is of no effect if it would result at any time in the employee’s remaining accrued entitlement to paid annual leave being less than 6 weeks when any other paid annual leave arrangements (whether made under clause 29.4, 29.5 or 29.6 or otherwise agreed by the employer and employee) are taken into account; and

(ii) must not require the employee to take any period of paid annual leave of less than one week; and

(iii) must not require the employee to take a period of paid annual leave beginning less than 8 weeks, or more than 12 months, after the direction is given; and

(iv) must not be inconsistent with any leave arrangement agreed by the employer and employee.

(c) The employee must take paid annual leave in accordance with a direction under paragraph (a) that is in effect.

(d) An employee to whom a direction has been given under paragraph (a) may request to take a period of paid annual leave as if the direction had not been given.

Note 1: Paid annual leave arising from a request mentioned in paragraph (d) may result in the direction ceasing to have effect. See clause 29.5(b)(i).

Note 2: Under section 88(2) of the Fair Work Act, the employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.” 10

[13] Therefore, having regard to the various provisions contained in the Agreement, the incorporated Award, and the Act, does Toll have the ability to direct employees to take accrued annual leave under clause 26.1 after giving a minimum of 7 days notice? If not, does some other minimum notice period apply?

The Evidence and Submissions

[14] The TWU submits that a policy directing employees to take accrued annual leave on the basis of only 7 days’ notice is not permitted under the terms of the Agreement which covers the parties, and is therefore unlawful. It accordingly seeks a determination from the Commission that Toll be required to give employees at least 4 weeks’ notice of any requirement to take a period of annual leave.

[15] It continues to submit, in the alternative, that the Commission should find that Toll is not able to direct employees to take annual leave, based on only 7 days’ notice.

[16] The TWU submits that resolution of the dispute depends on the proper interpretation of the relevant provisions in the Agreement and the underlying Award, being the Road Transport and Distribution Award 2010. It also makes reference to a number of authorities it submits are relevant to the approach to be adopted in the interpretation of enterprise agreements and awards.

[17] It, firstly, makes reference to clause 6(a) of the Agreement, which deals with the interaction between the Agreement, the Award, and the National Employment Standards (“the NES”). Clause 6(a) states:

“6. Relationship to the Award and the NES

(a) This Agreement incorporates the Award, provided that part A of this Agreement and the Local Agreement will prevail over the Award to the extent of any inconsistency. An inconsistency will not arise simply because the Award provides a more beneficial entitlement to a Transport Worker than that contained in Part A of this Agreement.”  11

[18] It also refers to sub clause 6(c) which states:

“For the avoidance of doubt Toll will ensure that no Transport Worker will lose any entitlements that they may currently have arising out of any instrument.” 12

[19] The TWU indicated in its oral submissions that this sub clause is both “an important aid to the way in which one would interpret provisions of the agreement and particularly their interaction with the provisions of other instruments including the award, but also if one gets to it, it provides a substantive guarantee.” 13 It also submits that the relevant provisions in the Act are important in the context of this dispute and refers, in particular, to section 93(3) which states:

“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.” 14

[20] It also refers to clause 29.4 in the Award, “Excessive leave,” which enables an employer to direct that leave be taken, providing not less 4 weeks’ notice is given. It submits that this requirement is consistent with long-standing Award conditions that have applied to transport workers.

[21] It next refers to clause 26.1 in the Agreement dealing with annual leave, which is set out at an earlier point in this decision. It notes this sub clause was included in the current Agreement for the first time, and was not contained in the previous Agreement that covered the parties.

[22] It continues to submit, against this background, that the Agreement and the incorporated Award provisions do not permit Toll to direct that leave be taken with only 7 days’ notice. In its submission clause 6 of the Agreement acts to incorporate the Award, including clause 29.4, and the terms of the Award continue to apply “to the extent that no inconsistency arises.”

[23] The TWU also submits that clause 26.1 in the Agreement does not deal expressly with the period of notice to be given in the event of a direction to take annual leave, and therefore no inconsistency arises in relation to the amount of notice that must be provided. In these circumstances it submits the 4 week notice requirement in clause 29.4 continues to apply in the context of clause 26.1, and therefore there is no inconsistency between the respective provisions in regard to notice. It continued to indicate, “The obvious intention of the Agreement is that the Award provision be allowed to continue to operate to the extent that that is possible.” 15

[24] The TWU also rejects the suggestion that the provisions in the Award and the Agreement are dealing with different subject matter. In its submission they both deal with taking what is considered to be “excessive leave.”

[25] It also points again to clause 6(c) and submits that prior to the commencement of the present Agreement the only provision permitting an employee to be directed to take leave was in clause 29.4, which requires that at least 4 weeks’ notice be provided. It also submits that, in any case, clause 26 should not be interpreted as entitling Toll to direct that leave be taken without notice, or with less than 4 weeks’ notice. In this context it refers to section 93(3) of the Act, and submits it would be unreasonable to permit an Agreement to enable an employee to be directed to take leave without notice.

[26] It continues to submit that “a general approach of providing a period of 7 days notice of a requirement to take annual leave could not possibly take into account personal circumstances and wishes of individual employees,” 16 and a 4 week notice period is instead consistent with past practice, as well as being reasonable from the employee’s point of view.

[27] The TWU also submits, in conclusion, that there are three additional considerations that act to support its interpretation of the relevant provisions. Firstly, it is a sensible and practical outcome for the notice requirements in the Award to continue to have effect. Secondly, the approach advanced by Toll would leave “the period of notice entirely a matter up in the air.” 17 Thirdly, the Agreement should be interpreted in a way that assumes the drafters intended that a practical outcome, that could be understood, would be the end result.

[28] Mr Rick Milich is employed as a driver by Toll and has worked for the business for 15 years. He is also a TWU delegate at Toll’s Altona yard. His evidence indicated the employees at the yard were provided with correspondence in December last year, which indicated that 7 days’ notice to take leave could be provided to those employees with more than 20 days accumulated annual leave.

[29] He said the employees were generally unhappy about this possibility, and believed the provision of at least 4 weeks’ notice was important to be able to plan leave in conjunction with family and other commitments. It was also necessary to enable the various arrangements associated with the taking of leave such as travel, accommodation, and other associated expenses, to be planned for and organised.

[30] Toll submits, in response, that clause 26.1 stands alone and should not be read down by reference to the Award. It also submits the period of notice to be provided under the clause should depend on the particular circumstances prevailing at the time, and it is not suggesting that no notice period, or some other specific period of notice, should apply at all times.

[31] It acknowledges that it was foreshadowed that employees with more than 20 days of accrued leave may be required to take leave during the January and February period because of the “atypical” 18 trading conditions impacting on the business at the time. This was proposed “to help ameliorate temporary volume and labour cost factors which were adversely affecting Toll Express,”19 and the objective at the time was not to reduce excessive annual leave accruals.

[32] Toll also acknowledges the existence of clause 6 in the Agreement. However, it submits that when considering the terms of clause 26.1 in the Agreement and clause 29.4 in the Award there is no inconsistency between those provisions, because each deals with different subject matter and therefore stands alone.

[33] In its submission clause 26.1, on the one hand, creates the ability for Toll to direct employees to take leave, where reasonable, having regard to prevailing business requirements. The clause is directed at responding to business downturns and related operational issues, rather than dealing with excessive leave accruals. By contrast it submits clause 29.4 is concerned with the circumstances in which employees have accrued excessive leave balances. It also notes that clause 29 is subject to various conditions, which are not replicated in clause 26. In its submission the two clauses are therefore separate and distinct, and it is not appropriate for the notice period in clause 29 to be incorporated into clause 26 through the operation of clause 6 in the Agreement.

[34] It continues to submit that if clause 26 was to be read subject to clause 29 it “would be otiose,” 20 and have no work to do. It also rejects the suggestion that the clause in the Agreement needs to have a notice period specified in order to operate effectively. It notes in this context that section 93(3) in the Act does not impose a specific notice period, other than what is “reasonable,” in recognition of the range of circumstances that might arise in practice.

[35] Toll continues to emphasise that the decision taken in December last year was not directed at reducing leave balances, as provided for by clause 29.4, but was instead about the business responding to the conditions confronting it at the time, as it submits clause 26.1 is intended to enable. It notes that the clause includes various conditions, none of which are contained in the Award. It also notes it does not provide for a notice period, but submits this does not mean that no notice needs to be given. In its submission the relevant notice period is instead to be determined in all the circumstances prevailing at the time. It also submits the written communication provided to employees in December last year did not actually specify a particular notice period, and it is incorrect to state it has adopted a general policy of providing 7 days’ notice in these circumstances.

[36] Toll also rejects the TWU’s submission that clause 6(c) in the Agreement prevents the parties from reaching agreement about conditions that are different from those contained in the Award, and submits clause 6(a) is instead about incorporating the Award, but allowing for the Award conditions to be modified by agreement of the parties.

[37] Toll concludes by submitting that the correct way of dealing with the requirements of section 93(3) is for the test of what is “reasonable” to be determined at the individual employee level. It also submits that in terms of what is “reasonable,” notice will be one important factor, but must be considered along with other factors “such as the criticality and urgency of the operational need, and the personal circumstances of the employees in question.” 21

[38] Toll concludes its submissions by indicating that the Commission should find that clause 26.1 stands alone, and is not to be read down by reference to clause 29.4 of the Award. It continues to submit, as a consequence, that it is not necessary to give a minimum of 4 weeks’ notice in every case when a direction is made under clause 26.1.

[39] Mr John Rudden is the State Manager – Victoria for Toll Express, and is responsible for the operations and performance of the Toll Express business unit in Victoria. His evidence indicates that in the lead up to Christmas last year Toll experienced a decline in business at a time when it would normally be expected that volumes would be increasing. As a consequence it became evident that the business would be running significantly under budget in the early part of 2016.

[40] Mr Rudden said that given this situation the business began exploring all options to deal with the potential financial impact. This included reducing the number of casual employees and actively managing RDO’s. He also directed Managers to begin discussions with employees with more than 20 days annual leave accrued in an endeavour to encourage them to take some leave. A further proposal to have all the employees working from one depot was also proposed, but was rejected by a vote of employees in early December 2015.

[41] He said it was then decided to identify those employees who had significant annual leave balances, and who would have limited work to do during the January/February period. A letter was also provided to employees on 21 December 2015, advising that some could be directed to take leave in January and February, although no notice period was proposed in that letter. He also said it was never proposed that, in all cases, employees would only be given 7 days’ notice of the requirement to take leave, although Mr Rudden did acknowledge in cross-examination that it was something Toll believed it was potentially able to do, and it had been foreshadowed in respect of one employee. However, the dispute was then notified to the Commission, and from that point no further action was taken.

Consideration

[42] It is noted at the outset that the relevant provisions in the Award have been varied since the hearing to deal with this matter. As indicated at an earlier point in this decision this occurred as part of the 4 yearly review of modern awards, and the variation took effect from 29 July 2016. Consideration was given to providing the opportunity to the parties to make further submissions about the relevance of these recent variations to the Award, however, given the decision I have come to in this matter I subsequently decided this was not necessary. However, I am satisfied these changes do have some relevance in all the circumstances of this matter, and I have dealt with this issue in the conclusions at a later point in this decision.

[43] Both parties made reference in their submissions to the principles to be applied in interpreting an industrial instrument, such as an enterprise agreement or Award. Those principles have recently been consolidated in the Full Bench decision in Australasian Meat Industry Employees Union v Golden Cockerel[2014] FWCFB 7447 (“Golden Cockerel”) at [41] and it is not necessary to set them out in detail at this point. However, they make clear it is first necessary to determine whether an Agreement has a plain meaning or contains an ambiguity. In the latter case evidence of the surrounding circumstances can be considered as an aid to interpretation. This might include evidence of prior negotiations, notorious facts, or evidence of matters in common contemplation. A common intention is also to be identified objectively by reference to the language a reasonable person would understand by the language used. In addition, the task is not to rewrite the Agreement to achieve what might be seen as fair and just, but is instead to interpret the Agreement produced by the parties.

[44] The Commission is required in the present matter to consider the relationship between provisions contained in the Agreement, and those in the underlying Award that is incorporated into the Agreement, together with the relevant provisions in the Act.

[45] The respective positions of the parties have been set out in some detail already and are not restated now. I now turn to deal with those submissions based on the principles established in Golden Cockerel.

[46] I am satisfied, firstly, that the relevant provisions in the Agreement and in the Award have a plain meaning and should be understood on that basis. I am also satisfied that clause 26.1 in the Agreement and clause 29.4 in the Award deal with different subject matter and different circumstances, and should be considered accordingly. To this extent I agree with the submissions provided by Toll. My reasons for coming to this conclusion are as follows.

[47] Clause 26.1 in the Agreement indicates in the heading “Toll may direct Transport Worker to take annual leave.” It is an enabling clause that allows Toll to direct that leave be taken, subject to three provisos. Firstly, the direction is reasonable having regard to Toll’s business needs. This requires some justification from a business point of view of the requirement for leave to be taken in circumstances where the employees have not otherwise elected to take leave. The next two conditions provide some protection for employees. Their personal circumstances and wishes must be taken into account to the extent “reasonably practicable” and, secondly, any affected employee must be left with an annual leave accrual equivalent to the amount of leave accrued annually.

[48] This is different from the minimum accrual provided for in clause 29.4 in the Award, which again emphasises that each clause is dealing with different circumstances. By contrast clause 29.4 is headed “Excessive leave” and is directed at dealing with, or responding to, circumstances in which employees have significant leave accruals, and agreement cannot be reached about when leave is to be taken.

[49] The clause contains a different set of requirements to those in clause 26.1. For example, the employer must first have “genuinely trying to reach agreement” with the employee(s) about when leave is to be taken. The employer can then require leave to be taken by providing not less than 4 weeks’ notice provided that:

• the employee has 8 weeks or more of accrued leave at the time, and



• the amount of leave directed to be taken is less than or equal to a quarter of the amount of leave accrued. (Therefore, the minimum amount of leave that could be directed to be taken is 2 weeks for an employee with the minimum required accrual of 8 weeks.)

[50] Based on this review of the respective provisions I am satisfied that it is reasonable to conclude that each has a different purpose and intent. Clause 26.1 is, on the one hand, dealing with the circumstances in which the business can direct that leave be taken because of “business needs.” By contrast, clause 29.4 deals with the circumstances in which employees have “excessive leave accruals,” being accruals that are at least double the annual entitlement, and agreement is unable to be reached about how that accrued leave is to be taken. I am accordingly satisfied that the respective clauses are each dealing with different circumstances, and it is not appropriate to conclude that both are dealing with “excessive leave.”

[51] The TWU continues to submit that, regardless of this conclusion, clause 26.1 is silent about the amount of notice to be provided when leave is directed to be taken, and therefore the 4 week notice requirement in clause 29.4 also has application to clause 26.1, given clause 6(a) in the Agreement, and the fact there is no inconsistency in the two clauses about the provision of notice.

[52] It is acknowledged that there is no specific notice period provided for in clause 26.1, although it generally requires that any direction be “reasonable.” This obligation is reinforced by the overriding obligations in section 93(3) of the Act. Therefore, while no specific time limit is imposed in the context of clause 26.1, any direction must be “reasonable,” and evidently the amount of any notice provided will be critical in terms of what can be considered to be “reasonable.”

[53] However, the TWU continues to submit that the 4 week notice period in clause 29.4 continues to have application to clause 26.1 because the Award prevails to the extent of any inconsistency. However, I have already concluded that the two clauses deal with different circumstances. Therefore, I am not satisfied that it follows that the 4 week notice period in clause 29 can be said to have application in the context of clause 26.

[54] In this context I have had regard to the reference by the TWU to the decision of Senior Deputy President Lacey in Transport Workers’ Union v Linfox, 22 and the conclusions of the Senior Deputy President about determining whether an inconsistency exists between the terms of an enterprise agreement and those contained in an underlying award or “subordinate instrument.” However, as indicated I have concluded that the relevant clauses deal with different subject matter, and I am therefore not satisfied the clause in the Agreement is to be confined or subject to the provisions contained in the Award, or that the two provisions are intended to operate together.

[55] The TWU also submits that clause 6(c) acts to prevent clause 26.1 from having any application because clause 6(c) is intended to ensure employees do not lose the benefits of any existing entitlements. Toll submits, in response, that it is uncertain about the intent of the sub clause but, in any case, it cannot have the meaning attributed to it by the TWU because this would mean any provision in the Agreement, which sought to vary a pre-existing entitlement, would be overridden as a consequence.

[56] However, leaving aside these considerations I have already concluded that the two clauses deal with different subject matter. Therefore, clause 26.1 does not act to override or supplant clause 29.4; it is instead dealing with different circumstances. In addition, I am satisfied that this conclusion is not affected by the fact the relevant Award provisions have since been varied by the outcome of the 4 yearly review of modern awards.

[57] As indicated, in the present matter the TWU seeks an order that Toll be required to give employees 4 weeks’ notice of any requirement to take annual leave. It submits, in the alternative, that the order should make clear that employees cannot be directed to take annual leave based on only 7 days’ notice being provided. Toll submits this is unnecessary because it has not, at any time, directed employees to take leave based on only 7 days’ notice, (although the evidence of Mr Rudden indicated that at least one employee may have been told that they might be required to take leave based on 7 days’ notice.)

[58] I am not satisfied, in response, that it is appropriate to make a blanket determination about the amount of notice to be given under clause 26.1 in the absence of a dispute involving particular circumstances to do with the application of that clause. However, I am satisfied the clause does intend to enable some exercise of discretion about what notice period is reasonable in the particular circumstances existing at the time. However, while Toll may have the ability to direct that leave be taken, subject to the conditions in the clause, that ability is also subject to and limited by the requirement of “reasonableness” imposed by section 93(3) of the Act.

[59] Toll makes reference in its submissions to the Explanatory Memorandum which accompanied the Fair Work Bill in the context of section 93(3). The relevant parts of the Explanatory Memorandum state as follows:

“381. Subclause 93(3) permits terms to be included in an award or agreement that require an employee, or that enable an employer to require or direct an employee, to take paid annual leave in particular circumstances, but only if the requirement is reasonable. This may include the employer requiring an employee to take a period of annual leave to reduce the employee’s excessive level of accrual or if the employer decides to shut down the workplace over the Christmas/New Year period.

382. In assessing the reasonableness of a requirement or direction under this subclause it is envisaged that the following are all relevant considerations:

• the needs of both the employee and the employer’s business;



• any agreed arrangement with the employee;



• the custom and practice in the business;



• the timing of the requirement or direction to take leave; and



• the reasonableness of the period of notice given to the employee to take leave.” 23

[60] Toll submits, in response, that the test of what is “reasonable” from an employee’s point of view is to be considered by reference to the individual employee, and it also refers to the decision of Deputy President Bartel in AGL Torrens Islands Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union at [68] in this context, when the Deputy President stated:

“The requirement for reasonableness in s.93(3) of the Act is directed to the circumstances of an individual employee and this requires that AGL give consideration to the personal circumstances of a particular employee if representations are made by or on behalf of that employee.” 24

[61] It is also noted that the decision in that matter dealt with a clause in an enterprise agreement which enabled the employer to require that accrued annual leave be taken, but only in circumstances where not less than 4 weeks’ notice had been provided to the employee.

In Conclusion

[62] I am not satisfied, in conclusion, that it is appropriate in the abstract to make an “across-the-board” determination about what notice is appropriate in the context of clause 26.1, and section 93(3) of the Act.

[63] However, it is noted that section 88(1) and (2) of the Act contain what might be described as a general proposition that annual leave should be able to be taken, as far as possible, at a time suitable to the employee. The relevant sections state:

“Taking paid annual leave

(1) Paid annual leave may be taken for a period agreed between an employee and his or her employer.

(2) The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.” 25

[64] In addition, I am also satisfied that the recent variations to the Award, as a consequence of the 4 yearly review of modern awards, have some relevance in this context in considering what is “reasonable” in regard to any request or direction to take a period of annual leave.

[65] The variations to the Award followed a decision handed down on 11 June 2015 as part of the 4 yearly review of modern awards, in this case dealing specifically with entitlements in regard to annual leave. The relevant extracts from the decision makes clear that the variations are dealing specifically with circumstances involving “excessive leave accruals,” when the Full Bench states:

“[190] The model term is intended to establish mechanisms to assist both employers and employees to reduce or eliminate “excessive leave accruals” consistent with the statutory framework and subject to appropriate safeguards. It incorporates both terms requiring an employee to take leave in particular circumstances (s.93(3)) and terms otherwise dealing with the taking of paid annual leave (s.93(4)).” 26

[66] The following extracts from the decision then make reference to the conditions that the Full Bench determined should attach to the model term, together with the rationale for their inclusion. Some of these conditions are different from those previously contained in the Award.

“[198] Paragraphs (i) to (iv) of subclause 1.2(b) set out limitations on the period or periods of leave that may be required under the direction.

[199] Paragraph 1.2(b)(i) limits the amount of leave that the employee may be directed to take, by requiring that the direction must not result in the employee’s remaining accrued leave entitlement at any time being less than six weeks.

[200] Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday. The minimum is applied by considering the effect on the employee’s leave accrual of the directed leave being taken, taking into account all previously agreed paid annual leave, any previous directions to take leave and any previous notices given by the employee under subclause 1.2(c).

[201] Paragraph 1.2(b)(ii) requires the minimum length of any period of directed leave to be one week. This is to avoid an employee being required to take leave in a series of single days or clusters of a small number of days.

[202] Paragraph 1.2(b)(iii) requires that the employee be given at least eight weeks’ notice of the commencement of the directed leave. This is intended to ensure that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate his or her leave with family members. The same notice period applies in circumstances where an employee gives written notice to the employer, pursuant to subclause 1.2(c).

[203] Paragraph 1.2(b)(iv) requires that the directed leave commence in not more than 12 months. This is intended to ensure that the excessive leave accrual is dealt with reasonably promptly, but still allow sufficient scope for the leave to occur at a time that is suitable to both the employer and the employee.

[204] Paragraph 1.2(b)(v) requires that the direction not be inconsistent with any leave arrangement agreed to by the employer and employee. For example, general arrangements for taking leave might have been agreed in the employee’s contract of employment, or there may have been a one-off agreement between the employer and employee that the employee could accrue excessive leave for a particular purpose.” 27

[67] As indicated, the Full Bench has determined that some different conditions should attach to the model “Excessive leave accruals” clause, compared to those previously contained in the Award. In summary, these new conditions can be said to provide additional safeguards for employees. For example:

• Any direction to take leave must not involve a minimum leave period of less than one week.



• An employee must be given at least 8 weeks’ notice before the direction to take leave can commence. This compares with the period of 4 weeks previously contained in the Award.

[68] As the decision of the Full Bench makes clear, and as confirmed in its subsequent Determination, these conditions have been developed against the background of the provisions in the NES and s.93(3), in particular, which requires that any requirement to take annual leave must be “reasonable.” The fact that the Full Bench has decided that additional protection is required for employees in the model term, over and above what existed previously in the Award, suggests that what is considered “reasonable” in terms of the Agreement that covers the parties in the present matter, might also be viewed in a similar way, given that the provisions in the Agreement must also be considered in the context of s.93, as a consequence of s.55 of the Act.

[69] It is axiomatic that the entitlement to take annual leave is an important condition of employment. It is an entitlement that provides the opportunity to take a break from work. It provides the opportunity to spend time doing something different from what an employee is normally involved in at work, whether that be travel, the pursuit of a hobby or interest, work on a particular project, leisure and relaxation, or a host of other activities. Critically, it also provides an extended opportunity to spend time with family.

[70] The ability to maximise the benefits of annual leave obviously also often require that the period of leave is planned for and arranged well in advance. As the TWU indicates in its submissions, taking a period of annual leave invariably involves planning around the particular arrangements associated with the leave. It can also involve taking time to accumulate leave for a particular purpose, and aligning the taking of leave to other family obligations, such as school holidays and other associated commitments. These circumstances again, invariably, become more complicated when an employee’s partner is also working, and each needs to ensure their leave arrangements coincide.

[71] In reviewing the provisions that exist in Awards and Agreements that allow an employer to direct that leave be taken it was the case that a period of at least 4 weeks’ notice was commonly required. The TWU submits that this has been a long-standing requirement in the transport industry. Nothing was suggested to refute these submissions. The more recent variations to the Award have, of course, provided an extended notice period of 8 weeks in the case of “excessive leave accruals”.

[72] In conclusion, I am not satisfied that it is appropriate to impose a notice requirement in the context of clause 26.1, and the notice period that is appropriate in each case will instead depend upon all the circumstances existing at the time. However, I am satisfied that a direction to take leave with limited notice will almost certainly raise real issues in the context of both the conditions attached to clause 26.1, and those contained in s.93(3) of the Act. In addition, the bar does appear to have been raised in this context in terms of what might be “reasonable” when dealing with “excessive leave accruals” as a consequence of the recent award variations. Similar considerations will likely be relevant in terms of clause 26.1.

[73] I am also satisfied that the proper enjoyment of an employee’s annual leave entitlement should not readily be compromised or placed in jeopardy by the employee being required to take that entitlement at short notice so as to enable the business to respond to a particular operational issue.

[74] However, for the reasons indicated the present application is dismissed.

COMMISSIONER

Appearances:

M Gibian of Counsel and B Baarini on behalf of the Transport Workers’ Union of Australia.

C McCutcheon on behalf of Toll Holdings Limited T/A Toll Express and NQX.

Hearing details:

2016.

Melbourne:

11 July.

Final written submissions:

Applicant’s final written submissions received 27 May 2016.

Respondent’s final written submissions received 17 June 2016.

 1   AE405183.

 2   Ibid.

 3   Ibid.

 4   MA000038.

 5   Fair Work Act 2009 (Cth) s 93(3).

 6   AE405183.

 7   MA000038.

 8   4 yearly review of modern awards—Annual leave [2015] FWCFB 3406.

 9   MA000038, PR583070.

 10   MA000038.

 11   AE405183.

 12   Ibid.

 13   Transcript at PN200.

 14   Fair Work Act 2009 (Cth) s 93(3).

 15   Transcript at PN244.

 16   Applicant’s submissions, dated 27 May 2016 at para 18.

 17   Transcript at PN250.

 18 Respondent’s submissions, dated 17 June 2016, at para [8].

 19 Ibid at para [12].

 20 Ibid at para [24].

 21 Ibid at para [40].

 22   [2005] AIRC, PR955742.

 23   Explanatory Memorandum, Fair Work Bill 2008.

 24   [2014] FWC 4193.

 25   Fair Work Act 2009 (Cth).

 26   Above n, 8.

 27   Ibid.

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