DECISION

Fair Work Act 2009
s.739—Dispute resolution

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
EnergyAustralia Yallourn Pty Ltd
(C2016/1116)

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

Introduction

[1] This matter concerns the entitlements of casual employees when performing additional overtime work. The employees are employed by EnergyAustralia Yallourn Pty Ltd (“Energy Australia”) and work at the Loy Yang A power station. The dispute was notified by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“the AMWU”) under the dispute resolution procedure in the EnergyAustralia Yallourn Enterprise Agreement 2013 1 (“the Agreement”) after the dispute was unable to be resolved through discussions in the workplace.

[2] The application was dealt with by the Commission in conference on 30 May 2016 but was again unable to be resolved. The Construction Forestry Mining and Energy Union (“the CFMEU”) and the Electrical Trades Union (“the ETU”) both indicated at the time that they also support the application. The AMWU subsequently advised the Commission it now sought to have the matter arbitrated. The application was accordingly set down for hearing and directions issued for the filing and service of evidence and submissions.

[3] Mr David Vroland appeared in the proceedings on behalf of the AMWU. He also indicated that the CFMEU adopted the submissions of the AMWU. Ms Rebecca Fraser appeared on behalf of EnergyAustralia.

The Issue to be Determined

[4] The parties are covered by the EnergyAustralia Yallourn Enterprise Agreement 2013. 2 The entitlements of casual employees are dealt with in sub clause 5.3 of the Agreement under the heading “CASUAL EMPLOYMENT”. It relevantly states:

“A casual employee for working ordinary time shall be paid per hour one thirty–sixth of the weekly rate prescribed in this Agreement for the classification of work performed plus loading a of 25% of that weekly rate. A casual employee is entitled to penalty rates applicable to rostered shifts worked by the employee based on the ordinary rate of pay.

The casual loading is in lieu of all paid leave, paid personal/carer’s leave, compassionate leave, public holidays not worked, notice of termination and the other attributes of full time and part time employment. Nor are casual employees entitled to parental leave, except in circumstances prescribed by the FW Act.

Casual employees shall be paid overtime for all hours worked in excess of ordinary hours on any day (i.e. 8 hours/7 hours 12 minutes per day/shift length). Except as provided by Clause 13 – Public Holidays of this agreement, all time worked which is in excess of ordinary daily hours shall be paid at double time.” 3

[5] The dispute arises in circumstances where casual employees are required to perform overtime, being work that extends beyond the 36 ordinary time hours each week provided for in clause 10 of the Agreement. The AMWU submits the casual loading of 25% provided for in sub clause 5.3 “must first be accounted for to establish the employee’s ordinary time rate of pay before double time can be calculated.” 4

[6] EnergyAustralia disagrees. It submits it is only obliged to pay a casual employee twice the rate of pay applicable for the employee’s classification level as set out in Appendix 1 of the Agreement. In its submission it is not required to include the casual loading in calculating those payments when overtime is worked.

[7] The Commission is accordingly required to determine the correct interpretation of the relevant wording in sub clause 5.3.

The Evidence and Submissions

[8] The AMWU relies on the principles established by the Full Bench in Australasian Meat Industry Employees Union v Golden Cockerel [2014] FWCFB 7447 (“Golden Cockerel”) in regard to interpreting an enterprise agreement. It submits, in response, that there is nothing ambiguous about the relevant parts of sub clause 5.3 and the correct method for calculating the ordinary time rates for casual employees “…is discernible from the plain meaning of the words used in those paragraphs.” 5

[9] It submits the relevant ordinary time rate of pay is clearly established by sub clause 5.3, being one thirty–sixth of the relevant weekly rate prescribed in the Agreement for the relevant classification, plus the 25% loading. It submits the reference to “plus” means that the two amounts are added together to derive a casual employee’s ordinary time rate of pay. This then becomes the base figure to be used for calculating the double time overtime entitlements for a casual employee.

[10] In its submission there is nothing in the Agreement which contradicts the plain and ordinary meaning of the words used, and this is borne out by objective analysis. It also submits its approach is consistent with the Manufacturing and Associated Industries and Occupations Award 2010 (“the Manufacturing Award”), 6 in which the 25% casual loading is accepted as constituting a casual employees “all-purpose rate”.

[11] The AMWU also rejects the suggestion that the casual loading is provided in lieu of the matters referred to in the fifth paragraph of sub clause 5.3 of the Agreement, and therefore is not to be paid when overtime is worked. It submits, in response, that the paragraph in question simply contains a “broad-based explanation” 7 of why the casual loading is provided. It also notes that the additional words “the other attributes of full and part-time employment”8 make clear the loading is not simply provided in lieu of the paid leave entitlements that would be applicable for a full or part-time employee, but is instead provided in broad recognition of the essentially different nature of casual employee engagements. In its submission the differences between casual employment, and other categories of employment, go well beyond the absence of paid leave entitlements. It continues to submit it is not appropriate to rely on the words in the way EnergyAustralia contends when there is “a clear mathematical formula for the result the parties intended.”9

[12] The AMWU also makes reference to a decision of the Industrial Court of Queensland in the matter of Brisbane City Council v Australian Rail Tram and Bus Industry Union, 10 handed down by President Hall in 2004. It submits that while the decision did not accept that it was a “well-established rule” that the casual loading was to be included in the calculation of overtime payments, it did conclude that if an Award or Agreement did not intend to include the casual loading in such calculations this should be explicitly stated. The AMWU continues to submit that the decision provides support for its submission that the interpretation of the Agreement it relies on is not unusual or misconceived.

[13] It also submits that the parties to the Agreement must have been aware that the underpinning Manufacturing Award is to be interpreted in the way the Union now suggests, and in these circumstances the Agreement could have been expected to refer specifically to the exclusion of the casual loading if it was not intended it be included in the calculation of overtime.

[14] EnergyAustralia submits, in response, that sub clause 5.3 must be considered in its entirety. In this context it refers, in particular, to paragraph 5 in the sub clause which, as indicated already, states:

“The casual loading is in lieu of all paid leave, paid personal/carer’s leave, compassionate leave, public holidays not worked, notice of termination and the other attributes of full time and part time employment. Nor are casual employees entitled to parental leave, except in circumstances prescribed by the FW Act.” 11

[15] It continues to submit that full and part-time employees accrue paid leave entitlements during ordinary time hours only, and these entitlements do not accrue when overtime is worked.

[16] In its submission it follows that payment of the 25% loading to a casual employee should be limited to ordinary time hours only. As full and part-time employees do not accrue leave at these times it follows that casual employees also do not receive the additional loading when overtime is worked. It continues to submit the practice of double time being paid for all overtime hours is also then consistent across all employment categories.

[17] EnergyAustralia also make reference to the Award that underpins the Agreement. In its submission the relevant Award is the Electrical Power Industry Award 2010, 12 after it was established as the relevant Modern Award in place of two other awards that previously applied. It acknowledges that the Award is not called up or incorporated into the present Agreement, but submits it was referred to in the Employer’s Statutory Declaration lodged with the application for approval of the Agreement. It continues to submit that clause 13.4 of the Electrical Power Industry Award clearly states that a casual employee is not entitled to the casual loading for time worked and paid as overtime.

[18] It continues to submit that its approach is consistent with both the provisions contained in the previous Agreement and how they were applied in practice, and those contained in the Electrical Power Industry Award 2010. In its submission that Award should therefore be preferred as a guide, instead of the Manufacturing Industry Award, which applies more broadly across a wide range of businesses.

[19] EnergyAustralia also submits that while the Agreement does not make specific reference to the treatment of the casual loading when overtime is worked, it also does not contain any specific indication that the loading is to be treated as an “all-purpose rate.”

[20] EnergyAustralia also made reference to other enterprise agreements now in place in the Latrobe Valley which specifically exclude the casual loading when calculating overtime payments. (However, it is also noted that the AMWU responded by indicating that the Agreement in the present matter does not contain any similar specific exclusion.)

[21] EnergyAustralia also acknowledges that the principles established in Golden Cockerel 13 are relevant to the determination of this matter. It also notes they were recently adopted by another Full Bench of the Commission in the matter of CFMEU v Spotless Facility Services Pty Ltd14, and these and other similar decisions make clear the Commission should not adopt a narrow or pedantic approach, or one that places too much emphasis on legalese or jargon.

Consideration

[22] The submissions and evidence relied on by both the AMWU and EnergyAustralia have been summarised already and are not restated now. As indicated, the AMWU submits there is nothing ambiguous, or anything susceptible of more than one meaning, in the relevant words in sub clause 5.3 of the Agreement.

[23] As indicated already they are contained in paragraphs 4, 5 and 6 of sub clause 5.3, and relevantly state:

“A casual employee for working ordinary time shall be paid per hour one thirty-sixth of the weekly rate prescribed in this Agreement for the classification of work performed plus a loading of 25% of that weekly rate. A casual employee is entitled to penalty rates applicable to rostered shifts worked by the employee based on the ordinary rate of pay.

The casual loading is in lieu of all paid leave, paid personal/carer’s leave, compassionate leave, public holidays not worked, notice of termination and the other attributes of full time and part time employment. Nor are casual employees entitled to parental leave, except in circumstances prescribed by the FW Act.

Casual employees shall be paid overtime for all hours worked in excess of ordinary hours on any day (i.e. 8 hours/7 hours 12 minutes per day/shift length). Except as provided by Clause 13 – Public Holidays of this agreement, all time worked which is in excess of ordinary daily hours shall be paid at double time.” 15

[24] It is obvious at the outset that these provisions make clear that casuals have an entitlement to overtime. This is not at issue. However, I am not satisfied that the same degree of certainty necessarily exists about the appropriate pay rate to be provided to a casual employee when overtime is worked. As indicated, paragraph 4 states that casual employees are entitled to the penalty rates applicable to rostered shifts worked by other employees, although it continues to indicate that the rate is based on “the ordinary rate of pay.” However, it fails to clarify exactly what that rate is intended to be.

[25] The specific reference in the clause to payment of the 25% loading also appears to be confined to when ordinary time is worked, as the relevant words state: “A casual employee for working ordinary time shall be paid per hour one thirty - sixth of the weekly rate prescribed in this Agreement for the classification of work performed plus a loading of 25% of that weekly rate.” 16 Paragraph 6 then indicates that all overtime hours worked “shall be paid at double time.”17 However, this wording again fails to make clear what this rate is intended to be based upon.

[26] A review of the provisions contained in Modern Awards indicates that overtime entitlements for casual employees generally apply in one of three different ways. Firstly, the entitlement is based on a multiplier of a rate, which includes the casual loading. This is the interpretation that the AMWU submits should apply in the context of the present Agreement. (For example, in this case where a double time overtime entitlement applies and the casual loading is 25%, the casual employee would be entitled to 250% of the ordinary time hourly rate for a full-time employee when overtime is worked.)

[27] In the second case the casual loading is excluded completely from the entitlement when the overtime multiplier is applied, and overtime is instead calculated on the basis of the ordinary time rate for a full-time employee. This is the interpretation that EnergyAustralia submits should apply in the present matter. (In this case where a double time overtime entitlement applies and the casual loading is 25%, the casual employee would be entitled to 200% of the ordinary time rate for a full-time employee when overtime is worked.)

[28] Thirdly, the casual employee retains the entitlement to the loading for overtime hours, but the loaded rate is not used when the overtime multiplier is applied. The loading is instead added back on after the ordinary time rate has been multiplied. This approach is sometimes described as avoiding a situation whereby a penalty rate is applied to an already existing penalty rate. (For example, in this case where a double time overtime entitlement applies and the casual loading is 25%, a casual employee would be entitled to 225% of the normal ordinary time rate for a full-time employee when overtime is worked.)

[29] However, while these different approaches can be found in Modern Awards the Commission’s task in the present matter is to endeavour to identify the common intention of the parties to the Agreement at the time it was made. In this context the parties acknowledge that the decision in Golden Cockerel has confirmed the relevant principles to be applied in interpreting an industrial instrument, such as an award or enterprise agreement. The Full Bench did so after a detailed review of previous decisions of this Tribunal and other Courts. Those principles are set out at [41] of the decision in the following terms:

“1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In constructing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.” 18

[30] I turn to deal with the present application against the background of these principles in circumstances where, as indicated, I am not satisfied the relevant words in the Agreement necessarily have a plain meaning. Those principles make clear that in this situation evidence of the surrounding circumstances can be considered as an aid to interpretation. This might include evidence of prior negotiations, notorious facts, or evidence of matters in common contemplation. 19 A common intention is also to be identified objectively by reference to language a reasonable person would understand by the language used. The task is also not to rewrite the Agreement to achieve what might be seen as fair and just, but instead to interpret the Agreement produced by the parties.20

[31] In terms of any relevant surrounding circumstances the AMWU submits its approach is consistent with that in the Manufacturing Award, which provides that the 25% casual loading is indicated to be the casual employees “all-purpose rate”. In this context it is noted that sub clause 14.1 of the Award provides, in part, “The loading constitutes part of the casual employee’s all purpose rate”. 21 The only other reference in the Award to the rate to be paid for working overtime is then contained in clause 40.1(c), which deals with Overtime entitlements and states, “The hourly rate, when computing overtime, is determined by dividing the appropriate weekly rate by 38, even in cases when the employee works more than 38 ordinary hours in a week.”22

[32] The AMWU continues to submit that if the casual loading was intended to be paid for all purposes, apart from when overtime entitlements apply, then it could have been expected that this would have been specifically stated in the Agreement.

[33] The AMWU also rejects the submission that the casual loading is only paid in compensation for leave entitlements not received, and therefore should not apply when overtime is worked because leave entitlements do not continue to accrue when overtime is worked. In this context it points to the additional words in paragraph 5 of sub clause 5.3, which indicate the casual loading is also provided in lieu of “the other attributes of full-time and part-time employment,” 23 and not just in lieu of paid leave entitlements. This presumably extends to include matters like the exclusion from redundancy entitlements, and the ability to vary casual hours at short notice.

[34] EnergyAustralia rejects the reliance placed on the Manufacturing Award and submits that the relevant underpinning Award is, in fact, the Electrical Power Industry Award 2010. 24 In its submission this was made clear in the Employer’s Statutory Declaration that accompanied the application for approval of the Agreement. It submits, as a consequence, that the Electrical Power Industry Award 2010 should be preferred as a guide. It is noted in this context that clause 13 of that Award confirms that a casual employee is entitled to overtime, but it contains no reference to the casual loading being considered as an all-purpose rate. It also states in sub clause 13.4 (b) “… save that a casual employee is not entitled to the casual loading for the time worked and paid as overtime.”25 The next two sub clauses continue to state as follows:

“13.5 Casual loading is paid instead of annual leave, paid personal/carer’s leave, public holidays not worked, notice of termination, redundancy benefits and the other attributes of full-time or part-time employment.

13.6 Casual employees entitled to a penalty rates applicable to rostered shifts worked by the employee based on the ordinary rate of pay.” 26

[35] The coverage of the Electrical Power Industry Award 2010 is set out in clause 4 of the Award. Sub clause 4.1 indicates that it includes “employers throughout Australia in the electrical power industry and their employees in the classifications listed in clause 16—Classifications and Schedule B—Classification Descriptions to the exclusion of any other modern award”. 27

[36] Sub clause 4.2 continues to indicate that the “electrical power industry” includes “the generation (by whatever means), transmission, distribution and retail supply of electrical power”. 28 It accordingly appears that the Electrical Power Industry Award 2010 is the relevant underlying Award for a business involved in electricity generation.

[37] It is also noted that EnergyAustralia submits that the previous Agreement was also applied in the same way as it submits the present Agreement should be interpreted in regard to the calculation of overtime entitlements for casual employees. It submits this should continue be the case in circumstances where the relevant provisions in the current Agreement reflect those contained in the previous Agreement, and can be said to be a matter that is in common contemplation.

[38] However, the AMWU submits, in response, that if the casual loading was not intended to be included in the calculation of overtime it could have been expected that the same exclusion that exists in the Electrical Power Industry Award 2010 would be contained in the current Agreement.

In Conclusion

[39] Both parties have highlighted matters that they consider relevant to the determination of this application. However, in conclusion, in endeavouring to interpret the intention of the Agreement that has been produced by the parties I have had particular regard to the provisions contained in what appears to be the underlying Award, namely the Electrical Power Industry Award 2010, and what appears to be the common understanding about how the previous Agreement was to be interpreted and applied.

[40] Having regard to these considerations I am not satisfied that it can be concluded that sub clause 5.3 intends that the casual loading is to be included in the calculation of overtime. The application is accordingly dismissed.

COMMISSIONER

Appearances:

D Vroland appeared on behalf of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

R Fraser appeared on behalf of Energy Australia Yallourn Pty Ltd.

Hearing details:

2016.

Melbourne.

1 August.

Final written submissions:

Applicant’s final submissions received 19 July 2016.

Respondent’s final submissions received 12 July 2016.

 1   AE405605.

 2   Ibid.

 3   Ibid.

 4   Exhibit AMWU1 at [3].

 5   Exhibit AMWU1 at [7].

 6   MA000010.

 7   Transcript, PN26.

 8   AE405605 at [5.3].

 9   Transcript, PN28.

 10   [2004] QIC 7.

 11   AE405605 at [5.3].

 12   MA000088.

 13   [2014] FWCFB 7447.

 14   Construction, Forestry, Mining and Energy Union and Ors v Spotless Facility Services P/L t/a Spotless [2015] FWCFB 1162.

 15   AE405605 at 5.3.

 16   Ibid.

 17   Ibid.

 18   [2014] FWCFB 7447 at [41].

 19   Ibid.

 20   Ibid.

 21   MA000010.

 22   Ibid.

 23   AE405605 at [5.3].

 24   MA000088.

 25   Ibid.

 26   Ibid.

 27   Ibid.

 28   Ibid.

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