| FWC 638 [Note: An appeal pursuant to s.604 (C2016/500) was lodged against this decision - refer to Full Bench decision dated 15 August 2016 [ FWCFB 3075] for result of appeal.]|
|FAIR WORK COMMISSION|
Fair Work Act 2009
s.739 - Application to deal with a dispute
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
Forgacs Engineering Pty Ltd T/A Forgacs
SYDNEY, 22 FEBRUARY 2016
Application to deal with a dispute.
 This decision relates to an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), with the support and consent of Forgacs Engineering Pty Ltd (Forgacs), in relation to an interpretation of the Forgacs Engineering Pty Ltd Enterprise Agreement 2013 1 (the Agreement).
 The parties tabled an Agreed Statement of Facts 2 which contained an agreed question for determination, namely:
“A number of permanent employees have prior contiguous periods of service as casuals. Do these prior contiguous periods of casual service count as service for the purposes of clause 21 (notice of termination) and clause 23 (severance payments)?”
 The AMWU was represented by its Legal Officer, Ms Lucy Saunders. Forgacs was represented by Mr David Tiller from The Australian Industry Group (AiG).
 The Agreed Statement of Facts 3 provides a useful summary of the dispute:
“Agreed Statement of Facts
1. This dispute arises under the Forgacs Engineering Enterprise Agreement 2013 (The Agreement).
2. Forgacs is a large engineering and shipbuilding company, with locations around Australia. It builds blocks for Australian Submarine Corporation (ASC) as part of the Air Warfare Destroyer (AWD) program at the Tomago Shipyard. The AMWU represents a large majority of workers at this site.
3. Due to the completion of the contract with ASC, and the absence of other work, Forgacs is making a large proportion of its workforce at the Tomago Shipyard redundant.
4. There is no dispute between the parties that these redundancies are genuine, or, that the consultation requirements under the Agreement have been met.
Prior Casual Service
5. As at 9 July 2015, there were a number of persons employed by Forgacs on a permanent basis who had prior contiguous periods of service as casuals, working on a regular and systematic basis, with no break between these periods of service.
6. When these workers were employed as casuals, they were paid the wage rate of a permanent employee as specified in cl.28 of the Agreement, plus a loading of 25% in accordance with cl.14 of the Agreement.
7. The employment of a number of these individuals has been terminated or will terminate by reason of redundancy.
8. When calculating redundancy termination payments, Forgacs:
a. Recognise prior contiguous periods of casual service for the purpose of long service leave under the Long Service Act 1955 (NSW);
b. Does not recognise prior contiguous periods of casual service for calculating notice under cl.21 of the Agreement; and
c. Does not recognise prior contiguous periods of casual service for the purpose of severance payments under cl.23.3 of the Agreement.”
 The relevant provisions of the Agreement 4 are:
“6.0 RELATIONSHIP TO PARENT AWARD
The terms of the Manufacturing and Associated Industries and Occupations Award 2010 (“the Award”), as varied from time to time, are incorporated into this Agreement. If an incorporated award term is inconsistent with an express term of this Agreement, the express term in the Agreement prevails over the incorporated award term to the extent of the inconsistency.
7.0 NO EXTRA CLAIMS
This Agreement is in full settlement of all claims, and possible claims, for the duration of this Agreement. No further claims will be made for changes in any terms or conditions of employment, or to this Agreement, during the period of operation of this Agreement.
8.0 NATIONAL EMPLOYMENT STANDARDS
The National Employment Standards (NES), as varied from time to time, will apply to this Agreement. In the event of any inconsistency between the NES and any term of this Agreement, the term of the Agreement will prevail provided that the Agreement entitlement is more favourable than the entitlements of the NES and provided that there will not be an additional entitlement under the NES.
14. CASUAL EMPLOYEES
At the time a casual Employee is engaged they will be given a letter of engagement which nominates that the Employee’s services will be required during a particular project or series of projects, and their tenure will expire at the completion of those projects.
The Award conditions will apply to the transition of casual Employees to permanent employee status after six (6) months of continuous employment, should there be a foreseeable continuity of work. If an Employee is invited to join the permanent workforce, and declines that invitation, there will need to be an exit strategy from the casual status agreed of no longer than one month’s further employment at casual rates. This exit strategy could include a move to permanent status, or termination of casual employment.
The wage rates for casual employees will be based on the permanent employee rates specified in Clause 28 plus a casual loading of 25%.
21. NOTICE OF TERMINATION
21.1.3 A Casual Employee is not entitled to notice set out in this clause.
23.6 The Company will not be required to make severance payments or notice payments set out in this clause where an employee is redeployed under Clause 23.1 or where the Employee would not be entitled to notice or redundancy pay in accordance with the NES.”
Summary of Submissions
 The AMWU argued that if casual service is recognised under the National Employment Standards (NES), then due to the operation of section 55 and 56 of the Fair Work Act, 2009 (the Act), which basically renders provisions of an Agreement or Modern Award which are less beneficial then the NES as ineffective or invalid, then clauses 21.1.3 and 23.6 of the Agreement have no effect.
 Part 2.2 Division 11, of the Act deals with notice of termination and redundancy pay. The amount of payment given to an employee in this circumstance is based on the calculation of “continuous service”. Continuous service is not defined in Division 11 of the Act. However, section 123(1)(c) says:
Employees not covered by this Division
(1) This Division does not apply to any of the following employees:
(c) a casual employee”
 In an attempt to overcome this exclusion, the AMWU referred me to the definition of continuous service in section 12 of the Act which says:
(1) A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).
(2) The following periods do not count as service:
(a) any period of unauthorised absence;
(b) any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or
(ii) a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c) any other period of a kind prescribed by the regulations.
(4) For the purposes of Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2:
(a) a period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include:
(i) any period of unauthorised absence; or
(ii) any other period of a kind prescribed by the regulations; and
(b) a period referred to in subparagraph (a)(i) or (ii) does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service; and
(c) subsections (1), (2) and (3) do not apply.”
 The AMWU argued that section 22 encompasses both casual and permanent employment.
 Further, the AMWU referred me to section 384 of the Act, which states:
“384 Period of employment
(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.
(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; and
(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and
(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and
(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and
(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;
the period of service with the old employer does not count towards the employee’s period of employment with the new employer.”
 The AMWU referred me to section 65 of the Act, requests for Flexible Service, which states:
Employee may request change in working arrangements
(a) any of the circumstances referred to in subsection (1A) apply to an employee; and
(b) the employee would like to change his or her working arrangements because of those circumstances;
then the employee may request the employer for a change in working arrangements relating to those circumstances.
Note: Examples of changes in working arrangements include changes in hours of work, changes in patterns of work and changes in location of work.
(1A) The following are the circumstances:
(a) the employee is the parent, or has responsibility for the care, of a child who is of school age or younger;
(b) the employee is a carer (within the meaning of the Carer Recognition Act 2010);
(c) the employee has a disability;
(d) the employee is 55 or older;
(e) the employee is experiencing violence from a member of the employee’s family;
(f) the employee provides care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because the member is experiencing violence from the member’s family.
(1B) To avoid doubt, and without limiting subsection (1), an employee who:
(a) is a parent, or has responsibility for the care, of a child; and
(b) is returning to work after taking leave in relation to the birth or adoption of the child;
may request to work part-time to assist the employee to care for the child.
(2) The employee is not entitled to make the request unless:
(a) for an employee other than a casual employee—the employee has completed at least 12 months of continuous service with the employer immediately before making the request; or
(b) for a casual employee—the employee:
(i) is a long term casual employee of the employer immediately before making the request; and
(ii) has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.”
 The AMWU argued that the legislation specifically excluded casual employees from section 65 (2)(a) which clearly indicates that the legislator has identified that casual service counts as continuous service except where specifically excluded.
 The AMWU also argued that “notice” and “redundancy” are not accruing rights like annual leave or long service leave. They do not accrue as your employment continues but are merely benefits that may get paid at a certain point in time after certain preconditions are met. An employee only receives the notice or redundancy payment if they are unlucky enough to lose their job.
 The AMWU compared the service of casuals who are made permanent employees to the service of an apprentice who is employed at the conclusion of their apprenticeship. It is settled law that employees who were apprentices immediately before their permanent employment have their apprenticeship service “count” for the purposes of notice and redundancy pay, even though they are not entitled to notice or redundancy during their apprenticeship.
 Finally, the AMWU argued that their interpretation of continuous service is consistent with the entire scheme of the Act and consistent with the Objects of the Act.
 AiG argued that when the relevant employees were working as casuals for Forgacs, they were paid a 25% loading on top of the wage rate of the permanent employee.
 AiG referred me to Clause 21.1.3 and 23.6 of the Agreement. AiG argued that Clause 21.1.3 specifically excludes casual employees from receiving any “notice” payment and that that Clause 23.6 refers the Agreement back to the NES provisions, which also precludes a casual employee from receiving notice or redundancy pay (see section 123(1)(c) above).
 AiG also referred me to clause 14 of the Agreement (see above) which contains the casual conversion clause which identifies when a casual employee can transfer to permanent employment after 6 months continuous service if there is a foreseeable continuity of work. Significantly, the clause identifies that Casuals are paid a loading of 25% on top of the permanent employees rate. AiG argued that this loading is being used to “buy out” the entitlements enjoyed by permanent employees, including notice and redundancy pay.
 AiG stated that there is a natural flow on from these provisions, ie, because casual employees are not entitled to notice or redundancy pay under the Agreement or the NES, it is logical that the employee does not accrue “service” during any period of casual employment that would count towards notice or redundancy pay.
 Mr Tiller referred me to the “Metals Casual Case” 5, which is the benchmark Full Bench Decision in this sphere of employment law. The Full Bench said:
“ Except in relation to quantification, the debate between the applicant and respondents about the inclusion of components for notice of termination and severance was not responsive to the counter-propositions each advanced. In our view, no one aspect of the award entitlements is more prominent on the face of the Award than the discrepancy between the notice of termination required to be given to full-time and other continuing employees, and the lack of any such requirement applicable to casuals. Like the express exclusion of casuals from paid leave and severance benefits, the difference in entitlements to notice of termination of employment is an intended difference in the award based incidents of full-time and casual employment. The question that must be determined in this context is what, if any, value should be attributed to those differences in a loading designed to achieve a balance between different types of employment related to the minimum standards established by the Award.
 We consider that the different entitlements to notice and to severance benefits are appropriately to be taken into account in any judgment of the adequacy of the casual rate loading. The differences, together with the employment by the hour distinction, are fundamental to the respective types of employment. However, we are not persuaded that there is any cogency in the approximations made by the AMWU about the value of the respective entitlements based on average or estimated numbers of “dismissals” of casuals, or an attributed number of terminations of full-time employment.
 In our view, the appropriate course is to acknowledge the existence of component intrinsic to the different types of employment. We will take it generally into account in establishing the level of the casual rate loading. In that judgment, the existence and comparable entitlements of fixed term employees in particular are also to be kept in perspective. From its establishment, the rationale of weekly employment was that of a type of employment associated with greater certainty, with more security of income, and with a stable basis for establishing minimum standard conditions, founded upon a requirement for a relatively longer notice of termination of employment. Daily hire or casual employment was not certain, secure or founded upon more than minimal notice of termination. It came with a loading to the pay rate, lest its existence as a type of employment obliterate weekly employment and the minimum standard conditions associated with it. It would be dysfunctional to now restrict the notional constituents of such a loading to the most visible and readily cashed out accruable benefits of secure weekly hire employment but exclude any allowance whatever for the most fundamental differential term upon which the relatively greater certainty and security is founded.”
 AiG submitted that the definition of “service” in the Act does not specifically include or exclude periods of casual employment. Mr Tiller identified a range of other NES entitlements which do not apply to a casual employee, such as:
 AiG advised that the Act makes special provisions in relation to casual employees gaining access to the unfair dismissal remedies in the Act (see section 384(2) above). AiG argued that casual employees gaining access to the unfair dismissal provisions under the 2009 Act by an expressed provision was a significant change from the previous Act and that if the legislature had intended for casual employees to gain access to the notice and redundancy pay provisions of the Act then the legislature would have included an express provision in these terms.
 Both parties referred me to a number of cases, two of which were recent and on point.
 In Australian Municipal, Administrative, Clerical and Services Union v Fairfax Regional Media – Newcastle Newspapers (Herald) 6, Sams DP was asked to provide an opinion, rather than a decision, in relation to the dispute. He said:
“ While I can well understand why the employees feel aggrieved that their long periods of unbroken casual service, are not included for the purposes of calculating redundancy, the fact is that throughout this time they had received a 20% casual loading on their base rates of pay. Casual loadings are intended to compensate a casual employee for the benefits and entitlements otherwise available to permanent part time and full time employees; such as annual leave, sick leave and redundancy payments. This has been a long-held and well known principle under workplace law. The fact that long service leave was payable to the employees according to State legislative provisions and that certain shift allowances, penalty rates and overtime may be paid, does not alter the strict legal position.”
 In Transport Workers’ Union v Q Catering Limited 7, Hampton C, held:
“ There is evidence to suggest that at least some, and potentially most, casual employees at the Adelaide operations of Q Catering in past years were engaged on a relatively regular and consistent basis. Clause 15.8 contemplates casual employees being primarily used to meet unplanned or peak workloads to maintain the efficiency of the Company's operations. However, the provision is not written in exclusive terms and the casual employees here were engaged and paid as casuals for the relevant initial periods of their employment.
 In the end, there is a balance of considerations. Although “year of service” may be given the widest import to include service of any kind, there is no express provision confirming that the prior casual service is to be counted and there is no history of such service being included for present purposes. Further, the nature of casual employment, the general context for the operation of redundancy provisions, and the fact that it is agreed that Appendix A does not apply to casual employees, are important factors. Despite some contrary considerations set out above, I do not consider that the intention of the Workplace Determination should be taken to operate in that manner.
 On balance, I do not consider that full-time (or part-time) employees, who have previously had a period of employment as a casual employee, are entitled to have the prior service as a casual employee included for the purpose of calculating compulsory redundancy entitlements under the terms of the Workplace Determination.”
 Commissioner Hampton referred to a decision of the Industrial Relations Court of South Australia in Schuman v Pace Trading Pty Ltd 8, where it was held that an employee’s prior casual service does not count for the purposes of calculating redundancy pay entitlements. Hardy IM held:
“ I am also of the view that if the applicant is to be considered to be a casual employee during the first period of her employment and I certainly consider that to be the case, there would have been no question that she would not have qualified for a redundancy payment had her employment been terminated during that period of casual employment. The applicant’s submissions depend in part upon the fact that she was terminated as a permanent employee so that the previous casual service can be included but I do not agree. If the casual service did not qualify her for a redundancy during the currency of that service it makes no sense to me that it would do so at a later juncture after some permanent service.”
 In the Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd 9, a Full Bench of the FWC provided a useful summary in relation to the interpretation of Enterprise Agreements, but also conveniently provided a summary of the relevant precedents in relation to Statutes and Awards:
“ The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union 10 (Wanneroo):
“The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).” 11
 To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited 12 (Kucks) that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:
“. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.” 13
 From the foregoing, the following principles may be distilled:
1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.
2. In construing 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.”
 I have taken into account all of the submissions of the parties both written and verbal. This is a complex matter which has required detailed analysis and deliberation in relation to the Act, the Modern Award and the Agreement.
 It is agreed between the parties that this dispute is not an attempt to obtain notice and redundancy pay for casual employees but rather an enquiry as to whether prior casual service of a permanent employee should count towards the calculation of “continuous service” for the calculation of the notice and redundancy pay entitlements of the Agreement.
 I do not accept the argument that casuals transferring to permanent employment can be reconciled with the situation of apprentices being employed as tradespersons. Apprenticeships are completely different. Apprentices do not have a contract of employment with their employer but a contract of training. Whilst the set 4 year apprenticeship has all but disappeared from the industrial landscape due to the introduction of competency based training, the contract specifies a learning outcome based on skills acquisition and competency assessment. Apprentices are paid a fraction of the tradesman rate, not a loading, and accrue benefits such as annual leave and personal leave which are benefits and entitlements accrued by permanent employees – not casuals. I have taken this into account.
 I accept the submission and find that the “Metals Casual Case” provided compensation for the “prominent discrepancy” between casuals and permanent employees in relation to notice and redundancy pay in determining the appropriate level of the casual loading. I have taken this into account.
 I have taken into account and applied the principals for the interpretation of enterprise agreements, namely, by giving words their plain and ordinary meaning. As such, I am not convinced that there is any ambiguity in relation to the meaning and interpretation of the Agreement.
 In relation to the interpretation of the Act, I adopt the obiter cited earlier in Kucks. It is not within the scope or jurisdiction of the Fair Work Commission to extend the employment benefits of casual employees by importing words or notions into the Act, in order to satisfy the notions of fairness and justice.
 The AMWU’s argument focusses on the meaning of the term “continuous service” and its correlation with the phrase “period of service” in section 22 of the Act and then applies that connection to section 384 of the Act. However, as the Full Bench said in Wayne Shortland v The Smiths Snackfood Co Ltd 14:
“ Moreover, it is more than tolerably clear that s.384 is concerned with how an employee’s period of employment is calculated for the purposes of s.382(a)”
I have taken this into account.
 The argument in relation to “double dipping” was not extensively argued at the hearing, however, the argument does have merit. It would not seem to be fair or logical for an employee who has been paid a loading, which I have found to contain compensation for notice and redundancy pay, to then be able to use that same period of service in the calculation of notice and redundancy pay as a permanent employee. As an example, if two employees had started with Forgacs on the same day – employee A as a permanent employee, employee B as a casual. For 6 months, employee B receives the same rate as A, plus a 25% casual loading. After 6 months, B becomes a permanent employee in accordance with section 14 of the Agreement. If 2 years and 9 months later both A and B get made redundant, the AMWU believe that both employees have 3 years and three months continuous service for the purposes of their notice and redundancy entitlements. This would mean that both A and B would receive the same notice and redundancy pay. I cannot see how such an outcome is possibly fair to employee A. Employee B received a 25% loading for 6 months, which contained compensation for the lack of notice and redundancy pay entitlement in B’s initial period of employment.
 I agree with the sentiments of Industrial Magistrate Hardy, Deputy President Sams and Commissioner Hampton that the legal principal against “double dipping” in this regard is a logical, well known and universally accepted industrial practice.
 I accept the argument that if the legislature had wanted prior casual service to count towards a permanent employees period of service then it would have been expressly stated in the Act in a manner similar to the way section 384 has provided for access for casual employees into the unfair dismissal provisions of the Act.
 The provisions of the Agreement are also drafted without ambiguity. The NSW Branch of the AMWU is an intelligent, well run and highly respected Union. If the AMWU had wanted to count this casual service towards the service of a permanent employee, then it would have negotiated an appropriate, clear and concise provision in the Agreement to facilitate this outcome.
 Whilst accepting that the term “continuous service” has not been definitively defined within the Act, I do not accept the proposition enunciated by the AMWU.
 The wording of the Agreement is without ambiguity. The plain and ordinary meaning of the Act identifies no reduction in entitlement and therefore no impediment to the operation of the Agreement.
 It is a long held principle of industrial jurisprudence that casual employees are paid a loading to compensate them for the loss of benefits and rights afforded to permanent employees. Access to notice and redundancy pay is one the benefits of full time employment that are forgone by casual employees.
 I find that the prior casual service of permanent employees does not count towards the calculation of the period of service for the purposes of notice and redundancy pay at Forgacs.
 The application is dismissed.
1  FWCA 4338 - AE402153
2 Exhibit A2 – AMWU Outline of Submissions paragraph 3.
3 Exhibit A1
4  FWCA 4338 – AE402153
5 Metal, Engineering and Associated Industries Award 1998 – Part 1, (2000) 110 IR 247)
6  FWC 5631
7  FWC 6160
8 (2009) 169 IR 101
9  FWCFB 7447
10 (2006) 153 IR 426
11 Ibid at 438
12 (1966) 66 IR 182
13 Ibid at 184
14  FWAFB 5709
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