Victorian Hospitals' Industrial Association

[2022] FWCA 4390

[2022] FWCA 4390

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.218A - application to vary an agreement to correct or amend errors, defects or irregularities

Victorian Hospitals' Industrial Association

(AG2022/5191)

Doctors in Training (Victorian Public Health Sector) (AMA Victoria/ASMOF) (Single Interest Employers) Enterprise Agreement 2022-2026

Health and welfare services
DEPUTY PRESIDENT MASSON	MELBOURNE, 13 DECEMBER 2022

Doctors in Training (Victorian Public Health Sector) (AMA Victoria/ASMOF) (Single Interest Employers) Enterprise Agreement 2022-2026.

1. Victorian Hospitals’ Industrial Association (the Applicant) has made an application pursuant to s.218A of the Fair Work Act 2009 (the Act) to vary the Doctors in Training (Victorian Public Health Sector) (AMA Victoria/ASMOF) (Single Interest Employers) Enterprise Agreement 2022-2026[1] (the Agreement) to correct or amend an error, defect or irregularity in the Agreement.

1. The Applicant is an Employer Association registered under the Fair Work (Registered Organisations) Act 2009 (RO Act) and acts on behalf of the Employers covered by the Agreement. The Australian Salaried Medical Officers Federation (ASMOF) is covered by the Agreement. 

1. The Agreement was approved by the Commission on 2 November 2022 and commenced operation on 9 November 2022[2]. The Applicant submits that the Agreement contains a substantive error, defect or irregularity, the details of which are set out and considered below. The ASMOF advised on 12 December 2022 that it supports the proposed variation to the Agreement. Both parties were content for the matter to be determined on the basis of the material filed.

Statutory Provisions

1. Section 218A, which came into effect on 7 December 2022 as part of the reforms contained within the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, provides for the variation of enterprise agreements to correct or amend an obvious error, defect or irregularity and relevantly provides as follows;

“(1)The FWC may vary an enterprise agreement to correct or amend an obvious error, defect or irregularity (whether in substance or form).

(2)The FWC may vary an enterprise agreement under subsection (1);

(a) on its own initiative; or

(b) on application by any of the following:

(i)one or more of the employers covered by the agreement;

(ii)an employee covered by the agreement;

(iii)an employee organisation covered by the agreement.

(3)If the FWC varies an enterprise agreement under subsection (1), the variation operates from the day specified in the decision to vary the agreement.”

1. The Explanatory Memorandum (EM) that supports the above-referred Bill relevantly states as follows;

“772. This part would remove unnecessary complexity in the agreement-making process by amending the FW Act to:

·  simplify the process for correcting any obvious errors, defects or irregularities in enterprise agreements; and

·  provide a simple remedy to address the situation where the wrong version of an enterprise agreement or variation has been inadvertently submitted to, and approved by, the FWC.”

Consideration

1. The Applicant seeks to vary clause 60 of the Agreement by inserting a new sub-clause 60.4 and then renumbering the following sub-clauses of clause 60 to reflect the insertion of the new clause 60.4. The proposed sub-clause to be inserted provides as follows;

“60.4Payment Calculation

(a)   For the purposes of this clause 60, ‘wages’ means the ordinary weekly rate of pay and allowances consistent with the Doctor’s classification as averaged over the leave accrual year and calculated consistent with the following methodology:

(i)if the Doctor worked 60 hours or more: wages must be paid at 38 hours calculated at single time (1.0) and 22 hours at time and one half (1.5) for each week of leave;

(ii)if the Doctor worked less than 60 hours but at least 48 hours: wages must be paid at 48 hours calculated at single time (1.0) for each week of leave;

(iii)in all other circumstances the Doctor’s wages must be paid on 38 hours at single time (1.0) for each week of leave.

(b) For Registrars, all references to 38 hours in subclause 60.4(a)(i) through (a)(iii) above become 43 hours and all references to 22 hours become 17 hours.

(c)   When calculating the annual leave payable to a Doctor in accordance with this subclause, the Doctor must not be paid less than their base rate of pay for the Doctor’s ordinary hours of work in the period of paid annual leave.”

1. The Applicant submits that due to erroneous drafting, the parties inadvertently deleted the proposed sub-clause 60.4 which sets out how annual leave entitlements are to be calculated. The proposed sub-clause was in the same form in the previous agreement, that being the  AMA Victoria - Victorian Public Health Sector - Doctors in Training Enterprise Agreement 2018-2021[3] (the 2018 Agreement). According to the Applicant, deletion of sub-clause 60.4 was not intended by the parties, the consequence of its erroneous deletion being that of a reduction in the annual leave entitlements afforded to employees covered by the Agreement.

1. The Applicant further submits that the absence of the proposed sub-clause 60.4 means that the Agreement is silent on the established annual leave calculation methodology. This results in the calculation of the annual leave entitlement reverting to reliance on the less beneficial minimum standard conferred by the National Employment Standards (NES), which relevantly provides at s. 90 of the Act as follows;

“90Payment 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 for the 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.” (emphasis added)

1. It is apparent from the text of s. 218A and the supporting EM that s. 218A is intended to overcome the statutory limitation imposed by s.602 of the Act that was most recently identified by the Full Bench in Advantaged Care Pty Ltd v Health Services Union[4] (Advantaged Care). In that decision the Full Bench confirmed that the Commission could not amend the text of an agreement to correct an obvious error, defect or irregularity pursuant to s. 602 of the Act and that other provisions within the Act, ss. 210 or 217, might be used to rectify such error, defect or irregularity.

1. There are limitations to the use of ss. 210 and 217 of the Act in varying an agreement to address an obvious error, defect or irregularity. For example, it may be considered costly and impractical to conduct a ballot of employees for the purpose of obtaining approval for the variation of an agreement pursuant to s. 210 of the Act, where the variation sought is not substantive. Section 217 might also not be amenable to correcting an obvious error, defect or irregularity where the error does not create uncertainty or ambiguity. It is accepted that s. 218A confers an additional discretion for the Commission to amend an error, defect, or irregularity in an agreement, be that in form or substance.

1. In the present case the contended error is that of the inadvertent omission of clause 60.4 during the Agreement drafting process. The contended error which was not identified until after the Agreement was approved is arguably an error of substance and omission. A demonstrated error of omission would in my view fall within the scope of s. 218A(1).

1. Turning to whether the omission of clause 60.4 constitutes an error, defect or irregularity, the following is relevant to my consideration. The proposed clause 60.4 was included in the 2018 Agreement[5] in identical terms. It also appeared in other predecessor agreements[6] in similar, if not identical terms. Further, employees were advised in explanatory material accompanying the Agreement provided prior to the ballot for approval of the Agreement that the only change to the annual leave clause was that of “Amendments to the existing clause to provide for processes around taking annual leave in advance, cashing out of annual leave and excessive annual leave accruals”. Employees were not advised of the proposed removal of the annual leave calculation methodology that was included in clause 60.4 of the 2018 Agreement.

1. Having regard to the above, I am satisfied that the inadvertent omission of clause 60.4 from the Agreement was an error that arose during drafting of the Agreement prior to the ballot for approval of the Agreement. I am also satisfied that omission of the clause is an error of substance and significantly disadvantages employees in respect of their annual leave entitlements. While such disadvantage is not in my view a pre-requisite for the exercise of the Commission’s discretion to vary the Agreement, it is a matter I have taken into account in the present matter.

Conclusion

1. For the reasons set out above, I am satisfied that the omission of clause 60.4 was an error within the meaning of s. 218A(1) of the Act. I am further satisfied that the application to vary the Agreement has been made by the representative of the employers covered by the Agreement, thus satisfying the requirements of s. 218A(2)(b)(i) of the Act. The variation sought will operate from 13 December 2022. An order giving effect to this decision will be separately issued.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE518015  PR748856>

[1] AE518015

[2] [2022] FWCA 3828

[3] AE429349

[4] [2021] FWCFB 453

[5] 2018 Agreement, clause 60.4

[6] See clause 46.4 in Victorian Public Health Sector (AMA Victoria) - Doctors in Training (Single Interest Employers) Enterprise Agreement 2013 (AE405754);  and clause 45.4 in Victorian Public Health Sector (AMA Victoria) - Doctors in Training - Multi -Enterprise Agreement 2008-2012 (AE878489)

Printed by authority of the Commonwealth Government Printer

<AE518015  PR748856>