s.739 - Dispute resolution

Alleged dispute about matters arising under an enterprise agreement - expression of views

• [1] Glen Asmus has made an application under s 739 of the Fair Work Act 2009 (Act) and the dispute resolution procedure in clause 17 of the Health and Allied Services, Managers and Administrative Workers (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2021-2025 (Agreement). The dispute concerns the application of clause 29.3(d) of the Agreement, which provides that where there has been an underpayment, the employee concerned will be paid 'a penalty payment of 20% of the underpayment, calculated on a daily basis ... until all such moneys are paid.' Mr Asmus was underpaid one week's wages. The amount in question was $2,955.63. His employer, Barwon Health, corrected the underpayment, but with a 5-day delay. It paid Mr Asmus a penalty of $8.09 in purported compliance with clause 29.3 of the Agreement. The formula it used to calculate the penalty was to multiply the underpayment amount by 0.2, and then to multiply this amount by the number of days of delay, divided by 365. The dispute between the parties concerns the last step in the formula.

• [2] Barwon Health contends that it simply applied the decision of a Full Bench of the Commission in Health Services Union v Mercy Hospitals Victoria Ltd [2024] FWCFB 235 which examined the meaning and application of clause 29.3. At [134], the Full Bench said this:

'[134] ... In summary, our conclusion on the proper construction of clause 29.3 is:

6. Where the employer does not take the actions required under subclauses (b) and (c) the employer must pay a penalty to the employee calculated as follows: [Value of the payment for the period it was not made] x 0.20 x ([Number of days delayed] / 365) = Penalty.'

• [3] Barwon Health submits that the Full Bench laid down a definitive test for how a penalty under clause 29.3(d) is to be calculated, and that the formula includes a divisor of 365. This was the formula it applied to the circumstances of Mr Asmus. The HSU contends that the decision of the Full Bench must be understood in the context of the circumstances of the dispute in that case, which concerned flat rate allowances that were paid annually. The union said that this was the reason for the inclusion of the 365 day divisor. Although the formula was cast in general terms, this element of the Full Bench decision could only logically apply to underpayments of amounts that were payable annually. The HSU said that in the present case, Mr Asmus was underpaid his weekly wage, not an annual allowance. There was no basis for the application of a divisor of 365.

• [4] The HSU requested the Commission to express a non-binding view in the exercise of conciliation powers, in an effort to resolve the dispute that had been referred to the Commission under the Agreement. I consider it appropriate to do so.

• [5] In my view, the Full Bench included a divisor of 365 in its formula because the underpayments at issue in that case were annual allowances. The Full Bench was clear in its reasoning that it was necessary to calculate the penalty payment on a daily basis (see [130]), and that otherwise there would be a windfall to employees simply because the amounts that were underpaid were expressed as annual allowances rather than as weekly, daily, or hourly amounts (see [132]). In my opinion, the divisor of 365 has no application to the circumstances of Mr Asmus, who was underpaid his weekly wage. Barwon Health did not identify any rationale for the use of a divisor of 365 other than the fact that it appears in the decision of the Full Bench. I do not consider that the Full Bench intended this divisor to be applicable to all underpayments. The Full Bench was dealing with the circumstances of the case before it. To calculate a daily penalty in respect of an allowance payable annually, one divides the annual allowance by 365.

• [6] Mr Asmus submitted that the correct calculation of the penalty owing to him was the value of the underpayment, which is $2,955.63, multiplied by 0.20, and then multiplied again by the number of days of delay, which is five, to produce a total payment of $2,955.63. But this overlooks the fact that the underpayment of $2,955.63 was an amount of wages for one week, just as the allowance in the case before the Full Bench was an amount for one year. Consistent with the approach of the Full Bench, the penalty should be calculated on a daily basis and therefore the daily wage is to be identified. In my view, the appropriate divisor in respect of the weekly wage is five, being the number of days worked by Mr Asmus as a full-time employee in a week.

• [7] In my view, the penalty payable to Mr Asmus under clause 29.3(d) is calculated as follows: value of the underpayment = $2,955.63 x 0.20 x 5 days of delay = $2,955.63, divided by 5 working days to derive a daily amount = $591.13.

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