Australian Workers' Union, New South Wales v New South Wales Technical and Further Education

NOTIFIER Mr D Cameron and Mr R Tripodi Australian Workers' Union, New South Wales Branch RESPONDENT LEGAL REPRESENTATIVES: Mr P Edwards and Mr P Martin Pasminco Australia Limited (Administrator Appointed) LAWYERS Mr T Davies, Blake Dawson Waldron

JUDGMENT: 1 INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP

Notification under section 130 by The Australian Workers' Union, New South Wales Branch of a dispute with Elura Mines re non payment of union delegates and other matters DECISION AND RECOMMENDATION NSWIRComm 50

1 This dispute was originally listed for compulsory conference proceedings before McLeay, C on 23 May 2001 and subsequently re-allocated to me by his Honour the President, on 17 August 2001.

2 The dispute is between the Australian Workers Union, New South Wales Branch ("the Union") and Pasminco Australia Limited ("the Company") in respect to its underground mining activities at the Elura Mine, Cobar. The dispute was filed pursuant to s130 of the Industrial Relations Act 1996 ("the Act") and originally involved a number of issues. All the issues, save one, were either resolved during, or subsequent to, the compulsory conferences convened by the Commission on 5 September 2001.

3 This decision relates wholly to the outstanding issue of the method of calculating the underground operators' average rostered shift earnings for the purposes of annual leave and other leave.

4 The parties, (the Company now under administration) agreed to a determination of the outstanding issue by the Commission. Directions were issued for the filing and service of submissions; the last of the submissions being filed by the Company on 26 February 2002.

5 The Company employs some 173 employees at its Elura Mine, including 65 underground operators. The operators are covered by a consent award, known as the Elura Mine Enterprise (Consent) Award, 2001 ("the Award"). The reviewed Award (unpublished) took effect from 24 September 2001. It rescinded and replaced consent awards made in 1999 and 1996. Prior to this time, the industrial regulation at the site was by enterprise agreement.

6 The relevant Award provision is found at cl 16 Annual Leave. For the purposes of this decision, subclauses (i) & (v) are pertinent: i) All employees (other than casual employees) shall be entitled to the following periods of annual leave each year of service: In the case of continuous shift workers, 200 hours per year. In the case of other employees, 160 hours per year. ii) ……… iii) ……… iv) ……… v) For periods of annual leave employees shall be paid as follows: (a) For employees paid in accordance with Clauses 10 (ii) and 11 at the employees appropriate hourly rate. (b) For employees paid in accordance with Clause 10 (i) at the employee's average rostered shift earnings.

(cl 10 is referable to the underground operators rates of pay)

7 Under the 1994 enterprise agreement employees worked a 40hour week on a 3 panel roster. Underground operators worked a 5 day, night or afternoon shift. The annual leave rate of pay was determined by using a calculation based on average weekly earnings earned by the employee (excluding overtime) for the previous 12 months (Clause 16 (v) of the 1994 enterprise agreement).

8 The 1996 consent award introduced a new roster, which involved an average 42 hours per week, 12 hour shift system. Employees received an increase in the hourly rate of pay for working additional hours (see Matter 579/96, Murphy, C). The shift was a rotating 2 days and 2 nights on and 4 days off in an 8 week cycle. The result being 14 day shifts, 14 night shifts equalling 28 shifts over 56 days. During the cycle, 4 shifts were on Saturday and 4 on Sunday. Penalty rates were paid on weekend and night shifts. However, the total pay was the same in each 8 week cycle.

9 The Company's current payroll system was introduced in 1982. Since 1988 the system has calculated the employee's annual leave payments by a divisor of 40. When the 42 hour week was introduced in 1996 there was no change made to the divisor. The Company argues that the correct calculation, according to the average rostered shift earnings, must be by a divisor of 42.

10 The Company concedes that it was at fault in not correcting the system in 1996, or at any time since, and was unaware of the mistaken calculation.

11 The alleged incorrect calculation may be expressed as follows: (A) Average weekly earnings calculated by taking the 12 months previous earnings and dividing by 2080 hours (52 weeks multiplied by 40 hours). The result is an hourly rate, which is used to determine the rate to be applied to the leave taken.

12 The Company maintains the correct calculation should be: (B) Average weekly earnings calculated by taking the 12 months previous earnings and dividing by 2184 hours (52 weeks multiplied by 42 hours).

13 This results in a mathematical outcome, which will always have (A) being a higher hourly rate than (B), all other things being equal. The Company demonstrated this outcome by using hypothetical examples.

14 The Company submitted that the term "average rostered shift earnings" should be used to describe the amount earned in a 12 hour shift. Due to variations in weekly earnings, the figure is determined by calculating the total earnings over the 8 week roster cycle, (immediately preceeding the leave to be taken), divided by the number of rostered shifts, leaving an amount per shift. Divide this figure by 12, (the hours in a shift) and one is left with an hourly rate. 15 The Company put that it was not accurate to calculate average rostered shift earnings by reference to a 52 week period. This methodology will result in an underpayment if an employee changes classification in the 52 week period. Moreover, 52 weeks cannot be divided by a complete cycle of 8 weeks. Time off for injury or for other reasons will also produce variations.

The Union's Case 16 The Union's submissions were dealt with under three headings.

17 Firstly, the Union submitted that the Company had asked the Commission to make a direction or recommendation supporting it's interpretation of hypothetical underground operators shift work earnings. However in these circumstances, the dispute can only be resolved by examining the systems of work under the relevant industrial instruments and applying the Annual Holidays Act 1944, to these systems.

18 Secondly, the Union submitted that, when construing provisions in industrial instruments dealing with annual leave, regard must be had to s3 (1)(b) of the Annual Holidays Act 1944. 3(1). Except as otherwise provided in this Act, every worker shall at the end of each year of the worker's employment by an employer become entitled to an annual holiday on ordinary pay. Such annual holiday shall: a) Where any such year of employment ends upon or before 30 November 1974, be of three weeks, b) Where any such year of employment ends after 30 November 1974, be of four weeks. "Week " is defined as the worker's ordinary working week. "Ordinary Pay," is defined as remuneration for the worker's normal weekly number of hours of work calculated at the ordinary time rate of pay.

19 It followed, the Union submitted, that prior to 1996, leave was determined by multiplying four weeks by 40 hours to get 160 hours. This figure should now equate to 168 hours. i.e. 4 weeks multiplied by 42 hours. The Union claimed that this is the ordinary time rate of pay.

20 The Union referred to subsection 5(1) of the Annual Holidays Act, which provides that where more favourable annual leave entitlements apply under the terms of an award, agreement or contract of employment, then such entitlements shall apply. Therefore, as the employees are entitled to 168 hours annual leave, according to the award, this entitlement should prevail over the terms of the Annual Holidays Act.

21 Finally, the Union asked the Commission to direct or recommend that the Company: 1) Alter its computer to calculate annual leave entitlements of its underground operators in accordance with the observations of the AWU above. 2) Every underground operator employee should be given calculations by the company of their annual leave entitlements from 30 September 1996. 3) Further, any underpayments in relation to annual leave should be paid to the relevant employees. 4) Any relevant underpayments in respect to sick leave, workers' compensation and public holiday payments should be determined and paid to the relevant employees. 22 The Company, in a reply submission, put that this case did not require determining questions of fact, but rather the interpretation of the relevant industrial instruments.

23 The Company criticised the Union's reliance on the Annual Holidays Act for three reasons. 24 Firstly, the Act was of no assistance in determining the correct method of calculating other forms of leave such as public holidays, sick leave and worker's compensation.

25 Secondly, the Union was unable to demonstrate that the method of calculating annual leave proposed by the Company was incorrect. Its focus related to a different issue; namely the quantum of annual leave.

26 Thirdly, and in any event, the Union was wrong when it assumed that underground operators received 160 hours annual leave per year. In fact, the operators receive 240 hours annual leave per year - well in excess of annual leave entitlements under the Annual Holidays Act. On the Union's own argument, the annual leave entitlement under the Award is more favourable than the Act. Consequently, the Award provision applies by virtue of s5(1) of the Act.

27 The first observation I would make concerns the Union's complaint that there was a lack of direct evidence of the effect of the calculations on individual employees. While I apprehend such evidence would be readily available, it is obviously unnecessary. This is a dispute where the factual matrix is not disputed and where the Commission is not required to make any findings of factual contention. Rather, the Commission is asked to consider the interpretation of the industrial instruments governing the employment relationship according to law. It is to this question that I now turn.

28 The Commission's power to interpret Awards (and other industrial instruments) is to be found at s175 of the Act: 175. The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument).

29 When interpreting Awards, the Commission is guided by well held and clearly defined principles.

30 These principles were helpfully discussed by Schmidt, J in The Australian Workers' Union, New South Wales v New South Wales Technical and Further Education [2001] NSWIRComm 25 and I cite her Honour's observations: 15 The approach to be adopted to the construction of awards was discussed by the majority of the Full Court in Bryce v Apperley (1998) 82 IR 448, particularly at pp452 to 454. That approach requires that if the words used are capable, in their ordinary sense, of an unambiguous meaning, then it is not permissible to look further, unless it can be demonstrated that the effect was unintended. The true meaning of the award has to be ascertained from the actual words used, according to their plain, ordinary English meaning. That must be so even if the view is reached that the words used did not give effect to the intention of the award maker. On the other hand, the circumstances in which the award was made and the purposes for which it was intended are not irrelevant, but cannot justify a meaning, which the words are not fairly capable of bearing. 16……… 17……… 18……… 19 The interpretation of awards is, of course, not to be approached in exactly the same way as the interpretation of statutes. In Apperley reference was made to the approach discussed by Street J, as he then was, in GEO A Bond & Co Ltd (In Liq) v McKenzie [1929] AR (NSW) 498 at 5034: Now speaking generally, awards are to be interpreted as any other enactment is interpreted. They lay down the law affecting employers and employees in their relations as such, and they have to be obeyed to same (sic) extent as any other statutory enactment. But at the same time, it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result, as this award in fact did, from an agreement between parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. 20 That approach, however, envisaged that the parties' general intention be gleaned from the award as a whole. It cannot provide a basis for departure from the meaning of words, which have not been used in any technical sense or in the context of the customs and working conditions of a particular industry. Again, there was no evidence from which such considerations could be said to arise in this case. 21 Thus it is that the meaning of the clause must be ascertained from the words used themselves in the context of the Award as a whole. See also Kellogg (Aust) Pty Ltd v National Union of Workers, NSW Branch 89 IR 391 and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, NSW v BHP Steel Long Products and Australian Workers' Union, NSW v BHP Steel Long Products [2000] NSWIRComm 164

31 Just as in the matter before her Honour, here there was no evidence as to what the makers of the Award intended by the expression "average rostered shift earnings."

32 However, the result has been that employees have received a higher hourly rate of pay on leave, than when on duty. It would be inconceivable, in my opinion, if the parties, or a party, to the consent award intended such an outcome or that it would have not been complained about, had it been known at the time. In any event, such a result viewed purely on its industrial merit, cannot be supported. 33 The Union argued that, pursuant to the Annual Holidays Act, employees should receive 168 hours annual leave per year and not 160 hours as provided for in the Award. It relies on s5(1) of the Act, which relevantly provides for annual leave to be paid according to either an industrial instrument, or the Act - whichever has more favourable entitlements.

34 The concept underpinning s5(1) is undoubtedly sound, however, with respect, the Union's submission is misdirected. It seeks to answer the wrong question. The question to be determined is not the quantum of annual leave available, but rather the method of calculating annual leave and other leave arising from the change in shift arrangements in 1996.

35 Moreover, the Union's argument is predicated on an incorrect assumption that underground employees receive 160 hours leave a year. They do not (See cl 16 of the Award).

36 Underground operators receive 240 hours annual leave per annum - far in excess of the entitlements under the Annual Holidays Act. In other words the Union's contention is based on a false premise.

37 It is to be further observed that the Annual Holidays Act provides for annual leave in weeks, not hours. Consequently, leave should be determined by reference to the number and length of shifts in a week.

38 This dispute can be determined with two basic principles in mind. Firstly, that the award provisions should be given their plain ordinary English meaning. Secondly, should an employee receive a higher hourly rate of pay on annual leave than would be received when actually working? As I said earlier, I find it inconceivable that the parties to the 1996 Award intended such an outcome.

39 In determining this dispute, I have also had regard to the Commission's general obligations to determine matters "according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms" (s163 (1)(c)).

40 It also seems to me that a calculation based on hours worked must be derived from the actual hours worked (42 hours) and not some other figure which has no contemporary application.

41 It follows that the only fair and sensible approach is that proposed by the Company. I recommend accordingly.

42 I have also examined the correct and fairest approach to be applied in determining the concept of average rostered shift earnings. In my opinion, a calculation based on 52 weeks will invariably produce a distorted figure - albeit only marginally. Moreover, as the company contended, it may result in an underpayment to employees who change classifications in the 12 month period. For this reason alone, it should be rejected.

43 Therefore, I find favour with the proposal, which ensures the most equitable outcome. I recommend a calculation based on the 8 week roster cycle. CONCLUSION

44 In my view, the Union put no reasonable or objective basis as to why the Company's proposal should be rejected. Except, of course, the underlying but unstated argument that its members would not be paid a higher rate for annual leave. I accept that employees will feel understandably unhappy about losing a benefit they have enjoyed, albeit incorrectly, for many years. To the extent that this reason alone has any intrinsic or industrial validity, it must be rejected.

45 On the other hand, most employees have had the benefit of an incorrect calculation of their leave for some years through Company error and inadvertence. Having discovered and corrected the error, I do not believe that employees should be required to pay back monies which were overpaid. In my view, the Company must wear its mistake. It does not follow however, that employees who were underpaid and, about whom I have no evidence, should be paid for any underpayments. In any event, I presume this later group of employees are small in number and their underpayments in one year would be balanced by an overpayment in another.

47 Pursuant to s136(1) and s175 of the Industrial Relations Act 1996, the Commission recommends that: 1. The correct divisor for the purposes of annual and other leave for underground shift workers at Elura mine is 42 hours. 2. Average rostered shift earnings shall be calculated by reference to the 8 week roster cycle immediately preceding the leave to be taken. 3. No employee shall be required to pay back monies that have been overpaid since the changes in roster in 1996. 4. No employee shall be entitled to any shortfall in monies since the change of rosters in 1996. These proceedings are concluded.

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