United Voice v SERCO Group Pty Ltd
[2018] FCCA 2190
•10 August 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| UNITED VOICE v SERCO GROUP PTY LTD | [2018] FCCA 2190 |
| Catchwords: INDUSTRIAL LAW – Serco Immigration Services Agreement 2015 – whether remote district allowance payable as part of annual leave entitlement on redundancy – held to be payable. |
| Legislation: Fair Work Act 2009, ss.12, 44, 90(2), 540(2), 546 |
| Cases cited: Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100 Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 |
| Applicant: | UNITED VOICE |
| Respondent: | SERCO GROUP PTY LTD |
| File Number: | DNG 6 of 2017 |
| Judgment of: | Judge Young |
| Hearing date: | 14 March 2018 |
| Date of Last Submission: | 14 March 2018 |
| Delivered at: | Darwin |
| Delivered on: | 10 August 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bull |
| Solicitors for the Applicant: | United Voice |
| Counsel for the Respondent: | Mr Fernon SC |
| Solicitors for the Respondent: | Baker & McKenzie |
ORDERS
The court declares that, contrary to section 44 of the Fair Work Act (“the Act”), the respondent has contravened a provision of the National Employment Standards by failing to pay to the named employees the specified amounts for Remote District Allowance in accordance with clause 19(c) of the Serco Immigration Services Agreement 2015 as required by subsection 90(2) of the Act.
Name
Amount
Garry Anderson
$287.42
Michael Skinnon
$975.67
Victor Andrews
$960.88
Kamran Azeem
$1,681.98
Sheree Baltussen
$363.69
Troy Gannon
$229.11
Dave Hollands
$224.92
Mehdi Jafari
$273.86
Abdul Ramaran
$15.13
Luke Rissman
$1,697.76
Zara Thompson Hadley
$1,806.64
Ji Lim Van
$1496.97
Richard Wallington
$550.10
TOTAL
$10,564.12
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNG 6 of 2017
| UNITED VOICE |
Applicant
And
| SERCO GROUP PTY LTD |
Respondent
REASONS FOR JUDGMENT
The applicant is an industrial association under section 12 of the Fair Work Act (“the Act”). It brings an application on behalf of 13 named employees (“the employees”) pursuant to subsection 540(2) of the Act. The respondent (“Serco”) admits the applicant is entitled to represent the interests of the employees for the purposes of subsection 540(2) of the Act.
The applicant seeks a declaration that, contrary to section 44 of the Act, Serco contravened a provision of the National Employment Standards by failing to pay an amount for untaken annual leave as required by subsection 90(2) of the Act. That subsection provides:
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.
The applicant also seeks compensation for each of the employees, the imposition of a pecuniary penalty pursuant to section 546 of the Act, to be payable to the applicant, and disclosure in relation to other employees whose employment was terminated at the same time as the employees and a statement of the termination entitlements paid to those other employees.
The parties filed a statement of agreed facts from which the following description is taken.
Factual background
Serco managed an immigration detention facility on behalf of the Commonwealth government at Wickham Point near Darwin between December 2011 and 31 October 2016. Between May 2013 and 31 October 2016 Serco also managed a similar facility nearby described as an “alternative place of detention”. Collectively the places were described as the “Wickham Point Facility” (hereafter “Wickham Point” or “the facility”).
The facility was about 41 kilometres by sealed road and about 40 minutes driving time from Darwin. Between about 300 and 400 staff were employed there.
The employed staff did not live at the facility and there was no residential accommodation for staff. The employees would arrive from their homes before and depart to their homes after each rostered shift at the facility.
Each of the employees resided elsewhere and took their periods of annual leave at places other than at the facility.
From 2009 various enterprise agreements covered employees at the facility. From 18 September 2015 the relevant agreement covering the employees at the time of the termination of their employment was the Serco Immigration Services Agreement 2015 (“the 2015 Agreement”).
The 2015 Agreement designated Wickham Point, along with Christmas Island, as a “remote district or centre”.
Clause 19 provided for various allowances. Subclause 19(c) provided as follows:
Remote District allowance. In addition to the rates of pay prescribed in clauses 16, and 18 of this Agreement, if an Employee is located at a Company designated remote district or centre, that Employee will receive a remote district allowance. The remote district allowance is a flat allowance and separate from an Employee’s ordinary rate of pay. Further, this allowance would cease to apply if an employee transfers from a remote district. The allowance will be paid pro rata fortnightly in arrears in accordance with the normal pay cycle.
Effective from the date of operation of this Agreement, the designated remote districts/centres are Christmas Island, and Wickham Point. The remote district allowance will be payable to all Employees working on Christmas Island, including permanent, part-time, specified term, casual and will also apply to Employees on secondment or working under fly in fly out arrangements.
For all other designated remote districts or centres the remote district allowance will only be payable to full-time, part-time or specified term Employees permanently located at that Company designated remote district or centre.
The respective allowances are: [the allowances are then listed].
Each of the employees was entitled to 210 hours (5 weeks) of annual leave for each completed year of service. From 18 September 2015 to June 2016 an amount in respect of remote district allowance (“the allowance”) was paid to employees at Wickham Point while those employees took annual leave.
The employment of the employees was terminated on various dates in June, July and August 2016 (presumably in anticipation of closure of the facility) and the facility closed on 31 October 2016.
The respondent agreed that the payments for accrued annual leave paid to the employees on the termination of their employment did not include the allowance.
The dispute
The parties agreed that the word “payable” in the phrase “would have been payable” in subsection 90(2) meant payable pursuant to a legal obligation: Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100, [28].
The applicant argued that the obligation arose under subclause 19(c) of the 2015 Agreement. The applicant said that the employees were “located” at Wickham Point, a designated remote district or centre, regardless of whether they took annual leave elsewhere and were accordingly entitled to receive the allowance.
Counsel for the applicant argued that the obligation might also have arisen as a contractual term under a custom or practice but this was pressed only faintly and the court was not referred to any relevant authorities. I do not propose to give that point further consideration.
The applicant argued that on a plain reading of the 2015 Agreement as a whole the word “located” in the phrase “if an Employee is located” in subclause 19(c) took its meaning from where an employee was “located in regard to their normal place of work” or, in simple terms, “located” referred to where the employee normally worked.
The respondent’s argument, on the other hand, emphasised what it said was the purpose of the provision. It said that clause 19 was concerned with allowances. It pointed to some of the allowances provided for in clause 19, including an allowance where an employee was required to take a meal break at his or her post, an allowance where an employee was required to perform duties for more than two hours after the normal time of cessation of work and an allowance if an employee was located at a designated remote district/centre.
The respondent pointed out that clauses 16 and 18 of the 2015 Agreement provided for “aggregate rates”. These clauses, which applied to different categories of employees, stated that the “aggregate rates provided for are in full consideration of all requirements of the position in respect of conditions, hours of work, annual leave loading, extended hours and times of employment (penalty and shift allowances), unless otherwise provided for in this Agreement”. The respondent argued that these clauses were intended to reward the employee for the performance of work.
The respondent said that, in contradistinction, the allowance in subclause 19(c) was not a component of salary. This construction was said to be supported by the statement in subclause 19(c) that the allowance was “a flat allowance and separate from an Employee’s ordinary rate of pay”.
It argued that the purpose of subclause 19(c) was to compensate an employee for the particular circumstances of the employee while work was performed. Accordingly, the entitlement to the allowance arose from the performance of work at Wickham Point and not simply from the performance of work. It said that it followed that the allowance was not payable to an employee while taking annual leave.
The respondent said this construction was supported by the distinction drawn in subclause 19(c) between employees at Christmas Island where the allowance was “payable to all Employees working on Christmas Island, including permanent, part-time, specified term, casual and will also apply to the Employees on secondment or working under fly in fly out arrangements”. The allowance for an employee at Wickham Point was said to be more limited and payable “only to full-time, part-time or specified term employees permanently located at Wickham Point”.
The respondent argued that the construction contended for by the applicant was incorrect because it equated “located” with the notion of “engagement or appointment” to work at Wickham Point irrespective of the performance of work at Wickham Point.
The respondent said if “located” was meant in that sense the language would have been different and words such as “engaged at or appointed to” could have been used.
Consistently with this submission the respondent argued that the allowance was not payable at any time the employees were absent from Wickham Point on annual leave. It was payable “only to full-time, part-time or specified term employees permanently located at Wickham Point”. It said, in effect, that the payment of the allowance during periods of annual leave at earlier times was gratuitous and not payable under an obligation.
Construction of an enterprise agreement
The proper construction of the enterprise agreement “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose…”: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241, 246 [2] per Gleeson CJ and McHugh J.
In Kucks v CSR Limited (1996) 66 IR 182 at 184 Madgwick J, in dealing with the construction of awards, observed that:
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been held to mean particular things may sensibly and properly be held to mean something else in the document at hand.
This passage was quoted with approval by Kirby J, at 271, and Callinan J, at 282-3, in Amcor Ltd v Construction, Forestry, Mining and Energy Union.
These principles were restated by French J in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 at (57):
It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities… There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned… It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
Awards, whether made by consent otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.
The observations of Madgwick J in Kucks have been held to have even stronger application to certified agreements than to awards: Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 per Northrop J.
As O’Callaghan J said in Australian Rail, Tram and Bus Industry Union v Metro Trains Melbourne Pty Ltd [2017] FCA 1494 at [34], guidance to the construction of industrial instruments may also be obtained from the principles applying to the construction of commercial contracts. Commercial contracts should, as Kirby J held in Pan Foods Company Importers & Distributors Pty Ltd v ANZ Banking Group Ltd (2000) 170 ALR 579, “… be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction”. See also Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437.
Consideration
The evident industrial context and purpose of the provision is to compensate employees for working in a remote place. It may be readily accepted, as the respondent argues, that the allowance was not a component of salary and was “separate from an Employee’s ordinary rate of pay”. These factors might tend to provide support for the respondent’s argument that the allowance ceased be “payable” when the employee was away from the facility while taking annual leave and for “located” to be construed accordingly.
A corollary of the respondent’s argument is that payment of the allowance was “decoupled” (although that word was not used by the respondent) from the payment of the employee’s ordinary salary or wage, which was payable fortnightly in arrears (clause 20) while the employee was employed, including during periods of annual leave.
I am unable to accept the respondent’s argument. Even if the purpose of the allowance was to compensate the employee for working in a remote place, which I accept, it does not follow that the allowance was “payable” only while the employee was present and working at the facility. It is conceivable that it was intended that the compensation would be paid over the entire period of the employee’s employment at the remote place in a way that spread the payments equally over each pay period. This would, for example, have an advantage for an employer in simplicity in administering its payroll system and for an employee in having a consistent income.
That this is the objective intention of the 2015 Agreement is strongly supported in my opinion by the words in subclause 19(c): “Further, this allowance would cease to apply if an employee transfers from a remote district. The allowance will be paid pro rata fortnightly in arrears in accordance with the normal pay cycle”.
Thus the only criterion for cessation of payment of the allowance expressed in the 2015 Agreement is an employee’s transfer from a remote district. Otherwise the allowance was to be paid fortnightly in accordance with the normal pay cycle. In my view this is inconsistent with an intention that the obligation to pay the allowance would cease temporarily while the employee was taking annual leave.
The word “located” is not defined in the 2015 Agreement and does not appear elsewhere in it. The word is the past participle of the verb “locate” (but serving as an adjective in this case). In my view it has the meaning of set, fixed or established in a place, situation or locality: Macquarie Dictionary, 5th ed. In this sense it refers to the place to which the employee has been assigned or posted by the employer to work and is not merely a synonym for “present”. In my view an employee who had been assigned or posted to work at Wickham Point would still be “located” there for the purpose of subclause 19(c) even while taking annual leave at some other place.
The related word “location” appears in the definition section of the 2015 Agreement where “normal place of work” is defined to mean “the location where an Employee is engaged to work, either on initial engagement, a secondment, or a subsequent permanent transfer…”. Here “location” is simply a synonym for “place” and provides little guidance on the meaning of “located” in subclause 19(c) but its meaning is at least not inconsistent.
One point raised by the parties should be noticed. The applicant submitted that subclause 19(c) “significantly” made a distinction between employees on Christmas Island and other employees at remote district or centres. The distinction was said to be that under that subclause the allowance was payable “to all Employees working on Christmas Island, including permanent, part-time, specified term, casual and… to Employees on secondment or working under fly in fly out arrangements” but that for employees in other designated remote district or centres the allowance “will only be payable to full-time, part-time or specified term Employees permanently located at that company designated remote district or centre” (emphasis in applicant’s submissions).
The respondent submitted that this apparent distinction leads to absurdity because it differentiates between whether an employee is “located” at Wickham Point or “working” at Christmas Island (although it should be noted that the respondent’s submission described at paragraph 23 above appears to make a similar differentiation).
The applicant’s submissions did not explain why this distinction was significant in relation to the construction point. In my view, when subclause 19(c) is read as a whole, the distinction is of little moment and simply makes clear that all employees working at Christmas Island were entitled to the allowance, including those who might otherwise be doubted to have been “located” there, such as fly in fly out employees. I do not accept that the distinction emphasised by the applicant is significant and, accordingly, I reject the respondent’s counter submission.
In conclusion, I am satisfied that the allowance was payable to the employees pursuant to an obligation under the 2015 Agreement during periods when they took annual leave. Accordingly, when the employment of the employees ended there was payable to them an amount in respect of the allowance pursuant to subsection 90(2) of the Act.
In the event that I found that the allowance was payable the parties have agreed on the precise figures and these will be included in the orders of the court for compensation.
Pecuniary penalty
I have found that the respondent breached section 44 of the Act by contravening a provision of the National Employment Standards by failing to pay the allowance for the period of untaken annual leave as required by subsection 90(2) of the Act.
The applicant sought the imposition of a pecuniary penalty on the respondent pursuant to section 546 of the Act. I have received submissions from the parties on this issue but I consider that I should defer consideration of the question pending the resolution of the other matter raised by the applicant. The applicant has sought an order for, in effect, disclosure or discovery in relation to whether or not the respondent has committed a similar breach in respect of the other employees whose employment was terminated in similar circumstances to the termination of the employment of the 13 employees on whose behalf this application was brought.
The other employees
An order is sought by applicant that the respondent provide to the court “a schedule of all employees terminated at Wickham Point after 13 May 2016 other than the Members with a statement of the termination entitlements paid to each employee”. I am not satisfied that the applicant may apply for this order because subsection 540(2) of the Act states that an employee organisation may apply for an order under the relevant Division in relation to an employee “only if” the organisation “is entitled to represent the industrial interests of the employee”.
After I reserved judgment counsel for the applicant provided me with a copy of its rules and its (lengthy and detailed) membership criteria. On perusing the rules it was not clear to me whether or not the other employees were covered by the applicant’s membership criteria or whether the applicant was entitled to represent the industrial interests of the other employees.
I propose to seek further submissions on this point from the parties.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Young
Date: 10 August 2018
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