[2014] FWC 747

The attached document replaces the document previously issued with the above code on 31 January 2014.

The reference to the Determination of Senior Deputy President Harrison in the subject paragraph has been changed from [PR5465558] to [PR546558].

Sean Howe

Associate to Deputy President Sams

Dated 3 February 2014

[2014] FWC 747

FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s 604 - Appeal of decisions

Transport Workers' Union of Australia
(C2014/2553)

Road Transport Industry

DEPUTY PRESIDENT SAMS

SYDNEY, 30 JANUARY 2014

Appeal against decision [2013] FWC 9805 and Determination [PR546558] of Senior Deputy President Harrison on 16 December 2013 and 7 January 2014 in various matters - two yearly review of Modern Awards - payment for meal breaks on overtime - stay application - prospects of success - balance of convenience - stay granted.

[1] On 6 January 2014, the Transport Workers’ Union of Australia (the ‘appellant’ or the ‘Union’) filed an application for leave to appeal and appeal of a decision published on 16 December 2013, of Her Honour Senior Deputy President Harrison in [2013] FWC 9805, following Her Honour’s review of the Road Transport and Distribution Award 2010 [MA000038] (the ‘Modern Award’) as required by Sch 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the ‘Transitional Act’). On 7 January 2014, Her Honour published a Determination [PR546558] arising from her earlier decision in which some 21 variations, covering a number of subject matters, were made to the Award. As a consequence, on 13 January 2014, the Union filed an amended application for leave to appeal; now including an appeal of Her Honour’s Determination and seeking a stay of the Determination until the substantive appeal is heard and decided by a Full Bench of the Commission (listed for hearing on 21 February 2014).

[2] A number of employer organisations and individual transport companies are respondents to the Modern Award. At a hearing of the stay application, the following respondents were represented or had filed brief written submissions:

Subject matter under appeal

[3] It is readily apparent that the only matter subject to the appeal is a single discrete issue identified as variation 17 in Her Honour’s Determination. This variation replaces the existing clause 26.2 with the following:

 

‘26.2

Meal breaks after ordinary hours and before overtime hours

   

(a)

An employee required to work overtime for two hours or more after working ordinary hours must be allowed a paid break of 20 minutes before commencing overtime work or as soon as practicable thereafter. A further rest break must be allowed upon completing each four hour period until the overtime work is finished. Any rest breaks shall be paid for at the ordinary time rate.

   

(b)

Wherever reasonable and practical, the rest break must be taken at a time to coincide with any requirement to take a break under fatigue management rules/regulations.

   

(c)

An employer and employee may agree to apply any variation of this provision in order to meet the circumstances of the work in hand.’

[4] The controversy may be shortly stated as to whether Her Honour erred in deciding that meal breaks required to be taken during periods of overtime, should be paid at ordinary time rates (as Her Honour decided) or at overtime rates as contended for by the appellant.

Grounds of appeal

[5] The grounds of appeal are set out as follows:

‘1. Her Honour denied the Appellant procedural fairness in conducting the review of the Road Transport and Distribution Award required by Schedule 5, item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in that;

2. Her Honour’s construction of the rate payable during the paid break contemplated by clause 26.2 of the Road Transport and Distribution Award 2010 was in error and was inconsistent with the decision of the Full Bench in Transport Workers’ Union of Australia v Linfox Australia Pty [2012] FWAFB 8958.’

[6] Mr A Howell of Counsel, for the appellant, wisely in my view, did not press Ground 1 during the hearing of the stay application; although he stressed the Union would be doing so during the substantive appeal. Mr Howell submitted that the Commission would only need to rely on Ground 2 for the purposes of applying the principles applicable to the granting of stay applications. I will come to these principles shortly.

[7] As to the question of whether it is in the public interest to grant permission to appeal, the appellant submits that:

‘1. The decision the subject of this application for permission to appeal an appeal was the substantive decision in relation to the review of the Road Transport and Distribution Award 2010, required by Schedule 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. This modern award is the substantive modern award operating in the road transport sector and establishes the minimum terms and conditions for many thousands of workers and their employers. It is in the public interest that a statutory review of a modern award such as this is conducted in a procedurally fair manner, is free from error, and that the product of such a review is consistent with decisions of the Full Bench of the Commission.

2. The appeal, if permission to appeal were granted, will permit the Full Bench to consider whether it is available for a member of the Commission to have regard to their personal view of the content of a Modern Award (made by a Full Bench), when conducting a review of a modern award required by the Fair Work Act 2009.

3. Her Honour failed to follow the decision of the Full Bench in Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2012] FWAFB 8958. It is in the public interest that individual members of the Commission follow decisions on the construction of a Modern Award.’

Statutory provisions and applicable principles

[8] Section 606(1) of the Act provides that:

[9] The principles to be applied by the Commission in considering an application for a stay order are now well settled. These principles are set out in the decision of Ross VP (as he then was) in P Edghill v Kellow Falkiner Motors Pty Ltd (Print S2639), which was adopted by the Full Bench of the Australian Industrial Relations Commission (AIRC) in Kellow-Falkiner Motors Pty Ltd v Edghill (Print S4216). His Honour said at paras [5] and [6]:

See also: Boom Logistics Limited v Bell and Mackay [2013] FWC 1017; GM Holden Ltd v Symonds [2013] FWC 332; Vondoo Hair v Crockett [2012] FWA 9553; Vita Property Group Pty Ltd v Clayworth [2012] FWA 6547; DesignInc (Sydney) Pty Limited v Xu [2012] FWA 1088; Suncorp Staff Pty Limited v Brewer [2012] FWA 823; and Gippsland Waste Services Pty Ltd v Irene Meadley [2013] FWC 3090.

SUBMISSIONS

For the appellant

[10] Mr Howell informed the Commission that the only element of cl 26.2 which is subject to appeal is whether overtime meal breaks are paid at overtime rates or ordinary rates. Her Honour had construed the clause as providing for the meal breaks to be paid at ordinary rates, despite a Full Bench decision in Transport Workers’ Union of Australia v Linfox Australia Pty [2012] FWAFB 8958 (‘Linfox’), which determined that on a proper construction of the clause, overtime rest breaks should be paid at overtime rates.

[11] Mr Howell submitted as a result of Linfox, there was no ambiguity or uncertainty required to be corrected by the Review process and even if the Modern Award was to be varied, it should be consistent with Linfox.

[12] Mr Howell noted that Her Honour preferred the obiter comments of Rares J in the Federal Court in an appeal of Linfox; See: Linfox Australia Pty Ltd v Transport Workers Union of Australia [2013] FCA 659. His Honour construed the clause as providing for the overtime rest breaks to be paid at ordinary rates.

[13] Nevertheless, Mr Howell expressly disavowed a submission that Her Honour was bound to follow the Linfox decision. While there were other grounds of appeal, it was only necessary for the Commission to consider Ground 2 in this stay application. He put that Her Honour had made both a jurisdictional error and a discretionary error. The appellant had a reasonably arguable case based on the proper construction of cl 26.2.

[14] Mr Howell argued that the balance of convenience favoured the appellant as if the Union is successful and the determination was not stayed, thousands of employees under the Modern Award would be underpaid. On the other hand, if the appeal fails and Her Honour’s determination is not disturbed, no prejudice would flow to the employers.

For AIG and NatRoad

[15] Mr B Ferguson submitted that it was completely open and appropriate for Her Honour to prefer the reasoning of Rares J in relation to the interpretation of cl 26.2. However, Her Honour was doing more than interpreting the clause. She was undertaking a broad two year review of the Modern Award. In doing so, Her Honour found that ambiguity and uncertainty existed and corrected it in the context of competing decisions of a senior member of the Commission, the Full Bench and a Judge of the Federal Court.

[16] Mr Ferguson said the Commission has a broad discretion to vary the Award on any terms the Commission considers appropriate. Her Honour was not obliged to follow the Linfox decision as it was clearly distinguishable. It was a private arbitration under an enterprise agreement. There was no appellable error.

[17] As for balance of convenience, Mr Ferguson argued that a real practical issue arose if there was not the flexibility available as to the taking of the meal break. It was not always possible for meal breaks to be taken after ordinary time and before overtime. Employers might be in breach of the Modern Award if that part of the Clause was to be stayed. Mr Ferguson said there would be confusion and cost if employers, on advice, had changed their systems to reflect Her Honour’s Determination. He noted that the Union’s original appeal application did not seek a stay.

[18] Mr Ferguson further submitted that notwithstanding the Linfox decision, employers continue to argue that meal breaks on overtime should be paid at ordinary rates. If a stay was ordered, it was likely that disputes would arise if employers were ‘pressured’ to pay overtime rates. Moreover, if the Determination is upheld, there would be little chance of recovery of overpayments. He put that this was an important variation to the Modern Award which should not be further delayed.

For AFEI

[19] Ms Flight opposed the granting of the stay and endorsed the submissions of AIG.

For ARTIO

[20] Mr Ryan, in short written submissions, outlined the principles relevant to the grant of a stay order. He submitted that Her Honour had clearly identified an oversight to be remedied and the industry was entitled to rely on the decision. Mr Ryan said the Full Bench decision in Linfox was not binding on Her Honour as it involved the interpretation of an enterprise agreement through consent arbitration.

[21] Finally, in applying the principles in Kellow Falkiner, the appeal has no reasonable prospects of success and the balance of convenience does not support the grant of the stay order.

For Business SA

[22] Mr H Wallgren indicated his organisation had only a limited interest in the Modern Award and made no submissions in respect to the appeal.

For ABI

[23] Mr N Ward, in a letter to the Commission, said that while ABI opposed the Union’s appeal, it did not wish to express a position in regard to the stay application.

For Followmont Transport Pty Ltd

[24] Ms K Murphy, in a short written submission, supported the submission of the ARTIO and added that Followmont had led evidence in the proceeding before Her Honour to support the view that the status quo was the payment of meal breaks on overtime at ordinary time rates. The Union had led no evidence to contradict this premise. It followed that if the appellant was seeking the status quo by its stay application, it is meaningless, because the status quo was what Her Honour clarified by her Determination in respect to cl 26.2.

In reply

[25] Mr Howell emphasised that in light of the Linfox decision, the appellant’s case must, at least, be reasonably arguable.

[26] As to the balance of convenience and Mr Ferguson’s submission, Mr Howell said that there was no determination to stay until 7 January 2014. This was why the original appeal did not seek a stay. Further, if AIG was confusing their members by not informing them of an appeal, ‘be it on their head’. As to the status quo, if a stay is granted, it will not alter the status quo prior to Her Honour’s Determination. Whereas, if the appeal is successful and the stay not granted, employees would lose an entitlement and employers would face underpayment claims from 7 January 2014 until the appeal was determined. Thus, the balance of convenience weighs entirely in the appellant’s favour.

[27] Mr Howell did not rely on Ground 1 of the appeal, but said that as presently instructed, the issue of Her Honour’s actual or perceived bias would be pressed in the substantive appeal.

For the NUW

[28] Mr D Mujkic supported the appellant’s submissions.

CONSIDERATION

[29] At the outset, I make two comments in respect to Mr Ferguson’s submissions. Firstly, there was some implied criticism of the appellant for not seeking a stay of Her Honour’s decision of 16 December 2013 and this had led to confusion as to what advice was given by AIG to its members. This confusion would be exacerbated by the grant of a stay. Such criticism is misplaced. Counsel for the appellant was correct when he responded that there was nothing for the Commission to stay until Her Honour made a formal Determination on 7 January 2014. An amended application for leave to appeal and appeal, including an application for a stay, was filed on 13 January 2014.

[30] Secondly, Mr Ferguson submitted that if Her Honour’s determination was stayed, employers in the industry may be in breach of the Award because of the impracticality of always providing a meal break immediately before the commencement of overtime. This issue was not lost sight of by Her Honour. See; para [86] of the Decision. For my own part, I readily accept that this is a real consideration, given that truck drivers are not always in a position to stop driving immediately after their ordinary hours of work. They may be driving, caught in traffic, loading or unloading. Presumably, it is why the words, ‘20 minutes before commencing overtime work or as soon as practicable thereafter’ were inserted in the subclause.

[31] That said, however, it must be observed if there was ambiguity or uncertainty under the former clause in the Modern Award, the same situation would have been encountered on numerous occasions over last few years. No doubt this conundrum was treated sensibly and rationally by employers, employees and the Union, conscious, of course, that the predecessor to the Modern Award, the Transport Workers Award 1998 [AP799474], provided for crib breaks on overtime to be paid at the ordinary rate of pay. I see no reason, at least for a relatively short period, why the past practice cannot be applied in a sensible and practical way. Moreover, I am inclined to agree with Mr Howell that the Union cannot be held responsible for the confusing or wrong advice AIG gave its members during a period where there was no formal Determination of Her Honour and the appeal filing period had not lapsed.

[32] In any event, Followmont Transport Pty Ltd submitted that the status quo prior to Her Honour’s Determination was that employees are paid ordinary time for meal breaks on overtime and the Union had led no evidence to the contrary.

[33] The issue to be determined by the Full Bench in this appeal is straightforward. There is no doubt Her Honour did not agree with the ratio of the Full Bench in Linfox. Nor did she feel bound by to follow the decision; See para [82] of the Decision. Rather, Her Honour preferred the obiter views of Rares J in the appeal of the Full Bench to the Federal Court; See: Linfox Australia Pty Ltd v Transport Workers Union of Australia. Counsel for the appellant acknowledged that Her Honour was not bound to follow the decision in Linfox, nor was she bound to follow Rares J’s obiter comments. This submission is unremarkably correct. This is so because, inter alia, the Full Bench in Linfox was undertaking a private arbitration in accordance with the wishes of the parties under the terms of their enterprise agreement and in the context of the history of the parties’ industrial relationship and coverage.

[34] It is trite to note that Her Honour was exercising the Commission’s powers and functions in an entirely different context; namely, a two yearly review of a Modern Award under Sch 5, Item 6 of the Transitional Act. Nevertheless, I note that Counsel for the appellant submitted that the Full Bench Linfox decision reflects a proper construction of the relevant award clause, therefore there is no ambiguity or uncertainty such as to enliven the Commission’s Review jurisdiction to vary the Award. Moreover, even if the Award was to be varied, it ought to be consistent with the reasoning of the Full Bench in Linfox.

[35] Given that the onus is on the appellant to establish jurisdictional error or an error in the exercise of discretion; See House v The King (1936) 55 CLR 499 (as contended for by Mr Howell), that Mr Howell conceded Her Honour was not bound to follow the ratio in Linfox and the predecessor Federal Award to the Modern Award - the Transport Workers Award 1998 [AP799474] expressly provided for crib breaks on overtime to be ‘paid at the ordinary rates’, I have some doubt as to the appellant’s prospects of success as to leave to appeal, let alone in respect to the appeal proper. However, in the absence of all of the appeal grounds being developed (Ground 1 in particular), I cannot be satisfied, at this stage, that the appeal has no prospects of success.

[36] This now calls into play the balance of convenience test. Counsel for the appellant described the balance of convenience test in this way:

I consider that Mr Howell’s characterisation of the balance of convenience in this case to be correct. Accordingly, I find the balance of convenience favours the appellant.

[37] Having regard for the relevant principles, I have decided - but not without some hesitation - to grant a stay of Her Honour’s Determination [PR546558] of 7 January 2014 in respect to cl 26.2 of the Road Transport and Distribution Award 2010 [MA000038]. The stay shall remain in force until further order of the Commission. Orders to this effect will be issued contemporaneously with this decision.

DEPUTY PRESIDENT

Appearances:

Mr A Howell, Counsel for the Transport Workers’ Union of Australia.

Mr B Ferguson for the Australian Industry Group.

Ms J Flight for the Australian Federation of Employers and Industries.

Hearing details:

2014

Sydney:

28 January

Printed by authority of the Commonwealth Government Printer

<Price code C, MA000038  PR547305 >