Warren and Secretary, Department of Jobs and Small Business
[2019] AATA 95
•31 January 2019
Warren and Secretary, Department of Jobs and Small Business [2019] AATA 95 (31 January 2019)
Division:GENERAL DIVISION
File Number(s): 2017/7027
Re:Mr Kyle Warren
APPLICANT
AndSecretary, Department of Jobs and Small Business
RESPONDENT
DECISION
Tribunal:Deputy President B W Rayment OAM QC
Date:31 January 2019
Place:Sydney
The reviewable decision is set aside and the matter remitted to the respondent for reconsideration in light of the Tribunal’s reasons.
...............................[sgd]................................
Deputy President B W Rayment OAM QC
CATCHWORDS
EMPLOYMENT ENTITLEMENTS – whether casual loading payments advanced to the applicant during course of employment can be offset against National Employment Standards – contract of employment purported to provide for casual employment – applicant employed on a full-time permanent basis – whether applicant entitled to annual leave, payment in lieu of notice and redundancy pay upon termination of employment – inconsistency between contract of employment and the provisions of the Fair Work Act including the National Employment Standards and the Black Coal Mining Industry Award – contract of employment denied applicant entitlements under legislation and the model award – decision under review set aside and remitted for reconsideration
LEGISLATION
Conciliation and Arbitration Act 1904 (Cth) (No longer in force)
Fair Entitlements Guarantee Act 2012 (Cth), ss 19, 23
Fair Work Act 2009 (Cth), Pt 2-2, Div 6 of Pt 2-2, ss 12, 16, 44, 45, 55, 61, 87, 90, 92, 93, 94, 117
Industrial Relations Act 1988 (Cth)Workplace Relations Act 1996 (Cth), s 173 (Superseded)
CASES
Australia and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785; (2001) 111 IR 227
Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410
Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100; (2015) 231 FCR 298
Commonwealth of Australia v Director, Fair Work and Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482
CEPU of Australia v CJ Manfield Pty Ltd [2011] FMCA 374
Kilminster v Sun Newspapers Ltd [1931] HCA 37; (1931) 46 CLR 284
Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99; (2015) 240 FCR 578
Scott v Sun Alliance Australia Ltd [1993] HC 46; (1993) 178 CLR 1
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429
Williams v MacMahon Mining Services Pty Ltd (No.2) [2009] FMCA 763
Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321
WorkPac Pty Ltd v Skene [2018] FCAFC 131SECONDARY MATERIALS
Black Coal Mining Industry Award 2010
REASONS FOR DECISION
Deputy President B W Rayment OAM QC
31 January 2019
Background
Mr Warren was employed in the coal mining industry by SubZero Group Limited (‘the company’) by a letter dated 14 May 2013 which he signed and returned on 21 May 2013 (‘the letter agreement’). A document tendered by the respondent records that Mr Warren actually began his employment on 7 January 2013.
On 11 February 2016, Ernst & Young were appointed as administrators to the company and Ferrier Hodgson was appointed as receivers and managers of the company.
The employment of all employees was terminated by Ferrier Hodgson on 30 September 2016 when Mr Warren was 43 years of age. The end of the employment of Mr Warren was due to the insolvency of the company. On 14 November 2016, Ernst & Young were appointed as liquidators of the company.
That satisfies one of the general conditions for an advance under the Fair Entitlements Guarantee Act2012 (Cth), and this review concerns Mr Warren’s monetary entitlements under s 19 of that statute. That section is in the following terms:
19 Working out amounts for employment entitlements
(1)Work out the amount for each of a person’s employment entitlements to be taken into account under section 16 by:
(a) working out the basic amount for the entitlement under Subdivisions B and C; and
(b) reducing the basic amount (but not below nil) by the sum of the amounts described in subsections (2) and (3) for the entitlement.
(2)One amount of the reduction of the basic amount for a particular employment entitlement of a person for his or her employment by an employer is the total of amounts that:
(a)are attributable to the entitlement; and
(b)have been paid by anyone:
(i)to the person; or
(ii)to someone else for the person’s benefit or in accordance with the person’s direction; and
(c) are not costs of the winding up or bankruptcy of the employer.
(3)The other amount of the reduction of the basic amount for a particular employment entitlement of a person for his or her employment by an employer is the total of amounts that:
(a)are attributable to the entitlement; and
(b)are payable (and have not been paid) by anyone:
(i)to the person; or
(ii)to someone else for the person’s benefit or in accordance with the person’s direction; and
(c) are not payable:
(i)under the Corporations Act 2001 in the winding up of the person’s employer; or
(ii)under the Bankruptcy Act 1966 from the proceeds of the property of the bankrupt employer of the person; or
(iii)under this Act.
The provisions of Division 2 of the Act, a division which includes s 19, largely depends upon the legal entitlements of employees, whether under their contracts of employment, awards, statutes or other instruments. The entitlements to which the Act relates are specified in sections 6 and 7 of the Act. They are entitlements for annual leave, long service leave, payment in lieu of notice, redundancy pay and wages paid during the wages entitlement period, an expression which is defined in the Act. It relates to a period of 13 weeks, and not to the whole of the period of employment. It follows that an employee is left to such rights as he or she has under the general law or other statutes for unpaid wages outside the 13 week period. Mr Warren made no claim against the respondent for unpaid wages or long service leave.
I will therefore begin these reasons with an examination of those entitlements, having regard, at the same time, to any modifying provisions of the Fair Entitlements Guarantee Act. The parties had hitherto directed attention to the question of whether the casual loading and the “further loading” were properly to be set off against relevant amounts already paid to Mr Warren by his employer. My review has extended to an examination of the entitlements of Mr Warren under the Fair Work Act 2009 (Cth) and the relevant model award, for the purpose of considering the arguments addressed to me and the reviewable decision.
The contract of employment constituted by the letter agreement entered into between Mr Warren and the company was plainly in conflict with both the National Employment Standards described in Chapter 2, Division 2 of the Fair Work Act, and the Black Coal Mining Industry Award 2010 (‘the award’), a model award also made under that Act. There was no enterprise agreement which covered Mr Warren. The importance of the question of construction which arises under the letter agreement is that it is necessary to decide whether and to what extent set-offs should be made between some amounts paid to Mr Warren while he was employed and Mr Warren’s unpaid entitlements (to the extent to which they are available to be claimed under the Fair Entitlements Guarantee Act) when his employment ceased.
On behalf of Mr Warren, it has been submitted that the consequence of the inconsistency between the Fair Work Act (and/or the award and the National Employment Standards) and the letter agreement is that to the extent of the inconsistency, the letter agreement is of no effect and that certain parts of its provisions should be disregarded in calculating his legal entitlements for the purposes of the Fair Entitlements Guarantee Act. That submission is disputed by the respondent.
In Byrne v Australian Airlines Limited [1995] HCA 24 (1995); 185 CLR 410, the High Court examined the relationship between an award originally made under the Conciliation and Arbitration Act 1904 (Cth) and continued in force as if made under the Industrial Relations Act 1988 (Cth), and a written contract of employment.
In the joint judgment of Brennan CJ, Dawson and Toohey JJ at [11], their Honours stated that the contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award, and that the award operates with statutory force to secure those terms and conditions imposed by the award.
At [9] their Honours wrote:
(9) A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right. As Latham CJ points out in his judgment in Amalgamated Collieries of WA Ltd v True(10), the legal relations between the parties are in that situation determined in part by the contract and in part by the award. And as the judgment of the Privy Council in that case suggests, a provision in an award may also be made a term of the contract by agreement between the parties, but that is only to emphasise the distinction between an obligation imported by statute and one arising by agreement.
Having said that derogation was impossible, the Court refused to imply any terms into the contract merely repeating the award provisions, on the basis that it was unnecessary to do so for the reasonable or effective operation of the contract in the circumstances of the case, and refused to imply such terms on other bases suggested.
It seems clear that the Fair Work Act also has the effect that its provisions, and those of a model award made under the Act, prevail over any contract of employment which deals with the relationship between the employer and an employee covered by the Act and a model award made under it, to the extent of any inconsistency.
Section 44 of the Fair Work Act provides that an employer must not contravene a provision of the National Employment Standards and provides that the provision is a civil penalty provision, and s 45 provides that “a person” must not contravene a term of a modern award and that also is a civil penalty provision. Civil penalty provisions are dealt with in Part 4.1 of the Act. Those provisions do not make the conduct in question illegal, but provide for a monetary penalty recoverable in civil proceedings, in order to discourage repetition of the conduct in question. See generally, Commonwealth of Australia v Director, Fair Work and Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [53]-[55].
Section 55 of the Fair Work Act regulates the permissible contents of a model award, and s 55(3) provides that:
(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).
By section 61 of the Fair Work Act, the National Employment Standards set minimum standards which “cannot be displaced” and the matters to which they relate include maximum weekly hours, annual leave, long service leave and notice of termination and redundancy pay. It seems to be implicit in the scheme for which the Act provides, that the standards validly provided for in a model award also cannot be displaced, or as the High Court said in Byrne, cannot be derogated from.
Clause 10 of the award permitted, in the case of Mr Warren, that he be employed only as a full-time employee or a part-time employee. Casual employees were entitled to be employed as such only if they fell within the classifications in Schedule B of the award. Mr Warren did not fall into any of those categories. He fell within the description of a full-time employee. So much of the letter agreement as purported to make him a casual employee and all related provisions, cannot stand.
Annual leave
By clause 25 of the award, the consequence of Mr Warren not being a casual employee was that he was entitled to enjoy and to be paid for annual leave of at least five weeks per year, being a longer period of leave than the four weeks provided by the National Employment Standards. Mr Moutasallem, who appeared for Mr Warren, pointed out that in fact, Mr Warren’s entitlement to annual leave was to six weeks leave, pursuant to clause 25.2(b) of the award. That is because he was a seven day rostered employee working a roster which required ordinary shifts on public holidays and no less than 272 ordinary hours per year on Sundays. The same information was assumed in the reviewable decision. Mr Moutasallem also told me that the working week of Mr Warren was for 42.5 hours per week for which he was paid the hourly rate specified in the letter agreement, rather than amounts payable under the Fair Work Act and the model award. By clause 25.7, he was entitled to be paid during annual leave more than his ordinary rate of pay, being the greater of a 20% loading and an amount calculated by reference to his rostered earnings. The reviewable decision also assumes that the higher rate was applicable to Mr Warren, and calculates the increment at 56%, a figure which each party submits was correctly calculated. The expression “ordinary rate of pay” is not defined in the award, but there is a definition of “ordinary week’s pay” which has regard to the minimum rates specified in the award. Assistance in understanding clause 25.7 of the award may possibly be obtained from the High Court’s decision in Scott v Sun Alliance Australia Ltd [1993] HC 46; (1993) 178 CLR 1 at [6] which contains a discussion of the expression “ordinary time rate of pay” in Tasmanian workers compensation legislation.
By s 87(2) of the Fair Work Act, the employee’s entitlement to annual leave accumulates progressively during each year of employment and accumulates from year to year. So if six weeks of leave per year is correct, he would have eighteen weeks of untaken leave at the end of his employment plus additional weeks of leave for the two periods of less than one year. He took no paid annual leave at all during his employment and worked for a total of 3.73 years.
The calculations included in the reviewable decision are: 3.73 x [(six weeks at the minimum weekly rate payable in 2016) + 56%]. This produces a total amount of $29,027.53.
The calculation relevant to Mr Warren involved consideration of his rostered earnings since the award provided for different rates of pay depending on whether the work was done during the week or on a Saturday, or a Sunday, and for different rates on Saturdays depending on how many hours were worked. If “ordinary rate of pay” means only the minimum wages that would have been payable to Mr Warren had he worked a 35 hour week Mondays to Fridays, then the calculations made in the reviewable decision seem to be correct.
Further, the calculations needed to take account of s 90 of the Fair Work Act.
Section 90 provides as follows:
90 Payment for annual leave
(1)If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay 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.
By section 90(2) of the Fair Work Act, if and when the employment of an employee ends and 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. By contrast with s 90(1), the rate at which the employee is to be paid in those circumstances does not necessarily have regard to the expression “base rate of pay” in s 16: See Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100; (2015) 231 FCR 298.
The rate of pay at which Mr Warren should have been remunerated during his annual leave was to be calculated in accordance with clause 25.7 of the award, having regard to his rostered earnings, including overtime, rostered public holidays (paid at double time) and shift allowances, since he was a seven day rostered employee.
If public holidays intruded, then he was also entitled to be paid at award rates, or at the rates mentioned in clause 3.2 of the letter agreement, whichever was the higher. That is because over-award payments are not prohibited under the Act or the award, and that has long been recognised. See, for example Kilminster v Sun Newspapers Ltd [1931] HCA 37; (1931) 46 CLR 284 and Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at [11]. The purpose of the award and the Act was only to specify minimum terms and conditions of employment, including wages, in an industry or sector of an industry.
Having heard the parties at a resumed hearing following the preparation of a draft of these reasons, I am satisfied by them that the various considerations so far mentioned concerning annual leave have all been taken into account in the respondent’s reviewable decision, which requires no amendment in that regard.
The award prohibits the “cashing out” of annual leave except in accordance with clause 25.13. It will be necessary to return to that provision, and to the corresponding provisions of the Act later in these reasons.
Payment in lieu of notice
Section 117 of the Fair Work Act provides as follows:
117 Requirement for notice of termination or payment in lieu
Notice specifying day of termination
(1)An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).
Note 1: Section 123 describes situations in which this section does not apply.
Note 2: Sections 28A and 29 of the Acts Interpretation Act 1901 provide how a notice may be given. In particular, the notice may be given to an employee by:
(a)delivering it personally; or
(c)leaving it at the employee’s last known address; or
(d)sending it by pre-paid post to the employee’s last known address.
Amount of notice or payment in lieu of notice
(2)The employer must not terminate the employee’s employment unless:
(a) the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b) the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
(3) Work out the minimum period of notice as follows:
(a) first, work out the period using the following table:
Period
Employee’s period of continuous service with the employer at the end of the day the notice is given
Period
1
Not more than 1 year
1 week
2
More than 1 year but not more than 3 years
2 weeks
3
More than 3 years but not more than 5 years
3 weeks
4
More than 5 years
4 weeks
(b) then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.
Accordingly, if the employer terminates an employee’s employment, in the case of a person such as Mr Warren who had been employed for more than three years but less than five years, he was entitled under the Act to three weeks’ pay at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice. Because he had not turned 45 at that time, he was not entitled to a fourth week of pay under the Act.
However, in accordance with clause 13.4 of the award, Mr Warren was entitled to a minimum period of four weeks’ notice of termination. That provision supplemented the entitlements under s 117 of the Act.
The reference to hours which he would have worked in s 117(2)(b) requires an estimation to be made of what, in the prevailing circumstances, his working week would have involved had his employment continued. In the relevant circumstances, that would require the hypothesis that the employer’s business operations did not come to an end in September 2016. The model award provisions as to ordinary hours of work do not necessarily govern that entitlement and since he would have worked hours at overtime or penalty rates, the overtime or penalty rates will form part of the “full rate of pay” for the purposes of the s 117 entitlement.
This analysis also accords with the reviewable decision reasoning at paragraph 31.
Redundancy pay
By clause 14.3 of the award, severance pay where the employment is terminated at the employer’s initiative because of insolvency, results in one ordinary week’s pay for each completed year of employment. This provision does not replace entitlements under s 117 of the Fair Work Act, because clause 14.1 of the model award excludes Subdivision B of Division 11 of the National Employment Standards, and s 117 of the Act is in Subdivision A of Division 11. The expression “one ordinary week’s pay” has a definition in the award. It means the amount in the total payment column for the award classification rate in respect of 35 ordinary hours. So different calculations need to be made for the s 117 entitlements and for clause 14.3 of the model award, but Mr Warren is entitled to both.
The expression “ordinary week’s pay” is defined to mean the amount in the total payment column for the award classification in respect of 35 ordinary hours, so this entitlement does not require reference to Mr Warren’s rostered earnings.
Clause 3.3 of the letter agreement makes “severance pay …arising under the award” part of what is covered by the casual loading, and I take clause 3.3 to mean that the clause 14.3 entitlement (which describes itself as a severance payment), is covered by the casual loading. That may suggest that the s 117 entitlements, varied as they appear to be under clause 13 of the award, are not properly described as “severance pay . . . arising under the award”. The parties differed on this matter of construction of the letter agreement, and I will consider those submissions when dealing with the set-off questions arising in the proceedings.
Other entitlements
The calculation of Mr Warren’s entitlements to unpaid wages, an expression which includes allowances, loadings, overtime and penalty rates, will affect Mr Warren’s claim only for the 13 week “wages entitlement period”. I note that no claim is made on Mr Warren’s behalf in respect of that matter. Nor is long service leave claimed from the respondent, apparently on the basis that a state instrumentality is responsible for that payment.
The letter agreement
In the next place, the letter agreement calls for construction so far as relevant.
Its terms are as follows:
Terms and Conditions of Employment
1. Casual Employment
1.1You will be employed on a casual basis from time to time. Each period of engagement as a casual employee will constitute a separate period of employment from any other period of engagement.
1.2The Company makes no commitment to provide you with regular ongoing employment and nothing in this letter should be taken as constituting such a commitment. As the basis of any period of employment is casual, you will have no entitlement to continuing or further employment after the conclusion of each engagement.
2. Duties & Location
2.1Your duties will be that of a Mining Operator, and you will report to Chrissy Haylen.
2.2The Company may issue you with a duty statement or revised duty statement from time to time. You must act in accordance with any directions given to you, including Company policies and procedures, and any lawful directions issued by the Company's clients.
2.3By accepting employment with the Company you agree honestly and faithfully to serve the Company and use your best endeavours to promote its interests and welfare.
2.4You agree to work in any location reasonably required by the Company, having regard to your position and duties.
2.5The terms set out in this letter will continue to govern your employment in any period of engagement with the Company despite any changes in your duties and responsibilities, remuneration or employment location, unless otherwise agreed in writing.
3. Rate of Pay
3.1You will be paid an all-inclusive flat rate for all hours worked. Your hourly rate will be $39.01 per hour (gross). This includes a base rate plus 25% casual loading and further loading to compensate for other loadings, penalty rates and allowances. You will be paid weekly by electronic deposit to an account nominated by you.
3.2Notwithstanding clause 3.1 of this letter, your hourly rate of pay for work on a recognised public holiday will be $80.29 per hour (gross). This public holiday rate includes a base rate plus 25% casual loading and a further loading to compensate for other loadings and allowances. Where you are required to work on a recognised public holiday, you will be paid at the rate of treble time the public holiday rate.
3.3The payment of a casual loading of 25% is inclusive of, and compensates you for, any and all benefits with respect to paid annual leave, other forms of paid leave (including but not limited to paid personal/carer's leave, paid compassionate leave and paid community service leave) and severance pay (other than as set out in this letter) that arise under the Award or any other industrial agreement. The payment of the further over-award loading is inclusive of, and compensates you for, all allowances, penalty rates and loadings (other than as set out in this letter) that arise under the Award or any other industrial agreement, including all:
(a)rest breaks;
(b)incentive based payments and bonuses;
(c)monetary allowances for expenses incurred in the course of employment;
(d)monetary allowances for disabilities associated with the performance of particular tasks or work in particular conditions or locations;
(e)loadings for working overtime;
(f)loadings for working shift work;
(g)penalty rates; and
(h)outworker conditions.
3.4You agree that the payment of the casual and over-award loadings fully discharge the Company's obligations with respect to these benefits. In the event any of the above benefits become due and payable for any reason, the monetary value of such benefit may be set off against the amount paid as casual or over-award loading (as applicable), in which case the monetary value of the benefit will be calculated by reference to your base rate of pay.
4. Superannuation
4.1If your pay reaches the legislative threshold, the Company will contribute the minimum amount to a complying superannuation fund in order to avoid any charge under the Superannuation Guarantee (Charge) Act 1992.
5. Hours of Work
5.1The Company may operate within a seven (7) day, twenty four (24) hour operation and, as such, you may be required to work on any day of the week during any shift within the twenty four (24) hour operation.
5.2The Company will inform you of your requirement to work as soon as practicable after being made aware by the client that there is a labour need. As a casual employee you may, at times, be asked to work on short notice. The Company will endeavour to limit these occasions and, wherever possible, will provide reasonable advanced notice that you are required to work. Each shift will constitute a separate engagement.
5.3The length of a shift may be up to twelve (12) hours and thirty (30) minutes depending on the location of work or job. You will receive a minimum of four (4) hours' payment on each shift.
5.4Shifts are allocated on a daily basis with a minimum of one (1) hour's notice. It is recognised that from time-to-time, casual employees will not be required to attend work, as dictated by the Company's clients' requirements. The Company does not guarantee that you will be offered a certain number of hours (or any hours) in any week.
6. Termination
6.1Either you or the Company may terminate your employment at any time by giving one (1) hour's notice or pay in lieu of notice.
6.2If you engage in misconduct or commit a serious breach of your employment conditions, the Company may terminate your employment immediately without notice.
6.3As you are a casual employee, you will not be entitled to redundancy pay.
7. Leave
7.1As you are a casual employee, you will not be entitled to annual leave or any other forms of paid leave including but not limited to paid personal/carer's leave, paid compassionate leave and paid community service leave (with the exception of long service leave).
7.2You may, however, be entitled to various forms of unpaid leave (including unpaid personal/carer's leave, unpaid compassionate leave, unpaid parental leave and unpaid community service leave as provided under applicable legislation, as amended or varied from time to time.
8. Downturn/Shutdown Periods
8.1The Company will provide you with a minimum of one (1) hour's notice prior to a downturn or shutdown. If possible the Company will attempt to find you alternate employment during downturn periods until the individual requirements of the Company's client operations require the Company to commence work again.
9. Unforeseeable Circumstances
9.1You acknowledge the variable nature of your casual employment. Your employment is dependent on the Company's clients' demands. Downturn or shutdown periods may occur due to the individual requirements of the Company's client operations not continuing. In addition, you acknowledge the existence of unforeseeable circumstances, such as inclement weather and/or operational requirements, where it is not reasonable and/or not safe for employees to continue working under the conditions. Examples may include but are not limited to rain, hail, fog, snow, extreme cold, wind, dust, extreme heat, machine failure, extreme noise, flooding and/or any other reason as dictated by the Company's clients.
9.2When you are not required due to such circumstances, a minimum of one (1) hour's notice will be provided.
9.3Notice will be communicated by the client to a Company representative who will then be responsible for providing notification to employees. Notice may be provided by text message. The Company representative will require a response acknowledging receipt of message by you. Failure to do so will result in a telephone call from a Company representative.
9.4If you receive less than one (1) hour notification (from the time the text message was sent) that you are not required to attend work, you will be entitled to four (4) hours' pay.
9.5If you arrive at work and/or are at work and are then advised you are not required to attend work due to unforeseeable circumstances, you will be entitled to four (4) hours' pay at minimum, in addition to pay for all hours worked in excess of four (4) hours.
10. Confidential Information
10.1 You must not, either during or after your employment, use or disclose to any person any Confidential information, except:
(a)In the proper performance of your responsibilities and duties;
(b)If you are compelled by law and have used every lawful means available to you to prevent disclose; or
(c)If you have been authorised in writing by the Company do to so.
10.2 You must immediately deliver to the Company all Confidential Information capable of delivery:
(a)upon the termination of your employment; or
(b)at any time on the request of the Company or its nominee.
10.3 You must keep the terms of this letter and the terms and conditions of your employment confidential and not disclose them to any person, except as permitted by law.
11. Intellectual Property
11.1 You acknowledge and agree that all Intellectual Property developed, created or conceived by you during your casual employment with the Company is, and will be, the sole and exclusive property of the Company. You further acknowledge that:
(a)full right, title and interest in and to copyright works created by you will vest in the Company immediately on creation;
(b)full right, title and interest in all other Intellectual Property is assigned to the Company by you;
(c)you shall promptly execute all documents and do all things necessary to vest or assign full right, title and interest in the Intellectual Property in and to the Company; and
(d)you grant the Company (and the Company's licensees, successors in title and authorised agents) consent to do or omit to do any act which would otherwise infringe your moral rights under the Copyright Act 1968 (Cth) in relation to all copyright works you make in the course of your employment.
12. Surveillance
12.1 Your computer use, including your Internet and email use, may be subject to monitoring through the use of software, in accordance with Company policy.
12.2 You may be subject to camera surveillance through visible cameras while you are on the Company's premises. You may also be subject to client surveillance whilst on-site.
13. Policies
13.1 You agree to abide by all policies of the Company as replaced, amended or varied from time to time including, but not limited to, the Company's Anti-Discrimination and Sexual Harassment Policy. However, the policies of the Company are not incorporated into this letter and they do not form part of your contract of employment.
14. Long Service Leave
14.1 You will accrue Long Service Leave in accordance with the Coal Mining Industry (Long Service Leave Funding) Act 1992.
15. Entire agreement
15.1 This agreement may only be varied, replaced or terminated by agreement in writing signed by yourself and an authorised representative of the Company. This letter embodies the entire understanding of the parties in relation to your employment by the Company and all previous negotiations, representations or agreements are superseded by this letter.
16. Severance
16.1 Any provision of this letter which is or becomes illegal, void or unenforceable in any jurisdiction:
(a)is severable;
(b)will be ineffective and severable in that jurisdiction to the extent of the illegality, voidness or unenforceability;
(c)will not invalidate the remaining provisions of this letter; and
(d)will not affect the validity or enforceability of that provision in any other jurisdiction.
17. Definitions
For the purposes of this letter:
Confidential Information means all information regardless of the manner in which it is recorded or stored, including but not limited to information in an electronic form, relating to the business interests, methodology or affairs of the Company, its related entities, or any person or entity which the Company deals or is concerned with.
Intellectual Property means patents, trademarks, copyright, and designs, whether registered or unregistered and software developments, computer programs, eligible layout rights, know-how, processes, inventions and improvements in procedure made or discoveries conceived.
As will be apparent, the letter agreement purports to exclude many of Mr Warren’s entitlements under the legislation and the model award. To some extent, it purports to compensate him for the entitlements which it takes away.
The purported effect of the letter agreement was to make Mr Warren a casual employee, subject to dismissal without cause on one hour’s notice, with no assurance of any particular hours of employment in any one week, no entitlement to paid annual leave, no entitlement to severance pay, no entitlement to penalty rates, no entitlement to other award payments and allowances, no entitlement to payment in lieu of notice, or termination pay. Work which would be done on the weekends was to be paid at the same rate as work done during the week, and there was no overtime payable for any work done.
As a contract, the letter agreement would ordinarily call for construction within its four corners, and in the context of the surrounding circumstances known to both parties. One thing is clear: It could not take away the statutory or model award entitlements of the employee, and to the extent to which it purported to do so, it was of no effect. Mr Warren was not a casual employee, but a full-time employee with all of the statutory and other rights conferred by the Fair Work Act and the model award. The letter agreement could validly improve on those statutory and other rights, but could not supplant them. It follows that the majority of the terms of the letter agreement were ineffective.
Three other things about the letter agreement should be noticed. First, it has the hallmarks of a contract of adhesion, wholly drafted by the employer, rather than what one would describe as a commercial agreement negotiated in the usual way. Second, it contains no arbitration clause, which might have enabled uncertainties about its terms to be resolved so as to bind the parties to the agreement.
Third, it purports to make provision for payment, hour by hour, of any annual leave entitlements as part of the “casual loading”. “Cashing out” ordinarily occurs when an employee has an annual leave entitlement and trades all or part of it for the cash he or she would have received during the period of his or her (untaken) leave. However, it is hard to distinguish that kind of arrangement from a trade done in advance of a leave entitlement. Therefore what happened here appears to involve “cashing out”, and it is necessary to consider the effect of sections 92, 93 and 94 of the Fair Work Act.
Section 92 is as follows:
(92) Paid annual leave must not be cashed out except in accordance with permitted cashing out terms
Paid annual leave must not be cashed out, except in accordance with:
(a) cashing out terms included in a modern award or enterprise agreement under section 93, or
(b) an agreement between an employer and an award/agreement free employee under subsection 94(1).
Section 93 provides as follows:
(93) Modern awards and enterprise agreements may include terms relating to cashing out and taking paid annual leave
Terms about cashing out paid annual leave
(1) A modern award or enterprise agreement may include terms providing for the cashing out of paid annual leave by an employee.
(2) The terms must require that:
(a) paid annual leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks; and
(b) each cashing out of a particular amount of paid annual leave must be by a separate agreement in writing between the employer and the employee; and
(c) the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.
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.
Terms about taking paid annual leave
(4) A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.
Section 94 provides that:
(94) Cashing out and taking paid annual leave for award/agreement free employees
Agreements to cash out paid annual leave
(1) An employer and an award/agreement free employee may agree to the employee cashing out a particular amount of the employee’s accrued paid annual leave.
(2) The employer and the employee must not agree to the employee cashing out an amount of paid annual leave if the agreement would result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks.
(3) Each agreement to cash out a particular amount of paid annual leave must be a separate agreement in writing.
(4) The employer must pay the employee at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.
Requirements to take paid annual leave
(5) An employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable.
Note: A requirement to take paid annual leave may be reasonable if, for example:
(a) the employee has accrued an excessive amount of paid annual leave; or
(b) the employer’s enterprise is being shut down for a period (for example, between Christmas and New Year).
Agreements about taking paid annual leave
(6) An employer and an award/agreement free employee may agree on when and how paid annual leave may be taken by the employee.
Note: Matters that could be agreed include, for example, the following:
(a) that paid annual leave may be taken in advance of accrual;
(b) that paid annual leave must be taken within a fixed period of time after it is accrued;
(c) the form of application for paid annual leave;
(d) that a specified period of notice must be given before taking paid annual leave.
In its original terms in 2010 the model award did not vary any of the requirements of sections 92-94 of the Act. The papers before me show that from 28 July 2016 (just before Mr Warren’s employment came to an end) clause 25.11 of the model award was inserted to require a number of things to be done when annual leave was cashed out. For almost all the period of Mr Warren’s employment, therefore, it seems from the materials before me that the Act made the only relevant provisions concerning cashing out.
Cashing out by the means specified in the letter agreement did not conform to sections 92 and 94 of the Act.
The effect of a contravention of sections 92 and 94 of the Fair Work Act requires analysis. One effect is that the employer will be liable to a civil penalty under s 45, but as I have already observed, that does not involve criminality, and contravention, by a contract, of a civil penalty provision does not make the contract void.
It seems to me that for the Fair Work Act to produce the consequence that any money paid to an employee by way of unauthorised cashing out is to be treated as an over-award payment of wages, express words would be required, and no such words have been used in the Act.
The most important provisions to construe for present purposes are those within clause 3 which provide for a casual loading, because the “further loading” (also referred to in clause 3.3 as an “over-award loading”) cannot be set off against any of Mr Warren’s entitlements under the Fair Entitlements Guarantee Act. In any event, the quantum of the “further loading” cannot be ascertained at all under the letter agreement. To find out the quantum of the “casual loading” it is necessary to quantify the “base rate”, and if that cannot be done, the “casual loading” cannot be ascertained at all.
A serious question arises as to what, if anything, the base rate is. The draftsman has chosen not to define it, although he or she has defined other terms in clause 17. It could have been defined either as a dollar amount or by a formula indicating how it should be calculated.
I have concluded that it is only if one may have regard to the provisions of the Fair Work Act and the model award that the expression “base rate” may possibly be given any meaning. Plainly enough, it is intended to refer to the employee’s ordinary hourly rate of pay, without regard to the various allowances and entitlements purportedly excluded under clause 3.1 and 3.3, and called “further loading” or “further over-award loading”.
No light seems to be shone on the “base rate” by clause 3.2. The final sentence of clause 3.2 seems to be some sort of explanation given to the employee by the employer. It tells the employee that he will be paid at the rate of treble time, yet although the “all-inclusive flat rate” in clause 3.1 of $39.01 includes a formula also used in clause 3.2 (a casual loading of 25% of the “base rate” and a further loading described in somewhat similar terms in both sub-clauses without mentioning, in the case of clause 3.2, penalty rates), the sum of $80.29 bears no relationship to treble the amount mentioned in clause 3.1, or $117.03. Similarly, one third of $80.29 is $26.76 and one third of a cent. Rather than shining light on clause 3.1, clause 3.2 seems to make the expression “base rate” even more puzzling and may provide a reason or rather a further reason to find that the relevant part of the letter agreement is void for uncertainty.
From the four corners of the letter agreement, one knows only that the base rate is pay without allowances and other benefits, but one does not know what amount is intended. Unless the base rate can be quantified by some other method, it seems to me to mean nothing.
Courts strain to avoid the consequence that a contract or clause is void for uncertainty. In Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429, and other cases, the reluctance of courts to find that a contract or one of its terms is uncertain has been emphasised. In a commercial contract, in particular, such a result is to be avoided if possible. No “narrow or pedantic approach” is warranted in the search for a relevant meaning. Upper Hunter was concerned with a contract containing an arbitration clause, which played a role in the court’s reasoning.
I would not describe the letter agreement as a commercial contract. It does not seem to be the product of negotiation and has the hallmarks of a contract of adhesion, effectively imposed by one party on the other, in terms drawn up by the employer. Nor did it contain an arbitration clause, unlike the contract considered in Upper Hunter.
The only way some meaning can be given to the expression “base rate” is by having regard to the very award which the letter agreement seeks to supplant in many respects, and it is arguable that resort should not be had to the award or the Fair Work Act for that reason. The terms of the award are not incorporated by reference, for example, and the agreement does not recognise that its terms have effect subject to the provisions of the Act or the award. Moreover, the letter agreement purportedly makes Mr Warren a casual employee, which he was not. If resort is to be had to the Act and award, does one treat him as a casual employee or a full-time employee?
The Fair Work Act, in s 16, makes a provision which at first blush, may assist. It provides as follows:
16 Meaning of base rate of pay
General meaning
(1)The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:
(a) incentive-based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) any other separately identifiable amounts.
Meaning for pieceworkers in relation to entitlements under National Employment Standards
(2)Despite subsection (1), if one of the following paragraphs applies to a national system employee who is a pieceworker, the employee’s base rate of pay, in relation to entitlements under the National Employment Standards, is the base rate of pay referred to in that paragraph:
(a) a modern award applies to the employee and specifies the employee’s base rate of pay for the purposes of the National Employment Standards;
(b) an enterprise agreement applies to the employee and specifies the employee’s base rate of pay for the purposes of the National Employment Standards;
(c) the employee is an award/agreement free employee, and the regulations prescribe, or provide for the determination of, the employee’s base rate of pay for the purposes of the National Employment Standards.
Meaning for pieceworkers for the purpose of section 206
(3)The regulations may prescribe, or provide for the determination of, the base rate of pay, for the purpose of section 206, of an employee who is a pieceworker. If the regulations do so, the employee’s base rate of pay, for the purpose of that section, is as prescribed by, or determined in accordance with, the regulations.
Note: Section 206 deals with an employee’s base rate of pay under an enterprise agreement.
Section 16(1) is a definitions section for the Act, as s 12 makes clear. However, it does not help in ascertaining the base rate as that term is used in clause 3 of the letter agreement. The “rate of pay payable to an employee for his or her ordinary hours of work” in this industry will vary according to when the employee is asked to work and for how long, and whether he was in fact a casual employee.
Section 16 is similar but not identical to clause 3.1 of the award in its definition of “base rate of pay”. The difference may be immaterial because Mr Warren had no entitlements to incentive based payments or bonuses.
Another problem about clause 3 of the letter agreement is that it does not envisage that the hourly rate will change from time to time, or that it will do so whenever the award is varied. There were annual increments to the award pay of a mining employee under the award. Is the “base rate” to be treated as a fixed amount, as clause 3 seems to presume, or are annual increments to be applied to the “base rate”?
Clause 21.2 of the award states:
21.2All ordinary hours worked by an employee on the following days will be paid for at the following rates:
Day of week
Rate of pay
Monday to Friday
Single time
Saturday
First 4 hours at time and a half
After 4 hours at double time
Sunday
Double time
The award treats those rates as “ordinary hours worked” and deals with penalties, overtime and allowances elsewhere.
The letter agreement provides no information as to whether weekend work will in fact be involved, and leaves it open to the employer to require such work to be done at the same gross rate as provided by clause 3.1, nor does it make a 35 hour week a standard working week. I repeat that I was informed that a 42.5 hour week was worked, with some work done on public holidays and weekends. Section 16(1) of the Act then becomes difficult of application. Take a week where no weekend work was done: is the 25% casual loading to be calculated differently for that week than for another week when weekend work is done?
The Fair Entitlements Guarantee Act requires the ascertainment of amounts attributable to the entitlements specified in sections 6 and 7 of the Act: see s.19(2) set out in [4] above. The entitlements are then to be reduced by the total of those amounts which have been paid to the person by anyone, including the employer. Since his hourly rate varied over the term of his employment, it seems to me that the amounts are “attributable” if actually paid, even though that may have involved a departure from the literal terms of clause 3 of the letter agreement.
It would be a very strong thing to treat a contract of employment as void for uncertainty in any respect, particularly insofar as it affects the wages payable to the employee.
Therefore I have concluded that despite the various difficulties in understanding the “base rate” to which I have referred, the calculations made in the reviewable decision represent the correct or preferable determination of the amounts by which the entitlements of Mr Warren under s 19 of the Fair Entitlements Guarantee Act should be ascertained, subject to the set-off question which was debated before me.
Set-off
Counsel for Mr Warren drew attention to the reasons for judgment in CEPU of Australia v CJ Manfield Pty Ltd [2011] FMCA 374 at [108]-[111]. The clause in the employment contract relevantly provided that “the flat hourly rate is inclusive of all overtime penalties, 20% loading in respect of annual leave, sick days, rostered days off and public holidays. This hourly rate is inclusive of all allowances”.
At [108]-[111] Lucev FM said:
108.In any event, the nature of the 20% loading poses particular problems for any attempt to set it off against any Award entitlement to be paid accrued annual leave on termination. The 20% loading is not solely a loading in lieu of an annual leave entitlement. Whilst particular paid leave entitlements that the loading is said to be in lieu of are identified, those entitlements are not entitlements which are apportioned in any way within the loading. Why should the Court allocate the entire 20% loading as a set-off in lieu of annual leave entitlement when the 20% loading is also in lieu of sick leave, rostered days off and public holidays? The Award prescribes an entitlement to:
a.up to ten days sick leave a year
b.specified public holidays; and
c.rostered days off.
109.There is in this case however no evidence as to:
i.whether there were additional public holidays gazetted under clause 38.7 of the Award; and
ii.whether or not the respondent and a majority of its employees agreed to accrue the up to five rostered days off provided for in clause 28.7.1 of the Award, for the locality in which Mr Stewart and Ms DiIulio were working
110.It is therefore not possible to accurately quantify the amount of the loading attributable to the annual and sick leave entitlements, rostered days off, and public holidays, the loading is said to be in lieu of. The evidence does not establish any basis on which the entitlements can be allocated in a specific way against specified quantums so as to allow the proper calculation of any set-off, and the respondent has therefore not established the evidentiary basis for the claimed set-off.
111.For all of the above reasons, and in all the circumstances, the set-off claim must fail.
What was written by Lucev FM related particularly to defects in the evidence led before the court in that case. In the court, onus of proof questions arose, which do not directly arise before the Tribunal. Here, the “casual loading” mentioned in clause 3.3 of the letter agreement is allocated to “all benefits with respect to paid annual leave, other forms of paid leave (including but not limited to paid personal/carer’s leave, paid compassionate leave and paid community service leave) and severance pay (other than as set out in this letter) that arise under the Award or any other industrial agreement”. The annual leave entitlements of Mr Warren have been discussed above and their quantum is agreed. The entitlements of Mr Warren to the “other forms of paid leave”, if any, do not arise directly, because they are not entitlements able to be claimed by Mr Warren under the Act. However, it is true that if, say, $1,000 of Mr Warren’s unpaid amounts were for “other forms of paid leave” then an appropriate deduction should be made from the credit which Mr Warren must give under s 19 of the Fair Entitlements Guarantee Act. Once one ascertains the “severance pay” that arises under the award or any industrial agreement, that also must be worked out and quantified. Mr Warren has an entitlement under section 6 of the Fair Entitlements Guarantee Act to “payment in lieu of notice” and “redundancy pay” and, depending on the proper construction of the words “severance pay” in the letter agreement, those claims under s 6 of the Act may bear a relationship to “severance pay”. Whatever may be the relationship, the “severance pay” has to be aggregated with the annual leave and “other forms of paid leave” in order to calculate what reduction should be made to the entitlements of Mr Warren in accordance with s 19 of the Act. The result may be that the reduction is less than Mr Warren has been paid by way of “casual loading”.
If the evidence placed before the Tribunal is insufficient to enable computation of the reduction amount, then the appropriate remedy is for the tribunal to set the reviewable decision aside and direct that the agency recalculate on the correct basis.
The reviewable decision has adopted a different methodology. It has regard to the award provisions in calculating “personal/carer’s leave” being the award entitlements of Mr Warren, as distinct from the outstanding amounts which he was entitled to from his employer, so the respondent allowed $1.37 per hour for that entitlement.
As to payment in lieu of notice and redundancy pay, the reviewable decision calculates those entitlements at $1.37 per hour.
Then at annexure C to the reviewable decision, the respondent has calculated that for “severance pay” Mr Warren has already received $11,053.47. Precisely what meaning has been attributed to “severance pay” is not apparent to me.
Annexure C also indicates that “personal/carer’s leave is not payable under the Fair Entitlements Guarantee Act and therefore has not been included in the calculations”. That remark appears to me not to take account of the approach I have indicated in [72] above. It is true that no claim for other forms of paid leave can be made under the Fair Entitlements Guarantee Act. Nevertheless, to the extent to which the “casual loading” compensated for that item, the reduction which should be made for payments already made to Mr Warren under s 19 of the Act because of his receipt of the casual loading will itself be reduced.
I have already noted that the parties are in dispute as to the meaning of “severance pay” arising under the award.
The respondent submits that termination payments made under clause 13 of the award fit the description of “severance pay . . . arising under the award” because the effect of clause 13 of the award is in some cases at least to increase amounts which would otherwise be payable under s 117 of the Act. An amount equal to four weeks’ pay is a minimum amount payable to all employees whose employment is caused by redundancy as defined in clause 14.2 of the award. Under s 117 if the employee is terminated after less than five years of employment, as Mr Warren was, then the employee will be entitled to less than four weeks’ pay. The respondent submits that s 117 entitlements varied by the award are within the ordinary meaning of “severance pay . . . arising under the award”. That shows that the amounts payable under clause 13 arise under the award. It does not show that the amounts are for “severance pay” arising under the award.
The applicant submits that the s 117 entitlements which are varied by clause 13 of the award are not “severance pay . . . arising under the award” because the award itself describes the clause 14.3 entitlements as “severance pay”. The applicant points out that the clause 13 entitlements are simply described in the award as notice of termination entitlements. That is, the applicant submits that the purpose of clause 13 is to vary the amounts payable under s 117 of the Fair Work Act, whereas the purpose of clause 14 is to vary the amounts payable under s 119 for “redundancy”. That seems to me to be correct.
So, reverting to the analysis described in [72], so far as I can see, the right meaning has not been attributed to severance pay arising under the award in the reviewable decision. The preferable course, at least for more abundant caution, is to set aside the reviewable decision and to ask that the agency recalculate the reduction amounts applicable under s 19 of the Act consistently with what I have written in [72] and [80]. The applicant submits that he has rights to a redundancy payment under clause 14 of the award. If that has not been taken into account thus far by the respondent, it should form part of the reassessment which I direct.
Also, all amounts payable to Mr Warren under the Fair Entitlements Guarantee Act need to be brought back to an after-tax amount, in accordance with s 24 of the Act.
Is the casual loading able to be set off?
The word “attributable” in s 19 of the Fair Entitlements Guarantee Act takes its common law meaning, that is, its ordinary English meaning. Section 19 is a provision designed to avoid double payment. That consideration alone justifies rejection of the applicant’s submissions based upon cases decided under earlier legislation in my opinion.
As to offsetting, that produces a result consistent with two cases referred to by the respondent decided by the Full Court of the Federal Court. The cases are Australia and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785; (2001) 111 IR 227 and Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99; (2015) 240 FCR 578. In the latter case, the principles are to be found in seriously considered dicta in the joint judgment of North and Bromberg JJ. If an over-award payment is made in respect of one entitlement, it cannot reduce another entitlement. On the other hand, if there is a close correlation between a contractual payment and an award entitlement, payments of the first will reduce the second.
The applicant relies upon another line of authority, being cases decided under the Workplace Relations Act 1996, including the decision of Barker J in Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321. A flat hourly rate was paid to the employee under a contract which provided:
The rate of pay is all inclusive and takes into account all responsibilities, disabilities, allowances... and includes payment for all hours necessary to undertake your rostered duties, and as a casual employee, a loading in lieu of paid leave entitlements. The rate includes compensation for any necessary shift, public holiday and weekend work.
The Workplace Relations Act provided in s 173 that a term in a workplace agreement or a contract has no effect to the extent to which it purports to exclude the Australian Fair Pay and Conditions Standard [AFPCS] or any part of it.
Barker J held at [62]-[69] as follows:
62. Mr Williams, however, seeks to emphasise the following framework of the WR Act in relation to leave accrual. Section 232 entitled an employee to accrue a period of annual leave during his or her employment. Section 236 entitled the employee to take a period of annual leave, if authorised, and prohibited the employer from unreasonably refusing leave. Section 235(2) arose only if an employee had a period of accrued leave when the employment ended and entitled the employee to payment in that event.
63. The WR Act therefore did not permit the payment of an amount of money in lieu of a period of time off work on pay. Accordingly, a provision which seeks to substitute a payment in place of actual leave excludes that entitlement. Mr Williams submits that this is made clear by s 233 which permitted, subject to strict limitations, the cashing out of annual leave. An employee could forego a period of annual leave if he or she elected in writing to do so. A workplace agreement applying to the employment permitted an employee to forego annual leave. The employee was then entitled to pay in lieu of the annual leave of at least his or her basic periodic rate of pay for the period foregone and the maximum amount of leave foregone was two weeks in any 12 month period. Those restrictions would be for no purpose if, consistent with the AFPCS, an employer could simply nominate a rate of pay said to include payment and wherewithal paid annual leave.
64. Accordingly, Mr Williams submits that s 173 renders as having “no effect” any provision to the extent that it purports to exclude any part of the AFPCS. The section does not require that a contract that expressly seeks to exclude the AFPCS or even be intended to have that effect, although in this case the intention to exclude is clear. The ultimate question is whether the contractual provision is inconsistent with the statute.
65. I accept the respondent’s submissions.
66. In my view, there is a real inconsistency between the contractual term and the entitlement that s 173 seeks to preserve. I accept the framework of the scheme of the WR Act provisions contended for on behalf of Mr Williams. Section 173 reflects a parliamentary intention that a person cannot, by one means or the other, contract out of their entitlement to be paid out annual leave and other leave entitlements at the end of a employment period, save for the particular provisions allowing for the sacrifice of annual leave.
67. In any event, as the Federal Magistrate found, the Contract does not attempt to make any particular allocation between different types of leave, which it contends have been provided for in advance. It simply asserts the hourly rate is inclusive. In doing so it simply purports to justify the payment of a more generous hourly rate by asserting it is inclusive of any of the nominated benefits. This is a plain attempt to contract out of the payment of those benefits without regard to whether or not they are actually payable at the time of payment of the hourly rate.
68. The intent of the statute is that there will be entitlements in accordance with the AFPCS. If it were open to an employer to make a contract of employment that included terms such as that the subject of consideration here, such a process could no doubt have a real impact on bargaining rights. While it may be correct to say that some attempt has been made in the contract here to pay an additional sum allocated to potential leave entitlements, the effect of such a contractual provision is, in fact, to exclude an entitlement to be paid annual leave and other forms of leave under the Act at the termination of the employment. In those circumstances, s 173 of the WR Act applies to render such a contractual provision of no effect.
69. For that reason, in my view, the Federal Magistrate was correct in the decision he came to and no error is revealed.
Barker J was dealing with several appeals from the Federal Magistrates Court. In the appeal to which those paragraphs relate, Mr Williams was the respondent.
It is not clear to me that any of the findings made by Barker J which I have set out in [87] is inconsistent with the remarks I have made about offsetting in these reasons. In particular, his Honour does not appear to suggest that, if any amount could be identified as a payment in advance of any particular award entitlement, the employee was entitled to be paid that amount again. Any assertion to that effect would in any event be inconsistent with the Full Court decisions to which I have referred in [84].
In the first instance decision from which an appeal was brought to Barker J, reported as Williams v MacMahon Mining Services Pty Ltd (No.2) [2009] FMCA 763, the Federal Magistrate held at [87]-[89] that the provisions of the service contract could not be accurately quantified, that it was a term of no effect because of s 173 of the Workplace Relations Act and that the particular entitlement which was in issue, that is, annual leave, could not be singled out from the description of the loading involved. It seems to me that the same comment as I have made about Barker J’s judgment in [89] also applies to the reasoning of the Federal Magistrate at first instance. That is, if the Federal magistrate held that if any amount in the service agreement could be identified as a payment in advance of any particular award entitlement, the employee was entitled to be paid again, then such a holding would be inconsistent with the Full Court decisions to which I have referred in [84].
At the further hearing which took place in these proceedings after I had prepared a draft of certain parts of these reasons, reference was made to the decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131. I do not believe that anything said in that decision requires any amendment to these reasons. It is true that a provision for annual leave in an award may have more than a monetary purpose, but what is critical under s 19 of the Fair Entitlements Guarantee Act is whether the amount of a monetary entitlement has been paid.
Decision
For the reasons indicated the reviewable decision is set aside and the matter is to be remitted to the respondent for reconsideration in the light of these reasons for decision.
I certify that the preceding 92 (ninety-two) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM QC
...............................[sgd]..............................
Associate
Dated: 31 January 2019
Date(s) of hearing: 28 June 2018 and 24 October 2018 Counsel for the Applicant:
Advocate for the Applicant:
Mr A Moutasallem, H B Higgins Chambers
Ms J Short, CFMEU Northern Mining & NSW Energy District
Counsel for the Respondent: Ms T Wong, Banco Chambers Solicitors for the Respondent: Mr J Bird, Clayton Utz
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