//
[90]
[2019] FWC 4732
General information, not legal advice.
Fair Work Commission
2019-07-08
Original judgment source is linked above.
s.739 - Application to deal with a dispute
Construction, Forestry, Maritime, Mining and Energy Union
North Wambo Pty Ltd T/A Peabody Energy Australia
Application to deal with a dispute in accordance with a dispute procedure in an enterprise agreement - interpretation of enterprise agreement - entitlement to personal/carer's leave.
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and North Wambo Pty Ltd T/A Peabody Energy Australia (Peabody) are in dispute about the proper construction of clause 21 of the Wambo Underground Enterprise Agreement 2018 (Agreement), which concerns personal/carer's leave (Dispute). For ease of reference, I will refer to personal/carer's leave as personal leave for the balance of this decision.
[2] On 5 April 2019, the CFMMEU filed an application pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act) in the Fair Work Commission (Commission) for the Commission to deal with the Dispute.
[3] Following a short conciliation conference at which it became readily apparent that the Dispute would not be resolved by agreement, I listed the Dispute for arbitration.
[4] There is no dispute between the parties, and I am satisfied on the evidence, that I have jurisdiction to arbitrate the Dispute.
[5] The parties filed a Statement of Agreed Facts in the following terms:
The Wambo Underground Mine is operated by Peabody.
Mr Raymond Stanford commenced employment at the Wambo Underground Mine on 6 September 2010 (Commencement Date).
Mr Stanford ceased work due to an injury incurred during a shift commenced on the evening of 11 December 2017. The injury has not been accepted as a work - related injury by the insurer.
From 12 December 2017 to 18 February 2018, Mr Stanford accessed his personal leave entitlements.
Mr Stanford exhausted all of his accrued personal leave (including the 120 hours of personal leave credited to him by Peabody on 6 September 2017) by 18 February 2018.
From 19 February 2018 to 20 May 2018, Mr Stanford accessed his annual leave entitlements until he exhausted the entitlements he could take.
From 21 May 2018 to 3 June 2018, Mr Stanford accessed his long service leave entitlements.
From 4 June 2018 to 6 June 2018, Mr Stanford accessed his annual leave entitlements.
Mr Stanford exhausted all of his accrued annual leave on 6 June 2018.
From 7 June 2018 to 14 January 2019, Mr Stanford accessed unpaid leave as he remained off work under the provision of a "Capacity for Fitness" medical certificate provided by his nominated treating practitioner.
Mr Stanford's employment was terminated effective 14 January 2019.
For the purpose of this matter, the relevant industrial instrument which applied to Mr Stanford's employment was the Agreement which was approved by Commissioner Lee on 7 June 2018 and came into operation on 14 June 2018.
Peabody did not credit Mr Stanford with 120 hours of personal leave on the anniversary of his Commencement Date in 2018.
Mr Stanford did not receive or seek to take a period of personal leave after the anniversary of his Commencement Date in 2018 and prior to his employment being terminated.
[6] In addition to the Statement of Agreed Facts, the CFMMEU tendered a witness statement of Mr Stanford dated 14 May 2019. Mr Stanford was not required for cross examination. I accept the evidence given by Mr Stanford in his witness statement.
[7] The additional evidence given by Mr Stanford in his witness statement includes the following:
On the commencement of his employment, Mr Stanford was allocated 120 hours of personal leave. Mr Stanford was allocated a further 120 hours of personal leave on each anniversary of his commencement with Peabody, other than on his anniversary that fell on 6 September 2018;
Prior to the commencement of operation of the Agreement, Mr Stanford was covered by earlier enterprise agreements entitled North Wambo Enterprise Agreement 2012 and North Wambo Underground Union Collective Agreements 2009. Each of those enterprise agreements contained provisions in the same terms as the Agreement in relation to the allocation of personal leave to employees;
Mr Stanford did not seek to take personal leave after the anniversary of the commencement of his employment in 2018 because his personal leave was not allocated to him. Mr Stanford raised the issue with the CFMMEU Site Lodge at the mine, which led to discussions taking place and then the present proceedings being commenced in the Commission;
No personal leave was paid to Mr Stanford on the termination of his employment;
Mr Stanford is aware that in the coal mining industry, it has been a long term condition under the Black Coal Mining Award 2010 (Award) and its predecessor awards, and it is a common feature in the industry, that personal leave is credited on commencement of employment and then each anniversary of employment thereafter; and
The employer's statutory declaration filed in support of the application for approval of the Agreement declared, inter alia, that the Agreement contained terms or conditions of employment that are more beneficial than equivalent terms and conditions in the Award, including "21.1 Personal Leave Accrual", and that the Agreement does not contain any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the Award.
[8] The parties agreed on the following questions to be arbitrated in this Dispute:
Q1. Was Mr Stanford entitled to the benefit of a credit of 120 hours of personal leave entitlement under clause 21 of the Agreement on his anniversary of commencement of employment in 2018?
Q2. If the answer to question 1 is 'yes', was his employer entitled to adjust his credited hours of personal leave at the point he became entitled to access his accrued personal leave entitlement to reflect an accrued entitlement of nil, because he had no 'service' from the anniversary of his commencement of employment in 2018 to 14 January 2019 within the meaning of that term in the Act?
[9] The following provisions of the Agreement are relevant to the Dispute:
must, if the Employee has seventy (70) or more unused hours of personal leave, be paid for such leave at their Employee's ordinary rate for all unused hours.
[10] There is no dispute between the parties as to the principles that I must apply in properly construing the Agreement. Those principles were summarised by the Full Bench in AMWU v Berri Pty Ltd (Berri) as follows:[1]
"1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(ii) the disputed provision's place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the 'parties' to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are 'covered by' such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement 'with the employees who are employed at the time the agreement is made and who will be covered by the agreement'. Section 182(1) provides that an agreement is 'made' if the employees to be covered by the agreement 'have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement'. This is so because an enterprise agreement is 'made' when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding."
[11] In summary, Peabody submits that:
(a) The "crediting" of personal leave in advance still requires an employee to perform service under the Agreement in order to have the benefit of the credited entitlement;
(b) Clause 21.1(b) of the Agreement does not exclude the operation of s 96 of the Act, with the resultant effect that the entitlement to personal leave is dependent upon service, not simply employment; and
(c) In turn, Peabody was entitled to delay "crediting" personal leave for the prospective year of service where an employee is on a period of unpaid leave until the employee returns to work. Alternatively, an employee is not entitled to have a "credit" confirmed as an "accrual" where they are not providing service to the company, such that Peabody was entitled to reduce any credited entitlement to nil.
[12] The CFMMEU contends that the entitlement under the Agreement to personal leave for a full time employee is dependent on the employee's commencement of employment and on each anniversary of commencement thereafter (until termination of employment). The effect of this interpretation of clause 21 of the Agreement is obviously more beneficial to employees than the mechanism by which employees become entitled to personal leave under the Act, because a lump sum amount of 120 hours would become available to them at the beginning of the period throughout which they would have otherwise gradually accrued the personal leave under the Act. For instance, if an employee contracted an illness exactly one month following the commencement of their employment, they would have 120 days of personal leave available to them as opposed to 10 days. Central to the CFMMEU's argument in this regard is its contention as to the ordinary meaning of the word "credit" (or variations thereof) in clause 21 of the Agreement. The CFMMEU contends that "credit", in the context of clause 21 of the Agreement, is used as a verb and means to "enter a sum on the credit side of (an account) or of the account of (a person)".[2] Alternatively, if "credit" is used as a noun, the CFMMEU contends it means "a sum at a person's disposal in the books of a bank etc" or "the acknowledgement of payment by entry in an account: (a sum entered on) the credit side of an account".[3]
[13] Peabody contends that the word "credit" means the provision of goods or services on trust that the person has the ability and intention to pay at a later time.[4] It therefore imports the concept, so Peabody contends, that it may be reversed if the foreshadowed event does not occur. Peabody goes on to submit that, applying that meaning here, the crediting of an "entitlement" on commencement of employment or on the anniversary of commencement of employment must be said to be done on an assumption that the employee will perform service for the employer in that year. Where that service is not performed, Peabody contends that there must be an ability for it to adjust an employee's entitlements having regard to the service actually performed in a relevant period. Put another way, Peabody submits that a "credit", in the context of clause 21 of the Agreement, is the provisional advancement of a benefit (personal leave) on the assumption of service being provided and conditional on such service being provided.
[14] By way of example, Peabody submits that a person staying in a hotel may consume a beer from the mini-bar in a hotel room on credit. The beer is provided on trust that the person has the ability and intention to pay for it at a later time. Similarly, Peabody contends that 120 hours of personal leave is provided on credit to an employee at the commencement of their employment and on the anniversary of commencement each year on trust that the employee has the ability and intention to provide the service for the personal leave at a later time.
[15] "Credit" is defined in the following ways in the Macquarie Online Dictionary:
"noun 1. commendation or honour or acknowledgement given for some action, quality, etc.
2. a person or thing being acknowledged as a source of commendation or honour: a credit to the team.
3. influence or authority resulting from the confidence of others or from one's reputation.
5. trustworthiness; credibility: a story that has credit.
6.(plural) a list, appearing at the beginning or end of a film or television program, which shows the names of those who have been associated with its production.
a. official acceptance and recording of the work of a student in a particular course of study.
b. a unit of a curriculum (short for credit hour): she took the course for four credits.
8. Also, pass with credit. (in some educational institutions) a result in an examination which indicates performance higher than necessary to pass.
9. the practice of allowing time for payment for goods, etc., obtained on trust.
10. reputation of solvency and probity, entitling a person to be trusted in buying or borrowing.
12. a sum of money due to a person; anything valuable standing on the credit side of an account.
a. the acknowledgement of payment or value received, in an account, by an entry on the right-hand side.
b. the side (right-hand) of an account on which such entries are made (opposed to debit).
c. any entry, or the total shown, on the credit side.
15. any deposit or sum against which one may draw.
16. any aggregate of positive gains equivalent to a purchasing power, entitling the possessor to certain advantages, as an emissions credit.
-verb (t) 17. to believe; put confidence in; trust; have faith in.
18. to reflect credit upon; do credit to; give reputation or honour to.
19. to accredit (with): to credit the child with doing his homework.
a. Bookkeeping to enter upon the credit side of an account; give credit for or to.
b. to give the benefit of such an entry to (a person, etc.)
21. to award educational credits to: credited with three points in history.
-phrase 22. be a credit to, to behave in a way that brings honour to (someone considered a guardian or mentor).
23. do someone credit or do credit to someone, to be a source of honour or distinction to someone.
24. give credit to, to believe: to give credit to the theory of global warming.
25. give (full) credit to, to acknowledge the worth of (someone) in achieving something.
a. in a solid financial position in relation to: in good credit with the bank.
b. Obsolete enjoying the esteem of: in good credit with the king.
28. to one's credit, in acknowledgement of one's good intentions or behaviour."
[16] I accept that the word "credit" has a variety of meanings, depending on whether it is used as a noun or a verb, including those contended for by both parties. In my view, however, the meaning of the word "credit" in clause 21 of the Agreement becomes clear once the following contextual considerations are taken into account.
[17] In clause 21.1, the "credit" which a full time employee receives on the commencement of their employment and each anniversary thereafter is of "120 hours of personal leave entitlement". The characterisation of the "credit" as an "entitlement" is significant. The ordinary meaning of an "entitlement" is "that to which one is entitled, as part of a contract, will, employment arrangement, etc".[5] This suggests that the 120 hours of personal leave "credited" to the full time employee is at the employee's disposal on the day they commence their employment or on the day of their anniversary of commencement unconditionally, rather than obtained on trust that they will provide 12 months' service to the employer.
[18] There are several other textual indicators in clause 21 and the Agreement as a whole that provide support for this interpretation of the word "credit".
[19] First, clause 21 of the Agreement does not adequately explain how an employee can be credited with "120 hours of personal leave entitlement" but not have an entitlement to such leave. There is no reference in the clause to a requirement to provide a particular or any period of service, nor does the clause impose a condition on the entitlement to personal leave or address what happens if the unspecified condition is not satisfied. In contrast, other provisions of the Agreement expressly require the performance of a particular period of "service" in order to qualify for the relevant entitlement. For example, clause 23.1 of the Agreement requires an employee to provide "eight years of service in the coal mining industry" in order to become entitled to thirteen weeks' long service leave. Similarly, clause 31.4 of the Agreement provides an entitlement to an additional week's notice of termination if an employee "is over 45 years of age and has 2 or more years' service with the Company". These are important contextual considerations. If the makers of the Agreement had objectively intended for the accrual of personal leave to be dependent on "service", then it would be reasonable, having regard to these other provisions of the Agreement, to expect clause 21.1 to refer to "service" and require the provision of a particular period of "service" as a pre-condition to an entitlement to personal leave.
[20] Secondly, there is no clawback type mechanism in the Agreement to deal with circumstances where an employee is credited with personal leave and takes such leave but never provides the service. Clause 21.4 of the Agreement deals with the subject of "payment" in respect of an absence for personal leave. According to clause 21.4(a) of the Agreement, an employee "will be paid" at their ordinary rate of pay plus applicable bonus if they have "sufficient personal leave credits". Clause 21.4(b) of the Agreement deals with payment for personal leave absences of more than 7 consecutive calendar days. Such personal leave "will be paid" at the employee's projected roster earnings, rather than the employee's ordinary rate of pay plus applicable bonus. Both clause 21.4(a) and 24.1(b) of the Agreement provide for the employee's personal leave accruals to be reduced by the shift length for each day the employee is absent. Clause 24.1(b) also makes clear that no further payments will be made once "accruals have been exhausted". These provisions suggest that provided an employee has "sufficient personal leave credits", they have a right to be paid when they take personal leave. There is no indication that the right to payment is conditional or the amount paid may have to be repaid if the employee does not return to work to provide further service to Peabody. Indeed, clause 21.5 of the Agreement deals with the subject matter of payment of personal leave on termination of employment and does not suggest that repayment of personal leave may be required in particular circumstances. This is entirely distinguishable from the hotel mini-bar example given by Peabody, whereby hotel patrons agree to terms on or before arrival to repay the hotel for any goods consumed or services used during their stay, and commonly give their credit card details for that purpose.
[21] Thirdly, the heading of clause 21.1 of the Agreement ("Accrual") suggests that the Agreement comprehensively addresses the question of how personal leave is accrued, rather than leaving that issue to the National Employment Standards (NES). Consistent with this notion, the text of clause 21.1 of the Agreement and in particular the expression "shall be credited with 120 hours of personal leave entitlement" supports the idea that once personal leave is credited to an employee at the commencement of their employment and on each anniversary of commencement, it becomes part of the employee's "accrued" personal leave entitlements.
[22] There is some force to Peabody's argument that the use of the different expressions "accrual" and "credit" throughout clause 21 of the Agreement suggests that those expressions were intended to have different meanings. The ordinary meaning of "accrual" is "the act or process of accruing" or "something accrued" and the verb "accrue" means to "accumulate in the course of time".[6] Depending on the context, the word "accrual" may have a similar or different meaning to "credit". For example, when "accrual" means something that has accrued, it is a similar concept to "the balance in one's favour in an account" or "a sum at a person's disposal in the books of a bank etc", which are two similar meanings of the word "credit".
[23] As Justice Gray explained in SDA v Woolworths Limited,[7] there are reasons why the makers of enterprise agreements sometimes use loose language (references omitted):[8]
"There is no doubt that consistency in the use of terminology, particularly defined terms, is to be valued highly in any document. Inconsistency in the use of the same or similar words produces confusion in the interpretation of documents. This is why there is a presumption that a word used in one provision of a statute has the same meaning when it is used in another provision of the same statute. In statutory construction, consistency of use is no more than a presumption, and a fragile one at that. In Clyne v Deputy Commissioner of Taxation at 10, Gibbs CJ described it as 'not a presumption of very much weight'. His Honour said, 'there is no rigid rule; it all depends on the context'. In the same case at 15, Mason J (with whom Aickin and Wilson JJ concurred) said that the presumption 'readily yields to the context'. If the presumption of consistent use of terminology is so weak in legislative drafting, it must be even weaker in the context of a Certified Agreement. Typically, such agreements are the product of hard negotiation, in which wording of particular clauses is often agreed without reference to other provisions of the same document. Provisions are commonly transmitted from one agreement to the next in a series, without regard to whether their terminology sits well with the words used in newly adopted terms. The use of other agreements, and awards, as precedents can often result in the borrowing of provisions, again without regard to whether the words used in them are consistent with the rest of the agreement under consideration. For these and other reasons, consistency will often be absent. It is easy to see that the same word can be used in different provisions with different meanings."
[24] Although no evidence has been adduced in these proceedings concerning the negotiations for the Agreement, it is clear on the face of the Agreement that many expressions used in it are not defined, including "credit", "accrual", "accumulation" and "allocation". In my view, the context in which those and other relevant expressions are used in the Agreement is a surer guide to their meaning than any presumption about different expressions being intended to have different meanings.
[25] As well as in the heading of clause 21.1, the word "accrual" appears in clause 21.4, which requires an employee to have "sufficient personal leave credits" to be paid for personal leave and then states that the employee's "personal leave accrual" (emphasis added) will be reduced by the shift length for each day the employee is absent on personal leave. It is apparent from this context that the word "accrual" in clause 21.4 is used as a noun to mean "something accrued". In contrast, the word "accrual" is used in the heading of clause 21.1 as a verb to mean "accumulate in the course of time". Drawing these concepts together as part of a coherent scheme, the accrual of personal leave takes place in accordance with clause 21.1 by personal leave being credited to an employee at the commencement of their employment and on each anniversary of commencement. It then becomes part of the employee's "accrued" or personal leave entitlements and those "accruals" are reduced when the personal leave entitlement is used.
[26] Further, it must be noted that although it is apparent from the submissions and analysis set out above that the language of clause 21 of the Agreement concerning "credits" and "accruals" is ambiguous, there is no evidence of any particular surrounding circumstances which provides any material aid to my task of interpreting the relevant provisions of the Agreement.
[27] Fourthly, the entitlement to personal leave for full time employees in the Agreement is consistent with that of fixed term employees. Clause 21.1(d) of the Agreement governs the "accrual" of personal leave for fixed term employees. In particular, the clause requires that at the commencement of an employee's fixed term employment, the employer credit the employee with a projected personal leave accrual at the rate of 10 hours for each projected month of the employee's fixed term employment. The accrual is only "projected" because the actual period of employment may exceed the "forecasted fixed term", in which case the employee's personal leave accruals are adjusted at the rate of 10 hours at the commencement of each month. Although clause 21.1(d) deals expressly with the crediting of additional personal leave accruals in the event that an employee's employment extends beyond the "forecasted fixed term", it does not suggest that any personal leave may have to be reduced or that an amount paid in respect of personal leave may have to be repaid if the employee does not work for the entire "forecasted fixed term" or for the whole of each month in respect of which the fixed term is extended. This suggests that the entitlement to personal leave is unconditional once it has been credited to an employee.
[28] Fifthly, clause 20.1(a) of the Agreement addresses the question of credits and accrued entitlements to annual leave in much the same way as clause 21 (personal leave). That is, employees are "credited with annual leave" on a fortnightly basis and once the annual leave is "credited" to an employee, it becomes part of the employee's "accrued annual leave entitlement".
[29] Finally, there are numerous other provisions of the Agreement which provide that employees are entitled to the particular type of leave "in accordance with the NES". Provisions in this category include clause 24.1 (compassionate leave), clause 25.1 (parental leave), and clause 27.1 (community service leave). Having regard to these provisions, it would be reasonable to expect that if the makers of the Agreement had objectively intended for personal leave, or the way in which personal leave is accrued, to be determined "in accordance with the NES", clause 21 of the Agreement would have said so. This tells against the construction of clause 21 for which Peabody contends.
[30] I accept Peabody's argument that clause 21.8 of the Agreement is of limited assistance in determining the proper meaning of "credit" in clause 21. Clause 21.8 of the Agreement governs an employee's options in relation to personal leave accruals following the anniversary date of their commencement of employment with Peabody. It provides an employee with the option to "receive payment for the previous year's remaining personal carer's leave credits", provided they "maintain a minimum balance of one year's entitlement after cashing in personal carer's leave". Where an employee cashes in such amounts, their "personal carers leave credits shall be reduced by the allocated amount and the Employee will have no further claim on that allocated amount". Given that clause 21.8 deals with "remaining personal carers leave credits" in the pay period after the employee's anniversary date, which, on any view of the Agreement, is after the employee has an unconditional entitlement to such personal leave, it does not shed light on the proper meaning of "credit" in clause 21.
[31] As to contextual considerations beyond the text of the Agreement, it is relevant to consider the personal leave provisions in the Award covering the employees to whom the Agreement applies. Clause 26 of the Award provides:
26.1 Personal/carer's leave entitlements are provided for in the NES. This clause supplements those entitlements and deals with evidence required to be provided by an employee when taking paid personal/carer's leave.
A full-time employee is entitled to 105 ordinary hours of personal/carer's leave (inclusive of the employee's NES entitlement) on commencing employment and on each anniversary of commencement. Any personal leave which is not taken by an employee must accumulate without limitation."
[32] Clause 4.2 of the Agreement provides that the "Award provisions will only apply in relation to matters which this Agreement specifically indicates should be determined by reference to the Award". No such specific indication is given in the Agreement in relation to personal leave. Accordingly, clause 26 of the Award does not have any application to employees to whom the Agreement applies. That is not, however, the end of the matter. In some circumstances the terms of a relevant modern award may be a relevant contextual consideration in the construction of an enterprise agreement.
[33] In the present case, clause 21 of the Agreement is not the same as clause 26 of the Award. For example, clause 21 of the Agreement is more beneficial than clause 26 of the Award, in that the Agreement provides for 120 hours of personal leave, whereas the Award provides for 105 hours. Further, the Agreement refers to the concept of an employee being "credited" with a personal leave entitlement, whereas the Award does not. Notwithstanding the differences between clause 21 of the Agreement and clause 26 of the Award, they are similar in some respects. For example, and relevantly for the purposes of the present case, both the Award and Agreement refer to an employee having an entitlement to 120 hours (or 105 hours in the case of the Award) of personal leave on the commencement of employment and on each anniversary of commencement. This is quite different to, and more beneficial than, the NES and many other modern awards, which confer an entitlement to personal leave gradually throughout the year on the basis of service by an employee.
[34] In circumstances where the modern award in this particular industry contains a somewhat unusual provision concerning the conferral of an entitlement to personal leave on the commencement of employment and each anniversary of commencement, rather than gradually throughout the year as service is provided, and the Agreement refers to an employee being "credited with 120 hours of personal leave entitlement" on the commencement of employment and on each anniversary of commencement, I am of the view that clause 26.2 of the Award is a relevant contextual consideration to the task of properly construing clause 21 of the Agreement. Clause 26.2 of the Award provides some support for the CFMMEU's contention that the makers of the Agreement objectively intended for the accrual of personal leave under clause 21 of the Agreement to operate in the same way as the Award, namely as a lump sum entitlement on the commencement of employment and the anniversary of commencement each year.
[35] In construing clause 21 of the Agreement, there is no doubt that the Act is also a relevant contextual consideration, because it provides the legislative framework pursuant to which the Agreement was made and in which it operates.[9] Further, there is no doubt that part of that legislative framework includes the NES and, relevantly for the purposes of this case, the accrual of personal leave on the basis of the "service [of an employee] with his or her employer" under s 96 of the Act. Whilst it is correct that the Agreement does not exclude the operation of s 96 of the Act, it does not automatically follow that the entitlement to personal leave under the Agreement is dependent upon service. That is because, pursuant to section 55(4)(b) of the Act, an enterprise agreement may include a term that supplements the NES (but only to the extent that the effect of the term is not detrimental to an employee in any respect, when compared to the NES). Thus, if, on the proper construction of clause 21 of the Agreement, the entitlement to personal leave is dependent on something other than service which is more beneficial to the employee than if the entitlement were dependent on service, the terms of the Agreement apply and the entitlement to personal leave will not be dependent on service.
[36] For the reasons given, the proper construction of clause 21 of the Agreement is that an employee to whom the Agreement applies has an entitlement to 120 hours of personal leave on the commencement of their employment and each anniversary thereafter. This is more beneficial to employees than the entitlement to personal leave by accrual on the basis of the "service [of an employee] with his or her employer".[10] It follows that, insofar as the entitlement to personal leave goes, clause 21 of the Agreement supplements the NES.
[37] In my opinion, adopting Peabody's construction of clause 21 would either require words to be read into the provision or rewriting the Agreement to achieve what might be regarded as a fairer or just outcome. Neither approach is permitted. The task is one of interpreting the Agreement produced by the parties.
[38] Each party relied on other cases dealing with the accrual of personal or other leave. However, the relevant provisions governing the entitlement to, and accrual of, personal and other leave in those cases are materially different to clause 21 of the Agreement. They do not assist in the interpretation of clause 21 of the Agreement.
[39] The word "credit" in clause 21 of the Agreement is used as a noun and a verb. For example, it is used as a noun in the expression "If the Employee has sufficient personal leave credits" in clause 21.4(a). Whereas it is used as a verb in the expression "a full time Employee shall be credited with" in clause 21.1.
[40] For the reasons given, I am of the opinion that when the word "credit" is used as a noun in clause 21, it means "a sum or amount at a person's disposal" and when it is used as verb in clause 21, it means "to enter a sum on the credit side of an account or of the account of a person". Applying those definitions to clause 21, the provision, on its proper construction, establishes a regime whereby a full time employee, on commencement of employment, is credited with and has an entitlement to 120 hours of personal leave. At that point, the employee's personal leave entitlement is 120 hours. The same process is repeated on each anniversary of an employee's commencement of employment date. If an employee has sufficient personal leave credits, the employee will be paid when they take personal leave and their credits will be reduced accordingly. The crediting of personal leave to an employee under the Agreement is not subject to, nor conditional on, any particular period of service being provided by the employee to Peabody. The employee has an entitlement to the 120 hours of personal leave on the commencement of their employment and on each anniversary of the commencement thereafter until their employment with Peabody comes to an end.
[41] I resolve the Dispute by answering the agreed questions for arbitration as follows:
[2] Shorter Oxford English Dictionary, Sixth Edition
[4] Shorter Oxford English Dictionary, Fifth Edition
[9] AWU v MC Labour Services Pty Ltd [2017] FWCFB 5032 at [38]; applying Berri at [114(1)(iii)]
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Construction, Forestry, Maritime, Mining and Energy Union
North Wambo Pty Ltd T/A Peabody Energy Australia [2019] FWC 4732