Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots [2025] FCAFC 45

1. In the first judgment, the Deputy President ruled in relation to issue two that there is an entitlement to payment for all stand-by overtime under the Award. In reaching his finding, the Deputy President reasoned as follows:

(1) The absence of a penalty rate for overtime in the Award meant nothing more than that the Award does not require a higher rate of payment for overtime. It is not a relevant factor that goes to determining whether the Award requires payment for overtime: first judgment at [32] and [55].

(2) The absence of a specified hourly rate for full-time employees is not a prohibition on working overtime or an indicator that it is intended to be unpaid work. To the contrary, the Award clearly contemplates that paid overtime can be worked. For example, cl 5.1 of the Award includes "overtime rates" as a topic of "individual flexibility arrangements". The Award was also varied in March 2023 to include a written form for recording agreement between an employer and employee that the employee take paid time off instead of being paid to work overtime. The variation also provides for overtime penalty rates for helicopter aircrew conducting helicopter operations. This variation indicates that the Award did not previously preclude being paid for overtime: first judgment at [33]-[34] and [56].

(3) The hourly rate for stand-by overtime is set in the same manner as for part-time employees under the Award. Calculating the applicable rate of pay involves identifying on a pro rata basis the equivalent pay and conditions to those of full-time employees: cl 9.3 of the Award, first judgment at [61].

Does the award provide for averaging hours of work?

1. Again, it is necessary to have regard to cl 15.2 of the Award where it provides that "hours of work, days off and rest periods will be determined in accordance with [the Order, the Exemption, and any Fatigue Risk Management System (FRMS)] provided that ordinary hours of work must not average more than 38 per week".
2. As set out above, cl 15.2 provides that ordinary hours of work must not average more than 38 per week. That clause does not provide for, or otherwise identify, a period over which hours are to be averaged.
3. Section 62(1) of the Act relevantly provides that an employer must not request or require a full˗time employee to work more than 38 hours unless the additional hours are reasonable. Section 62(3) sets out matters that must be taken into account in determining whether the additional hours are reasonable. Section 62(3)(i) provides:

In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2), the following must be taken into account:

...

(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;

1. Section 62(4) provides that (for the purposes of the restriction of 38 hours in s 62(1)) the hours that the employee works in a week are taken to include any hours of leave or absence, whether paid or unpaid, taken by the employee that is authorised by the employer (or authorised by a term of employment or by a Commonwealth or state law).
2. Section 63(1) relevantly provides that a modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period, but that the average weekly hours over the period for a full-time employee must not exceed 38 hours. Section 63 does not include a provision in the same terms as s 62(4) (providing for the inclusion of leave or absence). However, it appears to us that ss 62 and 63 are intended to be read, and operate, together such that it might sensibly be said that it was not necessary to repeat s 62(4) within s 63.
3. How then should the provision for "averaging" in cl 15.2 be construed? The respondent submits that there are two possibilities. First, it says that cl 15.2 makes no valid averaging provision because it does not specify a period (on its own terms and elsewhere). Second, cl 15.2 permits averaging where CASA allows, over a period CASA specifies. It submits that the Deputy President held the second, then determined that CASA had not approved any averaging period and therefore none applied. The Deputy President said (at [13] of the first judgment):

... Clause 15.2 limits the ordinary hours of work to no more than 38 a week on average, subject to certain exceptions. These may include some CASA approved averaging periods, but none applied to this employment. Therefore, the Award limits ordinary hours of work to 38 each week. It also sets 38 as the minimum weekly hours for Ms Pulaska as a full-time employee, irrespective of what duties may have been allocated.

1. The respondent urges this Court to take the same approach. It says such an approach "orthodoxly construes cl 15.2, giving work to the word 'average' (should CASA address averaging in an instrument), whilst preserving validity".
2. As identified, s 63 provides that, where an award contemplates weekly hours exceeding 38 hours, the award may specify a period over which weekly hours will be averaged. Consistently with the capacity for an award to provide for averaging, cl 15.2 seeks to provide for full-time employees to work no more than an average of 38 hours per week. However, cl 15.2 does not specify a period over which hours are to be averaged. The appellants urge that the Order, the Exemption or an FRMS might specify a period for averaging. Given that cl 15.2 contemplates averaging but does not specify a period over which averaging is to occur, and also states that hours of work are to be determined in accordance with the Order, the Exemption or an FRMS, we are inclined to accept that, if those instruments did specify a period over which hours were to be averaged, then cl 15.1 could be regarded as "providing for the averaging of terms over" any such period, as contemplated by s 63(1) of the Act. However, we are unable to discern such a specified period in any of the Award, the Order or the Exemption. Certain periods are referred to in the Order, but none clearly for the purpose of an averaging of weekly hours of employees.
3. Clause 9.1 of Appendix 4 to the Order provides: "The cumulative flight time accrued by an FCM during any consecutive 28-day period must not exceed 100 hours". The appellants rely upon that clause to submit that the specified period for the purposes of cl 15.2 of the Award is 28 days. However, that clause is followed by cl 9.2 which provides: "The cumulative flight time accrued by an FCM during any consecutive 365-day period must not exceed 1000 hours". Next, cl 10.1 of Appendix 4 provides that the cumulative duty accrued by an FCM during any consecutive 168 hour period must not exceed 60 hours. All of those clauses are clearly designed for a different purpose and there is no textual or contextual support for the submission that, for example, cl 9.1 is intended to operate as the specified period for the purposes of s 63 of the Act and cl 15.2 of the Award. There was no explanation as to why the period in cl 9.1 is chosen by the appellants in preference to the periods in cll 9.2 or 10.1.
4. The appellants direct attention to two further periods. The fortnightly pay-cycle and the annual salary, to submit (in the alternative to 28 days) that the averaging period is a fortnight or a year. Again, the Award makes no express reference to either of those periods as the relevant period for the purposes of cl 15.2. We accept, consistent with the principles set out above, that the words of the Award are not to be "interpreted in a vacuum divorced from industrial realities" and "industrial agreements are made for various industries in the light of the customs and working conditions of each". However, there is no textual, contextual or purposive support for those periods over and above the other potential periods. There was no evidence before us about whether a fortnightly pay-cycle is an industry standard or otherwise consistent arrangement. There is nothing that satisfies us that cl 15.2 provides that the 38 hours were to be averaged over either of those periods.
5. We acknowledge that our approach gives no work to the word "average" in cl 15.2 of the Award in the circumstances of this case. Although the inclusion of that word in cl 15.2 suggests that it was intended that averaging over some period should be permitted, the result is unavoidable where none of the Award, the Order or the Exemption provides a specified period of time over which that "average" is to be calculated. A consequence of our conclusion is that the maximum number of hours per week is 38 hours, and rostered stand-by hours worked beyond the minimum number of hours must be remunerated. That is consistent with the conclusion of the Deputy President and, for the reasons set out above, we see no error in it.

APPEAL GROUNDS 1-8 AND THE FIRST AND SECOND ISSUES

1. For completeness, we indicate that we intend that the matters above address grounds of appeal 1-8. These grounds of appeal are stated as follows:
   1. The Air Pilots Award 2010 and 2020 (hereinafter referred to as the Award) the subject of this claim does not have a clause for Overtime notwithstanding that absence the Court below determined a rate for overtime for a pilot on stand-by duty and in so doing fell into error by not exercising a judicial function of interpreting the Award but performed an impermissible arbitral or legislative one.
   2. Erred by failing properly to construe sub-clause 15.2 of the Award by not having regard to relevant CASA regulations.
   3. Erred by failing properly to construe sub-clause 15.2 of the Award by disregarding the word 'average' with respect to the minimum hours of work, which entails an averaging process over a relevant period.
   4. Erred by failing to give due regard to the fortnightly pay cycle and the equal fortnightly pay as provided as assessed on the annual salary in accordance with terms of the Award and the contract of employment.
   5. Erred by failing to recognise that the salary is stated under the Award as an annual one which in turn means that the relevant period for the averaging of minimum hours is either an annual one or over another period.
   6. Erred by taking into account impermissible or irrelevant matters of assessing what would be a minimum hourly rate.

7. Erred by finding that stand-by duty was paid duty under the Award.

1. Erred by failing to find that the Award makes no provision for the payment to a pilot when on stand-by.

1. Ground 1 is addressed at [21]-[48] of these reasons, which deal with issue one. Ground 2 is addressed at [38]-[48], which deal with that part of issue one that addresses the appellants' construction. Ground 3 is addressed at [52]-[62], which deal with issue two. Grounds 4 and 5 are addressed at [61], which deals with part of issue two.
2. Ground 6 was not discretely dealt with by the appellants. We understand ground 6 to be directed to the consequence of the Deputy President's conclusion that averaging was not provided for because no averaging period was specified. This is addressed at [52]-[62] and [78]-[90] of these reasons, which deal with averaging and set-off.
3. Grounds 7 and 8 are addressed at [50]-[62] of these reasons, which deal with issue two.

1. Having determined that rostered stand-by duty is paid work under the Award, and that the appellants are not able to average the hours of a pilot over a specified period, it is necessary to determine the three remaining subsidiary issues previously identified at [3] above. They are each dealt with below.

1. By appeal ground 9, the appellants submit that the Deputy President erred by finding that "meal breaks had whilst on stand-by were to be regarded as paid time". The respondent submits that the Deputy President did not make that finding; rather, he found that, as a matter of fact, Ms Pulaska did not take meal breaks while on stand-by.
2. The consideration of this ground proceeds on the basis of our conclusions above that stand-by duty is "duty" and is "work" under the Award. Clause 17.1 of the Award states that "no pilot will be required to be on duty for a period in excess of 5 hours without a 30 minute break free of duty for a meal". One of the duties that applies to pilots whilst on stand-by duty is the duty to be contactable. To be free of that duty is to be uncontactable. So much is consistent with the terms of cl 15.6 that describes that a pilot on reserve or stand-by duty "will be contactable within any scheduled reserve duty period". The evidence of Ms Pulaska below was that she did not take a 30 minute break free of duty when performing stand-by duty at home. That evidence was accepted by the Deputy President: see second judgment at [26].
3. The Deputy President's findings were that Ms Pulaska "did not stop being on stand-by while she consumed a meal", "no breaks from stand-by duty were rostered" and "[t]here was no other instruction to take a break": second judgment at [18]. That is not a finding, as ground 9 suggests, that meal breaks taken whilst on stand-by were to be regarded as paid time; rather it is a finding that Ms Pulaska did not take those breaks. We see no error in that finding.
4. The appellants submit that it is "implausible" that Ms Pulaska was not free from duty during stand-by. However, the Deputy President had before him uncontested evidence that Ms Pulaska was always "contactable".
5. The correctness standard for appellate review requires the appellate court to reach its own conclusion, making due allowances for the advantages of the trial judge: Fox v Percy [2003] HCA 22; 214 CLR 118. The trial judge's advantages "derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole": Fox v Percy at 126 [23]. However, even allowing for that advantage, there was no dispute before the South Australian Employment Court about Ms Pulaska's evidence that she did not take, was not rostered to take, and was not instructed to take, meal breaks. Her evidence is not implausible. No amount attributable to meal breaks should be deducted from the amounts that are to be paid to Ms Pulaska.

Should authorised leave be counted as ordinary hours?

1. By ground 10, the appellants submit that the Deputy President erred by finding that "hours of paid leave, including statutory annual leave, weekly workers compensation, sick or personal leave [are] added to the total weekly hours for overtime purposes particularly in the absence of an Overtime clause in the Award".
2. The respondent submits that s 62(4) of the Act is a complete answer to this contention. Section 62(4) provides:

... the hours an employee works in a week are taken to include any hours of leave, or absence, whether paid or unpaid, that the employee takes in a week and that are authorised ...

1. As already identified, s 63 provides that a "modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period". Averaging of hours is provided for by cl 15.2 of the Award which states that "ordinary hours of work must not average more than 38 per week".
2. The appellants rely on the capacity to average hours to distinguish this case and the authorities relied upon by the Deputy President at [35] of the second judgment.
3. There is nothing in the text, context or purpose of s 63 that suggests that it operates to exclude s 62(4). Sections 62 and 63 are interrelated: see, for example, s 62(3)(i) (set out at [54] above). Section 63 allows for the averaging of hours in a modern award or enterprise agreement. Section 62(3)(i) provides that such averaging is a consideration that must be taken into account when considering whether hours worked above 38 are reasonable. Properly construed, ss 62 and 63 should be read together to provide for the maximum weekly hours allowed under the Act and circumstances where they may be exceeded. In that way, s 62(4) operates on any averaging under s 63. The text of s 62(4) is clear. The Deputy President did not err by including hours of leave in Ms Pulaska's total weekly hours of work for overtime purposes.

1. In relation to set-off, the appellants raised four related grounds of appeal. These grounds of appeal are stated as follows:
   1. Erred by failing to take into account relevant matters such as the contract of employment which provided a set-off for annual remuneration paid in excess of that provided by the Award in consideration for any work performed which may attract an additional Award entitlement.
   2. Erred by making concluded findings of fact without providing any or any adequate reasons as to how such findings arose in the face of competing evidence to the contrary.
   3. Erred in making a final order for a sum of money for underpayment under the Award without taking into account the contractual set-off available notwithstanding an earlier interlocutory finding that on account of sub-clause 10.3 of the contract of employment which expressly permitted a set-off of any salary component paid which was more than any minimum Award entitlements.
   4. Erred in making a final order for the payment of a sum certain and interest on that sum without providing any or any adequate reasons as to the calculation of that sum and the calculation of interest on it.
2. We deal first with grounds 11 and 13, being those that relate to the issue of set-off provided for at cl 10.3 of Ms Pulaska's contract of employment.
3. Clause 10.3 of Ms Pulaska's employment contract states: "Where your pay exceeds your legislative entitlements, any above component not otherwise allocated may be offset against any other applicable entitlements". Clause 10.1 provides: "Your pay will be the amount described at item 8 of the schedule". Item 8 provides for the annual amount of pay.
4. The Deputy President found that cl 10.3 of Ms Pulaska's employment contract permitted set-off of any over-Award payments against unpaid entitlements: second judgment at [48]-[49]. The Deputy President stated, at [47] of the second judgment, that:

While the text could be clearer, I find [Ms Pulaska's employment contract] permits any salary component that is more than "legislative entitlements", being the minimum Award entitlements, to "be offset against" any other applicable but unpaid entitlements. There is no time limit to the period in which pay, and entitlements may be offset. This means the employer may set-off any salary excess against the unpaid overtime.

1. The Deputy President also found that, while the respondent had submitted that there was no contractual set-off right, the respondent gave credit to the appellants for all salary paid throughout the employment in the respondent's calculation of what is owed: second judgment at [10] and third judgment at [4]. The Deputy President agreed with the respondent's calculation, finding that the appellants owed Ms Pulaska the total pre-tax sum of $22,198.60. This calculation comprised $29,450.53 of unpaid entitlements, less a $7,251.93 set-off: third judgment at [4] and [9]-[12]. The Deputy President also held that the respondent was entitled to interest of $4,000: third judgment at [12].
2. The third judgment makes clear that the Deputy President took into account the contractual set-off for over-Award payments and applied the set-off consideration to the calculation of the unpaid entitlements. The calculation of that sum was set out at [3]-[4] and [9]-[12] of the third judgment.
3. The appellants' submissions as to set-off reveal that their complaint in ground 11 is not the Deputy President's failure to take into account set-off in calculating the unpaid entitlements, as it is clear on the face of the first to third judgments that set-off was factored into this calculation. Instead, the appellants' complaint is more properly characterised as the Deputy President's failure to apply the appellants' proposed method when calculating that set-off amount.
4. The appellants contend that set-off should be calculated on the basis of averaging hours across Ms Pulaska's entire employment period. On this approach, if Ms Pulaska worked, for example, 20 hours in a week and was being paid a full-time salary, the appellants' position was that the first appellant was therefore 18 hours in credit and could "offset" those 18 hours against payments due in later pay periods. The appellants refer to this method of calculating set-off as the "running ledger" method. The appellants submit that the running ledger of credited hours could be reconciled over the totality of the period of Ms Pulaska's employment.
5. By way of contrast, the set-off method that was put forward by the respondent, and which was adopted by the Deputy President in his calculation of unpaid entitlements, is such that the Award amount (comprising, in Ms Pulaska's case, the base award salary plus a turboprop allowance plus a command instrument rating plus accident insurance annual leave loading) is added to Ms Pulaska's unpaid overtime entitlements. From this figure, there is a subtraction of the total payment Ms Pulaska received that year from the first appellant. The resulting figure is a set-off overtime entitlement that the respondent says is consistent with cl 10.3 of Ms Pulaska's employment contract, and which is owed to Ms Pulaska. The respondent contended, and the Deputy President agreed by virtue of his adoption of the respondent's calculations, that this exercise is to be done on an annual basis for every year there is an over˗Award excess.
6. Before this Court, the respondent submitted that the appellants' proposed method for calculating set-off, encompassing a running ledger unconstrained as to time, is, in effect, an attempt to relitigate the "averaging" point. The averaging point is described earlier in these reasons at [52]-[62] above. Counsel for the appellants appeared to agree with this, saying in the hearing before this Court that "whether you call it averaging or set-off, we're entitled to claim credit for [the amount] as a running account".
7. It is not necessary to say more about the averaging point. We have determined that the Award does not provide for averaging of hours because it specifies no period for that purpose as required by s 63(1) of the Act. In light of that finding, it necessarily follows that the appellants' proposed method for calculating set-off based on averaging is incorrect.
8. The respondent's method for the calculation of set-off on an annualised basis is correct. It aligns with the clear meaning of cl 10.3 of the employment contract: "Where your pay exceeds your legislative entitlements, any above component not otherwise allocated may be offset against any other applicable entitlements". Reading cl 10.3 alongside cl 10.1 and item 8 of the Schedule, "your pay" is understood to be on an annual basis: where Ms Pulaska's annual pay exceeds the Award amount, the difference may be set-off against Ms Pulaska's overtime entitlements. Construing cl 10.1 in such a way that reconciliation is not done on an annual basis, but is instead performed over the totality of the period that Ms Pulaska was employed, would tend to produce erroneous and unintended results. One could imagine a situation where an employee who has been with the same employer for 20 years states that they are presently being paid under the Award amount, only for their employer to respond that 20 years ago the employee was paid over the Award amount and therefore the employee has no entitlement to be paid.
9. We find that the Deputy President did not fail to take into account set-off. Moreover, he adopted the appropriate method in calculating the set-off amount. Ground 11 is rejected.
10. Ground 13 alleges the Deputy President failed to take into account contractual set-off, notwithstanding an earlier interlocutory finding that cl 10.3 permits set-off. The appellants' written submissions clarify that this ground relates to the Deputy President's alleged failure to take into account a calculation of set-off on the basis of averaging the running ledger over the totality of the period of Ms Pulaska's employment. The appellants contend that at [47] of the second judgment, the Deputy President had conveyed that set-off would be calculated in this manner, but that the third judgment expressly contradicted this earlier ruling and found that set-off was instead to be calculated on an annualised basis.
11. At [47] of the second judgment, the Deputy President found:

The set-off issue is determined by the text of cl 10.3 of the contract. In my opinion this clause records the respondent's agreement with Ms Pulaska that a set-off is permitted. While the text could be clearer, I find it permits any salary component that is more than "legislative entitlements", being the minimum Award entitlements, to "be offset against" any other applicable but unpaid entitlements. There is no time limit to the period in which pay, and entitlements may be offset. This means the employer may set-off any salary excess against the unpaid overtime.

(Emphasis added.)

1. The appellants submitted that the Deputy President's ruling in the third judgment, whereby the Deputy President rejected the averaging of hours for the purpose of calculating the set-off amount, was inconsistent with the finding in the second judgment that there was no time limit with respect to set-off. In particular, in the third judgment at [7], the Deputy President found:

The respondent has not submitted any different work times. Instead, and contrary to the Court's ruling, it has maintained its position that weekly hours exclude hours of paid leave and hours of paid workers compensation incapacity, and that it can average hours of work over the whole four years of employment.

1. We do not consider the rulings in the second and third judgments to be inconsistent. The better interpretation of [47] of the second judgment is that the Deputy President was saying that there was no time limit in respect of the process to pay a salary component more than the legislative entitlement. That is not the same as saying that there was no limited period that was relevant when calculating the set-off overtime entitlement. Ground 13 proceeds on a reading of the second judgment that is incorrect. The ground is rejected. In any case, even if the Deputy President had reasoned inconsistently in the two judgments, for the reasons already given at [89] above, the better view is that the contract of employment allowed for offsetting on an annualised basis.
2. As to the adequacy of the Deputy President's reasons, the appellants submit by grounds 12 and 14 that the Deputy President did not provide adequate reasons as to the calculation of the sum and the applicable interest, and made concluded findings of fact without providing adequate reasons as to how those findings arose.
3. Regarding both grounds, we find that, in context, the Deputy President's reasons were adequate. As the respondent submitted, both the appellants and the respondent had prepared and submitted quantum calculations that were premised on certain factual and legal assumptions. The parties' calculations assumed different methods of calculating set-off. The appellants assumed a calculation of the set-off amount based on averaging hours over the totality of Ms Pulaska's employment period, while the respondent assumed a calculation of the set-off amount based on an annualised reconciliation of the sum of Ms Pulaska's Award amount and unpaid overtime entitlements, less the total payment she received that year. In the first judgment, the Deputy President accepted that the respondent's calculation method was correct, and that no averaging of hours was permitted: first judgment at [13]. It necessarily followed that, in the second and third judgments, the respondent's quantum calculation would be preferred over a quantum calculation that was inconsistent with the Deputy President's ruling in the first judgment. This is also the case in regard to a number of factual and legal findings made by the Deputy President in favour of the respondent, including:

(a) the finding that claimed allowances were payable (second judgment at [5]);

(b) the finding that Ms Pulaska did spend time on pre-flight and post-flight duties (second judgment at [5]);

(c) the acceptance of Ms Pulaska's unchallenged evidence as to when she worked and took breaks (second judgment at [24]-[25]);

(d) the finding that no deduction was made for meal breaks (second judgment at [26]); and

(e) the finding that authorised leave counted towards Ms Pulaska's ordinary hours of work (second judgment at [45]).

1. Accordingly, it is clear that the Deputy President did not merely accept, absent reasons, the respondent's calculations. The Deputy President's acceptance of those calculations was premised on findings of fact and law that were made sufficiently clear in his judgments. Accordingly, grounds 12 and 14 are rejected.

1. For the reasons given above, none of the appellants' grounds of appeal has been successful. It follows that the appeal must be dismissed.

I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Logan, Dowling and McDonald.