The authorities - ordinary hours and overtime
106 At least four propositions should be noted.
107 First, the phrase "ordinary hours" has been construed as a reference to that which is "regular, normal, customary, usual": Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362 at 365. Gibbs J there said as follows of the phrase "ordinary hours" as it appeared in the Workers' Compensation Act 1912-1973 (WA):
The word "ordinary" means "regular, normal, customary, usual". A man's "ordinary hours" of work are the hours during which it is usual for him to work. There is nothing in the expression "ordinary hours" that connotes payment at any particular rate, and to understand the words as meaning "hours during which work is done for which overtime is not paid" would be to place upon them a meaning which they simply do not bear. The expression "the ordinary hours he would have worked" in my opinion means the same as "the hours he would ordinarily have worked" and it is of course no reason to depart from the proper meaning of the words because the same meaning could have been achieved by a different form of words; in the collocations to which I have just referred the use of the adjective instead of an adverb does not change the sense of the expression.
108 The phrase "ordinary hours of work", it has thus been similarly concluded, is to be given a meaning which "best promotes the underlying object or purpose of the Act": Quest Personnel [2002] FCA 85 at [20], (2002) 116 FCR 338 at 342 per Gray J. There in issue was the correct application of s 6(1) of the Superannuation Guarantee (Administration) Act and the definition of "ordinary time earnings" to circumstances where employees customarily worked a greater number of hours than specified in their contracts of employment. In dismissing an appeal from the Administrative Appeals Tribunal, it was concluded that, on the facts of that case, the actual hours worked were the "ordinary hours of work" for the purposes of s 6. Gray J there said of that phrase (at 342 to 343):
[20] The phrase "ordinary hours of work" in s 6 of the Act must be construed in the context of the Act and in a way which best promotes the underlying object or purpose of the Act. It is plain from the definition of "ordinary time earnings" in s 6 that, at least in some cases, ordinary hours of work are to be distinguished from actual hours worked. The Act does not require that the relevant percentage of an employee's total earnings for all hours worked must be paid to a superannuation fund in order to avoid the levy. On the other hand, there will be some cases in which the ordinary hours worked by an employee will be the actual hours worked, because no ground will exist for distinction between the two concepts. An example would be an employee whose terms and conditions of employment are covered by an award and who works the maximum standard hours but no overtime.
[21] The Act is not a piece of ordinary taxation legislation. Its primary purpose is not the collection of revenue. It is designed to provide a system under which employers are encouraged to make payments to superannuation funds for the benefit of their employees. An employer who fails to make such contributions will be forced to pay an amount equivalent to the shortfall in contributions to the respondent by way of superannuation guarantee charge. The underlying object of the legislation is to benefit employees. The construction that favours this underlying object should be preferred to any that does not. A strict construction, such as might be adopted for ordinary taxation legislation, is inappropriate.
109 Second, hours which are worked beyond standard or fixed hours may become such that they become the "ordinary hours" of an employee: Quest Personnel [2002] FCA 85, (2002) 116 FCR 338. As already outlined, Gray J there relevantly concluded as follows (at 344):
[27] As is demonstrated by [Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362], there may be cases in which the working of hours beyond fixed standard hours becomes so regular, normal, customary or usual that the additional hours are to be regarded as ordinary hours for a particular employee. This may be so notwithstanding that the additional hours are remunerated at overtime rates or penalty rates. …
By reference to the facts of that case, his Honour continued (at 345):
[30] … the Tribunal was correct to conclude that the ordinary hours of work of an employee of the applicant, doing work for the Victoria Police, were the normal, regular, customary or usual hours worked by that employee. If the normal, regular, customary or usual hours of a particular employee were more than the minimum specified in that employee's offer of employment, then the actual hours worked were the "ordinary hours of work", for the purposes of the definition of "ordinary time earnings" in s 6 of the Act.
[31] This conclusion also operates to promote the underlying purpose or object of the Act. It would tend to defeat that underlying purpose or object if an employer, by engaging employees on the basis that they would work for a low specified minimum, could avoid the obligation to pay superannuation contributions (or the charge in lieu of those contributions) in respect of much greater hours habitually worked by the employees. …
110 Third, there is a long-recognised distinction between ordinary hours of work and overtime: Thompson v Roche Bros Pty Ltd [2004] WASCA 110. EM Heenan J (with whom Steytler and Le Miere JJ agreed) there summarised the distinction as follows:
[31] There is a long series of cases in Australia where it is recognised that the term "overtime" includes hours worked beyond the standard working hours for the trade or industry even though an obligation to work those extended hours exists under the contract of employment, or the relevant applicable industrial award or agreement. In these instances the obligatory working hours beyond the standard hours are usually remunerated at a higher hourly or periodic rate but the fact that they are obligatory, rather than voluntary, additional hours worked beyond the standard or ordinary hours does not prevent them being referred to as "overtime". One example of this is to be found in The Chief Inspector of Factories (Vic) v Watsford (1936) 55 CLR 276 a case concerning the power of a State wages board established under Victorian legislation to prohibit all work on Saturdays except at overtime rates. In a decision which held that the State legislation did not empower the wages board to prohibit all work on Saturdays except at overtime rates, Dixon J, who with Starke and McTiernan JJ constituted the majority, said at 284:
"No doubt 'overtime' is now often used in a very wide and general way of extra or increased pay, but one might reasonably expect the enactment to apply the word only to higher rates for hours worked in excess of standard hours of labour or beyond or outside the daily hours of work."
which I take to be a recognition that overtime hours could be hours an employee is obliged to work and also to include those hours for which higher rates of remuneration are paid.
In further commenting upon the nature of "overtime" which an employee is required to undertake, his Honour later observed:
[39] Returning to the present case and, in particular, to cl 11(2) of sch 1 of the Act, the definition of overtime makes use of terms which, as the authorities which have been examined reveal, now have an established meaning. When the definition [in] Sch 1 of the Act provides that "overtime" means any payment for the hours "in excess of the number of ordinary hours which constitute a week's work" I can see no alternative to the conclusion that the ordinary hours which constitute a week's work can only mean, the standard number of hours for which the standard hourly remuneration is normally paid for employment under the industrial award or, in this case, the industrial agreement. In other words, overtime is meant to include time worked by employees, whether on a voluntary or compulsory basis for which premium hourly rates of remuneration are paid either because they are additional to the standard hours conventionally worked or because they are outside conventional hours such as occurs when employees are engaged on shiftwork or at weekends.
111 Fourth, the terms of an industrial instrument may themselves provide an answer as to what is meant by the term "overtime" or the phrase "ordinary hours of work". Thus, for example, when determining the "normal number of hours per week" for the purposes of s 95(1) of the Accident Compensation Act 1985 (Vic), in Catlow v Accident Compensation Commission (1989) 167 CLR 543 at 560 to 561 McHugh J (with whom Deane and Dawson JJ agreed) concluded:
In construing the terms of s. 95(1), it is helpful to bear in mind that the terms of employment of most workers are governed by industrial awards or agreements which provide for an ordinary time rate of pay for a standard or ordinary number of hours per week. Industrial awards and agreements usually state the number of ordinary working hours in each day and week and provide for the payment of overtime and penalty rates of pay for hours worked outside those ordinary hours. Thus, in the present case the industrial agreement under which the appellant was employed provided that the ordinary hours of work should be an average of 36 per week which were to be worked in the manner specified "without payment of overtime".
Against the industrial background of awards and agreements fixing a number of ordinary hours per week, it seems natural to read the expression "calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week" as a reference to the ordinary time rate of pay for the worker's standard or ordinary hours per week as fixed by award, agreement or contract. While it is true that on any view the "pre-injury average weekly earnings" calculated under s. 95 is a notional and not an actual figure, it would indeed be surprising if the legislature intended that those earnings are to be calculated by multiplying the ordinary time rate by overtime as well as ordinary hours worked. If "normal number of hours" included overtime hours, some other formula to include the overtime rate would surely have been used.
Judicial decisions on similar expressions in comparable statutes support the view that the "normal number of hours per week" in s. 95(1) means the ordinary hours fixed by award, agreement or the terms of the employment.
(Citations omitted.)
His Honour continued (at 563):
Accordingly, the ordinary meaning of the phrase "normal number of hours per week" read in its context, the industrial background of the legislation, the judicial exposition of similar phrases, and the history of the legislation all point to the phrase meaning the ordinary or standard hours fixed by the terms of employment.
His Honour went on to cite Kezich and concluded (at 565):
But the question in the present case is what is meant by the phrase "normal number of hours per week" in a context where the pre-injury earnings are to be calculated by multiplying those hours by the ordinary time rate of pay and where the context shows that the legislature assumed that the normal number of hours per week was fixed by industrial awards.
112 Subsequently, in Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1, the High Court was called upon to consider the phrase "ordinary time rate of pay" as used in s 69 of the Workers Compensation Act 1988 (Tas). Mason CJ, Brennan, Dawson, Toohey and McHugh JJ observed (at 5):
The terms of s. 69(1)(a) indicate that the legislature assumed that there is always an ordinary time rate of pay for the worker for the work on which he or she is engaged. No doubt in most cases this is true because when the 1988 Act was enacted the rates of pay of most workers were covered by industrial awards or agreements.
Their Honours then referred to the decision in Catlow and continued (at 5 to 6):
However, it is not always the case that a worker will have an ordinary time rate of pay. There may be no industrial award or agreement regulating his or her employment, and his or her contract of employment may not distinguish between ordinary and other time rates of pay or may provide for remuneration by a formula which has no temporal element - for example, piece work or commission. If the worker has no "ordinary time rate of pay", the compensation payable to him or her pursuant to s. 69(1)(a) must be calculated by reference to his or her average weekly earnings.
(Footnote omitted)
Their Honours concluded (at 7 to 8):
Thus in Kezich v. Leighton Contractors Pty. Ltd., this Court held that the words "the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury" in cl. 2 of the Schedule to the Workers' Compensation Act 1912 (W.A.) referred to the hours during which it was usual for the employee to work. In that case, Gibbs J. considered that it was not legitimate to construe the statute by reference to the meaning which the words bore in industrial awards and agreements. However, in this case, unlike Kezich, the relevant expression "ordinary time rate of pay" has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in s. 69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression "ordinary time" cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work. In s. 69(1)(a)(ii), "ordinary time" means the fixed standard hours as opposed to overtime or usual or customary time. However, just as individual employment contracts usually fail to distinguish between "ordinary time rates" of pay and other rates of pay, so do the majority of them fail to distinguish between the fixed standard hours and other working time. Consequently, s. 69(1)(a)(ii) would seem to have little scope for operation in relation to private employment contracts. By itself, this factor could not be decisive, but it is strong confirmation of the construction which flows from the presence of s. 69(3) in the Act.
(Footnotes omitted.)
Of particular importance, so Counsel for the Respondents contended, was the reference by their Honours to there being an absence of an "industrial award or agreement regulating … employment".
113 Such principles form part of the background against which the terms of each of the relevant agreements are nevertheless to be construed.