DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

KONE Elevators Pty Ltd t/a KONE
v
Martin Scibberas
(C2020/4051)

Appeal against decision [2020] FWC 1284 of Deputy President Gostencnik at Melbourne on 7 May 2020 in matter number C2019/5366.

Introduction

[1] KONE Elevators Pty Ltd (Kone) has lodged an appeal, for which permission is required, against a decision of Deputy President Gostencnik issued on 7 May 2020 1 (decision). The decision concerned an application made pursuant to s 739 of the Fair Work Act 2009 (FW Act) by Mr Martin Sciberras, an employee of Kone and a member of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), for the Commission to deal with a dispute concerning the proper interpretation of clauses 52 and 54 of the KONE Elevators Pty Ltd – Victoria Construction & Service Employees Enterprise Agreement 2019 (Agreement). The dispute was characterised in the application as concerning KONE’s failure to pay site allowances to employees, including Mr Sciberras, on rostered days off in accordance with clause 54(c) of the Agreement.

[2] There was no contest that the Commission had the power to arbitrate the dispute pursuant to the dispute resolution procedure in clause 8 of the Agreement. In the arbitral phase of the proceedings before the Deputy President, the parties agreed that the dispute could be resolved by the Commission answering the following question:

“Are employees entitled to a rostered day off (RDO) pursuant to Part C of the KONE Elevators Pty Ltd – Victoria Construction & Service Employees Enterprise Agreement 2019, to be paid any applicable site allowance:

a) for hours worked, at the time those hours are worked (pursuant to clause 52(c));

b) at the time of taking the RDO (pursuant to clause 54(c)); or

c) both?”

[3] The Deputy President’s answer to the question was “c) both”. Kone contends in its appeal that this answer was in error, and that the correct answer was “b) at the time of taking the RDO (pursuant to clause 54(c))”. There is no contest that the Deputy President’s decision is appealable, subject to the grant of permission of appeal.

[4] This appeal was originally allocated to a Full Bench consisting of Vice President Hatcher, Deputy President Asbury and Deputy President Kovacic, and was the subject of a hearing on 21 July 2020. Sadly, on 31 July 2020, Deputy President Kovacic passed away. On 12 August 2020, the President of the Commission, Ross J, reconstituted the bench to consist of Vice President Hatcher, Deputy President Asbury and Deputy President Dean. The parties were informed of this the same day, and advised that Deputy President Dean would read the submissions and other materials filed by the parties and would join in the decision-making process of the reconstituted Full Bench on that basis. The parties were given an opportunity to object to this course, but no communication of any objection was received, and accordingly the matter has been determined on the basis described.

Relevant provisions of the Agreement

[5] The Agreement is divided into six parts and has nine appendices. Part A is titled “General Conditions” and contains provisions applicable to all employees covered by the Agreement. Clause 2 of the Agreement, which is in Part A, provides that the Agreement covers and applies to employees of Kone employed in Victoria who are covered by the classification structure set out in Appendix 6, but does not apply to coordinators or managerial, clerical and administrative staff. Clause 15, which is in Part A, provides that employees (including apprentices) covered by the Agreement are entitled to payment of a Fares and Travel Allowance as detailed in Appendix 3. The amounts specified for the allowance in Appendix 3 are expressed as being payable “per day”.

[6] Part B of the Agreement is titled “Construction and Service (Common Clauses)”. Clause 34(a) of the Agreement, which is in Part B, provides relevantly that wages and other payments are payable on a fortnightly basis. Clause 34(b) deals with fortnightly pay slips and provides that the “information within the current pay period” which must be provided on a payslip must include, among other things, “Site allowance (in detail)”.

[7] Part C of the Agreement contains provisions specific to employees performing construction work, which is defined in clause 51 to mean the “work of construction, fabrication, erection and/or installation work or work incidental thereto when it is carried out at a construction site which is specifically established for the purpose of constructing, fabricating, erecting and/or installing the lifts or escalators”, and also to included work “in full replacement or modernisation of lifts or escalators, and any tendered repairs on a dedicated construction site, of 6 weeks’ duration or greater on-site”, but not to include routine servicing, maintenance, “on rounds”, breakdowns, tendered repairs of a duration of less than six weeks onsite, or employees who are “oncall” (who are covered by Part D of the Agreement).

[8] Clauses 52 and 54 of the Agreement form part of Part C. Clause 52 is concerned with the subject matter of site allowances. Clause 52(a) provides that “this procedure shall apply to work covered by Part C excluding Metal Engineering Construction Projects to which Appendix 5 applies”. Clause 52(b) provides for the quantification of the applicable site allowances depending upon the value and location of the project and cross-refers to clauses 52(f) and (g) in that respect, and also provides for a separate allowance quantum applicable to “Modernisation and full replacement jobs”. The quantified site allowances for which clauses 52(b), (f) and (g) provide are all expressed as amounts payable per hour. Clause 52(c) provides:

c) These Site Allowances shall be paid at the appropriate rate per hour flat for hours worked, to compensate for all special factors and/or disabilities on construction sites including any height allowance. Any applicable allowances in this Agreement shall be applied as and when incurred, in accordance with this Agreement.

[9] Clause 54 provides for the hours of work of employees covered by Part C. Clauses 54(a)-(d) are relevant to the dispute, and provide:

a) The ordinary working hours shall be 36 hours and be worked in a 10 day/2 week cycle, Monday to Friday inclusive, with eight hours worked for each of nine days, and with 0.8 of an hour on each of those days accruing towards the tenth day, which shall be taken as a paid day off.

b) The tenth day of the cycle shall be known as the Rostered Day Off (hereinafter called RDO), and shall be taken as outlined in this Clause.

c) Payment on such an RDO shall include the daily Fares and Travel Allowance, and any applicable Site Allowance as prescribed by this Agreement.

d) The current RDO calendars for Employees covered by this part of the Agreement are provided in Appendix 4.

[10] Appendix 4 contains RDO calendars for the years 2019, 2020 and 2021. The RDOs do not follow a regular fortnightly pattern as clauses 54(a) and (b) suggest they should, but are where practicable rostered in run-on patterns with public holidays or lockdown weekends. However, across the course of the year, the calendar provides for a nine-day working fortnight on average.

[11] Under the heading “RDO Flexibility”, clauses 54(e)-(f) of the Agreement provide that the regular day for the taking of a RDO may be altered in specific circumstances, including where there is agreement at a site level to reschedule a RDO, or where emergency, break down or similar circumstances require worked to be performed on a scheduled RDO in which case the missed RDO must be taken within the next 2 weeks. Clause 54(j) then provides:

Payment for RDO’s will be made on the basis of time accrued. Where insufficient time has accrued, payment will only be made for the time accrued.

The parties’ initial positions in the dispute

[12] It is necessary to identify the positions which the parties took in the dispute at the time the matter came before the Commission and was ultimately arbitrated because this explains the way in which the matter was decided by the Deputy President and also because Kone changed its position in the appeal proceedings before us. Kone’s practice prior to the matter coming before the Commission was to pay the applicable site allowance for all hours worked on each working day, including the 0.8 of an hour worked each day in order to accrue the RDO in each cycle, but not to pay the site allowance on RDOs. It was this position which was the subject of the dispute application lodged by Mr Sciberras. His application relevantly stated:

“5. Clause 52(c) of the Agreement provides that the site allowances under clause 52 ‘shall be paid at the appropriate rate per hour flat for hours worked’.

6. Clause 54(a) of the Agreement provides that the ordinary working hours of employees to whom that clause applies shall be ‘eight hours worked for each of nine days’ within a two-week cycle.

7. Consistently with those clauses, employees who come under Agreement Part C are ordinarily entitled to be, and are, paid eight hours’ site allowance for each day’s work.

8. This is in contrast with the entitlement of those employees to be paid wages for ordinary hours of work, which are paid at the rate of 7.2 hours’ pay for 8 hours worked, with the residual 0.8 hours per day accruing towards an entitlement to one paid RDO in each two-week cycle.

9. In addition to that entitlement, clause 54(c) provides that ‘Payment on … an RDO shall include the daily Fares and Travel Allowance, and any applicable Site Allowance as prescribed by this Agreement.’ This clause has been a feature of the predecessors to the Agreement from 2003 onwards. Its terms have not changed in that period. The principle behind the inclusion of this clause was to ensure that employees were not made financially worse off as a result of the transition from a 38 hour week to a 36 hour week.

10. Kone currently pays employees to whom Part C applies the daily fares and travel allowance on RDOs, consistently with cl 54(c) and the policy of that clause. However, it does not pay (and never has paid) those same employees the applicable site allowance, in spite of its obligation to do so under that same clause and its predecessors under earlier agreements.

11. Unsurprisingly, those employees are financially worse off as a result of Kone’s failure to do so. This is contrary to the policy behind the inclusion of cl 54(c) in the Agreement and its predecessors. A spreadsheet setting out the financial impact of Kone’s failure to pay site allowance on RDOs is attached to this application. The second tab of that document shows that employees under Part C are approximately $500 a year worse off than they would be otherwise as a result of Kone’s failure to pay site allowance on RDOs.”

[13] The submissions of the CEPU on behalf of Mr Sciberras in the proceedings before the Deputy President were consistent with the above position.

[14] Kone defended its existing practice of paying site allowances pursuant to clause 52(c), but not pursuant to clause 54(c), in the arbitral proceedings before the Deputy President. In its written submissions, Kone said:

“17. KONE submits that the words of clauses 52(c) and 54(c) of the KONE Agreement are plain and unambiguous…

18. It is abundantly clear from subclause 52(c) that the entitlement to be paid a site allowance under the KONE Agreement is linked the actual performance of work on a construction site. In this respect, the Macquarie Dictionary defines 'work' as the 'exertion directed to produce or accomplish something; labour; toil'.

19. In terms of the timing of the payment of the site allowances, subclause 52(c) expressly contemplates such payments being applied "as and when incurred" under the KONE Agreement. KONE submits that the plain and ordinary meaning of this phrase clearly refers to the time at which the hours that trigger the entitlement to a site allowance are worked.

20. Subclause 54(c) requires the payment made to an employee in relation to an RDO to include any applicable site allowance. It is important to note that an RDO is not just a "day off". It is an entitlement to time off that has been accrued by working additional hours on other days. In this respect, the requirement for payment of a site allowance on an RDO is a requirement to be paid the site allowance on hours that make up the RDO. Read in isolation, this requirement could be satisfied by paying the allowance either at the time the hours accrued towards an RDO are worked or the time at which the RDO is taken. In this respect, subclause 54(c) does not include any reference to the time at which the site allowance is required to be paid. This is dealt with in subclause 52(c) (as described above).

21. Therefore, on its face, subclause 54(c) simply confirms that the applicable site allowance is payable on hours accrued towards an RDO. It does not provide a separate and additional entitlement to the payment of a site allowance to that payable under subclause 52(c).”

[15] In effect, that meant that Kone’s proposed answer to the question posed for determination, which we have earlier set out, was “a) for hours worked, at the time those hours are worked (pursuant to clause 52(c))”. Although, on its face, that question allowed for three possible answers, the actual position was that both parties agreed that site allowances were payable for all hours worked on working days pursuant to clause 52(c), with the dispute between them concerning whether, in addition, site allowances were payable on RDOs pursuant to clause 54(c). Kone briefly adverted to an alternative position whereby, if it was wrong about the interpretation of clause 54(c), then site allowances could not also be payable under clause 52(c), but this was inconsistent with its primary position that clause 52(c) plainly and unambiguously required the payment of site allowance for all hours worked.

The decision

[16] In the decision, the Deputy President set out in an uncontroversial way the principles applying to the interpretation of enterprise agreements, and then first addressed the interpretation of clause 52(c). The Deputy President said (footnotes omitted, underlining added):

“[14] The words “…for hours worked…” in clause 52(c) of the Agreement set out the circumstances in which an employee is entitled to be paid a site allowance when undertaking work covered by Part C of the Agreement. It is a common contention of the parties that the provisions in dispute have a plain meaning. So far as clause 52(c) is concerned it is common ground that the applicable site allowance is payable for every hour of work on a site to which the allowance pertains. I agree.

[15] The effect of the words “…for hours worked…” in clause 52(c) of the Agreement is that an employee entitled to an RDO pursuant to Part C of the Agreement is to be paid any applicable site allowance for hours worked, at the time those hours are worked. This plainly includes the 0.8 of one hour of the 8 ordinary hours worked on each of the 9 days during the two week work cycle operating pursuant to clause 54, that accrues towards an RDO.

[16] The Respondent’s alternative submission, that it would be of no material consequence if the Commission prefers the interpretation that employees should be paid the site allowance at the time the RDO is taken, is rejected. This interpretation would require the words “…for hours worked…” to be given a meaning other than their plain and ordinary meaning for which there is no textual or contextual support.

[17] The effect of clause 52(c) of the Agreement is that an employee entitled to an RDO pursuant to Part C of the Agreement is entitled to be paid any applicable site allowance for all hours worked, at the time those hours are worked, including the fraction of the hour each day that accrues towards an RDO. This is uncontroversial and is consistent with the practice of the Respondent vis-à-vis the Applicant.”

[17] The Deputy President then turned to clause 54(c), and identified this as the subject matter of the dispute:

“[19] The dispute between the parties concerns the payment of any applicable site allowance for the day on which an RDO is taken. Since the taking of an RDO by an employee means that the employee is not working, a site allowance is not payable under clause 52(c) of the Agreement. That which is in dispute is whether clause 54(c) of the Agreement provides a separate and additional entitlement to the payment of a site allowance payable for hours worked under clause 52(c).”

[18] The Deputy President interpreted clause 54(c) the following way (footnotes omitted):

“[23] As a general principle, all words in an enterprise agreement must prima facie be given some meaning and effect. The proposition that the requirement in clause 54(c) that payment on an RDO is to include “…any applicable Site Allowance…”can be satisfied by paying the allowance at the time the hours accrued towards an RDO are worked would render the words “…any applicable Site Allowance…” in clause 54(c) otiose. Once it is accepted, as the Respondent correctly accepts, that site allowance is payable under clause 52(c) for all hours worked including the 0.8 of an hour that accrues towards a RDO, it is difficult to see what function the words in clause 54(c) have, other than to require payment on an RDO of any applicable site allowance.

[24] I do not accept the contention, advanced by the Respondent, that the words “…and any applicable Site Allowance…” in clause 54(c) simply confirm that the applicable site allowance is payable on hours accrued towards an RDO. An alternative explanation for the inclusion of the words “…and any applicable Site Allowance…”, and the interpretation that I favour, is that the words address the fact that site allowance in clause 52 is not payable in respect of every project and that the rate of site allowance varies depending on the value or location of the project. The word “applicable” in clause 54(c) is intended to convey the notion that the site allowance applicable at the site at which the employee is working when the RDO is taken is the site allowance that is to be paid to the employee on the RDO. Reading the Agreement in its totality, it is apparent that site allowance is not payable where employees are working on a metal engineering construction project to which Appendix 5 of the Agreement applies. This much is apparent from clauses 52(a) of the Agreement.”

[19] The Deputy President noted that, for employees covered by Part D who also worked a nine-day fortnight system with an RDO pursuant to clause 59(a), there was no equivalent to clause 54(c) requiring the payment of site allowances on RDOs. The Deputy President said that this supported an interpretation of clause 54(c) that required site allowance to be paid when the RDO was taken. The Deputy President then said:

“[26] Reading clause 54(c) as a whole, it is apparent that employees are entitled to fares and travel allowance on an RDO despite the fact that no fares are incurred as a result of traveling to or from a construction site, and no travel to or from a construction site is undertaken on an RDO. Rather, employees are entitled to a fares and travel allowance on an RDO by virtue of clause 54(c). The same result pertains in the case of an applicable site allowance.

[27] The purpose of the provision appears to be as stated by the Applicant. That is, to maintain the payment of the daily travel and fares allowances, and any applicable site allowance, in spite of the fact that no work or work-related travel is undertaken on an RDO, and none of the special factors or disabilities on construction sites encountered. Its evident purpose is to ensure that an employee receives substantially the same pay on an RDO as that employee would have received had ordinary hours been worked on site.

[28] The effect of clause 54(c) of the Agreement is that an employee entitled to an RDO pursuant to Part C of the Agreement is entitled to be paid any applicable site allowance at the time of taking the RDO pursuant to clause 54(c).”

Appeal submissions

[20] The primary case advanced by Kone in its appeal was different to its case before the Deputy President. It submitted that clauses 52(c) and 54(c) should not be interpreted literally, but rather needed to be given a purposive construction in order to avoid the absurd result of “double dipping”. It contended in its written submissions that:

•  the evident purpose of the RDO scheme in Part C of the Agreement is to provide workers with one paid day off every 10-day cycle without loss of pay;

•  this purpose is most clearly expressed through clause 54(a), which provides that working hours over a 10-day cycle shall be 36 hours per week, with eight hours worked for each of nine days, and 0.8 of an hour on each of those days accruing towards the RDO on the tenth day;

•  this means that on a working day, an employee will actually perform 8 hours’ work but will only be paid as if they worked 7.2 hours of work;

•  the key word in clause 54(a) is “accruing”: a worker who works the additional 0.8 of an hour is intended not to receive any form of remuneration for that time, with the remuneration being banked towards the accrual of 7.2 hours that will be paid for the RDO; and

•  accordingly a worker such as Mr Sciberras should not receive any site allowance in respect of the additional 0.8 of an hour worked each day to accrue an RDO, but should receive it only when they take the RDO.

[21] We note at this point that these contentions amount to the proposition that the site allowance is payable under clause 54(c) but not clause 52(c) – the opposite of the position advanced before the Deputy President. This was implicitly acknowledged in a footnote in Kone’s written submissions which said:

“The force of this submission was potentially not recognised below because, contrary to the terms of clause 54(a), KONE in practice paid the Site Allowance referable to the additional 0.8 of an hour that was worked during a working day in order to accrue an RDO at the time these additional hours were actually worked. The payment of the Site Allowance for these additional hours should have been paid when the RDO was taken. KONE's practice created an appearance that unless an employee also got paid the Site Allowance referable to those ‘banked (or accrued) hours’ at the time of the RDO, an employee's remuneration for the day of their RDO would be less than what they would receive on a working day. Thus, a perception of unfairness could incorrectly have been created.”

[22] Kone also noted that in the decision, the Deputy President had found that Mr Sciberras undertook work at different sites on different days and occasionally multiple sites in a single day. Consequently, it submitted, there could not be an “applicable” site allowance for a RDO, since it would be impractical to identify the site the employee would hypothetically have worked on if they had not taken a RDO. Rather, the applicable site allowance was that incurred when the employee worked the additional hours to bank the RDO.

[23] The CEPU submitted on behalf of Mr Sciberras that:

•  no error of principle in the decision had been identified by Kone, nor had it identified any particular error beyond a disagreement with the outcome;

•  the submission advanced by Kone required the Commission to give the words of clause 52(c) a meaning other than their ordinary meaning;

•  Kone’s submission was also directly inconsistent with the way Kone ran its case in the proceeding below and also inconsistent with its practice vis a vis Mr Sciberras;

•  Kone should not be permitted to alter its case in this way to correct what it perceives to be a deficiency in the way it ran its case the first time; rather, Kone is bound by the conduct of its case before the Deputy President;

•  that an employee is not physically on site when taking a RDO does not mean that there is no “applicable” site allowance; as the Deputy President correctly found, the site allowance that is applicable is that for the site at which the employee is working when the RDO is taken, meaning the broader period during which the RDO is taken;

•  the issue of the applicable site allowance to a person such as Mr Sciberras who changes sites could readily be resolved by an averaging approach over the fortnight, or by applying the site allowance payable on the day immediately prior to taking the RDO;

•  Kone’s approach to the payment of the travel and fares allowance, which is payable and which it pays on RDOs, is inconsistent with its approach concerning site allowances;

•  clause 54(a) implies that ordinary wages payable for 0.8 of an hour that accrues to the RDO entitlement are banked towards an accrued entitlement to be paid ordinary wages on the RDO, but there is no implication to be drawn from the terms of clause 54(a) about how allowances are to be paid;

•  the implication which Kone seeks to draw from the word “accruing” is inconsistent with the express requirement in clause 52(c) that allowances, including any applicable site allowances, are to be applied “as and when incurred”;

•  Kone’s proposed construction would also require the words “for hours worked” in clause 52(c) to be given a meaning other than their plain and ordinary meaning;

•  Kone’s proposed construction would also cause impracticality and uncertainty in its application as to which site allowance is payable when RDOs are worked and taken later, or a banked, or takes annual leave during a fortnightly period, and also leads to the impractical consequence that other flat-rate allowances would have to be banked;

•  the expression “double-dipping” used by Kone had pejorative connotations that should be rejected and were not relevant to the interpretational issue; and

•  permission to appeal should be refused and, in any event, the appeal should be dismissed.

Consideration

Permission to appeal

[24] As earlier stated, Kone seeks to advance a case in its appeal which is different to and inconsistent with its case before the Deputy President. The CEPU submits that permission to appeal should not be granted to permit Kone to do this. The normal principle, which is principally derived from the High Court decision in Coulton v Holcombe, 2 is that a party should not be permitted to argue a case on appeal which it did not raise at first instance and that permission to appeal would not be granted to permit this to occur. Nonetheless this principle is not unlimited in its operation, as explained in the Full Bench decision in Nilsen (SA) Pty Ltd v CEPU:3

“[14] However where the new argument raised by an appellant raises a pure question of law the determination of which could not possibly have been affected by any evidence the other party may have wished to adduce at first instance had the point then been raised, an appellate court or tribunal may allow the argument to be advanced and determined. In O'Brien v Komesaroff 4 the High Court said:

‘In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided …’.

[15] The above passage was quoted with approval in Coulton v Holcombe, with the Court making it clear that the operation of the principle was not confined to an ultimate court of appeal.”

[25] Thus the principle would not, we consider, necessarily be applicable to an appeal which is concerned only with the construction of an enterprise agreement. We also consider that the principle must give way to the proper application of s 739 of the FW Act. Section 739(4) empowers the Commission to arbitrate a dispute brought before the Commission pursuant to the section where, in accordance with a dispute resolution term in (relevantly) an enterprise agreement, the parties have agreed that the Commission may do so. However, s 739(4) operates subject to s 739(5), which provides:

(5)  Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

[26] The relevant effect of s 739(5) is that the Commission is prohibited from making a decision which is inconsistent with the terms of an enterprise agreement (being a species of “fair work instrument”), properly construed. This means that where an appellant raises a seriously arguable contention that a decision made pursuant to s 739(4) involves a misconstruction of the enterprise agreement to which the decision relates, it may be necessary to grant permission to appeal to ensure compliance with s 739(5).

[27] In this case, for the reasons which follow, we consider that the answer given to the question posed for determination in the decision under appeal is inconsistent with the terms of the Agreement, properly construed. Accordingly, we consider that permission to appeal should be granted, notwithstanding that Kone seeks to advance a different case in its appeal.

Merits of the appeal – construction of clauses 52(c) and 54(c)

[28] The outcome that pertains as a result of the decision appears to us to be counter-intuitive. In relation to employees covered by Part C of the Agreement, clause 54(a) provides for a 36-hour week which means that, across a fortnightly cycle, an employee will be paid 72 hours’ ordinary pay. However, under the approach preferred by the Deputy President, an employee would receive 79.2 hours’ worth of site allowances (made up of 8 hours’ allowances on each of the nine working days in the cycle and 7.2 hours on the RDO). This incongruity does not have any readily identifiable industrial rationale.

[29] The Deputy President said in the decision that the “evident purpose” of clause 54(c) is “to ensure that an employee receives substantially the same pay on an RDO as that employee would have received had ordinary hours been worked on site” 5 (underlining added). The use of the work “substantially” in this sentence is significant. The approach preferred in the decision does not result in employees receiving the same pay on RDOs as they would on a working day: rather they receive a lesser amount, since on a working day they would be entitled to payment of 8 hours’ worth of site allowances, but on a RDO they would only receive 7.2 hours. If the evident purpose of clause 52(c) is to ensure that employees receive the same ordinary pay for working days and RDOs, then the conclusion reached in the decision subverts rather than supports that purpose.

[30] We agree with the Deputy President that, on its proper interpretation, clause 54(c) must be read as requiring the payment of a site allowance when a RDO is taken. We will return to what the “applicable” site allowance is shortly, but the language of the provision unambiguously requires that it be paid, and Kone accepted this in the appeal. However, the position agreed by the parties at first instance, and accepted by the Deputy President, that the site allowance is payable for all hours worked on working days pursuant to clause 52(c) requires revisitation in light of the matters we have adverted to.

[31] Clauses 52(c) and 54(c), and their interrelationship with each other, must be understood in the context of the working system established by clause 54(a). As earlier stated, clause 54(a) provides for a 36-hour week, and sets out the method by which such hours are to be worked – namely 9 working days of 8 hours each in a fortnight, with 0.8 of an hour on each working day “accruing towards the tenth day”, which is taken as a “paid day off” – that is, a RDO. The expressions used in clause 54(a) implicitly embed a well-established industrial concept concerning payment in a RDO system. This is that, despite working 8 hours on a working day, the employee is only assigned 7.2 hours’ wages for that day, with wages for the remaining 0.8 of an hour “banked” to pay the wages for the RDO. Thus the payment that the employee receives for the RDO is not a separate and gratuitous payment, but represents deferred payment of the 7.2 hours (9 x 0.8) worked on the 9 working days. Clause 54(j) confirms that payment for a RDO is made on the basis of “time accrued”, and thus gives expression to this concept.

[32] Because clause 34 of the Agreement provides for a fortnightly pay cycle, notions of what pay is assigned to what day have little significance where the RDO is taken in each fortnight. However where the RDO calendar for Part C employees places the RDO other than within the regular pay cycle, or where RDOs are banked and taken at a later time, or are worked and then taken at a later time, the payment concept referred to has greater significance. It ensures that the employee receives the same payment for ordinary-time wages in each fortnightly cycle, regardless of how many RDOs are taken in that fortnight, in accordance with the concept we have discussed above.

[33] The CEPU on behalf of Mr Sciberras submits that the hours and payment system established by clause 54(a) is irrelevant to the proper construction of clauses 52(c) and 54(c), and that these provisions establish an entirely separate regime in respect of site allowances. We disagree. There are two textual contra-indicators to the CEPU’s position. The first is that clause 54(j) provides that payment for RDOs will be made on the basis of time accrued. The provision does not exclude payment of site allowances on RDOs from this stipulation. The second is that the first sentence of clause 52(c) provides that the purpose of the site allowances provided for by clause 52(c) is “to compensate for all special factors and/or disabilities on construction sites including any height allowance”. The payment of the site allowances on a RDO as a separate gratuity on top of the payment of the site allowance for all hours worked would be inconsistent with this purpose since, obviously, a person does not need to be compensated for special factors or disabilities if they are not at work on a construction site. However, this difficulty is overcome if the payment of the site allowance on the RDO represents, in the same way as for wages, a deferred payment of site allowances earned and accrued for 0.8 of an hour worked on a construction site on each working day.

[34] The reference in the first sentence of clause 52(c) to the site allowance being paid at the appropriate rate “for hours worked” does not operate to distinguish the position of site allowances from that of ordinary time wages. It cannot be said that an employee working under the system established by clause 52(a) is not paid wages for all hours worked; it is simply that the payment for 0.8 of an hour for each day is deferred in order to accrue a paid day off work every fortnight. There is no reason to understand site allowances any differently: a site allowance is payable for each hour worked on a construction site, but payment on 0.8 of an hour of the allowances is deferred so that, pursuant to clause 54(c), site allowances may be paid on RDOs.

[35] We do not accept the CEPU’s submission that the notion that site allowances are accruable towards a RDO is inconsistent with the second sentence of clause 52(c). The sentence refers to site allowances being “applied”, rather than paid, “as and when incurred”. That is, the allowance to be applied is the amount provided for the location and value of the site relevant to the time when the work is actually performed. It is best understood as in fact accommodating deferred payment of site allowances when RDOs are taken, because it requires that when site allowances are paid, the amount to be applied is that applicable to the site being worked at the time when the accrued hours were worked, not the site allowance which might be applicable at the time when the RDO is taken.

[36] It tells against the CEPU’s preferred approach that, when it comes to the question of how the site allowance payable on the RDO is to be calculated, it suggested two methods: first, an averaging approach and, second, using the site allowance applicable on the day immediately before the RDO is taken. The Agreement provides no textual support for either of these methods. Clause 54(c) refers to a requirement to pay “any applicable Site Allowance as prescribed by this Agreement” (underlining added). If the requirement to pay a site allowance on a RDO is separate and in addition to the obligation to pay site allowances under clause 52(c), then the underlined words would have no work to do, and clause 54(c) would be ineffectual, because clause 52 does not prescribe the payment of any site allowance when an employee is not working on a construction site. However, if the accrual system in clause 54(a) is understood as encompassing site allowances, then the applicable site allowance for the RDO will be that prescribed by clause 52 of the Agreement for the 0.8 of an hour’s work which accrues each day for the RDO. This creates harmony with the second sentence of clause 52(c). It may be accepted that if, during a fortnightly cycle, an employee changes sites and thereby attracts different quanta of site allowance, this might create some degree of complexity in the calculation of the amount to be paid on the RDO. However, this is the only method of payment for which the Agreement provides textual support. As earlier noted, clause 34(b) requires fortnightly pay slips to include, among other things, information concerning “Site allowance (in detail)”, and this indicates that it was contemplated that it would be necessary to explain how payments for site allowances have been calculated having regard to changes in working sites.

[37] Finally, it is necessary to deal with the CEPU’s submission that the requirement in clause 54(c) for the payment of the daily Fares and Travel Allowance on RDOs is inconsistent with the notion that site allowances accrue for a RDO in the same way as wages. The critical difference is that the Fares and Travel Allowance is a daily allowance and cannot accrue in the same way as an hourly rate. However, the requirement for payment of the Fares and Travel Allowance on RDOs is consistent with the underlying logic of the working system established by clause 54(a). The position may be understood this way: if there was no RDO system and the 36 hour week was applied simply by requiring employees to work five 7.2 hour days each week then, across a fortnightly pay cycle, a Part C employee (except those on Metal Engineering Construction Projects) would receive 72 hours’ wages, 72 hours’ site allowance (at the applicable rate), and 10 daily Fares and Travel Allowances. In accordance with the approach we prefer, the application of the RDO system would result in the employee receiving exactly the same level of payment. This is consistent with the underlying purpose of clause 54(a) that the employee receive a “paid day off” every fortnight – that is, a day for which the rate of pay is the same as for the days worked.

[38] In summary, we consider that the correct interpretation of the relevant provisions of the Agreement is that, as with ordinary-time wages, 0.8 hour of an hour’s payment of the applicable site allowance is accrued each working day, and the amount of site allowance so accrued across 9 working days is then paid when an employee takes a RDO.

Conclusion

[39] For the reasons stated, we consider that the common position of the parties at first instance concerning the proper interpretation of clause 52(c) was erroneous. The Deputy President’s acceptance of that position, together with the interpretation of clause 54(c) he adopted (which we consider was correct), led him to answer “c) both” to the question posed for determination. We consider that the correct answer was “b) at the time of taking the RDO (pursuant to clause 54(c))”.

[40] Accordingly we grant permission to appeal, uphold the appeal, and substitute the answer “b) at the time of taking the RDO (pursuant to clause 54(c))” for the answer given in the decision.

VICE PRESIDENT

Appearances:

Mr J Bourke QC with Mr A Denton of counsel for the appellant.
Mr J Liley for the respondent.

Hearing details:

2020.
Sydney (video-link):
21 July.

Printed by authority of the Commonwealth Government Printer

<PR722834>

 1   [2020] FWC 1284

 2   [1986] HCA 33, 162 CLR 1 at p.7

 3   [2016] FWCFB 3119

 4   [1982] HCA 33, 150 CLR 310 at 319

 5   [2020] FWC 1284 at [27]