Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union

relevant facts and legislation 140 The relevant background facts and applicable legislation are not controversial. The following summary is substantially extracted from his Honour's judgment.

Regime established by the SGA Act and the SGC Act 141 Section 3 of the SGC Act specifically provides that the SGA Act is incorporated, and is to be read as one, with the SGC Act. The constitutional validity of the regime was upheld by the High Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation [2011] HCA 35; (2011) 244 CLR 97. 142 As the primary Judge observed, Part 3 of the SGA Act deals with the liability of employers (other than Commonwealth and tax-exempt Commonwealth authorities) to pay a superannuation guarantee charge, and Part 6 deals with the collection and recovery of the superannuation guarantee charge. 143 The key legislative provisions are as follows: Section 5 of the SGC Act provides: 5 Imposition of charge Charge is imposed on any superannuation guarantee shortfall of an employer for a quarter. The amount of the charge imposed in respect of a superannuation guarantee shortfall is defined by s 6 of the SGC Act in the following terms: 6 Amount of charge The amount of superannuation guarantee charge payable on a superannuation guarantee shortfall of an employer for a quarter is an amount equal to the amount of the shortfall. Section 16 of the SGA Act establishes that the obligation to pay the charge is on the employer. As submitted by the appellants, the superannuation guarantee charge is automatically imposed, with provision made for averaging in ss 23(6)-(8) of the SGA Act. Section 47 of the SGA Act establishes the timing for payment of the charge. The amount of any charge payable by an employer is determined in accordance with ss 17 and 19 of the SGA Act. Section 17 provides: 17 Superannuation guarantee shortfall If an employer has one or more individual superannuation guarantee shortfalls for a quarter, the employer has a superannuation guarantee shortfall for the quarter worked out by adding together: (a) the total of the employer's individual superannuation guarantee shortfalls for the quarter; and (b) the employer's nominal interest component for the quarter; and (c) the employer's administration component for the quarter. Section 19 provides the meaning of and means of calculating the "individual superannuation guarantee shortfall", which is as follows: 19 Individual superannuation guarantee shortfalls (1) An employer's individual superannuation guarantee shortfall for an employee for a quarter is the amount worked out using the formula: where: charge percentage, for an employer for a quarter, means: (a) the number specified in subsection (2) for the quarter (unless paragraph (b) applies); or (b) if the number specified in subsection (2) for the quarter is reduced in respect of the employee by either or both section 22 and 23 - the number as reduced. … Subsection (2) includes a table with the charge percentage applicable during certain time periods. Section 23 of the SGA Act provides for the reduction of the charge percentage as follows: 23 Reduction of charge percentage if contribution made to RSA or to fund other than defined benefit superannuation scheme (1) This section applies only in relation to RSAs and to superannuation funds other than defined benefit superannuation schemes. Reduction of charge percentage where contributions are made by employer (2) If, in a quarter, an employer contributes for the benefit of an employee to a complying superannuation fund or an RSA, then the charge percentage for the employer (as specified in subsection 19(2)) for the employee for the quarter is reduced by the number worked out using the formula: where: contribution is the number of dollars in the amount of the contribution. ordinary time earnings is the number of dollars in the ordinary time earnings of the employee for the quarter in respect of the employer. Example: If the contribution is $60 and the ordinary time earnings are $1,000 then the charge percentage is reduced by 6. … It was common ground in the appeal that, to avoid the imposition of a superannuation guarantee charge, an employer is required to make contributions to complying superannuation fund accounts for employees in amounts equal to a minimum prescribed percentage of an employee's "ordinary time earnings". For the purposes of s 23 of the SGA Act, "ordinary time earnings" is defined in s 6(1) of the SGA Act as follows: 6 Interpretation-general (1) In this Act, unless the contrary intention appears: … ordinary time earnings, in relation to an employee, means: (a) the total of: (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment: (A) a payment in lieu of unused sick leave; (B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and (ii) earnings consisting of over-award payments, shift-loading or commission; or (b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter - the maximum contribution base. 144 It follows that, by making superannuation contributions in accordance with the formula in s 23(2) of the SGA Act, an employer could effectively reduce the charge percentage to zero, such that the individual superannuation guarantee shortfall under s 19 (and therefore the superannuation guarantee shortfall under s 17) was also zero. The calculation under s 23 relies on the employee's "ordinary time earnings" as defined in s 6(1). In such circumstances, no superannuation guarantee charge will be payable by the employer under s 5 of the SGC Act and s 16 of the SGA Act.

Relevant facts 145 The Union commenced proceedings against the appellants, alleging that the appellants failed to pay Jimmy Konstandaras, Jason Le Clerc (Mr Le Clerc), Mark Everett, Matthew Storey (Mr Storey), Jose Fernandes and Andrew Miller (together: the Named Employees) superannuation contributions in contravention of the relevant industrial instruments that were applicable to the Named Employees' employment, and, consequently, s 50 of the FW Act or Item 15 of Sch 16 to the FW Transitional Act as relevant. 146 At all material times, the Named Employees were employed by either the first or the second appellant. Before the primary Judge, it was agreed that the obligations in respect of all of the Named Employees could be determined, for the convenience of the Court and the parties, by reference to two Named Employees, that is Mr Storey and Mr Le Clerc. Mr Storey and Mr Le Clerc were both actually employed by the first appellant, but it is common ground that all findings were equally applicable to the second appellant. 147 The industrial instruments applicable to the Named Employees employed by the first appellant were: the BlueScope Steel (AIS) Pty Ltd - Port Kembla Steelworks Employees Award 2006 (Port Kembla 2006 Award), which operated from 13 January 2006 to 9 August 2013; the BlueScope Steel Port Kembla Steelworks Agreement 2012 (Port Kembla 2012 Agreement), which operated from 9 August 2013 to 25 November 2015; and the BlueScope Steel Port Kembla Steelworks Agreement 2015 (Port Kembla 2015 Agreement), which has operated from 25 November 2015. 148 The industrial instruments applicable to the Named Employees employed by the second appellant were: the BlueScope Steel Limited - Springhill and CRM Employees Award 2006 (Springhill 2006 Award), which operated from 13 January 2006 to 9 August 2013; the BlueScope Steel Springhill Workplace Agreement 2012 (Springhill 2012 Agreement), which operated from 9 August 2013 to 25 November 2015; and the BlueScope Steel Springhill Workplace Agreement 2015 (Springhill 2015 Agreement), which has operated from 25 November 2015. 149 The Port Kembla 2006 Award and the Springhill 2006 Award (collectively: the 2006 Awards) both contained cl 7.1 in substantially the same terms, being: 7.1 Superannuation Legislation - the Subject of Superannuation is dealt with exhaustively by federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth), the Superannuation (Resolution of Complaints) Act 1993 (Cth), and section 124 of the Industrial Relations Act 1996. This legislation, as varied from time to time, governs the superannuation rights and obligations of the parties. Subject to this legislation, superannuation is also dealt with by the trust deed and rules of the BlueScope Steel Superannuation Fund and the Superannuation Trust of Australia, and relevant agreements made from time to time between the Company and the Unions party to this award, including the BHPSteel - Superannuation Review dated 25 October 1995. 150 The Port Kembla 2012 Agreement, Port Kembla 2015 Agreement, Springhill 2012 Agreement and Springhill 2015 Agreement (collectively: Enterprise Agreements) each contained a cl 7 in the same terms, being: 7.1 Superannuation arrangements are governed by Federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth), and the Superannuation (Resolution of Complaints) Act 1993 (Cth). 7.2 The Company will make contributions to an employee's superannuation account at a minimum in compliance with the Superannuation Guarantee (Administration) Act 1992 (Cth), as varied from time to time. Additionally for permanent employees who are members of the BlueScope Steel Superannuation Fund or Australian Super, subject to these statutory minimum contributions and the Basic Member Contributions an employee makes to their superannuation account, the Company will make contributions into an employee's superannuation account in accordance with the below scale: Employee Contribution Company Contribution 0% 9.5% 3% 10% 4% 12% 5% 14%

All company contributions are based on an Employee's Defined Wage, as defined at clause 4 above. 151 Clause 4.5 of each of the Enterprise Agreements contained the definition of "Defined Wage", being: … the basic Agreement rate of pay (as set out in clause 6) any applicable permanent higher duties payments, standard steel industry shift allowances (as set out in clause 15), weekend penalty rates, (which may apply) plus Special Rates, specified in Clause 8 (Special Rates). 152 Various "Departmental Agreements" were made pursuant to the relevant awards or Enterprise Agreements which set out the work arrangements for specific departments or work areas. The relevant departmental agreements for the purposes of this appeal were: the BlueScope Steel (AIS) Pty Ltd - Port Kembla Bulk Operations Enterprise Agreement 2005 (Bulk Operations Enterprise Agreement); the Bulk Berth Operations Departmental Agreement 2013 (Bulk Berth Departmental Agreement); the Slabmaking - 12-hour Shift Agreement 2004 (Slabmaking Agreement); and the Slab-Yard - 12-hour Shift Agreement 2010 (Slab Yard Agreement). (I note that the Bulk Operations Enterprise Agreement was not strictly an "enterprise agreement" within the meaning of the FW Act, notwithstanding its title). 153 The Departmental Agreements provided for hours of work and annualised or aggregate salaries. 154 These methods of determining salary were based on a notional roster, which assumed that employees worked a certain number of working days, public holidays and other days, and was calculated to include a certain amount of guaranteed prepaid overtime (which may or may not be required to work) and a certain number of public holidays (regardless of whether or not those public holidays were actually worked). Depending on the relevant industrial instrument, salaries were either "annualised" or "aggregated" according to that notional roster. As such, employees' salaries were averaged over a 12 month period based on a notional working roster, and not on the days actually worked by the employee. 155 It is not in dispute that the appellants did not pay superannuation contributions in accordance with those that the Union alleged in the originating application and statement of claim were required. The appellants' position is that there was no such requirement.

Mr Storey 156 Mr Storey commenced working for the first appellant on 20 February 1995. Until 10 January 2016, Mr Storey was paid an annualised salary; after 10 January 2016, he was paid an aggregate salary. Mr Storey was covered by the following award, Enterprise Agreements and departmental agreements: Port Kembla 2006 Award (from 2006 to 8 August 2013); Port Kembla 2012 Agreement (from 9 August 2013 to 24 November 2015); Port Kembla 2015 Agreement (from 25 November 2015 to present); Bulk Operations Enterprise Agreement (from 17 February 2006 to 21 August 2013); and Bulk Berth Departmental Agreement (from 21 August 2013 to 16 January 2016). 157 The relevant award and the Enterprise Agreements consistently defined "ordinary hours of work" to be an average of 38 hours per week over the full cycle of the relevant work roster, with maximum hours during any 24 hour period and any 28 day period. Under the Bulk Operations Enterprise Agreement and the Bulk Berth Departmental Agreement, the annualised salary, which was calculated on the basis of a "notional roster", included a "component" for "additional hours worked", which was 5.5 overtime hours per week calculated at an overtime rate. In effect, therefore, Mr Storey was treated as working 43.5 hours per week. The Departmental Agreements set out the obligation placed on employees to work additional hours, as well as the period of notice that must be given to employees in respect of those additional hours. It is common ground that an employee was not required to actually work the additional hours, in order to receive the payments for the additional hours. However, the Departmental Agreements also provided for disciplinary procedures where an employee failed to work the additional hours in accordance with their obligation to do so. 158 The relevant provisions of the Bulk Operations Enterprise Agreement and the Bulk Berth Departmental Agreement in relation to additional hours were set out by the primary Judge. In particular I note as follows: 6 CONDITIONS OF EMPLOYMENT 6.1 Annualised Salaries All employees are remunerated with an annualised salary which provides employees with a secure income whilst ensuring safe, timely and effective operations. The annualised salary is made up of a base rate and a component which absorbs all additional payments such as penalty rates, allowances, shipping shift premiums, public holiday loadings and payouts and payment for additional hours worked outside the normal rostered hours to meet the requirements of the position. Work allocation will take place across all hours required by employee's covered by this Enterprise Agreement as per Clause 6.3 [Additional Hours]. 6.2 Calculation Formula for Annualised Salary Annualised Salary = Base Salary + Public Holidays + Shift Penalties + Additional Hours Base Salary = Ordinary Stevedoring Hourly Rate *38 hrs * 52 weeks Overtime = 5.5 hrs overtime per week x 2.1761 x Ordinary Stevedoring Hourly Rate The additional work hours component is not paid during annual leave and is calculated for 47 weeks rather than 52 weeks. Appendix 1 outlines some of the penalty arrangements currently applying in the Bulk Berth section that have been incorporated in the calculation of the annualised salary. Outlined below are the annualised salaries for each classification. … 6.3 Additional Work Hours Employee's will be required to work additional hours under the annualised salary system established at clause 6.2. Work undertaken on Additional hours will not be the subject of restrictions. All work required by the company on the Bulk Berth either directly or indirectly as part of operations will be required to be undertaken while on additional work hours. … 6.5 Superannuation Defined Wage for Annualised Salary The defined wage for the purposes of calculating employee and company contributions will be as appropriate for the following classifications: … The superannuation rates will be indexed with wages rises. The defined wage will be applied for the nominal term of this agreement. The defined wage for Superannuation purposes is: the defined wage will be calculated for the relevant classification by using the base rate for that classification and applying the appropriate Steel Industry shift allowances and weekend penalties as prescribed by the BlueScope Steel (AIS) Pty Ltd - Port Kembla Steelworks Employees Award 2004. 159 Relevantly cl 4 of the Bulk Berth Departmental Agreement also provided: 4.0 CONDITIONS OF EMPLOYMENT 4.1 Annualised Salaries All Bulk Berth Operations employees are remunerated with an annualised salary. Calculation formula for annualised salary is as follows: Annualised salary = base salary + public holidays + shift penalties + additional hours Base salary = base stevedoring hourly rate * 38 hours * 52 weeks Overtime rate = 5.5 hrs overtime per week * 2.1761 * base stevedoring hourly rate The additional work hours' component is not paid during annual leave and is calculated for 47 weeks rather than 52 weeks (5.5 x 47 = 258.5 hours per year) Table 1 outlines some of the penalty arrangements currently applying in the Bulk Berth section that have been incorporated in the calculation of the annualised salary. Base and Annualised Salaries for each classification as at 23 October 2012 are outlined below. …

Mr Le Clerc 160 Mr Le Clerc commenced working for the first appellant on 9 May 2011. His employment was covered by the following agreements: Port Kembla 2006 Award (from 2006 to 8 August 2013); Port Kembla 2012 Agreement (from 9 August 2013 to 24 November 2015); Port Kembla 2015 Agreement (from 25 November 2015 to present); Slabmaking Agreement (from April 2004 to 13 January 2013); and Slab Yard Agreement (from 13 January 2013 to present). 161 At all times, Mr Le Clerc was paid an aggregate salary in accordance with the Departmental Agreements referable to Slabmaking. Provision for the payment of an "aggregate salary" is made in both the Slabmaking - 12-hour Shift Agreement (cl 10) and the Slab Yard - 12-hour Shift Agreement (cl 10). Clause 10 of the Slabmaking - 12-hour Shift Agreement materially provided: 10. AGGREGATE SALARY All salaries will be paid fortnightly by electronic funds transfer directly into an account nominated by the employee with a bank, building society, credit Union or other financial institution recognised by the Company. The aggregated salary will: i.) Provide a stable income, with a standard pay on a fortnightly basis for the individual; ii.) Reduce inefficiencies by building in payment of shift work allowances; and iii.) Support the team concept. The aggregate salary will be paid as twenty-six equal fortnightly payments per annum (irrespective of the number of days worked in the pay period), and comprises three components: … 162 As his Honour explained: 21 ...These "three components" were thereafter addressed as being: • "Base Salary"; • "Additional Payments", which includes "Public Holidays"; and • "Shift Work Payments and Penalties". Clause 10.1 addressed "Base Salary" as follows: 10.1. Base Salary Payment for the award wage, over award (bonus) payment, tool allowance for tradespersons and electrical licence payments for electrical tradespersons. Weekly base salary is calculated by multiplying the employee's hourly rate (including bonus rate, where applicable) by thirty-eight hours. Base salary for each employee is subsequently calculated by multiplying the weekly base salary by fifty-two weeks. Calculation is therefore: Base salary = Hourly rate x 38 hours x 52 weeks. Clause 10.2 addressed "Additional Payments" as follows: 10.2. Additional Payments Payment for disability allowances for tradespersons, payment for all public holidays (worked and rostered). NOTE: Employees will no longer have the option to have a days annual leave added in lieu of a rostered off shift falling on a public holiday. 10.2.1. Public Holidays Payment is based on the average number of public holiday loading hours for each employee across four crews. With reference to the roster pattern above (Figure 1), each employee will work on average 5.425 of the eleven public holidays per annum and be rostered off on the remaining 5.575 days. Of the 5.425 days worked 4.75 incur public holiday loading while 0.675 days per year receive no loading due to their occurrence on the day of the 1st night shift. Six hours is deducted to avoid double payment of weekend penalties and public holiday loading on Easter Saturday. Public holiday loading is therefore based on an extra twelve hours pay for every public holiday falling on a rostered off shift and an extra eighteen hours for every public holiday worked. i.e. [(5.575 x 12) + (0.675 x 0) + (4.75 x 18)] = 152.4 - 6 Easter Saturday Deduction Rounding … = 146 hour per annum Calculation is therefore: Public holiday payment = Hourly rate x 146 hours. 10.2.2. Annual Leave Annual leave loading is not paid to shift workers as they have their shift allowance and weekend penalties included in the aggregated salary. The award conditions at the time will apply. Clause 10.3 addressed "Shift Work Payments and Penalties" and cl 10.4 provided as follows (without alteration): 10.4. Total (Aggregate Salary) The total aggregate salary is the sum of the above three components: i.e. Aggregate Salary = Base Salary + Public Holiday Payment + Weekend Payment + Shift Allowance Payment.

Fair Work Legislation 163 The respondent alleged that the failure to make the superannuation payments was a contravention of cl 7 of the Enterprise Agreements, which in turn formed the basis for a contravention of s 50 of the FW Act, which provides: 50 Contravening an enterprise agreement A person must not contravene a term of an enterprise agreement. Note 1: This section is a civil remedy provision (see Part 4-1). Note 2: A person does not contravene a term of an enterprise agreement unless the agreement applies to the person: see subsection 51(1). 164 Further, the respondent alleged a breach of Item 15 to Sch 16 of the FW Transitional Act in respect of the Awards, which were made under the relevant New South Wales legislation and as such are subject to the transitional provisions. Item 15 provides: 15 Continuing Schedule 6 instruments (1) A person must not contravene a term of a continuing Schedule 6 instrument that applies to the person. Note 1: This subitem is a civil remedy provision (see item 16, and Part 4-1 of the FW Act). Note 2: An injunction may not be granted in relation to a contravention of a continuing Schedule 6 instrument (see item 17). (2) A transitional employer must not contravene subclause 72J(2) or 72K(1), (2) or (3) of continued Schedule 6. Note: This subitem is a civil remedy provision (see item 16, and Part 4-1 of the FW Act). 165 It is common ground that the relevant awards and Enterprise Agreements are instruments capable of enforcement under the FW Act and related legislation. The awards are transitional instruments, breach of which was a contravention of Item 15 of Sch 16 to the FW Transitional Act. Contravention of terms of the Enterprise Agreements was a breach of s 50 of the FW Act.

The reasons of the primary judge 166 After observing that the claim of the Union concerned the superannuation entitlements of six employees, including Messrs Le Clerc and Storey, his Honour summarised the issue before him as, at its most simple: 6 … whether superannuation contributions are payable by one or other of the Respondents in respect to: • the "additional hours component"; and/or • the "public holidays component" of the salaries payable to the employees. That issue, in turn, depends upon the correct construction and application of the phrases "ordinary time earnings" and "ordinary hours of work" as employed in s 6(1) of the Superannuation Guarantee (Administration) Act 1992 (Cth). 167 His Honour noted the contention of the Union that the additional hours component and the public holidays component formed part of the "ordinary time earnings" and "ordinary hours of work", following from the terms of the variety of awards and agreements covering Messrs Le Clerc and Storey; or the alternative contention that Messrs Le Clerc and Storey had in fact performed work which fell within those two statutory phrases and for which no contributions had been paid. His Honour noted further the contention of the appellants that the Enterprise Agreements contained no term requiring the payment of superannuation contributions and that no question of a contravention of s 50 of the FW Act arose. 168 As his Honour noted at [10], there was a degree of commonality in the terms of the awards and Enterprise Agreements applying to Messrs Le Clerc and Storey. His Honour set out, in detail, provisions of the industrial instruments applicable to each worker, and from [45] outlined the nature of the superannuation regime under the SGC Act and the SGA Act. His Honour noted at [50] that the phrase "ordinary hours of work" was fundamental to the administration of the SGA Act, and that that phrase was incorporated into "ordinary time earnings" in s 6(1) of the Act. His Honour observed that the expression "ordinary" frequently occurs in industrial agreement, and that the meaning of the term in an industrial agreement was explained by Gray J in Quest Personnel Temping Pty Ltd v Commissioner of Taxation [2002] FCA 85; (2002) 116 FCR 338 in the following terms: 27 As is demonstrated by [Kezich v Leighton Contractors Pty Ltd [1974] HCA 50; 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. 169 As his Honour noted, similar conclusions were reached by the High Court in Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55; (2003) 201 ALR 271 in respect of the phrase "ordinary time earnings". 170 His Honour noted the submission of the current appellants that: Clauses such as cll 7.1 and 7.2 are not the source of any legal requirement on the part of the current appellants to make contributions to employees' superannuation accounts; The sole source of such requirement was to be found in the SGC Act and the SGA Act; and Unless these clauses were the source of an obligation to make such contributions, there could be no contravention of s 50 of the FW Act. 171 His Honour concluded at [61]-[64]: The SGC Act and the SGA Act created a statutory regime administered by the Commissioner of Taxation, determining the manner in which minimum superannuation contributions were to be made and calculated. Extensive statutory powers are conferred to ensure that the requirement to make superannuation contributions is satisfied. A contravention of a requirement to make minimum superannuation contributions may not be enforceable by contract. These conclusions said very little about the question in the proceedings, which required: • An identification of a term of an enterprise agreement; • A determination as to whether that term had been contravened - in this respect: • It was not necessary for a Court to conclude that the term was itself the source of any requirement to make a superannuation contribution; • A contravention of such a term is made out by a finding that the term may be but a mere acknowledgement of a requirement to make a contribution otherwise imposed by statute, and that such a contribution had not been made. In addressing those matters, no question arose as to whether or not the term was the source of a legal obligation to make a contribution, or was enforceable by an employee whose superannuation contributions may not have been paid by way of (for example) damages or specific performance. 172 The primary Judge rejected the appellants' argument that there was a preliminary barrier to relief for the respondent, in that there was no binding obligation that could be the subject of a contravention for the purposes of s 50 of the FW Act or Item 15 of Sch 16 to the FW Transitional Act. 173 His Honour held that the appellants were under a binding legal obligation to make the superannuation payments, and found as follows: 70 The obstacle sought to be placed by the Respondents in the path of the Applicant is to be rejected for the simple reason that a contravention of s 50 is made out if a term of an enterprise agreement has not been complied with. 71 Section 50, it is respectfully considered, does not turn upon the identification of the source of the legal requirement to make contributions to an employee's superannuation account. Whether the source of that legal requirement is to be found in the superannuation legislation or the Enterprise Agreement itself, what cl 7 requires is that such contributions are to be made. If such contributions are not made, the Respondents have failed to comply with the requirements of cl 7 and have thereby contravened a term of an enterprise agreement. 72 Section 50 is not to be construed and confined in its operations to only a contravention of those "terms" which themselves are the source of a legal obligation. 73 Even if it be accepted that the source of the legal requirement to pay superannuation contributions is to be sourced exclusively in the superannuation legislation and not the Enterprise Agreement itself, if payments which are required to be made have not been made, payments have not been made "in accordance with clause 7". 74 If this conclusion be correct, a contravention of s 50 may be made out and thereafter it remains simply a task of determining what orders (if any) should be made as to the imposition of any penalty and what orders should be made pursuant to s 545. 174 His Honour went on to consider whether there was an independent source of legal obligation under cl 7 of the Awards and Enterprise Agreements: 75 It is nevertheless separately concluded that cll 7.1 and 7.2 of the 2012 Agreement (and other like provisions) are the source of an independent legal obligation to make superannuation contributions, separate and distinct from the obligations imposed by the legislative regime set forth in the Superannuation Guarantee Charge Act and the Superannuation Guarantee (Administration) Act. 76 But such a conclusion has not, it should be expressly recognised, been reached without some degree of diffidence. 77 That diffidence is occasioned by the fact that clauses having some of the hallmarks of cll 7.1 and 7.2 have been repeatedly accepted as but a statement of the law as to an employer's duty to pay a superannuation levy and not as the source of an independent contractual right. 175 Decisions supporting the proposition that an employer's duty to pay superannuation contributions is imposed by law - not the relevant employment instrument or contract - were Soliman v University of Technology, Sydney [2008] FCA 1512, (2008) 176 IR 183, Akmeemana v Murray [2009] NSWSC 979; (2009) 190 IR 66 and Gramotnev v Queensland University of Technology [2013] QSC 158. His Honour considered the decision of the Full Court in National Tertiary Education Union v La Trobe University [2015] FCAFC 142; (2015) 254 IR 238 of more immediate assistance, in particular [45] of the judgment where the majority found that the relevant clause in the Agreement did not impose obligations on the employer. 176 At [84] his Honour identified features common to decisions where the Court concluded that the relevant clause was not the source of a legally enforceable obligation to make payments, as including: • the absence of any discernible intention to create legal obligations; • the acknowledgement that requirements imposed by legislation may change from time to time and hence lack the certainty of (for example) an enforceable contractual arrangement; and • the expressions used being more a statement of "aspirational commitment" than being a statement of "contractual stipulation". Those authorities also considered terms of industrial agreements having their counterpart in the present Agreements, including (for example): • "governed" by or "governed exhaustively" by. 177 His Honour concluded: Such factors are compelling. The present clauses have much in common with the clauses involved in the authorities relied upon by the Respondents. 178 At [86] his Honour then turned to cll 7.1 and 7.2 of the Port Kembla 2012 Agreement, noting that they were expressed in different terms to cl 7.1 of the Port Kembla 2006 Award. In particular, at [87] his Honour noted that cl 7.1 of the 2006 Award was drafted to include: • the expression that the "Subject of Superannuation is dealt with exhaustively by federal legislation"; and • a recognition that the "legislation, as varied from time to time, governs the superannuation rights and obligations of the parties". 179 At [87] his Honour also noted that cll 7.1 and 7.2 of the Port Kembla 2012 Agreement were drafted in terms which included the expressions: • "Superannuation arrangements are governed by Federal legislation"; and • "the Superannuation Guarantee (Administration) Act 1992 (Cth), as varied from time to time." 180 However, his Honour noted at [88] that cl 7.2 also employed the following expressions: • The Company will make contributions … at a minimum"; and • "the Company will make contributions into an employee's superannuation account in accordance with the below scale". 181 His Honour noted that that which was formerly included within cl 7.1 of the Port Kembla 2006 Award, but which no longer appeared in the Port Kembla 2012 Agreement, were expressions such as: • the reference to the "Subject of Superannuation" being "dealt with exhaustively by federal legislation"; • the reference to that legislation "govern[ing] the superannuation rights and obligations of the parties"; and • the reference to superannuation "also [being] dealt with by the trust deed and rules of the BlueScope Steel Superannuation Fund". 182 It followed, in his Honour's view, that the shift in language resulted in cll 7.1 and 7.2 in the Port Kembla 2012 Agreement (and clauses in later Agreements in similar terms) being a source of a legal obligation assumed by the appellants to make contributions. 183 The terms of cl 7.2 required more than the making of such minimum contributions as were otherwise payable pursuant to the SGA Act, by addressing the prospect that a permanent employee could make personal contributions into their superannuation account, and the appellants would make contributions in accordance with a prescribed scale. His Honour continued: 90. … The effect is that where the employee makes a personal contribution, the company will make an additional contribution over and above the minimum contribution required under the Act. The legislation does not provide for additional payments other than the minimum contributions to be made. It would be a curious conclusion to reach if the part of cl 7.2 directed to the making of a "minimum" contribution in accordance with the legislation were to be construed as but a recognition of rights conferred by legislation and thus lacking any discernible expectation of creating contractual rights, but a contrary conclusion was to be reached in respect to that part of cl 7.2 which addresses contributions greater than the minimum. The one clause would, on such an approach, be unenforceable as far as the former contributions were concerned, but enforceable in respect to the latter contributions. 184 His Honour said that these clauses underlay his principal conclusion, being that the object and purpose of provisions such as s 50 of the FW Act were fundamentally different to the object and purpose sought to be achieved by the SGA Act and the manner of administration of that Act by the Commissioner of Taxation. 185 His Honour then turned to the meaning of "ordinary time earnings" and "ordinary hours of work" as incorporated into s 6 of the SGA Act. 186 His Honour noted at [97] that the two fundamental questions to be resolved in the proceeding were: • whether the "additional hours component" of the annualised salaries were "ordinary time earnings", and • whether the "public holidays component" paid to the employees as a component of either an annualised salary or an aggregate salary were "ordinary time earnings". 187 His Honour observed that the terms "annualised salary" and "aggregate salary" appeared in various agreements to which the current appellants and the respondent were parties. Before his Honour the appellants argued, in summary, that the fact that employees may work beyond "standard working hours" and that such hours were mandatory did not change the characterisation of those hours as "overtime" (and therefore they were not "ordinary time earnings"). The respondent argued that there was no warrant for dissecting fortnightly payments of annualised salary into various components, where that approach was contrary to the agreement between the parties. 188 As to the meaning of "ordinary time earnings" and "ordinary hours worked", the primary Judge made the following findings: 105. It is concluded that: • there is a clear distinction drawn in the authorities, not surprisingly, between the normal (or ordinary) hours of work and "overtime" (or "additional" hours of work); and that: • in many cases the terms of an award or an enterprise agreement will themselves identify the normal (or ordinary) hours of work but that: • in the circumstances of the present agreements, the "ordinary hours of work" for the purposes of the Superannuation Guarantee (Administration) Act include the "additional hours" and the "public holidays" for which the agreements make provision in respect to an "annualised salary" - and are so included irrespective of whether an employee actually works "additional hours" or "public holidays". It is further concluded that, even if the last conclusion be incorrect, the "ordinary hours of work" includes: • the "additional hours" in fact worked by an employee. It necessarily follows that the Respondents erred in not making superannuation contributions in respect to that components, being the "additional hours" component. 189 In so finding, at [106]-[111] his Honour referred to four propositions, summarised as follows: (1) The phrase "ordinary hours" refers to that which is "regular, normal, customary, usual": Kezich v Leighton Contractors Pty Ltd [1974] HCA 50; (1974) 131 CLR 362 at 365. The phrase "ordinary hours of work" should be given a meaning which best promotes the underlying object or purpose of the Act: Quest Personnel [2002] FCA 85; (2002) 116 FCR 338 at [20]. (2) Hours which are worked beyond standard or fixed hours may become the "ordinary hours" of an employee: Quest Personnel at [27]. (3) There is a long-recognised distinction between ordinary hours of work and overtime: Thompson v Roche Bros Pty Ltd [2004] WASCA 110 at [31]. (4) The terms of an industrial instrument may provide an answer to what is meant by the term "overtime" or the phrase "ordinary hours of work": Catlow v Accident Compensation Commission [1989] HCA 43; (1989) 167 CLR 543 at 560-561. 190 Turning to the terms of the relevant agreements, his Honour said: 114. With reference to the terms of the Agreements in issue in the present proceeding, it is considered that: • the "Calculation Formula" set forth in cl 6.2 of the Bulk Operations Enterprise Agreement 2005 and its reference to the "annualised salary" being comprised of a "Base Salary", "Public Holidays", "Shift Penalties" and "Additional Hours" does not dictate a conclusion that each of those components forms part of the "ordinary hours of work". The "Calculation Formula" is no more than a "formula" for calculating the quantum of an "annualised salary". The reliance placed by the AWU upon that part of cl 6.1 which provides that the "annualised salary" is made up of components "which absorb all additional payments" is, with respect, equally misplaced. The fact that the quantum of a salary may absorb payments made in respect to a number of components says nothing as to whether work has "ordinarily" been performed in respect to any one or other of those components. 115. Nor, with respect, does the reference to (for example): • "overtime" in cl 6.2 of the Bulk Operations Enterprise Agreement 2005 dictate a conclusion that "overtime" may or may not form part of the "ordinary hours of work". 116. All such provisions nevertheless form part of the Agreements in question and form part of the matrix against which a conclusion is to be reached as to what are the "ordinary hours of work" performed by an employee with an "annualised salary". 117. Although the manner of calculating the "annualised salary" is more directed to the manner in which employees are to be remunerated for the work they undertake and does not of itself dictate a conclusion that the "ordinary hours of work" includes those components which form part of the calculation, it lends support to the conclusion advanced on behalf of the AWU. 118. The manner in which employees are remunerated, and the fact that the "annualised salary" is recognised as "absorb[ing]" each of the components identified, is some indication of the fact that there is a recognition in the Bulk Operations Enterprise Agreement 2005 that "additional hours" (and "public holidays") are so routinely worked - or customarily worked - that they do form part of the "ordinary hours of work". Each of the components identified, it is thus recognised, are so "ordinarily" undertaken that they should be incorporated - or "absorb[ed]" - into the "annualised salary" that is paid. 119. More useful for identifying the "ordinary hours of work" are not those terms identifying the manner in which remuneration is to be determined but rather: • the fact that the Agreements operate in a working context were [sic] employees work shifts and where staff need to be available 24 hours per day, 365 days of the year and the following terms of (for example) the Bulk Operations Enterprise Agreement 2005: • clause 2.4, being a clause directed at ensuring that "[o]perational needs [are] met" and providing that one of the "key pillars" that supports the bulk berth "to have an effective and efficient business" is "the guarantee that coverage will be available 365 days per year and 24 hours per day by the Bulk Berth employees"; and • clause 6.3 and the recognition that employees "will be required to work additional hours under the annualised salary system" and the recognition that "employees will be expected to attend work" even where one hour's notice is not able to be given of the requirement for an employee to work "additional hours". In contrast to a different work context where a distinction (albeit a blurring distinction) may be drawn between the ordinary or standard hours of 38 hours per week and overtime or additional time (even where employees may be required or expected to work additional hours or overtime), the present working context is one in which any distinction between standard or ordinary hours and overtime or additional hours is more theoretical than real. 120. Also of relevance is (for example) the following term of the 2006 Award and the 2012 Agreement: • clause 17, which provided that employees may be "required to work seven day shift work to meet the needs of the business" and that those employees "will be required to work Sundays and Public Holidays as ordinary working days". Again, the distinction in the present working context between work on a public holiday and work on any other day is also more theoretical than real. 121. It is the very fact that the Bulk Operations Enterprise Agreement 2005 (for example) requires employees to work "additional hours" and on "public holidays" as the norm that underpins the recognition that those employees can only fairly be remunerated by reference to an "annualised salary". Given the manner in which work is performed, and required to be performed, there is no real or practical distinction between (for example) the standard or ordinary hours of work separate from the total number of hours worked, including "additional hours". Nor is there any real distinction between work on a public holidays and work on any other day. 191 Further, his Honour noted that workers who received an "additional hours component" would work additional hours, although the extent to which particular employees worked such hours varied: [122]-[124]. 192 In relation to public holidays and aggregate salaries, his Honour observed that the "public holidays component" was included within the statutory phrase "ordinary hours of work". His Honour noted that the relevant industrial agreements covering Mr Le Clerc's employment were the Slabmaking Agreement (in force as at the date of the commencement of his employment in May 2011 and in force up to January 2013) (specifically cl 10) and thereafter the Slab Yard Agreement (specifically cl 10). His Honour continued: 139. As with the counterpart conclusion in respect to an "annualised salary", the concept of an "aggregate salary" as used in the two Agreements does not of itself determine the "ordinary hours of work". An "aggregate salary" remains but a means of calculating on a fortnightly basis the salary to be paid to an employee. Even though an "aggregate salary" is a recognition that an employee may be called upon to work on "public holidays" and that the "aggregate salary" is a recognition that the salary contains a number of components designed to compensate an employee for having to work - and being required to work - on "public holidays", that "aggregated salary" remains but a means whereby an employee is to be paid. It says nothing, with respect, as to whether an employee receiving such a salary, "ordinarily" works on a "public holiday" or the number of such days that employee "ordinarily" so works. That remains a question of fact. 140. In determining whether the "public holidays component" forms part of the "ordinary hours of work", reference may be made initially to the Slabmaking - 12-hour Shift Agreement. Clause 10.4 provides that the "total aggregate salary" is the sum of the base salary, plus additional payments (including public holiday payments) and shift work payment and penalties (including weekend penalties and shift allowances). Clause 10.4 concludes by stating that: Aggregate Salary = Base Salary + Public Holiday Payment + Weekend Payment + Shift Allowance Payment. It is cl 10.2.1 which specifically provides for "Public Holidays". That clause, it is considered, make it apparent that it is expected that employees who are covered by this Agreement may so regularly be called upon to work on public holidays that the Agreement recognises that: payment is "based on the average number of public holiday loading hours"; and each employee "will work on average 5.425 of the eleven public holidays per annum and be rostered off on the remaining 5.575 days". An "average", of course, say nothing as to the facts from which the average is calculated. But the "average 5.425 of the eleven public holidays per annum" identified in cl 10.2.1 is, it is considered, a quantification of the "ordinary" hours an employee will be required to work on a public holiday. 141. If attention is thereafter shifted to the Slab Yard - 12-hour Shift Agreement, cl 10.2.1 similarly provides for "Additional Payments" in respect to "Public Holidays" and cl 10.4 again similarly provides for the components going into the calculation of the "aggregate salary". 142. The same conclusion is reached as to the "public holidays component" of an aggregate salary forming part of the "ordinary hours of work", irrespective of which of these two Agreements is referred to. 143. Both Agreements provide (in cl 3.1) that they are "to be read in conjunction with the current Award at the time". In the case of the Slab Yard - 12-hours Shift Agreement, "the Award" is defined to mean the 2006 Award. If recourse is had to cl 17 of that Award, the present conclusion is only further reinforced by cl 17 stating that "employees will be required to work ... Public Holidays as ordinary working days". 193 Accordingly, his Honour found that the appellants' obligations to make superannuation contributions should not be confined to the public holidays actually worked by Mr Le Clerc. 194 The primary Judge made declarations of contravention in respect of the appellants' failure to make the minimum superannuation contributions, which formed the basis for breaches of s 50 of the FW Act and Item 15 of Sch 16 to the FW Transitional Act. The primary Judge made Orders accordingly, which are not the subject of any of the grounds of appeal.

Application for leave to intervene 195 By application dated 29 June 2018, the Commissioner sought leave to intervene in these proceedings pursuant to r 36.32 of the Federal Court Rules 2011 (Cth) (Rules). Rule 36.32 provides: 36.32 Applications to intervene (1) A person who was not a party to the proceeding in the court appealed from may apply to the Court for leave to intervene in an appeal. (2) The person must satisfy the Court: (a) that the intervener's contribution will be useful and different from the contribution of the parties to the appeal; and (b) that the intervention would not unreasonably interfere with the ability of the parties to conduct the appeal as they wish; and (c) of any other matter that the Court considers relevant. Note 1: The role of the intervener is solely to assist the Court in resolving the issues raised by the parties. Note 2: The Court may give leave to the intervener to intervene on conditions, and with the rights, privileges and liabilities (including liabilities for costs), determined by the Court. Note 3: When giving leave, the Court may specify the form of assistance to be given by the intervener and the manner of participation of the intervener and, in particular: (a) the matters that the intervener may raise; and (b) whether the intervener's submissions are to be oral, in writing, or both. 196 The Commissioner submitted that its interests in the appeal related solely to two issues, namely: whether the SGA Act and SGC Act impose upon an employer a positive statutory requirement to make superannuation contributions, and the proper construction of the expressions "ordinary time earnings" and "ordinary hours of work" within s 6 of the SGA Act. 197 In support of his application for leave to intervene, the Commissioner submitted that his direct interests in the proceedings were: The Commissioner is responsible for the general administration of the SGA Act, and in particular, is responsible for the assessment and collection of the superannuation guarantee charge arising in relation to the Full Court's ruling. The Commissioner will be bound by the decision of the Full Court and therefore has a direct interest in being heard in relation to it (Hua Wang Bank Berhad v Commissioner of Taxation [2013] FCAFC 28; (2013) 296 ALR 479 at [54]-[57]). The Commissioner has published a Superannuation Guarantee Ruling SGR 2009/2: Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' (SGR 2009/2). This ruling sets out the Commissioner's views on the meaning of the term 'ordinary time earnings' and 'ordinary hours of work'. 198 In Levy v Victoria [1997] HCA 31; (1997) 189 CLR 579, in relation to this issue of whether a non-party should be permitted to intervene, Brennan J said: … a non-party whose interest would be affected directly by a decision in the proceeding - that is, one who would be bound by the decision albeit not a party - must be entitled to intervene to protect the interest liable to be affected. 199 The Commissioner also contended that the approach of the primary Judge departed from the proper meaning of the provisions of the SGA Act and that the primary Judge's approach was inconsistent with the Commissioner's long-settled and published position on the meaning of "'ordinary time earnings"' and "'ordinary hours of work"'. To that extent, the decision of the primary Judge would have widespread and large scale consequences for Australian employees, employers and the Commissioner. The Commissioner submitted that, because s 43 of the SGA Act charged the Commissioner with the administration of the regime, the Commissioner has singular responsibility for the public interests sought to be served by the superannuation guarantee regime. Further, those broader interests could not be privately enforced by employees, either directly or through seeking to compel the Commissioner to do so, which the primary Judge acknowledged at [54] and [62] of his Honour's reasons. 200 The appropriateness of government regulators being heard in relation to important questions of construction of the legislation which they are required to administer has been recognised in such cases as Kabushiki Kaisha Sony Computer Entertainment v Stevens [2001] FCA 1379; (2001) 116 FCR 490 at [9], [15]-[16] and Sharman Networks Ltd v Universal Music Australia Pty Ltd [2006] FCAFC 178; (2006) 155 FCR 291. I also note the comments of the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [13]-[15]. 201 As to the specific factors listed in r 36.32, the Commissioner further submitted: As to whether the Commissioner's contribution would be useful and different from the contribution of the parties to the appeal - as a consequence of the Commissioner's administration of the regime, the Commissioner is well-placed to assist the Court in relation to questions of construction in the context of its application to the many and various employers and employees whose interests are affected by the superannuation guarantee regime (see comments of Sackville J in Kabushiki Kaisha Sony Computer Entertainment v Stevens [2001] FCA 1379; (2001) 116 FCR 490 at [16]). The Commissioner sought to address the Court on broader questions of statutory construction which may have an impact upon significant public interests, whereas the parties had approached the issues by reference to private interests. The Commissioner's submissions were not repetitive of the parties' submissions, but raised additional considerations in relation to the two issues which the Commissioner seeks to address and which, in the Commissioner's submissions, necessarily informed the Court's consideration of the proceedings. The Commissioner's intervention would not unreasonably interfere with the ability of the parties' ability to conduct the appeal as they wished, because it was confined to the two issues identified. 202 I was persuaded by the submissions of the Commissioner that he ought be granted leave to intervene in the proceedings, but considered that the Commissioner's contribution should be confined to the two issues identified by him.

Issues in the appeal 203 The appellants rely on the following eight grounds of appeal: 1. The primary judge erred in finding that the first appellant contravened: a. item 15 of Sch 16 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (FW Transitional Act), and b. s 50 of the Fair Work Act 2009 (Cth) (FW Act) in the manner set out in declarations 1 and 2 of the Orders. 2. The primary judge erred in finding that cl 7 of each of: a. the BlueScope Steel (AIS) Pty Ltd - Port Kembla Works Employees Award 2006, b. BlueScope Steel Port Kembla Steelworks Agreement 2012, and c. the BlueScope Steel Port Kembla Steelworks Agreement 2015 (together the Enterprise Agreements) constituted a term containing binding legal obligations relating to payment of superannuation payable to avoid a charge under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act) for the purpose of establishing a contravention of a term of an enterprise agreement under s 50 of the FW Act and item 15 of Sch 16 to the FW Transitional Act (see Reasons [70] - [73], [75] - [94], [105]). 3. Further or in the alternative, the primary judge erred in finding that the first appellant contravened the Enterprise Agreements by not including an "additional hours component" and the "public holidays component" in determining "ordinary hours of work" within the meaning of s 6(1) of the SGA Act for the purposes of clause 7 of the Enterprise Agreements (see Reasons [150], [158]), where in fact the SGA Act does not provide that an employer must make contribution by reference to such "components", but merely requires that an employer must make certain prescribed quantum of payment calculated by reference to the formula set out in the definition of "ordinary time earnings" to avoid the imposition of a charge under ss 19 and 23 of the SGA Act. 4. Further or in the alternative, the primary judge erred in relation to "additional hours" payments in: a. finding that ordinary hours of work within the meaning of s 6(1) of the SGA Act, and for the purposes of cl 7 of each of the Enterprise Agreements, includes in respect of Matthew Storey the "additional hours" prescribed under the Bulk Operations Enterprise Agreement 2005 and Bulk Operations Department Agreement 2013 (see Reasons [105], [114] - [121]); b. finding, in the alternative, that ordinary hours of work within the meaning of s 6(1) of the SGA Act, and for the purposes of cl 7 of each of the Enterprise Agreements, includes additional hours in fact worked by Mr Storey (see Reasons [105], [122] - [134]). 5. Further or in the alternative, the primary judge erred in not finding that the additional superannuation co-contributions made by the first appellant to Mr Storey in accordance with cl 7.2 of the Enterprise Agreements should be taken into account in complying with any obligation to make minimum superannuation contributions to Mr Storey to avoid a charge under the SGA Act as required by cl 7 of the Enterprise Agreements (see Reasons [135]). 6. Further or in the alternative, the primary judge erred in finding that ordinary hours of work within the meaning of s 6(1) of the SGA Act, and for the purposes of clause 7 of the Enterprise Agreements, includes the earnings of Mr Storey and Mr Jason Le Clerc in respect of penalty rates on public holidays paid by the first appellant in respect of public holidays not worked by Messrs Storey and Le Clerc (see Reasons [105], [136], [145] - [146]). 7. Further or in the alternative, the primary judge erred in failing to determine that the superannuation contributions made by the first appellant to Messrs Storey and Le Clerc in respect of an "added day" of leave (where the employee is on leave on a public holiday or is on a rostered day off on a public holiday and not required to work that day) is not ordinary time earnings within the meaning of s 6(1) of the SGA Act for the purposes of clause 7 of the Enterprise Agreements. 8. Further or in the alternative, the primary judge erred in failing to determine that the superannuation contributions made by the first appellant to Mr Le Clerc in respect of shift allowances paid on overtime is not included in ordinary time earnings within the meaning of s 6(1) of the SGA Act for the purposes of clause 7 of the Enterprise Agreements. 204 Further, the Respondent has filed a notice of contention and has argued that, should certain grounds of appeal be successful, the decision of the primary Judge should be upheld on alternative grounds: 1. If, contrary to the respondent's case, the appellant succeeds on ground 2 of its grounds of appeal, then the decision should be affirmed, in particular at [65] of the decision, on an alternative basis contended for below, namely that the appellant did not make superannuation payments in accordance with section 6(1) of the Superannuation Guarantee (Administration) Act 1992 (Cth), and a declaration or declarations would be made in lieu of Declarations 1 and 2 of the Orders to that effect… 2. In the alternative, the decision should be affirmed on the basis that the relevant workplace instruments at least required superannuation contributions for Matthew Storey and Jason Le Clerc to be calculated based on the additional hours and/or the public holidays they actually worked. … 3. Further in the alternative, the decision should be affirmed on the basis that under the Superannuation Guarantee (Administration) Act 1992 (Cth) the superannuation contributions for Matthew Storey and Jason Le Clerc were to be calculated based on the additional hours and/or the public holidays they actually worked. … 205 The respondent also provided alternative declarations, in the event that the declarations of the primary Judge were overturned. 206 At the hearing of the appeal the parties addressed broad issues, referable to the grounds of appeal, the notice of contention and issues identified by the Commissioner. These issues were, in summary: Was there a positive legal obligation on the appellants to make superannuation contributions to the employees, and, if so, what was the source of that obligation? (ground of appeal 2) Did the primary Judge adopt a legitimate approach to finding contraventions by the first respondent? (ground of appeal 3) If there was a positive legal obligation, what was the content of the obligation? (grounds of appeal 4-8) Ultimately, did the primary Judge err in finding that the first appellant had contravened Item 15 of Sch 16 to the FW Transitional Act and s 50 of the FW Act in the manner set out in declarations 1 and 2 of the Orders? (ground of appeal 1) 207 It is convenient to commence consideration of the appeal, and the submissions of the parties, by reference to these issues.

Was there a positive legal obligation on the appellants to make superannuation contributions to the employees, and if so, what is the source of that obligation? (ground of appeal 2)

Submissions of the parties 208 In respect of this issue, the appellants submit, in summary, as follows: The primary Judge found that it was possible for there to be contraventions by the appellants on the basis that first, if cl 7 of the Awards and the Enterprise Agreements contained a mere acknowledgment of a requirement to make a contribution otherwise imposed by the superannuation legislation, then the appellant contravened those terms by not making the requisite contributions; and second, that if contravention of the FW Transitional Act and s 50 of the FW Act required that the term created a binding obligation independent of the statutory superannuation regime, then cl 7 created such an obligation. His Honour erred in both respects because there can be no contravention of such a term unless the term imposes a legally binding obligation, as opposed to a mere acknowledgement of some other, independent legal obligation; and further, cl 7 did not create a legally binding obligation. Strictly speaking, there is no statutory obligation placed on employers to make superannuation contributions on behalf of employees under the SGA Act - rather, if an employer wishes to avoid the imposition of the superannuation guarantee charge and reduce the charge percentage to nil, the employer is required to make certain contributions. This reflects the fact that the constitutional foundation of the federal superannuation scheme, as applies to employers, is the taxation power. His Honour did not explain the rationale for his finding at [64]-[65] that a "term" did not have to create a binding legal obligation to establish a contravention of such a term for the purposes of s 50 of the FW Act and Item 15 of Sch 16 to the FW Transitional Act. Contrary to his Honour's finding, in order to establish a contravention of an enterprise agreement, the relevant term of the enterprise agreement must establish a legal norm or obligation with which a party must comply to avoid contravention. The term of the enterprise agreement must itself be the source of the legal norm or obligation, in order to be capable of being contravened. If the legal norm or obligation is contained in an external source such as another law, and the term of the enterprise agreement merely acknowledges the existence of an obligation under that source, the term of the enterprise agreement is not contravened. To the extent that his Honour found that cl 7 could be contravened even though it only contained an acknowledgement of the existence of another statutory obligation, his Honour erred. His Honour's finding that cl 7 created a binding legal obligation requiring the appellants to make contributions to an employee's superannuation account to avoid the imposition of a charge under the SGA Act is not supported by the text of the clause, particularly because the clause notes that the source of the parties' superannuation arrangements is the Federal superannuation legislation. Although his Honour placed emphasis on the change in language between cl 7 of the Awards, and cl 7.2 of the Enterprise Agreements, no evidence was adduced to explain the change in language. The change in language is more readily explicable as separating the minimum contributions made by the appellants in compliance with the SGA Act and the voluntary co-contributions made in accordance with the scale set out in cl 7.2. As a general proposition, where there is reference to compliance with statutory obligations in a legal instrument, the parties are not generally taken to intend to create fresh legal obligations in addition to existing statutory obligations. There is authority that a statement in a contract of employment that an employer will make superannuation contributions on behalf of an employee in accordance with superannuation legislation does not incorporate that statutory obligation into the contract of employment: Akmeemana v Murray [2009] NSWSC 979; (2009)190 IR 66 at [35], Cook v Chesterton International Pty Ltd [2015] NSWSC 283 at [18], [25]-[26]. This is because it is the relevant superannuation legislation that establishes the statutory obligations and such obligations are not enforceable by private parties to a contract: Kronen v Federal Commissioner of Taxation [2012] FCA 1463; 213 FCR 495 at [50]. If cll 7.1 and 7.2 of the Enterprise Agreements created an enforceable legal obligation then two distinct and potentially inconsistent legal regimes would co-exist. A construction of cl 7.2 that does not involve creating enforceable legal obligations would reconcile the inconsistency within cl 7.2 between the statements that the appellants' obligation to make superannuation contributions must be "at the minimum" in accordance with the SGA Act based on ordinary time earnings, and that the appellants' minimum contribution of 9.5 percent must be calculated based on "defined wage". The primary Judge erred in considering individual "components" in determining whether the appellants had made the minimum superannuation contributions in accordance with cl 7 of the relevant awards and Enterprise Agreements, and not making an assessment of whether the relevant amounts had in fact been paid. 209 The Union submitted that the primary Judge was correct in finding that cl 7 in the relevant awards and Enterprise Agreements imposed on the appellants binding legal obligations to pay superannuation. This is because, in summary: Each clause must be read in its statutory and historical context. It is clear that the legislature intended that the obligation to make superannuation contributions could be dealt with in a binding manner by way of award and enterprise agreement, despite the existence of the SGA Act. The text of the Enterprise Agreements creates a clear obligation to make superannuation contributions, in particular the expressions "will make" and "at a minimum". Further, the fact that the Enterprise Agreements could only be approved if they contained conditions that were better off overall than the modern award (which contained a clear obligation to make superannuation contributions) confirms that the enterprise agreement was intended to meet and exceed that minimum obligation, and it could only do so if it was itself creating an obligation. The awards were made under New South Wales legislation, in particular s 124 of the Industrial Relations Act 1996 (NSW), becoming deemed federal instruments. Clause 7.1 referred to s 124, and to that extent was a powerful indicator of an intent that the clause required the employer to pay contributions. 210 The Commissioner made no submissions concerning the language and purpose of clause 7 of the respective industrial instruments, however submitted that neither the SGA Act nor the SGC Act imposed requirements that an employer make superannuation contributions for the benefit of employees (rather the regime provided an incentive to employers to make such contributions at a minimum level). The Commissioner further submitted that the primary Judge appeared to - incorrectly - understand the legislation as establishing a positive obligation on employers to make certain minimum superannuation contributions, and to that extent the appellants' submissions in respect of ground 2 correctly reflected the basic operation of the regime.

Consideration 211 In my view the statutory regime created by the SGA Act and the SGC Act do not impose a positive binding obligation on employers to make superannuation contributions for the benefit of employees. The terms of the applicable awards, in particular cl 7, similarly do not create such an obligation. However, the terms of the applicable Enterprise Agreements, in particular cl 7.2, do create such an obligation. My reasons for these conclusions are as follows.

Regime established by the SGA and the SGC Acts 212 Both the appellants and the Commissioner have identified that the primary Judge appears to have understood the obligations under the SGA Act and the SGC Act to impose on employers a positive statutory to make superannuation contributions. In this respect, the appellants and the Commissioner point to the following extracts from the primary Judge's reasons: 61 It is concluded that the Superannuation Guarantee Charge Act and the Superannuation Guarantee (Administration) Act unquestionably create a statutory regime administered by the Commissioner of Taxation as to the manner in which minimum superannuation contributions are to be made and calculated. Extensive statutory powers are conferred to ensure that the requirement to make superannuation contributions is adhered to. 64 …. On such an approach: • a contravention of such a term is made out by a finding that the term may be but a mere acknowledgement of a requirement to make a contribution otherwise imposed by a statute and that such a contribution has not been made. … 71 Section 50, it is respectfully considered, does not turn upon the identification of the source of the legal requirement to make contributions to an employee's superannuation account. Whether the source of that legal requirement is to be found in the superannuation legislation or the Enterprise Agreement itself, what cl 7 requires is that such contributions are to be made. If such contributions are not made, the Respondents have failed to comply with the requirements of cl 7 and have thereby contravened a term of an enterprise agreement. 73 Even if it be accepted that the source of the legal requirement to pay superannuation contributions is to be sourced exclusively in the superannuation legislation and not the Enterprise Agreement itself, if payments which are required to be made have not been made, payments have not been made "in accordance with clause 7". 90 That conclusion is only further supported by the fact that cl 7.2 goes beyond the making of such minimum contributions as are otherwise payable pursuant to the Superannuation Guarantee (Administration) Act by further addressing the prospect that a permanent employee may make personal contributions into their superannuation account … 94 … The imposition of a penalty, for example, for a contravention of s 50 of the Fair Work Act arising out of the non-payment of a contribution required to be paid pursuant to the superannuation legislation serves a different end than the administration of superannuation rights by the Commissioner. (Emphasis added.) 213 I accept the submissions of the appellants and the Commissioner that the language used by his Honour denotes a requirement to make superannuation contributions, which can equally be understood as an obligation, and his Honour explicitly refers to that requirement being sourced in statute. 214 Insofar as the judgment below can be read as concluding that the statutory superannuation guarantee regime itself creates a binding obligation to make payments directly to employees, I respectfully disagree with the reasons of the primary Judge. This is a question quite separate from the effect of cl 7 of the various industrial instruments. 215 In my view, the Commissioner and the appellants correctly submitted that the SGC Act and the SGA Act do not impose any obligation on an employer to make superannuation contributions for the benefit of employees - rather, the regime under the SGC Act and the SGA Act creates an incentive or encouragement for employers to pay the minimum superannuation contributions. 216 First, it is clear that, under the regime, the employer may lawfully choose not to make superannuation contributions to the requisite amount, but in such a case, the employer will be liable to pay a charge on the resulting shortfall. This plainly follows from ss 16 and 17 of the SGA Act and ss 5 and 6 of the SGC Act. In particular I note the following observation of the plurality in Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation [2011] HCA 35; (2011) 244 CLR 97: 3 Broadly speaking, the effect of the legislation under challenge is that if, as specified in the Administration Act, an employer fails to provide to all employees a prescribed minimum level of superannuation then any shortfall represented by failure to meet that minimum level in full, becomes the Charge. This impost is levied on the employer by the Charge Act. The amount of the Charge is a debt due to the Commonwealth and payable to the respondent, the Commissioner of Taxation: Taxation Administration Act 1953 (Cth), Sch 1, s 255-5. The Charge includes a component for interest and an administration cost. The result is to supply an incentive to employers to make contributions to superannuation for their employees without incurring a liability to the Commissioner for the Charge. (Emphasis added.) 217 The point was also made by Heydon J in Roy Morgan in the following terms: 53 There is no general duty on private employers to pay superannuation contributions to superannuation funds for the benefit of their employees. But particular obligations to pay superannuation contributions can arise in various ways. They may be created by an award or certified agreement. They may be created by contract. This appeal concerns the legislative validity of an indirect method of ensuring the payment of superannuation contributions. … 57 The superannuation guarantee charge provides an incentive to employers to make superannuation contributions at the rate of 9 per cent of employees' wages. It ensures that in relation to the employees of employers who fail to do so there will be payments into approved superannuation funds equivalent to those which the employers did not make. There are significant factors influencing employers to make superannuation contributions directly to superannuation funds for their employees' benefit rather than pay the superannuation guarantee charge. Direct superannuation contributions are tax deductible; payments of the superannuation guarantee charge are not. Payments of direct superannuation contributions avoid the nominal interest component and the administration component of the superannuation guarantee shortfall. And in other respects the superannuation guarantee charge may be higher than the corresponding direct superannuation contribution. In a perfect world, no superannuation guarantee charge would be levied at all. But it tends to persuade employers to make direct superannuation contributions. This achieves public purposes quite independently of any revenue collected through it. Those public purposes centre on the encouragement of employers to contribute to superannuation funds so as to meet the needs of aged or infirm employees and to reduce the pension burdens which would otherwise have to be funded by the government. (Footnotes omitted, emphasis added.) 218 In summary - the superannuation guarantee charge created by the SGA Act and the SGC Act is a tax. Failure to make the minimum superannuation contributions to reduce the chargeable amount to zero in accordance with the statutory framework is not penalised. However, if an employer does choose to make those minimum contributions that employer can essentially reduce its superannuation guarantee shortfall to zero and therefore be subject to no requirement to pay the charge. As I noted earlier in the judgment, there are a number of incentives to do so, including that the contributions made directly to employees will be tax deductible, the relevant calculation in s 23 uses "ordinary time earnings" which may be a lesser amount than the amount of "total salary or wages" for the purposes of determining the shortfall, and the employer will not be required to pay administrative fees or interest associated with the collection of the charge. 219 Second, given that I accept that an employer may lawfully choose not to make superannuation contributions but instead be liable to pay the charge, it would be incongruous to find that such a lawful choice under the statute could also be a breach of an obligation sourced in that statute. 220 Finally, to the extent that the primary Judge states at [71] that s 50 of the FW Act does not turn upon the identification of the source of the legal requirement to make contributions to an employee's superannuation account, and therefore it is immaterial whether the obligation arises under statute or under the relevant enterprise agreements, I do not accept that proposition. Section 50 of the FW Act, and Item 15 to Sch 16 of the FW Transitional Act apply only to a contravention of a term of an enterprise agreement (or to a continuing Sch 6 instrument, in the case of the FW Transitional Act). It follows that the source of the obligation the subject of that contravention must be the enterprise agreement or award itself. Section 50 of the FW patently does not impose civil liability for the breach of an obligation, for example, under another statute.

Did Cl 7 of the applicable industrial instruments impose a binding obligation for the purposes of establishing a breach of s 50 of the FW Act or Item 15 to Sch 16 of the FW Transitional Act? 221 In ground of appeal 2, the appellants contend that there is no obligation imposed on employers to make superannuation contributions under the relevant awards or Enterprise Agreements, such that failure to do so could form the basis for a contravention of either s 50 or Item 15 to Sch 16 of the FW Transitional Act. 222 Clause 7 of each of the industrial instruments relevant in these proceedings refer to federal superannuation legislation. 223 In the case of the Awards, the provision names the legislation and the states that the payment of superannuation contributions is "dealt with exhaustively by" that legislation: 7.1 Superannuation Legislation - the Subject of Superannuation is dealt with exhaustively by federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth), the Superannuation (Resolution of Complaints) Act 1993 (Cth), and section 124 of the Industrial Relations Act 1996. This legislation, as varied from time to time, governs the superannuation rights and obligations of the parties. Subject to this legislation, superannuation is also dealt with by the trust deed and rules of the BlueScope Steel Superannuation Fund and the Superannuation Trust of Australia, and relevant agreements made from time to time between the Company and the unions party to this award, including the BHPSteel - Superannuation Review dated 25 October 1995. 224 In the case of the Enterprise Agreements, cl 7 provides: 7.1 Superannuation arrangements are governed by Federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth), and the Superannuation (Resolution of Complaints) Act 1993 (Cth). 7.2 The Company will make contributions to an employee's superannuation account at a minimum in compliance with the Superannuation Guarantee (Administration) Act 1992 (Cth), as varied from time to time. Additionally for permanent employees who are members of the BlueScope Steel Superannuation Fund or Australian Super, subject to these statutory minimum contributions and the Basic Member Contributions an employee makes to their superannuation account, the Company will make contributions into an employee's superannuation account in accordance with the below scale: … All company contributions are based on an Employee's Defined Wages, as defined at clause 4 above. 225 It is evident that the language of the clauses in the awards and the Enterprise Agreements differs significantly. In my view, it is appropriate to consider the effect of the text of each of the clauses independently, notwithstanding the submission of the appellants that the primary Judge erred by focusing too much on the change in language between the awards and the Enterprise Agreements. It is logical that the different language may have different effects. 226 At the hearing there were detailed submissions made by the parties in relation to whether the respective clauses in the awards and the Enterprise Agreements employed "language of recognition" as opposed to "language of obligation". In relation to this point I note in particular Soliman v University of Technology, Sydney [2008] FCA 1512; (2008) 176 IR 183 (Soliman v UTS), National Tertiary Education Union v La Trobe University [2015] FCAFC 142; (2015) 254 IR 238 (NTEU v La Trobe University), and University of Western Australia v National Tertiary Education Union [2003] FCA 1264; (2003) 129 IR 348 (UWA v NTEU). 227 In Soliman v UTS, the proceedings arose out of disciplinary actions taken by the University against the applicant. Relevantly, a clause in the contract of employment provided that (e) The appointment will be subject to and governed by the relevant provisions (as in force from time to time) of: - (i) The University of Technology, Sydney, Act 1987. (ii) The University of Technology, Sydney, By-Law. (iii) Conditions of Employment determined by the University under the above Act. (iv) The Australian Universities Academic Staff (Salaries) Award 1987. (v) The Australian Universities Academic Staff (Conditions of Employment) Award 1987. 228 The applicant claimed that the taking of the disciplinary action was in breach of the University of Technology, Sydney Academic Staff Agreement 2006. This was because subcll (e)(iv) and (v) of the contract of employment expressly incorporated the agreement into the contract by reference. This submission involved the following steps: the preamble in cl (e) provided that the applicant's appointment was subject to and governed by relevant provisions of certain documents; the preamble also described those relevant provisions of certain documents as "relevant provisions (as in force from time to time)"; two of the nominated documents were the Australian Universities Academic Staff (Salaries) Award 1987 and the Australian Universities Academic Staff (Conditions of Employment) Award 1987; the 2006 agreement replaced and was a successor instrument to those awards; and hence, by the force of cl (e) of the contract, the applicant's appointment was subject to and governed by the relevant provisions of the agreement. 229 Jagot J rejected the argument that cl (e) expressly incorporated the 2006 Agreement in the applicant's contract of employment. After finding that the 2006 Agreement was not the successor of the awards referred to in cl (e), her Honour continued: 67 … (4) In any event, the preamble to cl (e) has to be considered in context. The preamble refers to the appointment being "subject to and governed by the relevant provisions (as in force from time to time)" of the nominated documents. The nominated documents could not reasonably have been intended to represent obligations that were contractually binding. The first two documents are the University of Technology, Sydney, Act 1987 (NSW) and the University of Technology, Sydney, By-Law. These are legislative instruments capable of alteration from time to time without any involvement of the applicant. This indicates, as the respondents submitted, that cl (e) identifies relevant information capable of affecting the parties' contractual relations rather than documents intended to be binding and enforceable as part of their contractual relations. … (Emphasis added.) 230 In NTEU v La Trobe University the Full Court considered whether the university had contravened s 50 of the FW Act. The relevant clause of the enterprise agreement, namely cl 74, provided: The University is committed to job security. Wherever possible redundancies are to be avoided and compulsory retrenchment used as a last resort. The University reserves the right to use the agreed redundancy procedures and provisions set out in this Agreement when all reasonable attempts to mitigate against such action to avoid job loss. 231 The Full Court was required to determine whether cl 74 was prescriptive and capable of founding a contravention of s 50 of the FW Act, or simply aspirational. Bromberg and White JJ (Jessup J dissenting) held that the clause, when read as a whole, was prescriptive because the context of the second sentence of the clause was prescriptive, the words "are to be avoided" were not aspirational (nor were the words "as a last resort"), and the third sentence of the clause reflected that the clause contained a limitation upon at least some of the university's rights which would not have been necessary if the clause simply was aspirational. 232 Similarly to the circumstances in Soliman v UTS, in UWA v NTEU, Carr J considered the interpretation of a clause of an agreement which dealt with termination of employment and disciplinary action. Clause 16 of the Agreement relevantly provided: (a) Termination of employment at the initiative of the employer is governed exhaustively by Schedule D Unsatisfactory Performance, Schedule E Misconduct, Schedule F Redundancy Provisions and Clause 18 Termination of Employment on the Grounds of Ill Health. 233 Examining the words "governed exhaustively" in the clause his Honour said: 63 I have already held that clause 16 is only concerned with termination of employment at the initiative of the employer. In my opinion, a literal construction of the clause requires that that subject be governed exhaustively by the three schedules and clause 18 of the Agreement. Furthermore, in my view, such a construction is supported by the context to which I have referred immediately above, subject to clause 17 also being applied to confirm the relevant procedures. 64 I think that those words, "governed exhaustively", expressly exclude the application of what might otherwise have been the applicant's common law rights of termination. Clause 16(c), in my view, confirms that. The long and the short of it is that if the applicant wishes to terminate an academic's employment (otherwise than by mutual agreement) it must do so in accordance with clause 16. (Emphasis added.) 234 Accordingly his Honour declared that the clause, when read with the three schedules and cll 17 and 18 of the agreement, "governed exhaustively" the procedures to be followed in relation to termination of employment at the initiative of the employer. 235 In light of the text of cl 7.1 of the Awards and the authorities I have just examined, it is clear that the language used in cl 7.1 of the Awards is the language of recognition only. The language of that clause does no more than identify the federal legislative instruments that govern the minimum contributions of superannuation by employers. As I have already said, that legislative regime also does not impose a binding obligation of the employer. It follows that, insofar as concerns cl 7.1 of the Awards, a lawful choice is open to an employer not to make a superannuation contribution, but be liable to pay the charge under the statutory regime. 236 In respect of the argument concerning the promulgation of the relevant awards pursuant to the New South Wales legislation, s 124 of the Industrial Relations Act 1996 (NSW) relevantly provided: (1) If an industrial instrument requires an employer to pay contributions to a specified superannuation fund for the purpose of providing superannuation benefits to or in respect of an employee of the employer, the required contributions may, despite the industrial instrument, be paid to a complying superannuation fund nominated for the time being by the employee and approved by the employer. The respondent submitted that the specific reference to this section in cl 7.1 of the Awards was "a powerful indicator…that the clause was indeed requiring the employer to pay contributions," however I reject this submission. At best, in respect of cl 7.1 of the Awards, the reference to s 124(1) is again simply a recognition of the effect of that section, which in turn refers to circumstances where "an industrial instrument requires an employer to pay contributions". Section 124(1) itself does not impose an obligation to pay superannuation on an employer. 237 The position is, however, different in respect of the relevant clauses in the Enterprise Agreements. 238 Clause 7.2 provides that "The Company will make contributions to an employee's superannuation account" and "… the Company will make contributions into an employee's superannuation account in accordance with the below scale…". This language goes beyond what could be considered as simply the language of recognition, and is classically language of obligation. 239 Second, the inclusion of such imperative expressions as "will make contributions" in cl 7.2 in the Enterprise Agreements makes this clause distinguishable from cases such as Soliman v UTS and UWA v NTEU where no obligation was incorporated and the language of the relevant clause simply recognised an obligation elsewhere. 240 Third, the use of the word "additionally" in cl 7.2 of the Enterprise Agreements indicates that cl 7.2 should be read as a whole, and that the second sentence of cl 7.2 builds on the obligation set out in the first sentence of the clause. 241 Fourth, I reject the appellants' submission that the primary Judge erred by considering the change in the language used in the Awards and in the Enterprise Agreements. As the respondent correctly submitted, the Enterprise Agreements could only be approved if they contained conditions that were better off overall than the modern award: s 186(2)(d) FW Act; see also ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53; (2017) 350 ALR 381. To that extent, it is logical to compare the language used in the awards with that in the Enterprise Agreements. Given that no obligation to pay superannuation entitlements was imposed by the awards, it follows that an improvement of conditions in this respect would be achieved by a term in the Enterprise Agreements creating such an obligation. 242 Fifth, while I accept that it is possible, and indeed not uncommon, for employers to include non-binding obligations in Enterprise Agreements for the reasons identified by the appellants, I do not consider that this argument is capable of negating my finding in the present circumstances that cl 7.2 is binding on the appellants.

Conclusion 243 It follows that the appellants are partially successful in respect of ground 2, to the extent that their submissions relate to the Awards. There is no provision in the Awards capable of being breached so as to found a contravention of Item 15 of Sch 16 to the FW Transitional Act. Accordingly, declarations 1a and 2a of the Orders dated 20 March 2018 fall away and it is not necessary to consider the remaining issues in the appeal in respect of the Awards. 244 However, I reject ground of appeal 2 insofar as it contends that cl 7.2 of the Enterprise Agreements does not create a binding obligation. In my view, the language employed in cl 7.2 is sufficient to bind the employer to make contributions to employees and as such is an independent source of legal obligation. Although the appellants would not "contravene" the superannuation regime by failing to make payments directly to employees, the appellants would be in breach of cl 7.2, and in turn of s 50 of the FW Act. His Honour was correct in so finding.

The approach to and content of the obligations IMPosed on the employer by cl 7 of the enterprise agreements (grounds of appeal 3-8) 245 I now turn to the content of the obligations imposed on the appellants by cl 7 of the Enterprise Agreements to make superannuation contributions to Mr Storey and Mr Le Clerc. Pursuant to ss 6(1) and 23 SGA Act the contribution is calculated by reference to the "ordinary time earnings" and "earnings in respect of ordinary hours worked" by each employee.

Approach to grounds of appeal 246 Grounds of appeal 3-8 allege errors by the primary Judge in his interpretation of these phrases, including by itemising the earnings of relevant workers into "components". I note that, in response to ground 3, the Union conceded that the SGA Act did not provide for superannuation contributions to be made payable by reference to "components", but rather by reference to the earnings paid for ordinary hours of work. The Union further submitted however that the primary Judge approached the matter by reference to "components" as a practical way to resolve the threshold issues dividing the parties and, in particular, in light of the characterisation of aspects of the earnings of employees as "components" by a witness for the appellants during the hearing at first instance. In this respect, I also note that, although the appellants did not consent to his Honour's orders, nonetheless the parties agreed that the form of the orders of the primary Judge, referring to the "components", reflected the reasons for decision of the primary Judge. To that extent, ground of appeal 3 does not raise an appellable error of substance on the part of his Honour. 247 The substantive grievances on the part of the appellants are rather to be found in grounds of appeal 4-8 where they take issue with his Honour's interpretation of the concept of ordinary time earnings. 248 Grounds of appeal 4, 6 and 7 essentially raise questions in respect of whether "ordinary time earnings" in the context of the superannuation regime is confined to the earnings in respect of ordinary hours identified in the Enterprise Agreements, or if it means actual hours worked and in particular additional hours, public holidays and added days of leave. Grounds of appeal 5 and 8 raise more specific issues relating to the view taken by the primary Judge concerning co-contributions and contributions made in respect of shift allowances paid on overtime.

Approach of the primary Judge 249 As I have already noted, both Mr Storey and Mr Le Clerc are subject to clauses in the respective Enterprise Agreements requiring them to work additional hours in accordance with the operational needs of the appellants. The primary Judge at [97] explained his approach as being to consider whether, in respect of Mr Storey, the "additional hours component' of the annualised salaries were 'ordinary time earnings'; and whether 'the public holidays component' paid to the employees as a component of either an annualised salary or an aggregate salary were 'ordinary time earnings'". In respect of Mr Le Clerc, the primary Judge at [101] explained that the question as to whether the "public holidays component" which had been paid fell within "ordinary time earnings" was to be resolved in the case of Mr Le Clerc by reference to the fact that he received an "aggregate salary". 250 Section 6(1) of the SGA Act defines the phrase "ordinary time earnings" as follows: ordinary time earnings, in relation to an employee, means: (a) the total of: (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment: (A) a payment in lieu of unused sick leave; (B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and (ii) earnings consisting of over-award payments, shift-loading or commission; or (b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter - the maximum contribution base. 251 The definition in s 6(1) refers directly to earnings, namely earnings in respect of ordinary hours of work and earnings consisting of over-award payments, shift-loading or commission. The submissions of the parties in the proceedings focused in particular on the words "earnings in respect of ordinary hours of work". 252 In respect of both Mr Storey and Mr Le Clerc, cl 13.1 of the applicable enterprise agreement provided: 13.1 Full-time Employees - Ordinary working hours will be at an average of 38 hours per week over the full cycle of the relevant work roster. Ordinary working hours will not exceed: 13.1.1 Eight hours during any consecutive 24 hours, or up to twelve hours during any consecutive 24 hours where there is agreement between the Company and the majority of employees concerned in the relevant work area; or 13.1.2 152 in 28 consecutive days; except in the case of rostering arrangements which provide for the weekly average of 38 ordinary hours to be achieved over a period which exceeds 28 consecutive days. 253 There were also separate provisions for day workers and shift workers. 254 The Commissioner's position in the appeal was that the primary Judge erred in respect of the meaning of ordinary time earnings and ordinary hours worked. The primary error alleged by the Commissioner was that his Honour, although purporting to do so, did not have regard to the entirety of the complete statutory phrase as it appeared in s 6 of the SGA Act - that is, focused only on the words "ordinary hours of work", instead of the "earnings in respect of ordinary hours worked". The Commissioner also submitted that it was relevant to take into consideration the statutory history and purpose of the superannuation regime in interpreting the phrase "ordinary time earnings". 255 The primary Judge identified two possible meanings arising from the authorities as to the meaning of "ordinary hours of work", being: the hours of work to be found in the terms of applicable awards and industrial instruments, namely hours specified as standard hours to be paid at an ordinary time rate as opposed to those specified as additional hours to be paid at a special or higher rate; or the hours actually worked by each employee on a regular, normal, customary or usual basis. 256 The primary Judge ultimately held that "ordinary hours of work" had the second meaning and referred to hours that were typically or customarily worked. The Commissioner, however, submitted that the phrase "earnings in respect of ordinary hours of work" in the context of s 6(1) SGA Act must be understood as being more so aligned with the first meaning identified by the primary Judge. 257 In the proceedings there were extensive submissions as to the statutory purpose and history of the legislative superannuation regime. It is appropriate that I have regard to that statutory purpose and history, and relevant contextual material, in considering the meaning of "ordinary time earnings" and "earnings in respect of ordinary hours of work": Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503; Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664.

Ordinary time earnings: statutory purpose and history 258 It is uncontroversial that the purpose of the superannuation regime in the SGA Act and the SGC Act was to secure for Australian workers a minimum level of superannuation by the application of a charge to all employers in respect of their individual employees. 259 Helpful background information is set out in an Information Paper released by the then Treasurer in 1991 (Superannuation Guarantee Levy: An Information Paper Released by The Honourable John Kerin MP, Treasurer of the Commonwealth of Australia, December 1991) (Information Paper). Materially, the policy intent of the Government at the time was explained as follows: 1.1 The Government's policy is to ensure that all people have an adequate and secure level of income in retirement. To achieve this, the Government is committed to providing a minimum acceptable level of retirement income through the social security system and to encouraging private provision for retirement, for example, through superannuation. … 1.4 Under the SGLA, the Australian Taxation Office (ATO) will collect revenue where employers do not provide a minimum level of superannuation cover to their employees. These revenues will largely be redistributed in the form of superannuation contributions to complying superannuation schemes in respect of those employees for whom inadequate superannuation support has been provided. 260 The regime proposed in 1991, and eventually enacted, was formulated against the background of the award system covering a large proportion of Australian workers. As stated in the Information Paper: 3.25 The SGLA will operate independently of, but in conjunction with, the award system. Award superannuation support provided by employers will count towards the prescribed level of superannuation support. So long as the total level of employer support in respect of the employee under any complying superannuation scheme(s) meets the prescribed minimum standard, the Levy will not be payable. 3.26 The SGLA will not alter existing award provisions. Employers in default of their award obligations will be subject to existing award compliance mechanisms. Employers may not have satisfied their award obligations even though they have paid the Levy. 261 In the second reading speech to the Superannuation Guarantee Charge Bill 1992 and the Superannuation Guarantee (Administration) Bill 1992, the then Treasurer said, materially, as follows: The Bill, which applies from 1 July 1992, will encourage employers to provide a minimum level of superannuation support for employees. Where employers provide less than the minimum level of superannuation support, they will be liable for a superannuation guarantee charge. The superannuation guarantee charge - which will not be a deductible expense for employers - will be used to meet the superannuation contribution entitlements of the relevant employee and will be used, as I discuss later, to fund administration costs. I should stress that this mechanism is not intended to be the principal vehicle for the funding of employee's superannuation contribution entitlements. It is intended, instead, to be an incentive for employers to meet their own obligations, and to be a support mechanism for employees where those obligations are not met. In introducing the levy, the Government has been particularly conscious of minimising the labour cost impact of the levy on employers. We have designed the levy to be a floor under existing superannuation arrangements. All existing employer superannuation support that meets the provisions of the levy arrangements will count towards the minimum prescribed level of support. The level of superannuation support an employer is expected to provide will depend on the employer's annual payroll. For the 1992-93 year, employers with an annual payroll in excess of $500,000 will be expected to contribute 5 per cent of an employee's earnings base to a complying superannuation fund. This percentage will increase over the next nine years to 9 per cent. Employers with an annual payroll of $500,000 or less will be required to contribute 3 per cent, increasing on a slower transition schedule to 9 per cent. An employee's earnings base will depend on whether the employer was providing superannuation support for employees on 20 August 1991. Employers who, on that date, were contributing to a superannuation scheme which has an earnings base can continue to use that earnings base so long as it is not reduced. This will help minimise compliance costs. In any other case, the employer will be assessed against an earnings base that the employer is required to use under an industrial award or a base not less than ordinary time earnings. (Emphasis added.) (Mr Dawkins (Treasurer), Superannuation Guarantee (Administration) Bill 1992 Second Reading Speech, 2 April 1992, Australian Parliamentary Debates House of Representatives p 1763-1764) 262 In 1993 the Taxation Laws Amendment Act (No 4) 1993 (Cth) amended the definition of "ordinary time earnings" in s 6(1) of the SGA Act. Paragraph 13.11 of the Explanatory Memorandum stated as follows: 13.11 Ordinary hours of work, as stated above, may be specified in a statute or under an industrial award. If an employee is not covered by an award but has agreed to work a certain number of hours, those hours are the employee's ordinary hours of work. However, if there is no specific agreement, the ordinary hours of work will be the hours actually worked and any hours of paid leave. (Emphasis added.) 263 In 2004 the Superannuation Laws Amendment (2004 Measures No. 2) Act 2004 (Cth) (2004 Act) introduced the formula now found in s 23(2) SGA Act. The 2004 Act commenced on 1 July 2008. Relevantly the Explanatory Memorandum to the Superannuation Laws Amendment (2004 Measures No. 2) Bill 2004 (2004 Bill) stated as follows: Detailed explanation of new law 4.10 The amendments remove the mechanism for determining the notional earnings base of an employee by repealing sections 13, 13A, 13B and 14 of the SGAA 1992. Standardising the amount against which SG liability should be assessed to ordinary time earnings reduces complexity for employers, ensuring that employers only need consider ordinary time earnings as opposed to potentially multiple earnings bases for a variety of employees. Standardising earnings bases to ordinary time earnings means that where employees perform the same work under the same remuneration arrangements they can expect to receive SG contributions calculated against the same amount. [Schedule 1, item 5] 4.11 To ensure that employers still have a mechanism for reducing their charge percentage, section 23 of the SGAA 1992 will be amended. The amendments will remove subsections 23(2) to (5) and (9). The amendments will insert new subsection 23(2). This new subsection will provide a rule to reduce the charge percentage by a number calculated as: [formula] (Emphasis added.) 264 I also note the following passages in the Regulatory Impact Statement included in the Explanatory Memorandum to the 2004 Bill: REGULATION IMPACT STATEMENT Issue / Background 4.15 The Superannuation Guarantee (Administration) Act 1992 (SGAA 1992) permits the use of reduced notional earnings bases as set out in an industrial award or statute that applied before 21 August 1991. This creates complexities and inequities within the SG system. 4.16 When calculating an employer's SG liability, complexities arise for both employers and the Australian Taxation Office (ATO) in determining whether employers are entitled to use a reduced notional earnings base for their employees. 4.17 For example, the ATO will need to determine the appropriate notional earnings base for calculating an employer's liability to the SG charge when auditing compliance with the SG arrangements. This can require determining whether the employer is entitled to use a pre-1991 earnings base and, if so, the nature of that earnings base. Complexities for employers can also arise when businesses change ownership - in particular, the new owners will need to determine the appropriate earnings base to use in calculating the minimum superannuation contributions needed to avoid the SG charge. 4.18 Inequities arise when employees who earn equivalent amounts are entitled to differing levels of compulsory contributions based on their occupation, the composition/structure of their earnings, and/or the operation of an arrangement that commenced prior to them commencing work. 4.19 The interaction of the SGAA 1992 and award and statute provisions more generally also creates complexities around the relevant level of superannuation contributions payable under this Act to reduce or remove an employer's SG liability. 4.20 As the current arrangements are bound in legislation, addressing the anomalies present in the notional earnings base provisions of the SGAA 1992 requires direct Government intervention. Policy objective 4.21 The policy objective is to remove the complexity and inequity present in the current SG notional earnings base arrangements under the SGAA 1992. The basic principle underpinning this objective is that persons on similar overall levels of remuneration should receive similar levels of compulsory employer superannuation contributions. (Emphasis added.) 265 The Explanatory Memorandum noted the recommendation of the adoption of "Option 2", namely ordinary time earnings as a standardised earnings base, materially as follows: Employers Benefits 4.29 Employers will experience reduced complexity in determining the correct earnings base. This will be because all employees will have an earnings base of ordinary time earnings under this option rather than each employee having potentially different earnings bases depending on their industrial award, superannuation fund trust deed or law which may currently prescribe earnings bases. Cost 4.30 However, some employers will be required to make increased contributions if they are currently using an earnings base less than ordinary time earnings. These employers will also experience some initial administrative costs associated with system adjustments to determine the ordinary time earnings of each employee. The adjustment will only affect employers who need to capture different amounts. For instance an employer who currently does not capture a payment in calculating superannuation contributions that form part of an employee's ordinary time earnings will have to adjust their systems to capture that payment. Employees Benefit 4.31 The inequality in the level of contributions between equivalent employees will be removed, resulting in higher retirement savings for affected employees. Employees who currently have their superannuation calculated on an earnings base less than ordinary time earnings may receive higher contributions. (Emphasis added.)

Ordinary time earnings: previous authorities 266 During the course of argument, the parties referred to a number of authorities that may have some application to the present case by analogy, namely Kezich v Leighton Contractors Proprietary Limited [1974] HCA 50; (1974) 131 CLR 362 (Kezich), Catlow v Accident Compensation Commissioner [1989] HCA 43; (1989) 167 CLR 543 (Catlow), Scott v Sun Alliance Australia Ltd [1993] HCA 46; (1993) 178 CLR 1 (Scott), Quest Personnel Temping Pty Ltd v Commissioner of Taxation [2002] FCA 85; (2002) 116 FCR 338 (Quest) and Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55; (2003) 201 ALR 271 (ACE). It was common ground that none of the authorities were precisely on point, and I note further that all of these decisions predated the legislation currently before the Court. However, there is dicta in each case which is relevant. I now turn to briefly consider these authorities. 267 In Kezich the appellant had applied for compensation under the Workers' Compensation Act 1912-1973 (WA) after he was totally incapacitated by injury. The relevant legislation provided that he was entitled to be paid compensation for the amount equal to his "weekly earnings" computed in accordance with the legislation. Materially the legislation stated: For the purposes of this Act, 'weekly earnings' means the amount of the ordinary wage or salary (including any over award payment) the worker would have received for the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury. 268 The appellant's employment was subject to an award which provided, inter alia, that "the ordinary working hours shall be 40 in a week to be worked in five days", the award fixed the rates of pay which were to be paid for these "ordinary working hours" and provided an overtime payment at an increased rate for work in excess of those hours. The Court noted that, in fact, the appellant was engaged on the basis that he would normally work sixty hours per week (that is ten hours six days per week). The question for decision was whether the appellant was entitled to an award of $167.50 per week which should for the purpose of his application be taken as the amount which he ordinarily earned prior to the accident, or whether he was not entitled to an award at a higher rate than $91.40 which represented the pay he would have received if he had worked forty hours per week. 269 Gibbs J, with whom the other members of the Court concurred, noted that the legislation dealt with compensation payable to workers generally, and that although most workers were employed in accordance with the terms of an industrial award it was not a condition of the liability to pay compensation and it would not be legitimate to construe the legislation by placing upon the words "ordinary hours" the meaning they happened to bear in an industrial award governing employment of a particular kind. His Honour continued at 364-365: …What has to be determined is the meaning that those words have in the Act and since the words "ordinary hours" are common English words they should, in accordance with established principles of statutory construction, be understood in their natural meaning unless the context otherwise requires. 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. With respect, I cannot agree with the suggestion that if the phrase is construed in this way the word "ordinary" would add nothing to its meaning. If the word "ordinary" where it appears before "hours" had been omitted from cl. 2, it would not have been clear whether, in the common case in which a workman's hours of employment had varied from week to week, depending upon whether he had worked overtime and on how much overtime he had worked, the hours mentioned were to be determined by ascertaining what hours were ordinarily worked or by taking an average or in some other way. As the clause stands, what has to be determined is what were the hours the workman would ordinarily have worked had he not been incapacitated. The workman is then to be paid the wage he would ordinarily have received for working those hours. The clause is not concerned with the question whether the "ordinary wage" included something extra for overtime, but solely with the question what was ordinary for the particular worker concerned. 270 In his judgment, Mason J observed at 368-369: The respondent's suggested construction which found favour with the majority in the Full Court produces more formidable problems. According to this view the compensation payable is referable to the ordinary (standard) rate of pay for the ordinary (non-overtime) hours of work in the particular occupation, whether the employment is regulated by an industrial award or not. Where the employment is regulated by such an award it will fix what are the ordinary hours of work and what is the ordinary rate of pay. Where the employment is not so regulated, other evidence will be required to establish what is standard in the relevant occupation. This approach reads the word "ordinary" in the expression "ordinary hours that he would have worked" as referring to hours which attract no additional payment, i.e. for which overtime is not payable; it thereby avoids the conversion from "ordinary" to "ordinarily". This approach has the attraction of providing a measure of compensation easily calculated when the worker is working the ordinary hours each week under an industrial award. It is, however, a very different story when one moves away from this routine situation. Special problems arise in the case of a casual or shift worker whose hours of work are remunerated otherwise than by reference to the ordinary rate of pay. Assuming that such a worker intended to continue casual or shift work it could not be said that, if he were not incapacitated, he would have worked any "ordinary hours" in the sense which the respondent gives to that expression. An endeavour was made to vault this yawning chasm by saying that the hours which would have been worked not exceeding the number in a week stipulated in the award should be treated as ordinary hours. However, there is no warrant for this course in the basic interpretation put forward by the respondent. Faced with a choice between the two alternatives I prefer that advocated by the applicant. It is subject to grammatical criticism, but this so it seems to me is of less importance than the serious criticism that the competing construction does not enable one to calculate compensation for certain classes of workers, except by deserting that construction when that difficulty arises. 271 In Catlow the appellant was totally incapacitated for work because of a compensable injury. Pursuant to the Accident Compensation Act 1985 (Vic) (AC Act), the appellant was entitled to weekly compensation payments. 272 The amount of the weekly payment was provided for in s 93(4) of the AC Act: Subject to this section, a weekly payment to a worker shall be an amount equivalent to - (a) 80 per cent of the worker's pre-injury average weekly earnings; or (b) $400 - whichever is the lesser. The phrase "worker's pre-injury average weekly earnings" was defined in s 95(1) of the AC Act as: (a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been employed by the same employer for the period; or (b) the average weekly earnings for the period less than 12 months preceding the relevant injury for which the worker has been continuously employed by the same employer - calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week. The phrase "normal number of work hours" was in turn explained in s 95(3) of the AC Act: For the purposes of sub-section (1) - … (ba) if the normal number of work hours per week is fixed in any industrial award applicable to a worker, the worker's normal number of hours per week in that work shall be deemed to be the number so fixed; (c) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1); … 273 The appellant conceded that the phrase "the worker's ordinary time rate of pay" in s 95(1) did not include any overtime rate, and that an ordinary time rate of pay was fixed for his work under the terms of his employment. However he contended that the "normal number of hours per week" meant the number of hours usually worked by a worker and that they included any overtime hours usually worked during the week. 274 The leading judgment of the majority was delivered by McHugh J. His Honour found that the appellant's normal number of hours was fixed by an industrial award and that, where the normal number of hours was fixed, for the purposes of determining the worker's pre-injury average earnings, they included those standard hours excluding overtime and not the number of hours the appellant usually worked. His Honour formed that view: Against the industrial background of awards and agreements fixing a number of ordinary hours per week, where it seemed 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; In light of various provisions of the Act which assumed that the "normal number" of hours per week would be fixed by the industrial award or agreement; Where the general policy of the Act was that hours actually worked were not to be taken into account if they exceeded the prescribed number of hours, being 35 hours per week; In view of the history of the Act, which supported the view that overtime hours usually worked were not to be taken into account in determining the worker's "normal number of hours" 275 Scott concerned Tasmanian workers' compensation legislation. The appellant was engaged as a casual labourer and was paid pursuant to the Tanning Industry Award 1987. As a casual worker, the appellant was paid in accordance with cl 13 of the relevant award: (a) A casual worker is a worker engaged and paid as such. A casual employee for working ordinary time shall be paid per hour, one thirty-eighth of the weekly rate prescribed by this Award for the work the employee performs plus twenty per cent. The employment of a casual worker may be terminated by the giving of one hour's notice by either side. (b) A period of engagement shall not exceed ten working days continuously, provided that the period may extend beyond ten days with the written consent of the Union Branch Secretary. 276 Initially, after being injured and becoming incapacitated for work, the appellant was paid for 38 hours per week, but the respondents later applied to the Workers Compensation Commissioner for review of the payments. 277 Section 69(1) of the Workers Compensation Act 1988 (Tas) provided: Subject to this section, where total or partial incapacity for work results from an injury suffered by a worker and where the existence of such total or partial incapacity is supported by a certificate in the prescribed form from a medical practitioner, the compensation payable to him under this Act is, in addition to any lump sum that may be payable under section 71 or 72 in respect of that injury - (a) in the case of the total incapacity of the worker for work, weekly payments equal to - (i) the average weekly earnings of the worker; or (ii) the ordinary time rate of pay of the worker (as expressed by reference to a week) for the work in which he was engaged immediately before the period of incapacity, whichever is the greater. … 278 The critical phrase to be interpreted in Scott was "ordinary time rate of pay". Mason CJ, Brennan, Dawson, Toohey and McHugh JJ observed that the expression "ordinary time rate of pay" was well known in industrial relations. Their Honours found at 5 - 6: … Unless the context other requires, "ordinary time rate of pay" means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours… 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 the 1988 Act was enacted the rates of pay of most workers were covered by industrial awards… 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 may not distinguish between ordinary and other time rates of pay or may provide 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. (Footnotes omitted.) 279 Their Honours concluded that the use of the expression "ordinary time rate of pay" was intended by the legislature to apply only to rates of pay fixed by industrial awards or agreements, and not by individual employment contracts. 280 The applicant in Quest was contracted by the Victoria Police to provide data entry operators to work in the Central Data Entry Bureau. The employees engaged by Quest to carry out this contract received offers of employment that specified that the hours of work were a minimum of three standard shifts per week, five standard shifts per week (most commonly), or seven hours and 36 minutes per rostered day or between 8.00 am and 4.00 pm. In some cases, the employees were simply required to work "As notified by Quest from time to time". 281 The Commissioner assessed the employer as having superannuation guarantee shortfalls in the financial years ending 30 June 1997 and 30 June 1998, because superannuation contributions had not been made by Quest in respect of the actual hours worked by its employees. The solicitors for Quest filed a notice of objection to these assessments, which was disallowed by the Commissioner. Quest then applied to the Administrative Appeals Tribunal (Tribunal) for review of that decision. 282 The Tribunal dismissed Quest's application and found that the assessments were correct because they had calculated the shortfall on the basis of the "ordinary hours of work", being the actual hours worked by Quest's employees who were doing work for the Victoria Police. 283 The definition of "ordinary time earnings" as found in s 6 of the SGA Act at that time was as follows: ordinary time earnings, in relation to an employee, means: (a) the total of: (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment: (A) a payment in lieu of unused sick leave; (B) a payment in lieu of unused annual leave within the meaning of subsection 26AC(1) of the Income Tax Assessment Act 1936 [(Cth)]; (C) a payment in lieu of unused long service leave within the meaning of subsection 26AD(1) of the Income Tax Assessment Act 1936; and (ii) earnings consisting of over-award payments, shift-loading or commission; or (b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the contribution period - the maximum contribution base. 284 For the purposes of the proceeding, the focus was on the phrase "ordinary hours of work" in subpar (a)(i) of that definition. 285 After examining the decision of the Tribunal, Gray J continued: 18 The definition of "ordinary time earnings" in s 6 of the Act is designed to cover all situations of employment. Many employees work on terms and conditions that are specified by awards or industrial agreements. In such cases, it is common for the instrument governing the terms and conditions of employment to specify what are the ordinary hours of work. In some cases, it may be necessary to construe the instrument, for the purposes of determining what earnings can be regarded as ordinary time earnings for the purposes of the Act. An example is to be found in Deputy Commissioner of Taxation v Australian Communication Exchange Ltd (2001) 48 ATR 426, in which the Full Court had to construe a state industrial award for the purpose of determining what were the ordinary time earnings of casual employees. 19 Counsel for the applicant in the present case attempted to equate the offers of employment made to the applicant's employees with such an industrial award or agreement. He contended that the employees could only be obliged to work the minimum number of standard shifts specified in the offer of employment, so that all work done in excess of these standard shifts should be regarded as overtime, and therefore not as ordinary hours of work. The analogy fails. The offers of employment specified the minimum hours for which an employee could be called upon to work. The clear import of the word "minimum" was that an employee could be expected to be asked to work more than five standard shifts in a fortnight. An industrial award or agreement usually expresses the maximum hours that an employee may be required to work. It is true that provision is often made for work beyond such standard hours, but it is usual for the award or agreement to provide that such additional work is to attract a higher level of remuneration. This is what marks it out as work performed outside ordinary hours. 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 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. (Emphasis added.) 286 His Honour turned to the decisions of the High Court in Kezich and Catlow, and, after noting that the outcomes in those cases could be contrasted, continued: 26 The distinction between these two cases appears to rest upon the proposition that the fixing by collective means of standard hours of work, coupled with a provision for remuneration at a higher rate of hours worked beyond those standard hours, will usually lead to the conclusion that the standard hours fixed are to be considered as "normal hours" or, perhaps, "ordinary hours". As I have said, that is not the present case. The offers of employment accepted by the employees in the present case did not purport to fix standard hours, with remuneration at a higher rate for hours in excess of them. They fixed only minimum hours, with hours worked beyond the minimum paid at the same rate as those worked within it. 27 As is demonstrated by Kezich, 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… (Emphasis added.) 287 Gray J noted decisions of the Full Court of the Supreme Court of South Australia in Workers Rehabilitation & Compensation Corporation v Harle [1994] SASC 4023; (1994) 61 SASR 507 and Ashford v The Corporation (Halliburton) Geophysical Services Inc (1994) 57 IR 325 where the term "overtime" was considered. His Honour quoted Perry J at Harle, including the following at 519: …if a particular worker, notwithstanding the terms of the award, is engaged upon the basis that he would normally work a span of hours different from the normal hours of work contemplated by the award. A worker who is engaged on such terms could, in my opinion, successfully contend that, notwithstanding the terms of the award, his normal hours of work were defined specifically by the actual arrangement entered into with the employer. 288 His Honour concluded on the basis of those authorities that the Tribunal had correctly concluded that the "ordinary hours of work" of an employee of Quest in these circumstances were the "normal, regular, customary or usual hours worked by that employee". It followed that 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. His Honour also considered that this conclusion operated to promote the underlying purpose or object of the Act, and observed: 31 … 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. … The point is that the fixing of the extent of the obligation to pay superannuation contributions (or the charge in lieu of those contributions) should not be left to the employer concerned. It should depend upon the objective circumstances of the work performed. Otherwise, the underlying purpose or object of the Act will be undermined. … 289 The High Court in ACE considered the meaning of "ordinary time earnings" in the context of an objection to the Deputy Commissioner's assessment of the appellant's superannuation guarantee shortfall. The appellant operated a national telephone relay service and engaged casual officers who were covered by the Clerical Employees Award - State (Qld) made under the Industrial Relations Act 1990 (Qld). 290 Clause 3.5 of the award materially provided: … (2) Contributions (a) Amount - Every employer shall contribute on behalf of each eligible employee as from 20 November 1989 an amount calculated at 3% [at the time of the making of the award] of the employee's ordinary time earnings, into an Approved Fund as defined in this clause. Each such payment of contributions shall be rounded off to the nearest ten (10) cents. … (3) Definitions … (d) 'Ordinary time earnings' shall mean the actual ordinary rate of pay the employee receives for ordinary hours of work including shift loading, skill allowances and supervisory allowances where applicable. The term includes any over-award payment as well as casual rates received for ordinary hours or work. Ordinary time earnings shall not include overtime, disability allowances, commission, bonuses, lump sum payments made as a consequence of the termination of employment, annual leave loading, penalty rates for public holiday work, fares and travelling allowances or any other extraneous payments of a like nature. (Emphasis added.) 291 Clause 4.1 of the award provided that "The ordinary hours of work prescribed herein" could be worked on not more than five consecutive days in a week, Monday to Saturday inclusive, subject to the following: (i) Except as otherwise specifically provided herein, ordinary hours may be worked between 6.30 am to 6.30 pm on Mondays to Fridays inclusive, and between 6.30 am and 12.30 pm on Saturdays. Such spread of ordinary daily working hours may be altered as to all or a section of employees provided that there is agreement between the employer and the employee or the majority of employees involved. (ii) Ordinary hours worked by all employees, excluding casuals, on a Saturday between the hours of 6.30 am and 12.30 pm shall be paid for at the rate of time and a-quarter. (iii) Any arrangement of hours which includes a Saturday as ordinary hours shall be subject to agreement between the employer and the majority of employees involved. 292 The Deputy Commissioner assessed the appellant as liable to pay a superannuation guarantee charge, on the basis that he considered that the appellant was otherwise required to make superannuation contributions in the amount calculated in respect of all amounts paid to the officers, regardless whether work was done during the defined ordinary hours or not. 293 The task identified by the Court was to construe, in particular, cl 3.5, being the clause that relevantly stated the obligation of the appellant to make a contribution measured by and in respect of an employee's "ordinary time earnings". 294 The proceedings were complicated by the different categories of employees, in particular full-time, part-time and casual employees. McHugh, Gummow, Callinan and Heydon JJ accepted at [39] that the Award did not prescribe the ordinary hours which the employer must offer, or a casual employee must work or be willing to work; rather: …What the award does specify is the spread of hours within which an employee may work for ordinary rates of pay. The fact that no work need necessarily be performed within those hours does not alter their quality as ordinary hours, or the nature of the rates of pay, and therefore earnings that they are to attract. 295 Their Honours continued: 43. We do not accept that it is only the additional entitlement (that is, the difference between the ordinary rate of pay multiplied by the overtime hours worked and the total pay received for overtime work) that is to be regarded as "overtime" within the meaning of cll 3.5, 4.2 and 4.7 of the award. The definition in cl 3.5(3) of "ordinary time earnings" by reference to the actual ordinary rate of pay is intended to be read, and should be read, as the earnings for work done in ordinary time at the ordinary (not overtime) rate of pay. The award itself is the result no doubt of compromises. It is not for this court to reach a compromise of those compromises. The flexibility that casual work offers, and the desire of workers to engage in it, might well have been regarded as recompense for some other advantage forgone, either by the employee or employers or both of them. The casual "loading" of 19% might have been intended to offset all disadvantages, or may be less than it would be, but for the obligations that the appellant owes under the Acts. The framing of the definition of "ordinary hours" in the way that it was might itself have been of importance and advantage to casual employees as well as to the appellant. The Full Court saw as a desirable end, an interpretation of the award which achieved "compatibility between the positions of full-time, part-time and casual employees". An assumption that compatibility be achieved or should be attempted between different classes of employees can provide no certain or justifiable basis for the construction of the award. And although "means" might conceivably be construed as "includes" such a construction, in a case, as this one is, of a comprehensive definition omitting the word "includes", is, in our opinion an improbable one. It is not without significance that in adopting the construction that it did, the Full Court said that it was one that might "not readily spring to mind". 44. The correct approach is not, with respect, that adopted by the Full Court, to search cl 3.5(3)(d) of the award to see whether there is anything in it "which would exclude from 'ordinary time earnings' that portion of casual employees' remuneration for working in overtime periods to which they would have been entitled if they had not worked 'outside or in excess of' ordinary working hours." (Footnotes omitted, emphasis added.) 296 The majority of the High Court allowed the appeal, in summary finding that the employer was only required to make superannuation contributions in accordance with what was defined in the award as ordinary time earnings and ordinary hours of work in order to avoid the imposition of the superannuation guarantee charge.

Consideration of general principles 297 Brennan and Gaudron JJ pointed out in Catlow at 550 that interpretations placed by tribunals and courts on words found in a different statutory context were of little assistance in the interpretation of the critical phrases before the Court in that case. Similar principles operate in respect of the legislation before this Court. To that extent, observations in respect of concepts of "ordinary hours" made in such cases as Kezich, Catlow, Scott, Quest and ACE must be treated with caution in the present context. However, certain relevant principles can be distilled from those cases and, read with the relevant legislative provisions in the SGA Act and SGC Act, and the extrinsic material to which I referred earlier in this judgment, warrant the following findings. 298 First, as noted by the primary Judge in these proceedings at [55], the term "ordinary" is one which frequently occurs in industrial agreements. I would go further and note that the term "ordinary" is frequently used in industrial agreements, and legislation referable to employment relationships, in respect of earnings and hours worked. In this respect, and notwithstanding the caution with which interpretations accorded to these - or similar - expressions should be treated, I note that in Catlow, Scott and ACE the High Court construed "ordinary time earnings" and "ordinary time rate of pay" as meaning earnings payable for ordinary, not actual, hours as specified in awards. This is not surprising, in the sense that if the legislature had intended the relevant issue for determination in those cases to be the actual hours worked by employees, including any amounts payable for shift work, overtime or other penalties, it would have been a simple measure to legislate so. The same principle applies in this case - if the legislature had intended that "earnings in respect of ordinary hours worked" meant "earnings in respect of actual hours worked", it could have legislated so. 299 Second, the primary Judge referred to the interpretation of "ordinary hours" in Kezich as a reference to that which is "regular, normal, customary, usual" (at [107]). However, it is evident that the legislation the subject of consideration in Kezich required a determination by the High Court as to the actual hours which the employee would have worked in that case. I note in particular the definition of "weekly earnings" in cl 2 of the first Schedule to the legislation considered in Kezich, namely the amount of the ordinary wage or salary (including any over award payment) "the worker would have received for the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury." The legislation there clearly concerned the hours the injured employee would have actually worked - not the standard hours under the award. Kezich was subsequently distinguished in Catlow and Scott for that very reason. As McHugh J said in Catlow at 565-566: 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. It is true that both Gibbs J. (at p 364) and Mason J. (at p 367) also said that the worker in Kezich "would normally work sixty hours per week". But, as the Industrial Commission of New South Wales pointed out in John A. Gilbert Pty. Ltd. v. Irving ([1962] A.R., at p. 318), "normal" may mean "regular or usual, or it may mean conforming to standard". Thus, while it was accurate in Kezich to speak of the worker's usual hours as his normal hours, it does not follow that in s.95(1) "normal number" means "usual number". Indeed, the different context and history of the phrase "normal number of hours per week" in s.95(1) dictate that it be interpreted as meaning the ordinary or standard number of hours worked and not the usual number of hours worked. (Emphasis added.) (See also Scott at 12.) 300 To that extent, I consider Kezich to be distinguishable from the circumstances currently before the Court. 301 Third, the definition of "ordinary time earnings" in s 6(1) of the SGA Act is referable to earnings in respect of ordinary hours of work. By its terms, the section specifically excludes payments in lieu of unused sick leave, unused annual leave and unused long service leave, and accordingly contemplates payments relating to used sick leave, used annual leave and used long service leave. As the Commissioner pointed out in submissions, the reference in s 6(1) to earnings "in respect of ordinary hours of work" reflects entitlements assessed by a consideration of the terms and conditions of employment set out in industrial instruments or agreements, which in turn specify the ordinary hours of work and the ordinary rate of pay for those hours. Such entitlements are not normally assessed by a consideration of the hours employees customarily, typically or routinely work in actual practice. 302 Fourth, the definition of "ordinary time earnings" in s 6(1) of the SGA Act makes separate and express provision for earnings which are not paid at the standard rate for standard hours. In particular, s 6(1)(a)(ii) refers to earnings consisting of over-award payments, shift-loading or commission - these earnings are not included in "earnings in respect of ordinary hours of work" in s 6(1)(a)(i). It follows that if "earnings in respect of ordinary hours of work" were simply earnings for hours actually worked, such earnings would naturally include over-award payments, shift loadings and commissions paid in respect of those hours in appropriate circumstances. An interpretation favouring a construction whereby "earnings in respect of ordinary hours of work" did not include such non-standard payments attributes meaning to s 6(1)(a)(ii). An interpretation of "earnings in respect of ordinary hours of work" in s 6(1)(a)(i) extending to non-standard of hours of work, including overtime payments, would render s 6(1)(a)(ii) otiose, and is therefore not a desirable construction of s 6(1). 303 Fifth, while s 6(1) of the SGA Act refers to "earnings in respect of ordinary hours of work" it may be distinguished from other provisions in the SGA Act which deal with "salary or wages". I note, for example, s 19(1) of the SGA Act which sets out the formula for calculating an employer's individual superannuation guarantee shortfall for an employee for a quarter as the amount worked out as being: Total salary or wages paid by the employer to the employee for the quarter x (Charge percentage for the employer for the quarter divided by 100) 304 "Salary or wages" is defined by s 11(1) of the SGA Act as follows: (1) In this Act, salary or wages includes: (a) commission; and (b) payment for the performance of duties as a member of the executive body (whether described as the board of directors or otherwise) of a body corporate; and (ba) payments under a contract referred to in subsection 12(3) that are made in respect of the labour of the person working under the contract; and (c) remuneration of a member of the Parliament of the Commonwealth or a State or the Legislative Assembly of a Territory; and (d) payments to a person for work referred to in subsection 12(8); and (e) remuneration of a person referred to in subsection 12(9) or (10). (Emphasis added.) 305 The definition of "salary or wages" in s 11(1)(ba) appears to include payment to an employee of all amounts they have earned in respect of their labour - apparently unlike "ordinary time earnings" which is not so defined. 306 In relation to this point it is important to note the specific attention given by Parliament to the distinction between "ordinary time earnings" and "salary or wages" as an earnings base referable to the minimum superannuation contribution contemplated by the SGA Act and the SGC Act. In particular, I note the Explanatory Memorandum to the 2004 Bill, and the 2004 Act which introduced s 23(2) of the SGA Act in its current form. The Explanatory Memorandum explained the consideration given by Parliament to retaining the then provisions whereby employers could make superannuation contributions calculated as a percentage of an employee's "notional earnings base" (by reference to industrial instruments, or salary and wages which included overtime: see Information Paper Appendix C cl 2), or alternatively moving to "option 2" which envisaged ordinary time earnings as the earnings basis for calculation of the minimum superannuation contribution by employers under the regime. Relevantly the Explanatory Memorandum stated: 4.48 The preferred option is option 2, which removes all references to industrial awards and statutes from the SGAA 1992 and adopts ordinary time earnings as the standard notional earnings base. 4.49 This option would remove the complexity and inequity present in the current arrangements without imposing the same level of cost on employers and Government as an earnings base, based on total salary and wages' would. (Emphasis added.) 307 To that extent, it appears that in 2004, when the earnings basis in s 23(2) SGA Act was being considered, Parliament rejected the continuation of the inclusion of overtime in the relevant earnings base of workers for that purpose. 308 Sixth, and as is clear from extrinsic material, the superannuation regime was intended to encourage employers to provide a minimum level of superannuation support for employees. However, the introduction of ordinary time earnings as the standard against which the superannuation liability should be assessed was also intended to reduce complexity for employers. The Explanatory Memorandum to the 2004 Bill explained that standardising the earnings base to ordinary time earnings meant that where employees performed the same work under the same remuneration arrangements they could expect to receive superannuation contributions calculated against the same amount. 309 The Commissioner submitted that contributions by employers at a specified level by reference to ordinary time earnings are workable and practical if employers are able to do this by reference to the terms of the awards and instruments which set out the ordinary hours worked at ordinary rates. If ordinary time earnings require an assessment of the earnings in respect of typical or customary hours of work of individual employees - which presumably would vary from employee to employee, and would also fluctuate depending on the amount of overtime worked - the level of contributions necessary to avoid a shortfall for each employee would be uncertain, or potentially so impractical as to be unworkable, or both. 310 The respondent rejected the Commissioner's submission on this point, arguing in summary that: Employees are employed on a regular or usual basis under rosters or under arrangements which are known; The regime operates on a self-assessment basis, and it is unlikely that employers would have difficulty identifying what are the regular or usual hours of their employees; It is not difficult for the Commissioner to ask for rosters or other material which would demonstrate the usual hours of employees. 311 As a general proposition the workability, practicality or otherwise, of legislation is not determinative of the preferred construction by the Court: Wingecarribee Shire Council v De Angelis [2016] NSWCA 189 at [20], Minister Administering the Water Management Act 2000 v Sharkey [2017] NSWCA 319; (2017) 226 LGERA 322 at [36]. Nonetheless, it is relevant to identifying the intent of Parliament that a particular construction of legislation results in reduced complexity for the body charged with the relevant responsibility: Lord Reid in Gill v Donald Humberstone & Co Ltd [1963] 1 WLR 929 at 934. This is particularly the case in respect of this regime, where a key purpose of the 2004 amendments to the SGA Act was to reduce complexity. 312 Finally, at the hearing there were extensive submissions concerning whether, hypothetically, the meaning of "ordinary time earnings" could vary depending on the source of the employees' earnings base. In particular, a question arose whether the meaning of "ordinary time earnings" would be different for an employee whose ordinary hours of work were explicitly stated in an industrial instrument or contract, compared with an employee whose relevant working arrangements were not so obviously defined. The Union submitted that the construction of "ordinary time earnings" advanced by the appellants and the Commissioner would lead to different meanings depending on whether or not an employee's ordinary hours of work were explicitly stated. The Union submitted further that the approach of the primary Judge in construing "ordinary time earnings" by reference to actual hours of work was correct, and would lead to consistency across varying employment arrangements (see WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 362 ALR 311 at [118]-[120]). The Commissioner submitted that the concept of "ordinary time earnings" would not change, irrespective of the source of the employment arrangements, although the manner of determining what a particular employee's ordinary time earnings were, could vary. 313 While the position advanced by the Union has some force, ultimately I do not accept it. In circumstances where the ordinary hours of an employee are not explicitly defined by an industrial instrument or contract, I accept that some reference to the actual hours worked by the employee would be necessary. However, this would only be to infer what the arrangement was as to the ordinary hours of work of that particular employee. By extension, that does not mean that the meaning of "ordinary time earnings" is different in respect of such employees, or that ordinary time earnings should be determined, for all employees, according to a Kezich style analysis by reference to actual hours worked. 314 In light of these findings, I conclude that the expression "ordinary time earnings" in ss 6(1) and 23(2) of the SGA Act, in the circumstances of the present case where "ordinary hours of work" are defined by the Enterprise Agreements, means earnings in respect of those ordinary hours of work as defined.

Ordinary hours of work: grounds of appeal 4, 6 and 7

Ground of appeal 4 315 In ground of appeal 4 the appellants claimed that the primary Judge erred in finding that, in respect of Mr Storey, the "additional hours" prescribed under the Bulk Operations Enterprise Agreement and Bulk Operations Departmental Agreement were ordinary hours of work within the meaning of s 6(1) of the SGA Act, and/or that ordinary hours of work included additional hours in fact worked by Mr Storey. 316 In the Bulk Operations Enterprise Agreement "additional hours" were defined as follows: 6.3 Additional Work Hours Employee's will be required to work additional hours under the annualised salary system established at clause 6.2. Work undertaken on Additional hours will not be the subject of restrictions. All work required by the company on the Bulk Berth either directly or indirectly as part of operations will be required to be undertaken while on additional work hours. Work undertaken as part of additional hours and credited against additional hours will include training and attending to administrative and improvement activities away from the berth, e.g., involvement on OHS committees, work request meetings, improvement initiatives, etc. These activities will be credited on an hour-for-hour basis as part of the additional hours allocation. All training times will be managed by the Team Leader. Whenever possible the company will attempt to notify employees of the requirement to work additional hours within 1 hour either side of the nominal shift time. While the company will be mindful of employees work/life balance in calling employees to attend for additional work hours, employees will be expected to attend work in circumstances where one hours notice cannot be given. … 317 The additional hours of work were "additional" to the base salary, public holidays and shift penalties set out in cl 6.2 of the Bulk Operations Enterprise Agreement. Clauses 6.1 and 6.2 provided: 6.1 Annualised Salaries All employees are remunerated with an annualised salary which provides employees with a secure income whilst ensuring safe, timely and effective operations. The annualised salary is made up of a base rate and a component which absorbs all additional payments such as penalty rates, allowances, shipping shift premiums, public holiday loadings and payouts and payment for additional hours worked outside the normal rostered hours to meet the requirements of the position. Work allocation will take place across all hours required by employee's covered by this Enterprise Agreement as per Clause 6.3 [Additional Hours]. 6.2 Calculation Formula for Annualised Salary Annualised Salary = Base Salary + Public Holidays + Shift Penalties + Additional Hours Base Salary = Ordinary Stevedoring Hourly Rate *38 hrs * 52 weeks Overtime = 5.5 hrs overtime per week x 2.1761 x Ordinary Stevedoring Hourly Rate The additional work hours component is not paid during annual leave and is calculated for 47 weeks rather than 52 weeks… … 318 The appellant submitted that the primary Judge erred in focusing on the operational justification for the obligation to work additional hours and the payment of what is in essence prepaid overtime. In the appellant's submission, this focus was misdirected, because the operational justification for the inclusion of provisions concerning the additional hours did not alter the fact that the additional hours were not part of the ordinary hours of work, being the 38 hours referred to in the Enterprise Agreements. 319 In the alternative, the primary Judge found that the additional hours in fact worked by Mr Storey formed part of the ordinary hours of work, and therefore contributed to their ordinary time earnings for the purposes of s 23 of the SGA Act. 320 The respondent submitted in summary that, because of the way in which the relevant salary was structured and administered as a practical reality, none of what the appellants contended was "the additional hours component" was, in reality, a payment for "overtime hours" actually worked. Rather, it was simply "earnings" that were "in respect of" the hours of work the employee was required to perform during the fortnight. The respondent submitted further that there was no proper ground for distinction between earnings "in respect of" actual hours of work and earnings "in respect of" ordinary hours of work in the given fortnightly period, and the label given by the parties to various components of payments was not relevant. The purpose of the Enterprise Agreements was to guarantee that employees would be available 365 days per year and 24 hours per day to meet operational needs so that there could be an effective and efficient business. 321 In my view the "additional hours" prescribed by the relevant Enterprise Agreements did not fall under the rubric of ordinary hours of work - rather they constituted overtime amounts which were distinctly identifiable. 322 First, although his Honour was not persuaded that the labels of "base salary", "public holidays", "shift penalties" and "additional hours" were conclusive as to whether they formed part of ordinary hours of work, I consider that the separate salary components were relevant to ascertaining the intent of the parties as to what aspects of salary fell within "ordinary hours of work". The natural meaning of "additional hours" is: work undertaken outside ordinary hours of work. 323 Second, as the appellants correctly submit, the fact that an employee receives regular overtime payments does not mean that the payments cease to be characterised as being paid in respect of overtime. The words "earnings in respect of" cannot be concerned with simply the hours customarily or typically worked, but is concerned with earnings referable to ordinary hours. 324 Third, for reasons already given in this judgment, the fact that additional hours may have been actually worked on a customary basis is not to the point. 325 Fourth, I note that cl 7.2 of the Bulk Operations Enterprise Agreement referred to "additional work" and "overtime" as separate concepts. However in my view this did not alter the character of "additional hours" as being work performed outside ordinary hours of work, calculated on a penalty premium. It was not controversial that "additional hours" represented: … prepayment for overtime based on the historical average overtime hours worked in that plant or department… to assist the Company budget overtime hours worked and to enable employees to have some certainty regarding the amount of their salary payments. (Affidavit of Leanne Noelle Thompson affirmed 11 August 2017) 326 In my view ground of appeal 4 is substantiated.

Ground of appeal 6 327 In ground of appeal 6 the appellants claim error by the primary Judge in finding that ordinary hours of work included earnings of Messrs Storey and Le Clerc in respect of penalty rates on public holidays, paid in relation to public holidays not worked by Messrs Storey and Le Clerc. 328 The appellants conceded before the primary Judge that the ordinary time earnings of Messrs Storey and Le Clerc did include penalty rates paid to them in respect of public holidays that were actually worked by Messrs Storey and Le Clerc. The appellants do not seek to demur from that concession in this appeal; however, the appellants contend that the first appellant was not required to include in the calculation of ordinary time earnings amounts paid in respect of public holidays that Messrs Storey and Le Clerc were not required to work and did not actually work (notwithstanding that this may be somewhat inconsistent with the concession made below). 329 Clause 17 of the Enterprise Agreements provides the following: Employees may be required to work seven day shift work to meet the needs of the business. These employees will be required to work Sundays and Public Holidays as ordinary working days. 330 The appellants submit that the effect of cl 17 of the Enterprise Agreements is that public holidays which employees are required to work are deemed to be "ordinary working days" for seven-day shift workers. Conversely, the appellants submit that public holidays which seven-day shift workers are not required to work are not "ordinary working days". The extension of this submission is that the first appellant was not required to make superannuation contributions in respect of public holidays on which Messrs Storey and Le Clerc were not required to work, and did not work, as these are not considered "ordinary hours of work" under the Enterprise Agreements. 331 The affidavit of Mr Fitzgerald of 22 May 2017 indicates that a notional public holiday's penalty payment was included when calculating aggregate salaries during the relevant period. That notional payment assumed that the employee would be required to be work six out of 12 public holidays. This appears to have been provided for in cl 10.2.1 of the Slabmaking Agreement. However, the evidence of Ms Fitzgerald also indicated that Messrs Storey and Le Clerc did not in practice work six public holidays, meaning that employees may receive a payment for a public holiday even if not required to work that public holiday. In the appellants' submission, the first appellant is not required to pay superannuation contributions in respect of these particular public holiday payments, since they are not "ordinary hours of work" within the meaning of the Enterprise Agreements. 332 The respondent submits that the primary Judge was correct to find that there was no proper basis to disaggregate from the public holiday payments the specific amounts paid to Messrs Storey and Le Clerc in respect of public holidays on which they were not required to, or did not in fact, work. The agreement with the employees was that they received the public holiday payment effectively in lieu of giving up the right to be paid otherwise for public holidays. 333 In my view, as a result of the definition of Sundays and public holidays as "ordinary working days" in cl 17 of the Enterprise Agreements, such days are "ordinary hours of work" under the Enterprise Agreements. Whether an employee is actually required to work or not on those days, in the context of a seven-day shift, is irrelevant - consistently with my reasons set out earlier in this judgment, I resist the invitation of the appellants to drill down into the actual hours of work of employees in the course of determining "ordinary time earnings". 334 Ground 6 is not substantiated.

Ground of appeal 7 335 In ground of appeal 7 the appellants claim error by the primary Judge in failing to determine that the superannuation contributions made by the first appellant to Messrs Storey and Le Clerc in respect of an "added day" of leave - where the employee is on leave on a public holiday or is on a rostered day off on a public holiday and not required to work that day - are not ordinary time earnings. 336 Ground of appeal 7 is conceptually linked to ground of appeal 6. For the same reasons as I have found in respect of ground 6, I find that ground 7 is not substantiated.

Ground of appeal 5 337 As previously noted, cl 7.2 of the Enterprise Agreements contained a further promise that the employer would match any voluntary additional superannuation contributions made by employees. It is not in dispute that appellants made such co-contributions in respect of Mr Storey. 338 The appellants contend that they should be able to "set-off" (in a non-technical sense) their employer co-contributions to match the salary sacrifice amounts of employees against their minimum contributions for ordinary time earnings, such that any outstanding contributions required under the first promise in cl 7.2 - that is, the minimum contributions in respect of ordinary time earnings - would be reduced. 339 To this end, the appellants submitted that s 23 of the SGA Act requires a simple arithmetic calculation of all contributions made divided by the correctly calculated ordinary time earnings. For this reasons, the various different aspects of why the contributions were paid are irrelevant and there is no statutory basis for separating them out. 340 However, in my view, for the following reasons, this contention cannot stand. 341 Clause 7.3.7 of the Enterprise Agreements provides as follows: 7.3.7 Superannuation Guarantee - The Company will not use any superannuation contribution made in accordance with an employee's election to meet its minimum employer obligation under the Superannuation Guarantee Administration Act 1992 (Cth) or any legislation which succeeds or replaces it. 342 With respect to cl 7.3.7, counsel for the appellants contended that the prohibition related only to the amount of the employee's voluntary contributions and not to the matched contributions made by the employer. However, the terms of cl 7.3.7 are broader than that. The clause refers to "any superannuation made in accordance with an employee's election", and is accordingly broad enough to refer to both the employee's contributions as well as the matched contributions made by the employer, by virtue in particular of the inclusion of the words "any" and "made in accordance with". 343 Further, that the same term existed in cl 7 of the Awards, despite there being no promise to pay co-contributions as there was in cl 7.2 of the Enterprise Agreements, does not detract from this being the proper construction of those words in the Enterprise Agreement. Importantly, cl 7.2 of the Awards contemplated, but did not oblige, such co-contributions being made by the Company, such that it still made sense to include this prohibition on using employee contributions or co-contributions in determining whether the minimum statutory contributions to avoid the imposition of the charge had been made by the employer. 344 However, I note that "contributions" as referred to in s 23 of the SGA Act contemplate only those that are made in accordance with that Act. The obligation to make co-contributions was sourced in the Enterprise Agreements and there is no such concept in the SGA Act. On this basis, I consider that the appellants' argument that there is no statutory basis for separating out the contributions and co-contributions has little merit, as the SGA Act involves no concept of the co-contributions. 345 I also consider it of some relevance that by "setting-off" the contributions made under the second promise in cl 7.2 against the contributions required by the first part of cl 7.2, the effect may be that the employer is nonetheless in contravention of the Enterprise Agreement, as the co-contribution obligation would no longer be fulfilled. This, in turn, would still result in the appellants being in breach of s 50 of the FW Act. However, I do note that this may still be more advantageous for the appellants as it would allow them to reduce the amount of the superannuation guarantee shortfall, and therefore the charge. 346 For these reasons, the primary Judge was correct at [135] of the primary judgment in rejecting the contention that the appellants, having made addition co-contributions, could somehow set off any shortfall. 347 Ground of appeal 5 is not substantiated.

Ground of appeal 8 348 The appellants adduced evidence that they had included in the calculation of ordinary time earnings amounts that they did not have a legal obligation to include, which included amounts for shift allowances paid on overtime to Messrs Le Clerc, Konstandaras and Everett. 349 In ground 8, the appellants alleged error by the primary Judge in making declarations that the first appellant had, without taking into account the superannuation contributions made in respect of shift allowances, paid overtime when determining the existence of a shortfall. The appellants submit that these payments did not form part of "ordinary time earnings", but should be credited in the calculation of any shortfall. 350 Ground 8 bears some similarity to ground 5; however, unlike ground 5, there is no relevant provision in the Enterprise Agreement preventing the superannuation contributions made (incorrectly) by the first appellant in respect of shift allowances from being set off against any shortfall. 351 The respondents submit that this was not an issue before the primary Judge and that, therefore, there was no reason for the primary Judge to make any findings in relation to the allegations the subject of ground 8. The respondents further noted that the sums involved in this respect were so small that there would be no basis to conclude that, had the primary Judge had regard to the precise calculations that arise from a consideration of the issue, it would have led to a conclusion that there had not been contraventions. 352 In circumstances where this issue was not raised before the primary Judge and involved questions of fact, I am not persuaded that it has merit as a ground of appeal. 353 Ground of appeal 8 is not substantiated.

Conclusion 354 For the reasons I have given, the appeal should allowed in part, with respect to grounds of appeal 1(a), 2(a) and 4. Otherwise the appeal should be dismissed. 355 The parties should have 14 days in which to file and serve submissions as to the form of any orders. I certify that the preceding two hundred and twenty-one (221) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

RANGIAH J: 356 I have had the advantage of reading the judgments of the Chief Justice and Collier J in draft. Their Honours are in general concurrence upon the most significant issues in the appeal, but disagree as to the outcome of Grounds 5, 6, 7 and 8 of the Notice of Appeal. 357 The Chief Justice considers that Grounds 5, 6, 7 and 8 should be upheld with the consequence that the appeal should be allowed; whereas Collier J considers that those grounds should be rejected with the consequence that the appeal should be allowed only in part. In respect of those grounds, I respectfully agree with the reasons of the Chief Justice. 358 I otherwise agree with the reasons of both the Chief Justice and Collier J and the order proposed by their Honours. I certify that the preceding three (3) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.