Did the State Act govern Mr Cooper's long service leave claim?
27 The answer to this question turns on the construction of s 113 of the FW Act. In particular, it turns on whether there are "applicable award-derived long service leave terms" in relation to Mr Cooper. Section 113, which is contained in Part 2-2 of the Act, relevantly provides:
113 Entitlement to long service leave
Entitlement in accordance with applicable award-derived long service leave terms
(1) If there are applicable award-derived long service leave terms (see subsection (3)) in relation to an employee, the employee is entitled to long service leave in accordance with those terms.
Note: This Act does not exclude State and Territory laws that deal with long service leave, except in relation to employees who are entitled to long service leave under this Division (see paragraph 27(2)(g)), and except as provided in subsection 113A(3).
(2) …
(3) Applicable award-derived long service leave terms, in relation to an employee, are:
(a) terms of an award … that …:
(i) would have applied to the employee at the test time (see subsection (3A)) if the employee had, at that time, been in his or her current circumstances of employment; and
(ii) would have entitled the employee to long service leave; and
(b) any terms of the award … that are ancillary or incidental to the terms referred to in paragraph (a).
(3A) For the purpose of subparagraph (3)(a)(i), the test time is:
(a) immediately before the commencement of this Part…
28 Part 2 of the FW Act commenced on 1 January 2010. Thus, "the test time" for the purpose of s 113 is 31 December 2009. The industrial magistrate said it was 1 January 2010 but the difference is immaterial.
29 It was common ground that, if s 113(3)(a) applied, then the State Act did not govern Mr Cooper's long service leave claim. In other words, Mr Cooper was entitled to long service leave under the State Act only if there were no "applicable award-derived long service leave terms" (as defined in subsection (3)) that related to him. Consequently, the question below was whether s 113(3)(a) applied to him. To answer that question it was necessary to decide first, whether there was an award containing terms which would have applied to Mr Cooper immediately before Part 2-2 of the Act commenced and secondly, whether the terms of that award would have entitled him to long service leave. Maughan's case was that there are terms in the LSL award that would have applied to Mr Cooper at the test time and that would have entitled him to long service leave. Consequently, Maughan contended that the State Act did not govern Mr Cooper's long service leave claim.
30 The industrial magistrate accepted that the terms of the LSL award would have applied to Mr Cooper at the relevant time and that Maughan was a respondent to the LSL award (Mr Cooper had argued to the contrary). For these reasons his Honour found that s 113(3)(a)(i) was satisfied. But his Honour rejected Maughan's argument that the award would have entitled Mr Cooper to long service leave at the relevant time.
31 His Honour concluded (at [47]) that s 113(3)(a)(ii) required that, for there to be "applicable award-derived long service leave terms", there had to be "an actual entitlement to take long service leave or to pro-rata long service leave at [the test time]" and there was no such entitlement in this case. That was because the LSL award did not entitle an employee to take long service leave until he or she had completed at least 10 years' service.
32 Maughan challenged this conclusion. Its point, based on the words used in s 113, is that any award that makes provision for long service leave entitlements for employees contains an entitlement to long service leave and there is nothing in the text to suggest otherwise. It submitted, in effect, that this construction would also best achieve the statutory purpose. As Maughan put it:
[T]he section is transitional in nature. The clear intent manifested by s.113 in its entirety is to maintain the various schemes for provision of long service leave. Thus s.113(2) preserves the effects of the various kinds of instrument already in existence - in particular, agreements - capable of conferring long service leave entitlements upon employees. Section 113(3) then, consistently, looks to preserve the operation of terms of awards that are already in place as at the test time which make provision for long service leave entitlements. It does this by continuing the application of those long service leave entitling award terms, both to those employees who are already bound by such awards (whether or not such entitlements have actually accrued) and extending the effect of those terms to employees engaged after 1 January 2010, who would have been entitled to long service leave under any such award had they been engaged before that date. By this means s.113, in its various subsections, continues the variety of provisions that confer long service leave entitlements.
The interpretation preferred by the Industrial Magistrate would have the reverse effect. Limiting the continuity of long service leave entitlements to entitlements actually accrued would significantly disrupt expectations of employers and employees alike. There is no purposive logic to such a limitation.
33 Maughan contended that its construction is supported by the Explanatory Memorandum to the Fair Work Bill 2008 (Cth), which relevantly recites (in [441]) that the clause "preserves the effect of long service leave terms in pre-modernised awards (i.e., awards as they stood immediately before commencement of the [National Employment Standards])", the LSL award being such an award.
34 Mr Cooper, on the other hand, maintained that there was no entitlement to long service leave under the LSL award until the employee was eligible to take leave, that is to say, until his entitlement had actually accrued. Mr Cooper had worked an insufficient number of years to accrue long service leave under the LSL award, which only provided for long service leave after 15 years' service and after 10 in certain circumstances. In contrast, Mr Cooper had worked a sufficient number of years for the purposes of the State Act, which provided for payment on termination after seven years (except in cases of termination for serious and wilful misconduct or unlawful termination by the employee).
35 In his written submissions Mr Cooper relied on one authority to support his argument. That was Jemena Asset Management (3) Pty Ltd v Coinvest Limited (2011) 244 CLR 508. It is hard to see how that case is relevant. In Jemena the High Court held that a State law providing for portable long service leave benefits for workers in the construction industry did not conflict with federal industrial instruments providing for the grant of, and payment for, long service leave because the State law was complementary to the operation of the federal instruments. In short, as Coinvest put it in that case, the State Act did not enter the field covered by the federal instruments. The subject matter of the portable long service leave benefits was not covered in the federal instruments.
36 That issue does not arise in the present case. As Maughan submitted, there is no issue here of inconsistency between State and Commonwealth laws. The question is simply one of statutory construction. Notwithstanding a suggestion to the contrary in his written submissions, Mr Cooper did not argue otherwise.
37 This case turns, then, on the proper construction of s 113 of the FW Act. On that question, Maughan's submissions should be accepted.
38 Interpreting the true meaning of the section begins with a consideration of the text: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [47]; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [33]-[34]. But the words of the section must be read in context and having regard to the statutory purpose or object: CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408. In interpreting a provision in an Act, the interpretation that would best achieve the purpose or object of the Act (regardless of whether the purpose or object is expressly stated) is to be preferred to each other interpretation: Acts Interpretation Act 1901 (Cth), s 15AA.
39 Turning first to the text, for there to be "applicable award-derived long service leave terms" the section expressly requires that two conditions be satisfied.
40 The first condition is that there is an award which would have applied to Mr Cooper at the test time if, at that time, he had been in his "current circumstances of employment". It was common ground that "current circumstances of employment" referred to Mr Cooper's circumstances of employment just before his employment with Maughan ended (that being the relevant time for considering his long service leave entitlement).
41 The second condition is that the terms of the award "would have entitled" Mr Cooper to long service leave. This was the subject of the dispute. So what is meant by "terms of an award…that…would have entitled"?
42 The language here is awkward, the meaning ambiguous. On one possible interpretation the phrase refers to terms that provide for an entitlement to long service leave. Alternatively, as Mr Cooper argued, it may refer to an entitlement that would have actually accrued.
43 In my view, the first interpretation is to be preferred. The second condition in s 113(3)(a) is satisfied if, at the test time, the employee would have had a right to long service leave under a relevant award (that is, an award satisfying the first condition in s 113(3)(a)), irrespective of whether at that time the employee would have accrued long service leave. If there was a federal long service leave award or terms in a federal award that provided for the payment of long service leave that would have applied to the employee at the test time, then they continue to apply. If not, then the State or Territory Act applied. If, under the terms of the award, Mr Cooper was not eligible for long service leave at the time of his redundancy, s 113 does not give him an entitlement under the State Act.
44 When regard is had to the legislative context and purpose, Mr Cooper's construction of s 113 is untenable. If it were to be accepted, there would be "applicable award-derived long service leave terms" in relation to an employee at the point at which an employee had worked sufficient years to accrue long service leave under the relevant award. From that point onwards, the award would govern the employee's long service leave, but before that point, the employee's long service leave would be governed by the State or Territory Act. This cannot be what Parliament intended. As Maughan submitted, s 113 is a transitional provision that is designed to preserve the effect of long service leave terms in awards as they stood before the commencement of the National Employment Standards.
45 The industrial magistrate said (at [47]) that on the construction for which Maughan contended, the provision in s 113(3)(a)(ii) would be redundant: "a superfluous restatement of s 113(3)(a)(i)". I respectfully disagree. Paragraph (a)(i) says nothing about long service leave. It is concerned with whether there was an award in place at the relevant time that would have applied to the employee. Paragraph (a)(ii) is concerned with whether that award includes an entitlement to long service leave. The two paragraphs must be read together.
46 The industrial magistrate also said (at [48]) that the LSL award had to be considered against the individual employee's circumstances because it only covered permanent full-time employees (citing cl 16), whereas casual and part-time employees in South Australia were covered by the State Act. Clause 16, however, merely reserves leave to a party to the award to apply for inclusion of provisions regarding part-time and casual workers, amongst other matters. The award covers all employees. The opening paragraph of the coverage clause (cl 3), which is entitled "parties bound and incidence of award", reads as follows:
This award shall as to all employees whether members of an organization or not operate in the States of New South Wales, Queensland, Victoria, South Australia and Tasmania in the industries set out in subclause 3(a) of the Vehicle Industry - Repair, Services and Retail - Award 1976 as varied from time to time and subject to clause 13 of this award to the same extent as the said award but subject to the same exceptions, exemptions and reservations as are provided by that award.
(Emphasis added.)
47 Clause 13 is irrelevant for present purposes.
48 Clause 4 states that:
An employee shall be entitled to long service leave with pay in respect of service with an employer as in this award provided.
49 "Employee" is not defined. But the reservation of leave in cl 16 to include provisions regarding part-time and casual workers does not, of itself, limit the meaning of "employee" in cl 4 to permanent full-time employees. The coverage clause (cl 3) makes that clear. The award does not include an exception or exemption for part-time and casual employees. The only exemption in the award is contained in cl 12 and neither party argued it had any application to the present case. The evident purpose of cl 16 was to enable the award to be varied to include special provisions relating, amongst other things, to those classes of employees. In my opinion, the award was intended to apply to all employees in the relevant industries.
50 In any case I fail to see why Mr Cooper's employment is properly characterised as part-time or casual. From the time of the introduction of the afternoon shift he worked fewer days (four, rather than five as before), but either way he worked a 40-hour week. His contract of employment (as evidenced by the letter entitled "Amendment to Previous Letters of Appointment" Maughan sent to him on 2 January 2008) did not describe his employment as part-time or casual and it bears all the hallmarks of a permanent full-time employment arrangement. He was to be paid an annual salary. As I said, he was to work a 40-hour week. He was to be entitled to annual, sick leave and long service leave. In my opinion, he remained a permanent full-time employee after he was transferred to the afternoon shift.
51 It is noteworthy that Mr Cooper did not seek to defend this aspect of the industrial magistrate's reasoning. His argument rested on the assertion that there could be no entitlement under the award until an employee had accrued sufficient service to be eligible for long service leave. For the reasons given above, this argument must be rejected.
52 There were, therefore, "applicable award-derived long service leave terms" in this case. Consequently, Mr Cooper's entitlement to long service leave was governed by those terms and not by the terms of the State Act. In other words, the State Act did not apply. The industrial magistrate erred in determining otherwise.