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[36]
[2021] FWC 5087
General information, not legal advice.
Fair Work Commission
2021-08-17
Original judgment source is linked above.
s.604 - Appeal of decisions
Appeal against decision [2021] FWC 4123 of Commissioner Williams at Perth on 21 July 2021 in matter number C2021/300 - stay application.
[1] The CPSU has lodged an appeal, for which permission is required, against a decision of Commissioner Williams issued on 21 July 2021[1] concerning the entitlement to personal/carer's leave under clause 33 of the Serco CPSU Acacia Prison General Enterprise Agreement 2019 (Agreement).[2] The Commissioner's decision, as expressed at [145] of the decision, was:
"[145] My decision is that the rate of accrual for personal/carer's leave for an employee under the Agreement is 10 days of paid personal/carer's leave per year of service, which in hours consistent with Mondelez HC is,
An employee's fortnightly ordinary hours, or if they do not work a fortnightly roster 1/26 of that employee's annual ordinary hours, provided that for employees in the classifications who work the corresponding shift patterns detailed in the table at 33.4 of the Agreement their rate of accrual shall be no less than the number of hours set out in Column A of the table."
[2] The reference to "Mondelez HC" in the above passage is to the High Court decision in Mondelez Australia Pty Ltd v AMWU.[3] In that decision, the High Court upheld an appeal against a decision of a Full Court of the Federal Court[4] concerning the NES entitlement to personal/carer's leave in s 96(1) of the Fair Work Act 2009 (FW Act) and made a declaration that s 96(1) was to be construed in the following way:
"The expression '10 days' in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee's ordinary hours of work in a year. A 'day' for the purposes of s 96(1) refers to a 'notional day', consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period."
[3] Clauses 33.2 and 33.3 of the Agreement specify the entitlement to personal/carer's leave for full-time and part-time employees in the following terms:
33.2 In accordance with the provisions of the NES, full time and part time employees are entitled to 10 days of paid personal/carer's leave per year of service.
33.3 Consistent with the current application of the NES provisions, when taking paid personal leave, the Employee will be paid for the ordinary hours of work they were allocated to work and otherwise would have for the day in question.
[4] Clause 33.4 provides for the entitlement in terms of hours per year as follows:
33.4 The table below details the Serco CPSU Acacia Prison General Enterprise Agreement 2017 entitlement in Column A, and the entitlement under this Agreement in Column B:
33.5 The parties acknowledge that should the interpretation of the application of clause 33.2 above change during the period of this Agreement, the parties will negotiate any consequences in accordance with clause 4.1 of this Agreement. Should the parties not be able to reach Agreement on those changes within a six month period, either party may refer the matter to the Fair Work Commission in accordance with clause 48 Dispute Resolution Procedure. The parties collectively commit to the outcome of any such referral not being less than the entitlement in Column A above. The Employer acknowledges that should this occur, no attempt will be made to recover personal leave payments made to any Employee up till that time.
[6] Clause 4.1, which is referred to in the above provision, provides:
4.1 With the exception of sub clause 3.2, and if relevant sub clause 33.5, it is agreed by the parties that up to the nominal expiry date of this Agreement, the parties will not pursue any further claims, and that this Agreement will cover all matters regarding employment conditions.
[7] Clause 48 contains the Agreement's dispute resolution procedure. Under clause 48.7(b), the Commission may arbitrate a dispute referred to it should the dispute not be resolved pursuant to the prior steps in the procedure.
[8] The relevant employer under the Agreement, Serco Australia Pty Ltd (Serco), referred the dispute concerning personal/carer's leave entitlements under the Agreement to the Commission for resolution. It contended that, as a consequence of the High Court's Mondelez decision, the quantum of the annual entitlement to personal/carer's leave under the Agreement was that specified in column A of clause 33.4.
[9] The Commissioner effectively upheld Serco's contention. He found that, while the Agreement was being negotiated, the Federal Court Full Court's Mondelez decision had been delivered, and that clause 33.3 of the Agreement and column B of clause 33.4 reflected the interpretation of s 96(1) determined in that decision. However, it also became known during the negotiation of the Agreement that the Full Court's decision had been appealed and that the High Court had granted special leave to appeal. The Commissioner found that Column A represented the personal/carer's leave entitlement as it was under the preceding enterprise agreement based on Serco's understanding of s 96(1) prior to the Full Court decision. The Commissioner said, in relation to clause 33.5:
"[140] Clause 33.5 of the Agreement is an agreed process to deal with any change in the interpretation of the application of clause 33.2, the entitlement to 10 days personal /carer's leave per year of service. Clause 33.5 means that should there be such a change the parties will negotiate any consequences and claims arising from a change are not subject to the no further claims clause. If the parties do not reach agreement on those changes within a six-months period either party may refer the matter to the Commission in accordance with clause 48 Dispute Resolution Procedure.
[141] Clause 33.5 also means the parties agree the outcome of any referral to the Commission will not be less than the entitlement in Column A of the table in 33.4. The Respondent also agrees not to attempt to recover personal/carer's leave payments already made to an employee prior to the outcome of the referral to the Commission."
[10] The Commissioner exercised the power he considered was conferred by clause 33.5 to apply the interpretation of s 96(1) preferred by the High Court in the Mondelez decision (which was delivered shortly after the Agreement was approved), with the consequence that the entitlement to personal/carer's leave became that in column A of clause 33.4 (being the minimum entitlement permitted under clause 33.5).
[11] The CPSU's notice of appeal contains the following grounds of appeal:
The Commission erred at law by making a decision that contravened section 739(5) of the Fair Work Act 2009 (Cth) (FW Act).
The effect of the judgement is to re-write the provisions found at clause 33 of the Serco CPSU Acacia Prison General Enterprise Agreement 2019 [AE508713] (the Agreement).
By varying the Agreement, the Commissioner acted beyond power and outside the jurisdiction of the application made under s 739 FW Act because he varied the Agreement absent any application under sections 207, 217 or 217A of the FW Act.
By attributing a replacement meaning to clause 33.2 of the Agreement based on an assessment of new circumstances that did not exist at the time the agreement was made, the Commissioner incorrectly applied the principles of interpretation as articulated in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, of which principles were endorsed in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Berri Pty Limited [2017] FWCFB 3005 (Berri).
[12] The notice of appeal contends that permission to appeal should be granted because it raises an important question of the jurisdiction of the Commission in the arbitration of disputes under s 739 of the FW Act, the Commissioner had acted upon wrong principles at law and had fallen into appealable error, and the legal principles applied by the Commissioner in interpretating the Agreement were inconsistent with those stated in the Full Bench decision in AMWU v Berri Pty Limited.[5]
[13] The notice of appeal also contains an application for a stay order to be granted pursuant to s 606(1) pending the hearing and determination of the appeal. This decision is concerned with that stay application.
[14] The principles applying to the determination of stay applications which are usually applied by the Commission are as stated in the decision of the Australian Industrial Relations Commission in Edghill v Kellow-Falkiner Motors Pty Ltd.[6] Paragraph [5] of that decision states:
"[5] In determining whether to grant a stay application the Commission must be satisfied that there is an arguable case, with some reasonable prospects of success, in respect of both the question of leave to appeal and the substantive merits of the appeal. In addition, the balance of convenience must weigh in favour of the order subject to appeal being stayed. Each of the two elements referred to must be established before a stay order will be granted."
[15] In assessing for the purpose of a stay application whether an appeal has the requisite prospects of success, the Commission necessarily engages in an assessment of the merits that is preliminary in nature, since the Commission will not have had the benefit of hearing the appellant's full argument and usually will not have had the opportunity to properly peruse the case materials.[7]
[16] For the reasons which follow, I am not persuaded as to either of the elements which need to be satisfied for a stay order to be granted.
[17] As to the first element, while I am satisfied that the CPSU has reasonable prospects of obtaining permission to appeal, my preliminary assessment is that I am not satisfied that the CPSU has an arguable case, with reasonable prospects of success, as to the merits of the appeal. The CPSU's appeal does not challenge the Commissioner's factual findings as to the objective background facts known to the parties at the time that the Agreement was negotiated, namely the delivery of the Federal Court Full Court's Mondelez judgment and the High Court's grant of special leave to appeal that judgment. Those objective background facts legitimately inform the construction of the relevant aspects of clause 33 of the Agreement.
[18] It does not appear to be in dispute that the substantive entitlement to personal/carer's leave under the Agreement is prescribed in clause 33.2, which incorporates by reference the NES entitlement in s 96(1) of the FW Act. That alone makes the Mondelez judgments directly relevant to the operation of the personal/carer's leave entitlements under the Agreement. Clause 33.3 sets out the "current application of the NES provisions" - that is, the construction of s 96(1) preferred in the Federal Court Full Court's Mondelez judgment and which applied at the time the Agreement was negotiated and made. So much is accepted by the CPSU, which in its submissions supporting the stay application said that "Clause 33.3 ... spells out the understanding held at the time, that a day of personal leave would equate to the length of a rostered shift and not a portion of fortnightly hours" (underlining added). The CPSU likewise accepts that Column B in clause 33.4 reflects that "understanding held at the time" (the Agreement was made).
[19] The opening sentence of clause 33.5 expressly contemplates that the "interpretation of the application of clause 33.2 above" might change during the period of operation of the Agreement. This can only reasonably be read as meaning that the "current application of the NES provisions" set out in clause 33.3, which reflected the Full Court's Mondelez decision, might be altered as a result of the High Court's appeal decision. That is the way the Commissioner construed it, and the CPSU's appeal does not contend that he erred in doing so. That opening sentence identifies the function and purpose of clause 33.5 - namely, to deal with the "consequences" if the High Court appeal succeeded. The cross-reference to clause 4.1, and the exception for clause 33.5 in the "no further claims" requirement in clause 4.1, indicates that parties might advance claims about the interpretation and application of clause 33.2 in light of the High Court's decision.
[20] Although clause 33.5 is not pellucidly drafted, it is clear enough that, in the absence of agreement as to "those changes" which might be necessary in light of the High Court's decision, the Commission had the power to arbitrate the issue, including any claims which might be advanced to deal with the consequences of the decision. This did not authorise the Commission to change the basic entitlement prescribed by clause 33.2, but it did authorise the Commission to change the way in which the entitlement was applied, as set out in clause 33.4, to reflect the construction of s 96(1) determined by the High Court. That the Commission was authorised to do so is made explicitly clear by the second last sentence in clause 33.5: "The parties collectively commit to the outcome of any such referral not being less than the entitlement in Column A above". This sentence demonstrates that the Commissioner was empowered to arbitrate an "outcome" which comprised something different to Column B of clause 33.4, provided that it was not less than Column A. The last sentence of clause 33.5, "The Employer acknowledges that should this occur, no attempt will be made to recover personal leave payments made to any Employee up till that time", further confirms that an arbitrated "outcome" which changed the quantum of personal leave payments to employees would be authorised by clause 33.5.
[21] Section 739(5) of the FW Act relevantly provides that the Commission must not, in arbitrating a dispute in accordance with the dispute resolution procedure in an enterprise agreement, make a decision that is inconsistent with that agreement. I do not consider that ground 1 of the appeal raises any reasonably arguable proposition that the Commissioner's decision involved any failure to adhere to s 739(5). The CPSU contends that the Commissioner "re-wrote" clause 33 of the Agreement by making a ruling that was inconsistent with clauses 33.3 and column B of 33.4. It is not literally correct that the Commissioner "re-wrote" clause 33. More importantly, to the extent that the Commissioner determined that the High Court's Mondelez interpretation should apply to the entitlement in clause 33.2 and that this entitlement should operate in practice in accordance with Column A of clause 33.4, the Commissioner was plainly authorised to do so by clause 33.5. The CPSU has not, in the limited argument before me, advanced any plausible alternative interpretation of clause 33.5.
[22] Ground 2 is, in substance, an alternative formulation of ground 1. It is sufficient to say that it is obvious that the Commissioner did not vary the terms of the Agreement, and the entitlement to personal/carer's leave in clause 33.2 remains unchanged. The Commissioner made an arbitral determination concerning the interpretation and practical application of that entitlement which he was authorised to make pursuant to clauses 33.5 and 48.7(b). Ground 3 of the appeal is fundamentally misconceived. Clause 33.2, as earlier stated, is entirely reflective of the minimum statutory entitlement to personal/carer's leave in s 96(1) of the FW Act. The High Court's Mondelez decision declared the meaning of s 96(1) which it had always held; it did not "retrospectively change its objective meaning". Clause 33.2 necessarily always had the same objective meaning. Thus, the Commissioner did not "attribute[e] a replacement meaning to clause 33.2 ... based on an assessment of new circumstances that did not exist at the time the agreement was made"; rather, he applied the proper meaning of clause 33.2 that it had always held including at the time the Agreement was made. Ground 4 of the appeal goes nowhere because, for the reasons already stated, the Commissioner adopted a plainly correct construction of the relevant provisions of clause 33.
[23] As to the balance of convenience, I am not positively persuaded that it favours the grant of a stay. If a stay is granted and the appeal (which I consider, on the basis of the limited argument advanced before me to date, does not have reasonable prospects of success) does not succeed, it is likely that Serco will be faced with the necessity of recovering overpayments of personal/carer's leave entitlements which have occurred between the date of the stay order and the time the appeal decision is delivered. That will involve considerable difficulty. The CPSU points to clause 18.3 of the Agreement, which it says provides a facility for the recovery of overpayments. Clause 18.3 provides:
18.3 In the event of an overpayment being identified and accepted by the Employee, the Employee must pay that overpayment back to Serco Australia Pty Ltd at a rate agreed between the parties but no less than 10% of the overpayment or $100 per fortnight, whichever is the lesser. Should the Employee dispute the alleged overpayment, then the Dispute Resolution Procedure of this Agreement will apply.
[24] I accept that clause 18.3 goes part of the way to resolving the difficulty. But it has two limitations. First, the repayment mechanism only applies if the individual employee is "accepted" by the employee; if the employee does not accept, Serco must then go through the steps in the dispute resolution procedure to have the issue determined. Second, even if the overpayment is accepted, the repayment is graduated over time. Further, if the employee simply does not comply with clause 18.3, it will be necessary for Serco to initiate court action or simply abandon the issue since the Agreement does not authorise deductions from pay to recover any overpayment.
[25] If a stay is not granted, then any employee taking personal/carer's leave in the period until the appeal is determined will at least receive their NES entitlements. Additionally, Serco has undertaken that, should the appeal succeed, it will repay any underpaid employees within seven days of the appeal decision. While I accept that the refusal of a stay may have a detrimental effect on someone who is approaching the limits of their NES entitlement and needs to take leave, the appeal's lack of reasonable prospects of success, the fact that the appeal will be heard in the October 2021 appeal roster and thus determined relatively quickly, the difficulties associated with the recovery of overpayments should a stay be granted and the appeal fail, and Serco's undertaking to expeditiously make good any underpayments should the appeal succeed, are factors which cause me to weigh the balance of convenience neutrally.
[26] For the above reasons, the CPSU's application for a stay order is dismissed.
[3] [2020] HCA 29, 381 ALR 601, 297 IR 338
[4] [2019] FCAFC 138, 270 FCR 513, 289 IR 29
[5] [2017] FWCFB 3005, 268 IR 285
[6] [2000] AIRC 785, Print S2639
[7] Supreme Caravans Pty Ltd v Hung Pham [2013] FWC 4766 at [9]
Printed by authority of the Commonwealth Government Printer
CPSU, the Community and Public Sector Union
Serco Australia Pty Ltd [2021] FWC 5087
(1982) 149 CLR 337