Whitt v Clough Projects
[2019] FCCA 3457
•20 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WHITT v CLOUGH PROJECTS | [2019] FCCA 3457 |
| Catchwords: INDUSTRIAL LAW – Interpretation of a Greenfields Agreement – Clough Projects Pty Ltd Onshore and Offshore Greenfields Agreement 2014 – whether the applicant was entitled to superannuation payments above the ‘maximum contribution base’ per section 19(3) of the Superannuation Guarantee (Administration) Act 1992 (Cth) (‘SGAA’) – whether the obligation to pay superannuation contributions ‘in accordance with’ the SGAA incorporated the ‘maximum contribution base’ per section 19(3) of the SGAA. |
| Legislation: Fair Work Act 2009 (Cth), ss.172(2)(b), 182(3) Superannuation Guarantee (Administration) Act 1992 (Cth), ss.6, 15, 19(2), 19(3), 62 |
| Cases cited: Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57 Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 Bannon v Nauru Phosphate Royalties Trust [2018] VSC 532 Other materials: |
| Applicant: | MATTHEW WHITT |
| Respondent: | CLOUGH PROJECTS |
| File Number: | PEG 104 of 2018 |
| Judgment of: | Judge McNab |
| Hearing date: | 10 September 2019 |
| Date of Last Submission: | 10 September 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 20 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Scaife |
| Solicitors for the Applicant: | Eureka Lawyers |
| Counsel for the Respondent: | Mr Blackburn SC |
| Solicitors for the Respondent: | Corrs Chambers Westgarth |
ORDERS
The application filed 23 February 2018 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 104 of 2018
| MATTHEW WHITT |
Applicant
And
| CLOUGH PROJECTS |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant, Mathew Whitt, filed this application on 23 February 2018.
Mr Whitt has been employed by the Respondent, Clough Projects Pty Ltd (‘Clough Projects’), from August 2017. He was employed as a rigger, performing offshore work on the Ichthys Project in the North West Shelf of Western Australia. Mr Whitt was employed pursuant to the Clough Projects Pty Ltd Onshore and Offshore Greenfields Agreement 2014 (‘the Agreement’).
Mr Whitt worked on a 42-day cycle; with 21 days on duty and 21 days off duty (each referred to as a ‘swing’). Typically, Mr Whitt would travel from Perth to Broome on the day prior to his swing beginning, on the first day of his swing he would travel from Broome to the Ichthys Project, and he would demobilise on the last day of his swing by returning to Broome and then onto Perth. While mobilised during the swing, Mr Whitt customarily worked 12 hour days.
Mr Whitt’s application of 23 February 2018 claimed that Clough Projects had failed to pay him his superannuation entitlements according to clause 3.11 of the Agreement. He claimed that there was a deficit in his superannuation entitlements for the payslips of 16 November 2017, 30 November 2017, 14 December 2017, 21 December 2017, and 4 January 2018. The total deficit is the sum of $3,434.80.
In addition to seeking re-payment of these entitlements, Mr Whitt sought orders from the Court declaring that Clough Projects had breached the Fair Work Act 2009 (Cth) (‘the Act’), penalties for that breach, compensation for his loss and interest on the sum of $3,434.80.
On 27 March 2018, Clough Projects filed their Response and Defence. Clough Projects denied Mr Whitt’s interpretation of clause 3.11 of the Agreement and sought orders that the application be dismissed.
The issue in the matter
The issue in this matter concerns the interpretation of clause 3.11 of the Agreement and whether Mr Whitt’s superannuation entitlements are limited by the maximum contribution base as determined by the Superannuation Guarantee (Administration) Act 1992 (Cth) (‘SGAA’).
Clause 3.11 of the Agreement states:
Employer funded superannuation contributions will be made in accordance with the Superannuation Guarantee (Administration) Act 1992 (the SGAA) into a fund nominated by the Employee that complies with the SGAA. Where the Employee does not nominate a fund, the superannuation contributions will be made to CBUS which is a MySuper Product compliant fund. Contributions will be paid on the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees). For the purposes of this clause, the Ordinary Hours for Onshore Employees is an average of up to 38 hours per week.
An Employee may elect to salary sacrifice part of their ordinary gross wage into their superannuation fund subject to any arrangements being in accordance with legislative requirements and the Employee being liable for any Fringe Benefits Tax or other tax liabilities. The Employee must notify the Company in writing utilising the appropriate Company forms for this purpose and a maximum of two changes to the salary sacrifice arrangements will be permitted in each calendar year unless otherwise agreed by the Company.
The maximum contribution base is determined by section 15 of the SGAA and for the year 2017-18, the maximum contribution base was $52,760. An employer, according to section 19(3) of the SGAA, is not obligated to pay more than the maximum contribution base. Section 19(3) of the SGAA provides:
If the total salary or wages paid by an employer to an employee in a quarter exceeds the maximum contribution base for the quarter, the total salary or wages to be taken into account for the purposes of the application of subsection (1) in relation to the quarter is the amount equal to the maximum contribution base.
Mr Whitt says clause 3.11 of the Agreement does not make reference to the maximum contribution base and therefore the superannuation contributions are not subject to the maximum contribution base. Clough Projects submit that clause 3.11 imposes an obligation on it to make superannuation contributions in accordance with the SGAA at a level that would avoid it from incurring a charge under the SGAA.
The parties agree that Mr Whitt was entitled to superannuation contributions pursuant to clause 3.11 of the Agreement. Accordingly, the Court will consider the question of whether clause 3.11 of the Agreement required the respondent to make superannuation contributions for the applicant in excess of the maximum contribution prescribed in the SGAA.
The Terms of the Agreement.
A summary of the terms of the Agreement was set out in the submissions filed on behalf of Clough Projects. Other than the differing interpretations of clause 3.11, that summary is not contentious and is reproduced below:
24. The Agreement is a greenfields agreement made in accordance with ss 172(2)(b) and 182(3) of the Fair Work Act 2009 (FW Act) between Clough and the AWU, the CEPU and the AMWU. The Agreement was made in or about November 2014 and approved by the Fair Work Commission on 24 December 2014.
25. The Agreement is expressed to operate to the exclusion of any award or other industrial instrument: clause 1.5.1.
26. The Agreement defines the employees covered by the Agreement as either Onshore or Offshore Employees.
27. An Onshore Employee is defined in clause 1.4 – Definitions to mean “an Employee engaged on an onshore Site in the North West Region Western Australia and Northern Territory”.
28. An Offshore Employee is defined in clause 1.4 to mean an “an Employee engaged on an offshore Site in the North West Shelf Western Australia and Northern Territory”.
29. Schedule 1 of the Agreement applies to work carried out onshore.
30. For Onshore Employees working onshore:
(a) the Ordinary Hours are an average of up to 38 hours per week, Monday to Friday, to be averaged over a Work Cycle not exceeding 6 months: clause 1.1 of Schedule 1;
(b) employees are paid for working Ordinary Hours the Ordinary Hourly Rate of Pay prescribed in clause 5.1 of Schedule 1; and
(c) work performed outside the Ordinary Hours is payable at overtime rates: clauses 1.7, 3.2-3.4 of Schedule 1.
31. In summary, Onshore Employees working onshore are paid an Ordinary Hourly Rate for Ordinary Hours (which are an average of up to 38 hours per week, Monday to Friday) and overtime rates for work performed outside the Ordinary Hours.
32. Schedule 2 of the Agreement applies to work carried out offshore.
33. For Offshore Employees working offshore:
(a) work is normally carried out on the basis of an On Duty Period followed by an Off Duty Period of equal time: clause 1.1 of Schedule 2;
(b) the Customary Work Hours consist of a period of work up to 12 hours: clause 1.5 of Schedule 2;
(c) employees are paid for working Rostered Work Days at a Flat Hourly Rate of Pay: clause 1.2 of Schedule 2;
(d) the Flat Hourly Rate of Pay is prescribed in clause 3.1 of Schedule 2 and includes compensation for all Rostered Working Days including work on weekends and public holidays and shift work: clause 3.2 of Schedule 2;
(e) hours worked outside Rostered Work Hours and/or Rostered Work Days are paid at the applicable Overcycle Flat Hourly Rate of Pay: clause 1.3 of Schedule 2;
(f) the Overcycle Flat Hourly Rate of Pay is prescribed in clause 3.5 of Schedule 2;
(g) travel time is not regarded as working time (clause 1.6 of Schedule 2) but Employees are paid for up to 2, 4 or 8 hours (depending on their place of residence) for travel both to and from the site: clause 5 of Schedule 2.
34. In summary, Offshore Employees work an even time roster, their Customary Work Hours are up to 12 hours and they are paid for working Rostered Work Days at a Flat Hourly Rate of Pay which includes compensation for work on weekends and public holidays and shift work. They are also paid for up to 2, 4 or 8 hours travel time to and from the site.
35. In accordance with the Agreement, the Applicant worked an even time roster comprising 21 days of 12 hours a day followed by 21 days off. He was also paid 4 hours travel time to and from the site.
36. Clause 3.11 deals with superannuation. It relevantly states:
Employer funded superannuation contributions will be made in accordance with the Superannuation Guarantee (Administration) Act 1992 (the SGAA) into a fund nominated by the Employee that complies with the SGAA.
Where the Employee does not nominate a fund, the superannuation contributions will be made to CBUS which is a MySuper product compliant fund.
Contributions will be paid on the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees).
For the purposes of this clause, the Ordinary Hours for Onshore Employees is an average of up to 38 hours per week. [emphasis added]
37. For Onshore Employees, superannuation contributions are to be “paid on the Employee’s ordinary time earnings based on their Ordinary Hours”.
38. For Offshore Employees, superannuation contributions are to be “paid on the Employee’s ordinary time earnings based on their … Customary Work Hours … including travel time …”.
(footnotes omitted)
Submissions of the parties
Mr Whitt’s submissions
Mr Whitt made 10 submissions on why his interpretation is preferred. The tenth submission sought to rely on conduct subsequent to the making of the Agreement, where Clough Projects made superannuation contributions for Mr Whitt during an earlier period of employment (on the Wheatstone project) and where those payments were not subject to the maximum superannuation base. I accepted Clough Project’s submissions that evidence of post-contractual conduct cannot be used as an aid to the construction of a written contract and that the same principle applies to the construction of an industrial instrument such as an award or enterprise agreement: see Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57 at [35] (Gummow, Hayne and Kiefel JJ) and Sir Kim Lewison and David Hughes, The Interpretation of Contracts in Australia (Lawbook Co., 2012) at 122-30.
The nine remaining submissions are:
32. First, cl 3.11 defines the basis on which an offshore employee’s “ordinary time earnings” are calculated as being his or her “Customary Work Hours during the On Duty Period”. These terms are defined in cl 1.4 as being a period of up to 12 hours on each of the total number of days that the employee is rostered to work. It is therefore plain that the Respondent is required to make superannuation contributions on earnings from hours that are specific to the Agreement.
33. Second, the terms “Customary Work Hours” and “On Duty Period” are defined in cl 1.4 by reference to further defined terms such as “Offshore Employee”, “Work Cycle” and “Rostered Working Days”. The Agreement thereby sets up a specific architecture for the making of superannuation contributions for offshore employees. That architecture can only be understood by having regard to the defined (and often internally referential) terms of the Agreement itself.
34. Third, and having regard to those defined terms, the “Customary Work Hours during the On Duty Period” of an offshore employee exceed the “38 hour standard” set out in s 62 of the FW Act and discussed by Allsop CJ in Bluescope Steel at [39] to [42]. The Agreement therefore departs from the “standard” approach of calculating superannuation contributions set out in the SGA Act.
35. Fourth, cl 3.11 uses the word “including” to expand the basis on which “ordinary time earnings” are calculated for offshore employees to extend beyond mere “Customary Work Hours during the On Duty Period” to also include “travel time paid for Mobilisation and Demobilisation Travel Day”. Paid travel time would not ordinarily be considered “ordinary time earnings” for the purposes of the SGA Act where the employee is not, in fact, working during that period.
36. Fifth, the Agreement acknowledges that “ordinary time earnings” for onshore employees are calculated by reference to their “Ordinary Hours”, reinforcing that the “ordinary time earnings” for offshore employees are calculated by reference to a different set out hours.
37. Sixth, the Agreement defines the term “Ordinary Hours” to mean “an average of up to 38 hours per week” for the purpose of cl 3.11. That definition is similar to the definition set out in cl 1.4 of the Agreement. The Agreement therefore expressly acknowledges the “38 hour standard” that is ordinarily used to calculate “ordinary time earnings” and, indeed, uses the standard to calculate the ordinary time earnings of onshore employees. In contrast, the text of the Agreement makes it clear that the parties have chosen not to use this standard in relation to offshore employees.
38. Seventh, the obligation to make superannuation contributions on an offshore employee’s “Customary Work Hours during the On Duty Period” is situated after a sentence in which the Agreement places an obligation on the Respondent to make contributions to CBUS where an employee does not nominate a fund. This is an obligation that plainly goes beyond the requirements of the SGA Act, lending further weight to the contention that the Agreement contemplates imposing (and, in the case of offshore employees, does impose) obligations in addition to those in the SGA Act.
39. Eighth, the first sentence of cl 3.11 can still be given work to do as a sentence that acknowledges the general way in which superannuation contributions are made under the SGA Act, such as by payment at a rate of 9.5% to a superannuation fund. That interpretation of the first sentence is consistent with the “practical bent” that the drafters of the Agreement are likely to have taken. It is also consistent with the phrase “in accordance with” meaning “in harmony with” such that regard should be had to substance, rather than form: Mount Barker Properties Ltd v District Council of Mount Barker [2001] SASC 249 at [24].
40. Ninth, cl 3.11 does not refer to the “maximum contribution base” or to any other type of cap on superannuation contributions. Neither does it refer to “ordinary time earnings” in relation to offshore employees in the way that phrase is defined in the SGA Act. Instead, contributions are simply to “be paid” on an offshore employee’s “Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day”. Where contributions are not paid on those (or some of those) hours, the obligation will not have been satisfied.
(footnotes omitted)
Mr Whitt says, further, that the difficulty for the Respondent’s case is that:
(a) the “maximum contribution base” is a technical calculation that is incorporated into the definition of “ordinary time earnings” in s 6 of the SGA Act, which would, in turn, need to be incorporated into the Agreement in respect of offshore employees contrary to the plain text of cl 3.11;
(b) the “maximum contribution base” is used in the SGA Act for the purpose of calculating an employer’s “individual superannuation guarantee shortfall” under s 19 of the SGA Act, rather than for the purpose of calculating the amount to “be paid” on behalf of a particular employee under cl 3.11 of the Agreement;
(c) the phrase “in accordance with” cannot sensibly mean “in complete agreement with” in the context of an industrial instrument, and particularly where the balance of cl 3.11 imposes additional obligations that are not consistent with those set out in the SGA Act;
(d) there are no clear and unambiguous words indicating that the SGA Act is to be incorporated in full into the Agreement, which contrasts with the express language that places obligations on the Respondent (and on employees) over and above the obligations in the SGA Act (that is, obligations that are not “in accordance with” the SGA Act).
Clough Projects’ submissions
Clough Projects’ submissions focus on the first and third sentences of clause 3.11 of the Agreement. The first sentence being:
Employer funded superannuation contributions will be made in accordance with the Superannuation Guarantee (Administration) Act 1992 (the SGAA) into a fund nominated by the Employee that complies with the SGAA.
The third sentence being:
Contributions will be paid on the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees).
With respect to the first sentence, Clough Projects submits that clause 3.11 should be construed in accordance with the statutory obligation to make superannuation contributions at a level and frequency that will avoid Clough Projects incurring a charge under the SGAA.
Clough Projects say this is appropriate as clause 3.11 of the Agreement does not prescribe the amount of superannuation contribution to be paid and that the SGAA does not actually require an employer to make any contributions (the SGAA imposes a levy on employers who do not make contributions to a certain level): BlueScope Steel (AIS) Pty. Ltd v Australian Workers’ Union [2019] FCAFC 84 (‘BlueScope’) at [13] and [25].
Clough Projects submit that the first sentence of clause 3.11 is conditioned by the third sentence, which imposes further obligations upon Clough Projects.
Clough Projects stress that ‘[c]ontributions will be paid on the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees)’.[1] Clough Projects emphasise the difference between ‘based on’ and using the word ‘for’, saying that if the Agreement intended to pay employees for the hours worked, the sentence would instead be:
Contributions will be paid on the Employee’s
ordinary timeearningsbased onfor their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees)Put another way, ‘ordinary time earnings’ is not a synonym or for ‘earnings’. It is put that ‘ordinary time earnings has a meaning beyond ‘earnings’.
[1] Emphasis added.
Proceeding on the basis that ‘ordinary time earnings’ has a meaning beyond ‘earnings’, Clough Projects say that the meaning can only be supplied by the SGAA:
In the context in which the expression “ordinary time earnings” appears, in a clause prescribing superannuation contributions and providing for contributions to be made “in accordance with” the [SGAA], it can only be taken as referring to “ordinary time earnings” as defined in the [SGAA].[2]
[2] Respondent’s submissions, filed 16 July 2019, [52].
Clough Projects say that ‘ordinary time earnings’ should have the meaning given in section 6 of the SGAA which provides:
ordinary time earnings, in relation to an employee, means:
(a) the total of:
(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:
(A) a payment in lieu of unused sick leave;
(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and
(ii) earnings consisting of over‑award payments, shift‑loading or commission; or
(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter—the maximum contribution base.
If the definition from section 6 of SGAA is adopted, it follows that the ‘maximum contribution base’ would limit the amount Clough Projects have to pay their employees.
Clough Projects, then, submit that the construction of clause 3.11 requires the third sentence of clause 3.11 to be read subject to subsection (a) of the definition of ‘ordinary time earnings’ of the SGAA. As put by Clough Projects, the resultant interpretation of clause 3.11 would be:
contributions for the applicant (as an Offshore Employee), to be paid on:
(a) the applicant’s earnings “based on [his] … Customary Work Hours … including travel time”; or
(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter – the maximum contribution base.[3]
[3] Respondent’s submissions, filed 16 July 2019, [55].
Such an interpretation is said to be appropriate because this construction is ‘consistent’ with the first sentence of clause 3.11 that contributions be made ‘in accordance with’ the SGAA.
Clough Projects makes further submissions that Mr Whitt’s proposed interpretation is less appropriate than theirs, saying that Mr Whitt appears to seek the following construction:
Contributions will be paid on:
(a) the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees); or
(b) Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees).
Clough Projects say that this interpretation is not consistent with the natural reading of the third sentence as:
64. Firstly, that is not a natural reading of the sentence. The natural reading of the sentence is that contributions will be paid on the Employee’s ordinary time earnings based on one or other set of hours, according to whether employees are Onshore Employees or Offshore Employees. The possessive pronoun “their” applies both to Ordinary Hours (Onshore Employees) and Customary Work Hours (Offshore Employees).
65. Secondly, the natural reading is to be preferred because superannuation contributions (including the contributions which employers must make if they wish to avoid a charge under the SGAA) are calculated as a function of and “paid on” earnings, not hours.
66. Thirdly, the natural reading is to be preferred because the alternative construction set out in paragraph 63 above would result in the maximum contribution base which forms part of the statutory definition of ordinary time earnings applying to Onshore Employees but not Offshore Employees. There is no apparent reason why the parties would have intended such an anomalous result.
67. By reading clause 3.11 as providing that contributions for offshore employees:
are simply to “be paid” on an offshore employee’s “Customary Work Hours … including travel time …
the applicant omits the expressions “ordinary time earnings” and “based on” and consequently misconstrues the clause.
Consideration
There was agreement between the parties as to the general principles to be applied when construing a certified agreement. Clough Projects referred to Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182 at [8]:
[8] The applicable principles for interpreting an enterprise agreement were recently recounted by a Full Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Tracey, Bromberg and Rangiah JJ) at [197]:
The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (French J). The interpretation “… turns on 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 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378–9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Madgwick J);Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).
The Agreement is a Greenfields agreement made in accordance with ss 172(2)(b) and 182(3) of the FW Act. It was made between Clough Projects, The Australian Workers’ Union, the Communications, Electrical, Electronic, Energy, Information, Postal and Plumbing and Allied Services Union and the Australian Manufacturing Workers’ Union. Given the parties involved, it was negotiated by parties familiar with the SGAA and its operation.
One effect of clause 3.11 of the Agreement is to impose an obligation on Clough Projects to make superannuation contributions at a level and frequency in order to be in accordance with the SGAA.
Separate to clause 3.11, the SGAA does not require employers to make contributions: the SGAA and Superannuation Guarantee Charge Act 1992 (Cth) imposes a charge on employers who fail to remit the prescribed minimum level of superannuation contribution. The legislative regime was explained by the Full Court in BlueScope at [13] and [25].
In Bannon v Nauru Phosphate Royalties Trust [2018] VSC 532 (‘Bannon’) at [173]-[175] and [178]-[179], McDonald J was required to construe the words of an employment contract that contained a provision requiring contributions to be made ‘pursuant to’ the SGAA. The relevant clause in Bannon (as set out in [15] of Bannon) provided as follows:
[15] Schedule 2 provided:
Remuneration
The Employee’s remuneration whilst employed by the Employer will consist of the following:
[…]
7. Superannuation contributions equivalent to 9% of the Employee’s base salary and the Employee’s entitlements under paragraph 4 of this Schedule 2, pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) to a superannuation fund selected by the Employee or, if no fund is chosen by the Employee, to an eligible fund nominated by the Employer;
[…]
His Honour at [178] found that the phrase ‘pursuant to’ means ‘in accordance with’ and that when properly construed, the clause had the effect that:
(a) [Nauru Phosphate Royalties Trust] was required to make superannuation contributions in accordance with the prescribed rates in s 19(2) of the [SGAA]; and
(b) Such contributions were subject to the maximum contribution base prescribed by s 19(3) of the [SGAA].
In oral submissions, Mr Whitt said the approach taken by McDonald J should not be followed as the employment contract and the Agreement were quite different instruments and that the interpretation contended for by Clough Projects required the parties to have knowledge of the SGAA.
In my view, the line in clause 3.11 that states‘[…] superannuation contributions will be made in accordance with the […]’, includes a reference to the maximum contribution base prescribed by s 19(3) of the SGAA. This interpretation gives the phrase ‘in accordance with’ work to do. Clause 3.11 was negotiated by parties familiar with negotiating industrial instruments, familiar with the provisions of the SGAA and the legislative and administrative schemes surrounding superannuation. Had the parties intended that the contributions not be subjected to the consequences or effect of particular provisions of the SGAA, the parties could have excluded those provisions by particular reference.
The first sentence of clause 3.11 must be read with the third sentence of the clause which fixes the earnings the contributions are to be paid on. The first and third sentence of clause 3.11 state:
Employer funded superannuation contributions will be made in accordance with the Superannuation Guarantee (Administration) Act 1992 (the SGAA) into a fund nominated by the Employee that complies with the SGAA. […].
Contributions will be paid on the Employee’s ordinary time earnings based on their Ordinary Hours (Onshore Employees) or Customary Work Hours during the On Duty Period, including travel time paid for Mobilisation and Demobilisation Travel Day (Offshore Employees).
I accept that the expression ‘ordinary time earnings’ has a different meaning to “earnings”. Where clause 3.11 necessitates the making of contributions in accordance with the SGAA, the definition of ‘ordinary time earnings’ in section 6 of the SGAA is therefore taken to be referred to in clause 3.11 given that ‘ordinary time earnings’ is not otherwise defined in the Agreement.
This interpretation is consistent with the parties making contributions ‘in accordance with’ the SGAA. To ignore the definition of ‘ordinary time earnings’ in section 6 of the SGAA would mandate an interpretation contrary to the provision of that Act.
Where the expression ‘ordinary time earnings’ is used in a clause which prescribes the contributions to be made ‘in accordance with’ the SGAA, the adoption of the definition of ‘ordinary time earnings’ as set out in the SGAA is appropriate.
It follows that when the statutory definition of ‘ordinary time earnings’ (as defined in section 6 of the SGAA) is read alongside clause 3.11 of the Agreement, the effect is that the superannuation contribution to be paid to the applicant (as an Offshore Employee) is paid on:
a)the applicant’s earnings ‘based on their Customary work hours’ including travel time; or
b)if the total payment as determined in accordance with (a) (above) would be greater than the maximum contribution base for the quarter, then the employee would be paid the maximum contribution base.
This reading is consistent with a requirement make payments ‘in accordance with’ the SGAA.
For those reasons, the application must be dismissed.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 20 December 2019
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