Deliberation
34 I should say at the outset that I am in no way disinclined to adopt an approach to statutory construction which takes into account all available indicators of statutory purpose. However, as the relevant principles demonstrate, a purposive approach to construction must never lose sight of the text being construed because ultimately the purpose of a provision must be found in the enactment itself.
35 In my view, this is a case where, having considered the context, the intended purpose of the provision in question is found in its text and structure, supported by both the surrounding text and by the legislative history of the scheme in which it sits. The purpose of s 113(1) is to preserve the operation of those "award-derived long service leave terms" which provide an employee with an entitlement to long service leave. The contrary purpose contended for by the Appellant/Intervener - that s 113(1) has an absolute preservation purpose rather than the more limited preservation purpose revealed by its text - is not made out, let alone plainly established (as it would need to be), by either the extrinsic material relied upon or the asserted "inconvenient and improbable" consequences for employers in relation to the construction which I prefer.
36 Although the Appellant/Intervener has not misstated the applicable principles, they have very substantially misapplied them. It seems to me that the submissions of the Appellant/Intervener assume a legislative purpose that is not apparent, let alone clearly apparent, from either the text or context and have then worked backwards to re-engineer the meaning to be attributed to the text of s 113(1) and (3). The dangers of such an approach are well known. In Certain Lloyd's, French CJ and Hayne J at [40] warned about the "dangers of reasoning from legislative 'intention' that is not based, as it must be, in the text of the relevant legislation". Their Honours stated at [41]:
It is not legitimate to identify a legislative purpose not apparent from the text of the relevant provisions (or in this case even expressed in some extrinsic material), to examine extrinsic material and notice that there is nothing positively inconsistent with the identified purpose, and then to answer the question of construction by reference to the purpose that was initially assumed. That reasoning is not sound.
37 Their Honours also warned at [26] about the related danger of "identifying a statute's purpose … [by] the making of some a priori assumption about its purpose. The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions." See further APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at [424] (Hayne J).
38 It is convenient to commence the detailed analysis here by restating the legal meanings contended for by the Appellant and by the NAB. The Appellant, in essence, seeks to have the ordinary meaning of the second condition - that the award terms "would have entitled the employee to long service leave" - displaced by a meaning that the award terms need only apply to the employee. The NAB contends that the ordinary meaning should be displaced by the meaning that the award terms "provide for", in the sense of "deal with", long service leave.
39 The first difficulty with the meanings contended for by the Appellant and by the NAB is a difficulty which those parties in essence acknowledge: the meaning they seek to have ascribed to the second condition is not its ordinary meaning.
40 I can well accept that the word "entitled" can mean different things in different contexts. The same may be said of the word "entitlement". It is, for instance, grammatical to say that a person is entitled to nothing. However, what s 113(3)(a)(ii) is doing is identifying a characteristic of the award terms being defined. To say that award terms "would have entitled the employee to long service leave" is to characterise the award terms as providing an entitlement to something, namely, long service leave. Those words are not capable of being grammatically construed as referring to award terms that would have entitled the employee to no long service leave at all.
41 Once it is appreciated that an entitlement means a right to long service leave rather than accrued long service leave (see Maughan at [43] (Katzmann J)), the text of the second condition is clear and, on its face, seems unambiguous. I accept, in accordance with the principles I have set out already, that ambiguity may become apparent once context is taken into account. However, before considering context, namely the legislative history and the extrinsic material, there are other textual indications in Div 9, beyond the text of the second condition, which support the proposition that the purpose and intent of the second condition is to preserve the application of the terms of a pre-modernised award but only in so far as those terms would have conferred an entitlement to long service leave on an employee.
42 The word "entitled" (or a derivative thereof) is used on 10 occasions in Div 9. It is highly unlikely that the draftsperson would have intended the term to have other than a consistent meaning throughout (Tabcorp Holdings Ltd v Victoria (2016) 328 ALR 375 at [65] (French CJ, Kiefel, Bell, Keane and Gordon JJ) and it is only the ordinary meaning of the term that sensibly accords with each of those uses.
43 The word "entitled" is first used in Div 9 in s 113(1). Its meaning must have been intended to be the same as the meaning intended for the term when used in the second condition in s 113(3)(a)(ii), that condition being part of a definition to be read into s 113(1). Similarly, the term "entitled" when used for the second time in Div 9 in the Note to s 113(1) must have been intended to have the same meaning as its meaning in s 113(1). Further, the word "entitled" as used in the Note must have been intended to have a consistent meaning with its use in s 27(2)(g) to which the Note specifically refers.
44 On each of those occasions of its use, the ordinary meaning of "entitled", as having a right or benefit to something, is grammatical and accords with the apparent purpose of the provision and the explanation for the provision provided for by the Note.
45 It is unlikely that a competent draftsperson would, in any of the contexts just illustrated or, indeed, on the other seven occasions in which the word "entitled" (or a derivative thereof) is used in Div 9, have adopted that word to say that the terms or instruments being there addressed need merely "apply to" an employee or "deal with" the subject of long service leave.
46 That is particularly so in circumstances where, when the draftsperson sought to address particular terms or instruments which "applied" or "applies" to an employee or which "deal with" long service leave, those words or phrases (and not the word "entitled") were used to communicate that intent.
47 The word "entitled" or "entitles" appears in contra-distinction to "deals with" or "applied" or "applies" in the same provision of Div 9 on three occasions, including in s 113(3)(a) itself where "applied" is used in the first condition and "entitled" in the second condition.
48 Given that textual content, it is not open to conclude that the use of the word "entitled" in the second condition is the product of infelicitous drafting or that it was other than a deliberate use of the term. It is highly unlikely that the term would have been deliberately used to communicate a meaning other than its ordinary meaning. That conclusion is further reinforced by the terms of s 113A(1)(b) where the phrase "not entitled" is used in a similar way to the use of the word "entitled" in the second condition: to limit the applicability of an instrument by reference to whether or not the instrument provides a right or benefit to the employee in question.
49 Furthermore, I agree with the Respondent's contention that the fact that "entitled" was intended to communicate its ordinary meaning is supported by its use in a scheme (Pt 2-2 - the National Employment Standards) the very objective of which is to provide employees with entitlements and because the focus of the provision is upon the particular employee.
50 Next, turning to the structure of s 113(3), the construction contended for by the Appellant/Intervener would give the second condition little or no work to do. In this respect, the Appellant/Intervener do not simply seek to displace the ordinary meaning of the second condition but, in essence, seek to displace its operation.
51 If the second condition was merely conditioned upon whether the "award-derived long service terms" would have "applied to" the employee, as the Appellant contended, the second condition would be superfluous. Whether the terms of the award "would have applied to the employee" is expressly the subject of the first condition.
52 Turning to the NAB's asserted meaning, if the function of the second condition is to do no more than identify that the "award-derived long service leave terms" must be terms that "provide for", in the sense of" "deal with", long service leave, that requirement is otherwise fairly apparent from the terms of s 113(1) even before the definition provided by s 113(3) is read into s 113(1). That is because the notion of "award-derived long service leave terms" in s 113(1) (emphasis added) necessarily requires that any applicable award will have terms that deal with long service leave. I appreciate, however, that a careful and cautious draftsperson drafting a definition provision may have nevertheless wanted to put the position beyond doubt. On that view, there would be some work for the second condition to do if it was intended to have the meaning the NAB asserts it has. On that construction, s 113(3)(a)(i) merely concerns whether an award applied to the employee at the relevant time (not yet asking whether that award contained any clauses dealing with long service leave) and s 113(3)(a)(ii) concerns whether that award included terms that "deal with" long service leave (irrespective of whether they conferred an entitlement to long service leave on the employee in question). However, if I am to presume in favour of the NAB's position that the second condition was carefully drafted, how can I accept that a careful and cautious draftsperson used "entitled" to communicate "deals with"?
53 I turn next to the legislative history. The legislative history of federal industrial laws dealing with long service leave is somewhat complex and need not be fully rehearsed. It is sufficient for present purposes to note that, following the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (Work Choices Amendment Act), long service leave was no longer included as an "allowable award matter" under s 513 of the WR Act. This did not mean that award-covered employees switched to State or Territory long service leave legislation. That is because, first, pre-reform awards, which included terms relating to long service leave, continued to bind certain employers, employees and organisations pursuant to item 4 of sch 4 of the Work Choices Amendment Act. Second, s 520 of the WR Act allowed new awards to include "preserved award terms" which, as defined in s 527(1)-(2), extended to terms about long service leave. For those reasons, the WR Act contained a scheme for preserving "award-derived long service leave terms". Accordingly, s 527 of the WR Act, though broader in its subject matter, may be regarded as the immediate predecessor provision to s 113(1) of the FW Act.
54 Immediately prior to the enactment of the FW Act, s 527 of the WR Act provided (emphasis added):
527 Preservation of certain award terms
(1) A term, or more than one term, of an award is a preserved award term if:
(a) the term or terms are about a matter referred to in subsection (2); and
(b) the term or terms were in effect immediately before the reform commencement.
Note: Section 525, which provides for certain terms of awards to cease immediately after the reform commencement, does not affect the operation of preserved award terms - see subsection 525(2).
(2) For the purposes of paragraph (1)(a), the matters are as follows:
(a) annual leave;
(b) personal/carer's leave;
(c) parental leave, including maternity and adoption leave;
(d) long service leave;
(e) notice of termination;
(f) jury service;
(g) superannuation.
(3) If a term of an award referred to in subsection (1) is about both matters referred to in subsection (2) and other matters, it is taken to be a preserved award term only to the extent that it is about the matters referred to in subsection (2).
(4) If more than one term of an award is about a matter referred to in subsection (2), then those terms, taken together, constitute the preserved award term of that award about that matter.
(6) A preserved award term continues to have effect for the purposes of this Act.
Note: Preserved award terms may not be varied.
(7) In this section:
personal/carer's leave includes war service sick leave, infectious diseases sick leave and other like forms of sick leave.
(8) The regulations may provide that for the purposes of subsection (2):
(a) the matter referred to in paragraph (2)(c) does not include one or both of the following:
(i) special maternity leave (within the meaning of section 265);
(ii) the entitlement under section 268 to transfer to a safe job or to take paid leave; and
(b) personal/carer's leave does not include one or both of the following:
(i) compassionate leave (within the meaning of section 257);
(ii) unpaid carer's leave (within the meaning of section 244).
Note: The effect of excluding a form of leave or an entitlement in relation to a matter is that the entitlement in relation to that form of leave or matter under the Australian Fair Pay and Conditions Standard will automatically apply.
(9) Regulations under subsection (8) may be expressed to apply generally or in respect of employees engaged in specified types of employment, such as full-time employment, part-time employment, casual employment, regular part-time employment or shift work.
55 This provision, like s 113(1) of the FW Act, deals with the preservation of some of the terms of pre-modernised awards. It designates certain terms to be "preserved award terms" and then at s 527(6) provides that a preserved award term continues to have effect. Like s 113(3), it provides the criteria or the conditions which must be satisfied for the operation of a term to be preserved. That is done is subs (1) and subs (2). Relevantly, and in relation to long service leave, there are two conditions:
(1) the term or terms "are about" long service leave; and
(2) the term or terms were in effect immediately before the reform commencement.
56 The second condition is of no present significance. The first condition is. It requires that, to be preserved, the term must be "about", or in other words "deal with" or "generally provide for", long service leave. On the NAB's construction, that requirement is the only requirement made by what I have described as the second condition in s 113(3) of the FW Act, in circumstances where the NAB say that the second condition and s 113(1) as a whole was intended to maintain the status quo without alteration and, as just demonstrated, the relevant status quo was s 527 of the WR Act.
57 Despite the NAB's assertion of no intended change, intended change is manifest in relation to the preservation of the operation of long service leave terms in pre-modernised awards when one compares s 527 of the WR Act with s 113 of the FW Act. Relevantly, there is a change in focus from what is generally provided by the term (ie what it is "about") to what is provided to "the employee" in particular and, by the use of the word "entitled", it is evident that the focus from the general to the particular was concerned with whether the term provided a right or benefit to the employee. It can thus be readily seen that s 113(1) is an intended change from the status quo ante because it imposes an additional condition for the preservation of the operation of a long service leave term in respect of a particular employee, being that the term provide the employee with an entitlement to long service leave.
58 It is not in contest that, under the WR Act, Mr Finch was not entitled to any long service leave under the LSL Act (SA). It is informative, however, to demonstrate why that was so. Under the WR Act, a term of an award "about" long service leave which applied to Mr Finch's employment was a preserved term within the meaning of s 527 and continued to have effect under the WR Act. That term (namely cl 32 of the Award) provided no entitlement to long service leave to Mr Finch. Section 17 of the WR Act relevantly provided that an award prevails over a law of a State or Territory to the extent of any inconsistency. Accordingly, any entitlement to long service leave under the LSL Act (SA) which Mr Finch may have had was displaced by reason of its inconsistency with cl 32 of the Award, which was preserved in its operation in relation to Mr Finch.
59 On the Respondent/Interveners construction of s 113(1) and the construction which I prefer, because of the change brought about by the enactment of ss 27(2)(g) and 113(1) and (3) of the FW Act, Mr Finch was no longer the subject of any inconsistency between cl 32 of the Award and the LSL Act (SA). That was primarily so because cl 32 did not "entitle [Mr Finch] to long service leave" within the meaning of the second condition and therefore did not constitute "an award-derived long service leave term". Accordingly, as Mr Finch was not "entitled under Division 9 of Part 2-2 to long service leave" (s 27(2)(g)), cl 32 of the Award was no longer in conflict with the LSL Act (SA) in relation to Mr Finch's entitlement to long service leave and did not displace it pursuant to s 26.
60 A comparison with its legislative predecessor shows that a change was made to the scheme for preserving "award-derived long service leave terms". A scheme for preserving "award-derived long service leave terms" of the kind that the Appellant/Intervener says now exists, did exist but was discontinued. The changed language and structure confirms the deliberate nature of the alteration to the scheme, including that the second condition was intended to have its ordinary meaning. The text and legislative history are powerful indicators which, it seems to me, leave little room for doubt as to what it was that Parliament intended.
61 I turn then to other contextual considerations found in the enactment itself. It needs to be noticed that the preservation of the operation of "award-derived long service terms" effectuated by s 113(1) is constrained by s 113(2). That is so because s 113(2) provides that s 113(1) does not apply whilst certain industrial agreements exist (irrespective of whether they deal with long service leave) or whilst certain industrial agreements or other instruments exist and "deal … with long service leave".
62 Section 113(2) provides:
(2) However, subsection (1) does not apply if:
(a) a workplace agreement, or an AWA, that came into operation before the commencement of this Part applies to the employee; or
(b) one of the following kinds of instrument that came into operation before the commencement of this Part applies to the employee and expressly deals with long service leave:
(i) an enterprise agreement;
(ii) a preserved State agreement;
(iii) a workplace determination;
(iv) a pre-reform certified agreement;
(v) a pre-reform AWA;
(vi) a section 170MX award;
(vii) an old IR agreement.
Note: If there ceases to be any agreement or instrument of a kind referred to in paragraph (a) or (b) that applies to the employee, the employee will, at that time, become entitled under subsection (1) to long service leave in accordance with applicable award-derived long service leave terms.
63 Without here detailing the somewhat complex history and provenance of the kinds of agreements and other instruments specified by s 113(2) and without specifying the many and various provisions of relevance in the WR Act, as at 20 January 1997, 16 December 2005, 31 March 2006 and 6 January 2009, and the Industrial Relations Act 1988 (Cth), as at 30 April 1992, 6 November 1992 and 10 May 1996, it is necessary to appreciate that the kinds of agreements and instruments specified in s 113(2) all arise out of industrial bargaining processes rather than the purely arbitrated outcomes imposed by the former Australian Industrial Relations Commission under the WR Act through the making of an "award" of the kind addressed by s 113(1). In each case, the industrial instruments displaced the effect of the applicable award whilst they operated and prevailed over, and continue to prevail over by operation of cl 5A(1) of sch 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transition Act), the law of a State or Territory to the extent of any inconsistency.
64 It is true to say that, by reason of s 113(2), an agreement or instrument of the kind specified by s 113(2) which "applies" to a particular employee will, whilst it is in operation (see the Note to s 113(2)), dis-apply the operation of s 113(1) with the effect that there will not be an "award-derived long service leave term" in relation to the employee. Therefore, by the operation of ss 26, 27 and 30 of the FW Act and cl 5A(1) of sch 3 of the Transition Act, even if the particular instrument in s 113(2) does not provide the employee with an entitlement to long service leave, the instrument will nevertheless prevail over State or Territory long service leave laws provided the instrument exists (in the case of workplace agreements and AWAs) or exists and "deal[s] with long service leave" (in the case of all other instruments).
65 If the intended result of the operation of s 113(2) was that the employee would become entitled to State or Territory long service leave entitlements if the relevant industrial instrument did not provide an entitlement to long service leave, the construction contended for by the Appellant/Intervener may have been significantly enhanced. That is so because it seems unlikely that it was intended that an employee who had traded away his or her entitlement to long service leave through an industrial bargaining process, leading to the making of one or other of the instruments specified in s 113(2), would become entitled to State or Territory long service leave on the commencement of the FW Act. Such a result would have provided a windfall for the employee and have imposed unfairness on the employer now burdened with both the obligation to provide the additional benefit for which the long service leave benefit was traded away and also a long service leave benefit under State or Territory law.
66 That such a result was to be avoided reveals the very purpose of s 113(2). That purpose is confirmed by the extrinsic material, including the following paragraph of the Federal Department of Education, Employment and Workplace Relations' Discussion Paper: National Employment Standards Exposure Draft (February 2008) (emphasis added):
Will every employee be entitled to long service leave under a pre-modernised award or NAPSA when the NES commence?
239. No. To avoid interfering with bargained outcomes, the proposed provisions protecting long service leave will not apply to employees covered by certain agreements while they are in operation.
67 The avoidance of interference with bargained outcomes is achieved when it is recognised that, in the words of s 30 of the FW Act, s 113(2) is "intended to apply to the exclusion of, or prevail over, laws of the States and Territories".
68 That intended displacement of State or Territory long service leave entitlements for an employee who does not have "applicable award-derived long service leave terms", but for whom an instrument specified by s 113(2) applies, is also apparent from the Explanatory Memorandum at [446]. When read in the context of [444] and [445], it can be seen that the intended displacement effect of the s 113(2) instrument is addressed in the words in parenthesis which I have emphasised at the end of [446]:
444. However, subclause 113(2) provides that an employee's award-derived entitlement will not apply if:
• a workplace agreement or AWA that came into operation before the commencement of the Bill continues to apply to the employee after commencement (whether or not that agreement deals with long service leave); or
• one of a number of listed industrial instruments that came into operation before commencement applies to the employee and expressly deals with long service leave.
445. The legislative note after this subclause makes clear if such an agreement or instrument ceases to apply, the employee will then be entitled to long service leave in accordance with any applicable award-derived long service leave terms.
446. If an employee does not have applicable award-derived long service leave terms, any entitlement to long service leave will be derived from State or Territory long service leave legislation (subject to its modification or exclusion by certain industrial instruments).
69 The rationale of avoiding interference with bargaining outcomes, where long service leave entitlements might have been traded away, is also reflected in the scheme provided for by s 113A and, in particular, by the specific arrangements capable of being made for prior service not to count in respect of future entitlements to long service leave. That explains the different approach to what the NAB called the "transition" to State or Territory schemes between the arbitral outcomes which are dealt with under s 113(1) and the bargained outcomes which are dealt with in ss 113(2) and 113A. Therefore, the differentiation of treatment and the fact that a "transition" is not provided for in respect of the arbitral outcomes addressed by s 113(1) is not a basis for saying that the second condition was not intended to have its ordinary meaning.
70 It is informative to notice paragraph [446] of the Explanatory Memorandum for another reason. The terms of [446] succinctly set out the fundamental aspects of the scheme which is established on the construction of s 113(1) which I prefer. That paragraph spells out the two requirements which determine whether an employee will be entitled to long service leave derived from State or Territory long service leave legislation. The first requirement is that the employee not have "applicable award-derived long service leave terms". The second requirement is that there are no applicable s 113(2) instruments which would displace the State or Territory laws. In relation to the first requirement, and consistently with the use in [446] of the ordinary meaning of the word "entitlement", an employee does not have "applicable award-derived long service leave terms" where those terms do not provide the employee with an entitlement to long service leave. The rationale of the scheme, as confirmed by the Explanatory Memorandum at [446], is simple. Where the source of the employee's entitlement to long service leave is not derived from the terms of an award, it will be derived from the applicable State or Territory long service leave legislation, unless that legislation has been displaced by the operation of s 113(2).
71 It should also be observed that the simple explanation of the fundamental aspects of the scheme given at [446] of the Explanatory Memorandum is repeated at [439] of the Explanatory Memorandum made in the following context (emphasis added):
436. This Division sets out the entitlement to long service leave for national system employees.
437. This entitlement is a transitional entitlement, pending development of a uniform, national long service leave standard with the States and Territories.
438. This Division preserves long service leave entitlements in pre-modernised awards (referred to as applicable award-derived long service leave terms).
439. If an employee does not have applicable award-derived long service leave terms, any entitlement to long service leave will be derived from State or Territory long service leave legislation (subject to its modification or exclusion by certain industrial instruments).
72 The reference to "transitional" at [437] of the Explanatory Memorandum and "preserves" at [438], and similar references elsewhere in the extrinsic material, was relied upon by the Appellant/Intervener in support of their construction. I will return to consider those submissions below. However, first it is convenient to refer to the indications found in s 113(2) and in the extrinsic material which, contrary to the case put by the Appellant/Intervener, tend to suggest that there was an intended disturbance of the status quo.
73 The operation of s 113(2) and the capacity of previously suspended award entitlements to become operative when a s 113(2) instrument ceases, of itself, shows that there was no intent to leave "the position in awards" entirely undisturbed. Furthermore, award-derived rights or benefits which had not simply been suspended but which were dispensed with, were revived. That is so because, under the version of the WR Act that was in force immediately prior to the commencement of the FW Act, an award had no effect in relation to an employee even if a workplace agreement covering their employment ceased operation (see s 399).
74 Furthermore, there is no reason to think that, if there was a never disturb intent in relation to award-derived entitlements, that intent would not have extended to entitlements however derived (ie agreement-derived entitlements). Yet, the scheme provided for significant other potential for disturbance to existing long service leave entitlements or arrangements, including by the regime created by s 113(4)-(6) and also that created by s 113A (which are both fully set out in the reasons of Raper J). Further, the Explanatory Memorandum reinforced the intended disturbance by advising that the Department of Education, Employment and Workplace Relations (Department) expected the provisions dealing with long service leave to have some (though minimal) "impact" upon the status quo ante.
75 The Explanatory Memorandum contained a section headed "Regulatory Analysis" which was prepared by the Department and "analyse[d] the regulatory implications of the key legislative proposals contained" in the Fair Work Bill 2008 (Cth). The analysis was said to state the regulatory implications of the legislative proposals in the Bill "compared with arrangements which existed under the legislative framework of the previous Government" (which must be taken to be a reference to the WR Act). The analysis contained a section dealing with the proposed NES. At [r.25] it was stated that the "Government's key objective is to address public concern about the adequacy of the safety net under the current workplace relations system by providing a safety net which is fair for employers and employees and supports productive workplaces". In a summary of "Proposed Changes" at [r.26], the analysis identified each of the ten "NES provisions" including long service leave, in relation to which it said this (emphasis added):
Long service leave: an entitlement to long service leave is currently provided by state and territory legislation, awards and agreements. Initially, the NES will draw on current state and territory arrangements for long service leave in providing this entitlement. Meanwhile, the Government is working with state and territory governments to develop nationally consistent long service leave entitlements.
76 In the following section headed "Impact Analysis", the analysis considered the impact of the various proposed NES provisions including long service leave, in relation to which this was said (emphasis added):
Long Service Leave
r.76. An entitlement to long service leave is currently provided by state and territory legislation, awards and agreements. The NES will preserve current arrangements for long service leave. Meanwhile, the Government is working with the states and territories to develop nationally consistent long service leave entitlements.
r.77. Given that the overwhelming majority of employees currently have access to long service leave, the Department expects a minimal impact from this NES.
r.78. The department is not aware of any data on the usage of long service leave. As noted above, there are divergent entitlements to long service leave in awards, agreements and state and territory legislation. However, an indication of the entitlement to long service leave is the number of employees with 10 years service or over. Table 2 displays ABS data that show an estimated 21.3 per cent of employees (2.2 million) were employed by their current employer/business for 10 years or more.
77 As seems to be apparent from the observations I have emphasised (particularly when read with [439] and [446] of the Explanatory Memorandum), the Explanatory Memorandum explained that, in providing the NES entitlement to long service leave, the NES would "draw on current state and territory arrangements for long service leave in providing this entitlement". The impact of that was expected to be "minimal" because "the overwhelming majority of employees currently have access to long service leave". In comparing the proposed position with the status quo under the WR Act (which, as explained above, must have been largely a comparison with what s 527 of the WR Act provided), the Department was saying here that, as the overwhelming majority of employees currently had access to long service leave (either under a relevant federal award or agreement, or under State or Territory law), there would be some employees, but only a very small minority, who were not entitled to long service leave under federal instruments and therefore, as a result of the change from the status quo, would become entitled to long service leave under State and Territory legislation.
78 It is evident that at least those persons who drafted the Explanatory Memorandum recognised that, although it was expected to be minimal, there would be some disturbance of the status quo in respect of long service leave entitlements.
79 I should add that, in my view, the Department could not have had in mind here award-free employees becoming entitled to long service leave because award-free employees would have already been entitled to long service leave under State and Territory legislation. That observation is further supported by the fact that where the Department did have in mind an impact being brought about by award-free employees becoming entitled to a NES entitlement, the Explanatory Memorandum said so expressly. For example, with respect to notice of termination and redundancy provisions, it stated that "the Department expects only a minor impact from extending notice of termination and redundancy provisions to currently award-free employees" ([r.86]). It follows that what the Department likely had in mind when drafting [r.76]-[r.77] were employees covered by federal awards or other federal industrial instruments who, like Mr Finch, had no entitlement to long service leave.
80 These observations made by the Explanatory Memorandum are, in my view, significant indicators against the Appellant/Intervener's attempts to show that the legislative purpose of s 113(1) was to preserve the status quo ante in relation to long service leave conditions without any change or disturbance. That point is reinforced when it is realised that where, in relation to the introduction of an NES entitlement, the regulatory analysis in the Explanatory Memorandum apprehended that there would be no disturbance or no impact, it said so expressly. For example, the Explanatory Memorandum notes with respect to: annual leave - "[t]he NES will not change the coverage or quantum of the annual leave entitlement" ([r.57]); and, with respect to public holidays - "the Department does not expect an impact from this NES" ([r.81]).
81 To this point, I have set out those indications which, in my view, support the proposition that the second condition was intended to have its ordinary meaning and tend to deny that an ungrammatical meaning was intended because Parliament intended to avoid the "mischief" of creating any disturbance to long service leave entitlements for employees covered by federal awards. I turn then to further consider the mischief for which the Appellant/Intervener contended. The existence of that mischief was sought to be established, in part, by reference to what the extrinsic material said but, in far larger part, by what the extrinsic material did not say. The onerous nature of that task is evident: the Appellant/Intervener seek to deny what was apparently said by the statutory text, largely by reference to what was not said by the extrinsic material.
82 The NAB point to the absence of any express statements in the extrinsic material adverting to an intent to "provide additional benefits" to employees or that entitlements would be "uprooted" from their industrial instrument source and placed into State or Territory sources. I accept that no express statements to that effect appear in the extrinsic material. But before dealing with an available response, I will set out another submission made by the NAB which, I think, should ultimately be construed as a contention that the extrinsic material did not warn Parliament of the asserted serious consequences for employers whose employees would switch to State or Territory long service leave laws upon the commencement of Div 9.
83 In making what was perhaps its primary suggestion of an absurdity arising from the second condition being given its ordinary meaning, the NAB submitted that it could not be accepted that "Parliament would have created a statute that caused employers to move into a State or Territory long service leave scheme where they would be criminally liable for non-compliance without any warning".
84 Read literally, the submission suggests that Parliament may have been expected to warn employers of the consequences for them of a law made. Parliament makes the law. It does not warn of its consequences. I do not think the contention was intended to be read in this way. Rather, I think the NAB was suggesting that the Executive might have been expected to warn employers about the consequences of the law. That submission would also go nowhere because the intent of Parliament cannot be discerned from any response the Executive makes (or fails to make) to the law Parliament has enacted.
85 If the NAB has any point to make in relation to Parliament's awareness of the possible criminal liability of employers, it can only be made by reference to the extrinsic material which was before the Parliament. The only point that could be made (although I ultimately think it is without much merit) is that if the draftsperson of the Explanatory Memorandum was proceeding on the basis that s 113(1) would have the effect of providing some employees access to State and Territory long service leave entitlements and thus expose their employers to criminal liability if they failed to provide such entitlements, the Explanatory Memorandum might have been expected to warn Parliament of that possible impact. The absence of such a warning may then be said to suggest that the draftsperson did not proceed with that intent and that, consequently, neither did Parliament.
86 However, if that is the real point to be addressed, it ought to be done free of the exaggeration made in the NAB's submission that the asserted consequence is that employers would "move into a State or Territory long service leave scheme where they would be criminally liable for non-compliance". It is commonplace in Australia for an employer covered by a federal award or agreement to also be subject to one or other of the State or Territory long service leave schemes. That is so because generally at least some employees employed by an employer (managerial employees and others) will not have their employment regulated by federal instruments at all or because, if so regulated, those instruments do not deal with long service leave and therefore do not displace State and Territory long service leave legislation. The NAB's assertion that giving the second condition its ordinary meaning would cause "employers to move into a State or Territory long service leave scheme", as if for the first time, is an unhelpful exaggeration of the likely position.
87 That being so, the point really being made is that, if the draftsperson of the Explanatory Memorandum was proceeding on the basis that some employees of some employers would gain access to State or Territory long service leave entitlements, it might have been expected that Parliament would have been made aware by the Explanatory Memorandum that some employers may face some additional exposure to criminal liability to that which they already face, in respect of any failure to comply with State and Territory long service leave legislation.
88 There is little or no merit in that point. First, it is not the function of an explanatory memorandum to alert Parliament to that which is otherwise obvious, namely, that serious sanctions will likely be imposed upon those who fail to comply with the law. The fact that those consequences might be penalties imposed as criminal sanctions, rather than civil sanctions (which are more commonly imposed in relation to the contravention of industrial laws) is not so earth shattering as to suggest that the Explanatory Memorandum should have done here that, which, as a matter of common experience, explanatory memorandums do not generally do.
89 Second, and in any event, even if there was a failure to warn of the possibility in question and even if any such failure was inexplicable, that failure would only be an indicator of whether or not the draftsperson of the Explanatory Memorandum was or was not proceeding on the basis that no employee would gain access to State or Territory long service leave entitlements. The force of any such indication would need to be assessed against any contrary indicators, including that the Explanatory Memorandum has specifically addressed the impact or consequence of the provisions in question. As observed at [74]-[80] above, the Explanatory Memorandum recognised that some employees will become entitled to State or Territory long service leave entitlements, that change being the impact which it regarded as "minimal".
90 Furthermore, the Explanatory Memorandum recognised that some employees would switch to State or Territory based entitlements at [446] (the terms of which are repeated at [439]). What is said at [446] is to be read in context by reference to the terms of s 113(1), including the terms of the second condition in s 113(3)(a)(ii). When read in that context - and applying the ordinary meaning of the language used in ss 113(1), (3)(a)(ii) and [r.26] and [446] of the Explanatory Memorandum - an explanation is there given that:
(1) an employee covered by a federal award, the terms of which do not entitle the employee to long service leave, would not have "applicable award-derived long service leave terms";
(2) if (i) is the case, the employee's "entitlement to long service leave will be derived from State or Territory long service leave legislation"; and
(3) it follows that their employer will, in relation to those State or Territory based entitlements, be liable under the applicable State or Territory long service leave legislation.
91 Contrary to the NAB's contentions, it is at least arguable that Parliament was told, and thus may be taken to be aware of the fact, that the employment of some employees covered by federal industrial instruments may, as a result of the enactment of s 113, move from federal to State or Territory regulation of long service leave. I accept, however, that the extrinsic material did not say that expressly and with the detail that the NAB contended was to be expected.
92 However, the issue here is not about what may have been done in a perfect world, but what would reasonably have been expected to be done by the Explanatory Memorandum in question. This was an Explanatory Memorandum which sought to explain a Bill which it described as implementing "major reforms" and, as it states and as was stated in the Second Reading Speech, created or built "a new workplace relations system" (page i).
93 The Explanatory Memorandum had much ground to cover which it sought to do over 429 pages and some 2849 numbered paragraphs (without counting the regulatory analysis section). Only eleven of those paragraphs were devoted to explaining the whole of Div 9 which contains the regime created by s 113(1)-(3A) dealing with "award-derived long service leave terms", the regime created by s 113(4)-(6) dealing with "agreement-derived long service leave terms" and the regime in s 113A dealing with the replacement of certain agreements and whether, and in what circumstances, prior service will be counted for the purpose of an employee qualifying for long service leave. Each of those regimes may fairly be described as complex. The way in which each regime was dealt with by the Explanatory Memorandum may fairly be described as very brief. However, in the circumstances, the brevity of treatment, or what may be fairly described as the bare bones explanation given about the operation of s 113(1), can hardly provide a basis, let alone a sufficient basis, for displacing the ordinary meaning of the statutory text.
94 For many of the same reasons, I see no merit in the NAB's contention that it would have been expected that "guidance" would have been given as to how employees would "transition" into State or Territory based regulation of long service leave. That is, how the prior service of an employee would be recognised for the purposes of eligibility for, and accrual of, long service leave. I would add the further observation that reliance upon the fact that "transition" was addressed in relation to the other NES entitlements to leave is misplaced. Of course it was, as it had to be, because those entitlements were entitlements directly conferred by the FW Act. But here, the Explanatory Memorandum and the Bill were not dealing with entitlements to be provided by the FW Act, but entitlements that may become available under State or Territory legislation upon the FW Act effectively "vacating the field". It is understandable that the prior service of an employee in respect of a benefit provided by a State or Territory law, should be left to be dealt with by that law. I might add that it is also understandable, for the reasons given at [66]-[69] above, why the FW Act permitted parties to bargained instruments to determine how prior service of an employee in respect of a benefit provided by a State or Territory law would be counted once the instrument, which previously did not entitle certain employees to long service, ceased.
95 By the next aspect of its appeal to context, the Appellant/Intervener sought to suggest that the "literal construction" could not have been intended because it would impose financial burdens on employers and result in administrative difficulties, including difficulties arising from an increased lack of uniformity of treatment of long service leave for employers whose workforce extended beyond any particular State or Territory.
96 The NAB referred to these difficulties as results which were "inconvenient and improbable" relying upon what was said by Brennan CJ, Dawson, Toohey and Gummow JJ in Bankstown at 408 that "the inconvenience or improbability of a result may assist the court in preferring to the literal meaning an alternative construction, which by the steps identified above, is reasonably open and more closely conforms to the legislative intent". For those observations their Honours cited the observations of Mason and Wilson JJ in Cooper Brookes Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320-321.
97 In Cooper Brookes, Mason and Wilson JJ prefaced the observation picked up at 408 of Bankstown by saying that "[g]enerally speaking, mere inconvenience of result in itself is not a ground for departing from the natural and ordinary sense of the language read in its context" (at 320). Their Honours went on to point out at 321 that the proprietary of departing from a literal interpretation is not confined to situations which raise absurdity or are capricious, irrational or the like but "extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions". They continued:
Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.
98 This is not a case where a construction which produces a more convenient operation is to be chosen. This is a case where one interpretation has a powerful advantage in ordinary meaning and grammatical sense and, in order for that meaning to be displaced, the consequences of its operation must be shown to be unintended.
99 As Campbell J observed at [36] in Ganter v Whalland (2001) 54 NSWLR 122, given the "strength of the language" used in the authorities, it is only a "very serious" anomalous result which would justify a departure from, what otherwise would seem, the correct construction of statutory text.
100 A financial burden will always be imposed upon employers by the statutory grant of an entitlement to their employees and, particularly where that entitlement is new rather than merely the extension of an existing benefit, the grant will likely be accompanied by some initial (if not ongoing) administrative burden. But inconvenience of that kind is the ordinary and expected consequence of the grant of an entitlement and, without more, is to be regarded as "mere inconvenience". It is only where the scale and nature of the inconvenience is at least shown to be extraordinary that its likelihood may begin to become informative as to whether its source - the grant of the entitlement - was or was not intended.
101 In this case, the extent of any inconvenience or "impact" that Div 9 was likely to produce was specifically addressed by the Explanatory Memorandum. As discussed earlier, Parliament was essentially told that, by reason of the overwhelming majority of employees currently having access to long service leave, "the Department expect[ed] a minimal impact from this NES".
102 There is therefore no basis for thinking that, if Parliament intended the second condition to have its ordinary meaning, Parliament had in mind anything other than that only a relatively small number of employees who were covered by pre-modernised awards without an entitlement to long service leave would gain access to long service leave entitlements and that, consequently, the impact of those new entitlements on employers would be anything other than "minimal". In that context, an argument that Parliament could not have intended the second condition to have its ordinary meaning, because it must have both appreciated and sought to avoid extraordinary inconvenience or impact upon employers, is simply unsound.
103 In any event, the evidence relied upon by the NAB as to the scale and nature of the inconvenience it asserted, fell well short of establishing that the inconvenience would be extraordinary or very seriously anomalous. As a starting point in establishing the nature and scale of the asserted inconvenience, it would have been helpful to know how many employees would, as a result of the second condition having its ordinary meaning, have become entitled to long service leave under State or Territory legislation. However, the NAB did no more than speculate as to the number of employers and employees who may be covered by a pre-modernised award that applied to a cohort of employees, such as casuals, but excluded them from long service leave. Even in relation to its effort to identify the effect upon the NAB itself in respect of its own casual employees, the NAB's evidence fell well short of providing much assistance. That was so because the NAB did not evaluate how many casual employees would, by reason of their years of service, ever likely qualify for long service leave under the State or Territory legislation.
104 Accordingly, the evidence did not enable any informative conclusion as to the scale of the asserted financial burden. Nor has the asserted administrative inconvenience, which may be caused by dis-uniformity of conditions between different long service leave schemes, been shown to be out of the ordinary. There is nothing extraordinary about dis-uniformity in conditions across an employer's workforce with respect to long service leave, even where the employer operates in one State or Territory alone. That is so because there may be multiple awards or agreements which bind the employer, and employees whose terms and conditions are not covered by any industrial agreement will be entitled to State or Territory long service leave entitlements.
105 The fact that dis-uniformity of long service leave provisions is ordinarily experienced by employers with Australia-wide operations cannot be doubted. However, nor can it be doubted that Parliament must have recognised that dis-uniformity of that kind would persist, because the scheme in s 113(1) involved substantially maintaining the status quo. I accept that, in so far as the status quo was altered by s 113(1), a greater level of dis-uniformity may have come about, but to what extent? The extent needs to be known and understood, and it would need to be established (but has not been) that Parliament was aware of it, before the point being agitated by the NAB could begin to be informative, even if the underlying reasoning for this contention had been sound. However, in circumstances where Parliament was expressly told that the impact of s 113(1) would be "minimal", the underlying reasoning is not sound.
106 Even if it had been proven that the second condition having its ordinary meaning produced very serious anomalous results, all that that would go to show is that the Department may have been wrong to advise Parliament that the impact of the change in question would be "minimal". On that view, the asserted anomalous results may be no more than the unintended consequences of the intended operation of s 113(1). As Kiefel CJ, Keane, Nettle and Edelman JJ cautioned in Esso at [52]:
It is not the Court's function to attempt to overcome unintended consequences of the intended operation of a provision by construing the provision as if it had a meaning that Parliament did not intend it to have. To do so would go beyond the judicial function of construing legislation according to established precepts of statutory construction and into the legislative realm of amending the Act by reference to what it may be supposed Parliament might have provided if it had considered the specific circumstances before the Court.
107 Justices Gageler and Keane similarly observed in Taylor v Owners - Strata Plan No 1 1564 (2014) 253 CLR 531 at [65] that "[t]he constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair." Similarly, in H Lundbeck A/S v Sandoz Pty Ltd (2022) 399 ALR 184, Kiefel CJ, Gageler, Steward and Gleeson JJ observed at [63] that "[t]he province of statutory construction is the attribution of meaning to the enacted statutory text, not the remediation of perceived legislative oversight".
108 Furthermore, it is highly questionable that the inconvenience to employers asserted by the NAB, even if made out and even if it were shown to have been appreciated by Parliament, should necessarily be characterised as something that Parliament would have regarded as a very serious anomaly. Parliament may simply have regarded the inconvenience to employers as the acceptable cost of providing long service leave (one of only 10 entitlements which Parliament perceived to be so essential as to be included in the NES) to employees who were disentitled under awards for no justifiable reason. As Black CJ and Sundberg J stated in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1998) 83 FCR 511 at 519:
Especially when different views can be held about whether the consequence is anomalous on the one hand or acceptable or understandable on the other, the Court should be particularly careful that arguments based on anomaly or incongruity are not allowed to obscure the real intention, and choice, of the Parliament.
109 I turn then to consider what was said in the extrinsic material upon which the Appellant/Intervener relied. I accept that the extrinsic material evinces a "transitional" intent as the NAB contended, but only in the sense that Div 9 was intended to provide a "transitional entitlement" (Explanatory Memorandum at [437]) as a first step towards an aspirational second step of providing for a "uniform, national leave standard" of long service leave entitlements. When the second step would occur was uncertain and the period in which the scheme would operate would not necessarily be temporary. It does not necessarily follow from that intent that Parliament must have intended to leave entirely undisturbed the "position in awards as they existed at 31 December 2009" as the NAB contended, especially given the uncertain intent as to duration. As the Respondent contended, "it is perfectly consistent to intend to change existing arrangements now, while holding an aspiration to change them further in the future" (emphasis in original). In the face of significant disturbance of the status quo which, as earlier indicated, is apparent from the text of ss 113-113A and the extrinsic materials, I do not consider that this consideration has much force.
110 I am mindful of the reliance made by the Appellant/Intervener on references made in the Explanatory Memorandum to the word "preserve" in support of its assertion that the status quo ante of long service leave arrangements were intended to be fully preserved. The second sentence of [r.76] - that "[t]he NES will preserve current arrangements for long service leave" - was relied upon by the Appellant in particular. It is the only occasion in which the phrase "preserve current arrangements" appears in the extrinsic material. Its use, however, is apt to be regarded as ambiguous. Read in context with the first sentence of the paragraph, the second sentence is arguably referring to the preservation of the current sources of long service leave entitlements. That is, that current arrangements, under which long service leave entitlements are "provided by state and territory legislation, awards and agreements", will be preserved. Furthermore, the word "preserve" is apt to be understood as a characterisation of the general, rather than the absolute, effect of the NES long service leave provisions. That is particularly so here because in the next sentence ([r.77]), there is clearly contemplated some change or departure from the status quo because of the expectation of an "impact" from the enactment of Div 9. That expectation is at odds with the notion that absolutely everything is being preserved.
111 At [438] of the Explanatory Memorandum (also set out above) it is said that Div 9 "preserves long service leave entitlements in pre-modernised awards". If "entitlement" is to be read according to its ordinary meaning, the paragraph supports rather than detracts from the proposition that the second condition was intended to have its ordinary meaning. Paragraph [439] which immediately follows is, for the reasons already explained, consistent with that conclusion.
112 The word "preserves" is also used at [441] of the Explanatory Memorandum, another paragraph relied upon by the Appellant. That paragraph and the paragraph that precedes it are in the following terms:
440. An employee is entitled to long service leave under this Division in accordance with applicable award-derived long service leave terms (subclause 113(1)).
441. This clause preserves the effect of long service leave terms in pre-modernised awards (i.e., awards as they stood immediately before commencement of the NES).
113 The word "preserves" as used in [441] is directed to the effect of "applicable award-derived long service leave terms" (as referred to expressly at [440]). Its use simply begs the question as to what terms were intended to fall within the description "applicable award-derived long service leave terms" and thus what was being preserved (ie the effect of all terms or only those that provide for an entitlement).
114 There was other material relied upon by the Appellant/Intervener, including that contained in a policy document of the Australian Labor Party made in 2007 when that party was in Opposition. That material must be regarded as of no relevance. Even if it were of some relevance, it would be of marginal utility. It is expressed at too high a level of abstraction and no "direct consideration" is there "given to the point which must now be decided": Lehman Brothers Holdings Inc v City of Swann (2010) 240 CLR 509 at [49] (French CJ, Gummow, Hayne and Kiefel JJ).
115 What the NAB's submission describes as "compelling countervailing factors against the literal interpretation" are simply not made out. No analogy may be drawn, as the NAB sought to do, with the rejection of a literal construction of the text in question in either of Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) (2020) 271 CLR 495 or Sydney Seaplanes, given the case-specific nature of the inquiry as to whether a legislative purpose at odds with the ordinary meaning of statutory text has been plainly demonstrated by the extrinsic material and other contextual considerations.
116 Lastly, the NAB sought to support its construction by reference to the object of the FW Act, stating that its construction aligns with the "fairness … certainty and suitability" invoked by the object of the FW Act. The general object of the FW Act, as set out in s 3, refers to fairness but not to either certainty or suitability. However, in Mondelez, Kiefel CJ, Nettle and Gordon JJ did say at [14] that "[t]he stated objects show that the Act is intended to provide fairness, flexibility, certainty and stability for employers and their employees. 'Fairness' necessarily has a number of aspects: fairness to employees, fairness between employees, fairness to employers, fairness between employers, and fairness between employees and employers."
117 That which provides fairness, or even certainty or stability, is often in the eye of the beholder and that may well explain the NAB's a priori assumption about the intention Parliament had. As the authorities set out at [27]-[33] above demonstrate, a court cannot ignore or displace the words of the statute by reference to a general purpose where the general purpose of a statute may say nothing meaningful about a particular provision. In my view, that is the case here.
118 As I have sought to explain, the text of the second condition is clear and its ordinary meaning, as principally communicated by the word "entitled", is obviously deliberate rather than a product of infelicitous drafting. In the words of Mason and Wilson JJ in Cooper Brookes at 321, the literal construction "has a powerful advantage in ordinary meaning and grammatical sense". The asserted legal meanings of the second condition largely displace that condition by denying it meaningful work to do and are clearly at odds with what the legislative history of s 113(1) reveals about its purpose. In so far as legislative purpose is revealed by the extrinsic material, what is revealed is more consistent with the legislative purpose apparent from the statutory text and legislative history than not. In any event, even if it were the case that the extrinsic material favours the Appellant/Intervener's case more than that of the Respondent/Interveners' case, taken alone or together with the "absurdities" relied upon by the Appellant/Intervener, those considerations do not demonstrate that "it is plain" that Parliament intended the second condition to have a meaning other than its ordinary meaning.
119 Accordingly, each of appeal grounds 1.2, 1.3 and 4, which essentially contend that the Tribunal misconstrued s 113(1), must be rejected.