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[2023] ICQ 14
General information, not legal advice.
Industrial Court of Queensland
2023-06-21
Davis J
Original judgment source is linked above.
INDUSTRIAL LAW - COMMONWEALTH - INDUSTRIAL INSTRUMENTS - APPLICATION AND EFFECT - EFFECT - where the respondent was an employee of the appellant - where the respondent's employment was governed by an enterprise agreement made in 2006 (the first agreement) - where the first agreement was made pursuant to the Workplace Relations Act 1996 (Cth) - where the first agreement was superseded by an agreement in 2010 (the second agreement) and an agreement in 2015 (the third agreement) - where the first agreement provided for payment of a loading to compensate for entitlements, including long service leave - where the respondent was a casual employee of the appellant for more than 10 years - where the Workplace Relations Act 1996 was repealed - where the Fair Work Act 2009 (Cth) was enacted - where the Fair Work Act 2009 (Cth) provided that State and Territory provisions prevailed over Commonwealth enterprise bargains - where there were transitional provisions - where the 1999 (Qld) provided for long service leave - where the respondent claimed that service under the first agreement counted towards calculation of long service leave entitlements under the 1999 (Qld) - where the QIRC held the service did count - where the appellant appealed - whether there was error in the Queensland Industrial Relations Commission's finding
Workplace Relations Act 1996 (Cth), s 61, s 62, s 170LT, s 170LY, s 170LZ, s 346D
Workplace Relations Amendment (Work Choices) Act 2005, schedule 7
Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24, cited
Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26, cited
Compass Group (Australia) Pty Ltd v Bartram [2007] FCAFC 26; (2007) 161 IR 307, followed
Conroy's Smallgoods v Australasian Meat Industry Employees Union [2023] FCAFC 59, cited
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited
Ex parte McLean (1930) 43 CLR 472; [1930] HCA 12, cited
Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 224 CLR 508; [2011] HCA 33, followed
Maughan Thiem Auto Sales Pty Ltd v Cooper (2014) 222 FCR 1; [2014] FCAFC 94, cited
Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 271 CLR 495; [2020] HCA 29, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited
New South Wales v Commonwealth of Australia (2006) 229 CLR 1; [2006] HCA 52, cited
Programmed Integrated Workforce Pty Ltd v Fox [2022] ICQ 32, cited
Queensland Independent Education Union of Employees v Beerwah and District Kindergarten Association Inc (2008) 188 QGIG 169; [2008] ICQ 18, cited
Queensland Services, Industrial Union of Employees v Moreton Bay Regional Council [2022] ICQ 23, cited
R v A2 (2019) 269 CLR 507; [2019] HCA 35, followed
Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213, related
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54, cited
WorkPac Pty Ltd v Rossato (2020) 278 FCR 179; [2020] FCAFC 84, cited
WorkPac Pty Ltd v Rossato (2021) 271 CLR 456; [2021] HCA 23, cited
[1] The appellant, Maurice Alexander Management Pty Ltd (MAM) was the employer of the respondent, Kaori Sato. Ms Sato claimed that she was entitled to payment of long service leave.
[2] During her employment with MAM, Ms Sato was subject to an enterprise agreement made pursuant to the provisions of the Workplace Relations Act 1996 (Cth)[1] and later was subject to enterprise agreements made pursuant to the Fair Work Act 2009 (Cth).[2] As later explained, long service leave was provided for by Queensland State legislation, namely the Industrial Relations Act 1999 (1999 IR Act).[3]
[3] While it was common ground that Ms Sato served the requisite 10 years' service with MAM which would qualify her for long service leave, MAM resisted the claim in reliance upon provisions of the first enterprise agreement.
[4] The application before the Queensland Industrial Relations Commission (QIRC) was conducted upon an agreed statement of facts and written submissions. There was no oral hearing.
[6] MAM appealed that decision. There is no dispute as to the quantum of Ms Sato's claim. The only issue is whether she is entitled to the sum awarded.
[8] On 27 March 2006, Ms Sato's employment with MAM commenced. It finished on 24 September 2016 after a period of continuous service of 10 years and six months. Any entitlement to long service leave arose at 10 years' service.[6]
[9] As earlier observed, over the period of her employment with MAM, Ms Sato's working conditions were regulated by three consecutive enterprise agreements:
[10] Over the course of the three enterprise agreements Commonwealth industrial legislation was in force. The 2006 agreement was approved pursuant to the Workplace Relations Act 1996 (Cth). Each of the 2010 agreement and the 2015 agreement were approved pursuant to the Fair Work Act 2009 (Cth).
[11] Presently in force in Queensland is the Industrial Relations Act 2016 (2016 IR Act). It provides for long service leave entitlements.[7] The 1999 IR Act was in force over the relevant period and it is common ground that it governs Ms Sato's claim to long service leave.
[12] While the 1999 IR Act governed Ms Sato's entitlement to long service leave, the proceedings in the QIRC were conducted pursuant to the 2016 IR Act which vests jurisdiction both in the QIRC and this Court.
[13] The periods of service during the time of each of the 2010 agreement and the 2015 agreement are taken into account in the calculation of service for the purposes of entitlement to long service leave. That much is admitted. It is the period under the 2006 agreement which is contentious.
[14] The 2006 agreement contained the following provision:
13.1 A Flight Attendant shall be paid a base hourly rate as set out in clause 39. This hourly rate of pay includes:
13.1.1 a casual loading that is paid in lieu of any entitlement to paid annual leave, paid personal leave (including sick leave), long service leave or payments for notice of termination or redundancy; and
13.1.2 expenses incurred during the course of a Flight Attendant's duty as follows:
"1. The Commission determined the matter by giving a particular meaning to clause 13.1.1 of the Flight Attendants' Association of Australia Domestic/Regional Division Casual Flight Attendants Enterprise Agreement 2006 (the 'Construction Point'). The Construction Point was not agitated by the Applicant ('Ms Sato'), nor did the Commission put the Respondent ('MAM') on notice about the Construction Point, or provide to MAM any opportunity to address the Commission in respect of the Construction Point. This amounts to a denial of procedural fairness such that there was a failure by the Commission to properly exercise its jurisdiction.
[18] This ground alleges that MAM was not given an opportunity to be heard on the construction of clause 13.1 of the 2006 agreement as ultimately found by the QIRC. Ms Sato submits that procedural fairness was afforded to MAM.
[19] There is no need to consider the merits of this ground.
[20] There were no factual disputes. The question of construction is a matter of law. MAM has a right to appeal on an error of law under s 557 of the 2016 IR Act.[14] It is for this Court to determine the proper construction of clause 13.1 and the parties have made full argument on the point in this Court. There is no utility in determining whether or not procedural fairness was afforded to MAM in the QIRC.[15]
Ground 2 - What is the proper construction of clause 13.1?
[22] Business contracts are made in the context of commercial dealings and will be interpreted in light of what a reasonable business person would have understood the terms to mean. That consideration will include "that the parties ... intended to produce a commercial result".[18] Here, the enterprise bargain is a contractual agreement entered into between an employer and employee representatives. It must be construed in an industrial context.[19]
[23] The enterprise agreement (a Commonwealth industrial instrument) was entered into[20] against the background of a legislative scheme which included Chapter 2 of the 1999 IR Act. Chapter 2 was entitled "Pre-modernisation employment conditions", reflective of the modernisation of awards process that occurred in the early part of the 21st century.[21] Part 3 concerns long service leave and s 43 provided, relevantly here:
(1) This section applies to all employees, other than seasonal employees.
(2) An employee is entitled to long service leave on full pay of -
(a) for the first 10 years continuous service - 8.6667 weeks; and
(b) if the employee has completed at least a further 5 years continuous service - another period that bears to 8.6667 weeks the proportion that the employee's further period of continuous service bears to 10 years.
(3) An employee who has completed at least 7 years continuous service is entitled to a proportionate payment for long service leave on the termination of the employee's service..."
[24] When long service leave was first introduced, it was not available to part-time or casual employees.[22] That changed. Difficult issues arise with the notion of "continuous service" for casual employees as casual employment is generally constituted by a series of individual contracts of employment, the duration of each being the duration of each casual work period.[23] These issues were addressed by s 47 of the 1999 IR Act with the calculation of entitlement to be performed under s 49 which provides:
(1) This section applies if an employee who is entitled to long service leave was a casual employee or regular part-time employee at any time during the employee's continuous service to which the long service leave relates.
(2) The minimum amount payable to the employee for long service leave is worked out using the formula -
An employee who worked 15600 ordinary working hours over a 10-year period and is being paid an hourly rate of $12 is entitled to be paid -
actual service means the total ordinary working hours actually worked by an employee during the employee's period of continuous service.
casual employee means an employee mentioned in section 47(1).
hourly rate means the hourly rate for ordinary time payable to the employee -
(a) if the employee takes the long service leave - on the day that the employee starts the leave; or
(b) if the employee's employment is terminated - on the date that the termination takes effect."[24]
[25] Section 43 embodies the concept of an "entitlement to" long service leave. Clause 13.1 of the 2006 agreement seeks, by its express terms, to displace "any entitlement to ... long service leave".
[26] In a carefully reasoned judgment, the Industrial Commissioner concluded that the "entitlement to long service leave" in clause 13.1.1 of the 2006 agreement was the same concept as "entitled to long service leave" in s 43 of the 1999 IR Act. He regarded s 43 as context against which to construe clause 13.1.1.[25]
[27] The Industrial Commissioner held that as "entitlement" under s 43 to long service leave arose on the tenth anniversary of the commencement of continuous service,[26] and as long service leave was not a continually accruing "entitlement", clause 13.1.1 ought to be construed accordingly. Therefore, the Industrial Commissioner reasoned, all that was being excluded by clause 13.1 was any "entitlement" to actually be paid long service leave which crystalised during the period of the 2006 agreement.[27]
[28] The 2006 agreement does not define the term "entitlement" or specifically refer to s 43 or any other provision of the 1999 IR Act. While s 43 is undeniably part of the context against which the enterprise agreement should be construed, it is not conclusive of the construction of clause 13.1.1. Depending on context, "entitlement" to long service leave might mean an accrued and existing right to leave or payment in lieu, or may mean a right to long service leave under a statute or industrial instrument, whether or not the right has crystalised.[28]
[29] Terms of employment are derived from various sources: the contract of employment, any relevant awards, any enterprise agreements and any statutory provisions.[29] Clause 3 of the 2006 agreement provides:
This is a comprehensive Agreement in settlement of all of the Association's Enterprise Bargaining claims. It replaces in its entirety the all other certified agreements[30], awards, orders of industrial commissions or industrial agreements that would otherwise apply to Flight Attendants. The parties agree that it is a term of this agreement not to pursue any extra claims except where provided for under this Agreement and/or except where consistent with the National Wage Case principles."
[30] The relevant awards and certified agreements[31] were not before the QIRC and were not before me. The 2006 agreement assumes that there are obligations and rights consequent upon an employee's employment as a casual flight attendant. Various provisions of the 2006 agreement then seek to vary those terms and conditions.
[31] Against that background, clause 13.1 imposes an obligation upon MAM to pay a "base hourly rate". The base hourly rate "includes" a number of items which may otherwise attract a separate payment. These are broken into two categories:
[32] The expenses are "miscellaneous expenses" and "grooming expenses". Grooming expenses are further dealt with in clause 17 of the 2006 agreement to which it is unnecessary to turn.
[33] The list of "entitlements" in clause 13.1.1 is not exhaustive. Other entitlements are provided by the 2006 agreement.[34]
[34] Clause 13.1.1 refers to "any entitlement to be paid annual leave" and then other entitlements are listed. Clearly, the word "entitlement" relates to each entitlement listed so that the clause means that the annual loading is paid "in lieu of":
[35] In each case, the right to payment arises in futuro. Paid annual leave accrues daily but is only payable when an employee elects to take leave. Paid leave for sickness or personal reasons arises when the sickness is contracted or the personal reasons arise. The "entitlement" to annual leave and leave for sickness and personal leave is the right to receive the benefit of leave with pay if the preconditions to those rights arise.
[36] As the Industrial Commissioner held, on a particular day, long service leave crystallises as a right to take leave with pay. It crystallises though because the employee has a right to have periods of service counted towards the ultimate entitlement to long service leave. The entitlement to long service leave is a right to paid leave when a specified term of service has been achieved.
[37] The casual loading is, in effect, a periodically paid sum which is designed to extinguish various "entitlements". It does that by compensating the employee with inflated pay rates to extinguish the benefit of the otherwise accruing "entitlements".
[38] Construed in that context, it is the service which is accruing and which ultimately crystallises into an entitlement to take paid long service leave. On a proper construction of clause 13.1, "the entitlement" to long service leave is the right to count service under the 2006 agreement towards an ultimate long service leave entitlement. I therefore respectfully disagree with the conclusion reached by the Industrial Commissioner and ground 2 of the appeal is made out.
[39] Success on ground 2 does not determine the appeal in favour of MAM.
Ground 3 - Was Ms Sato entitled to long service leave?
[40] Ms Sato submits that if clause 13.1 of the 2006 agreement operates so that her service under the agreement does not count in the calculation towards long service leave, that position was effectively reversed by s 113A of the Fair Work Act 2009 (Cth).
[41] MAM submits that s 113A does not affect what it says is an accrued right not to pay long service leave where that right has been obtained in exchange for the obligation to pay the loading.
[42] As previously observed, s 43 of the 1999 IR Act provides for an entitlement to long service leave and s 49 concerns its calculation. Therefore, by force of the 1999 IR Act, Ms Sato would become entitled to long service leave calculated in accordance with s 49 once she had completed "10 years continuous service" with MAM. If she completed seven years continuous service, she would, upon termination, be entitled to a proportion of the sum calculated under s 49. Commonwealth legislation has impacted upon the operation of the 1999 IR Act.
[43] Before the Fair Work Act 2009 (Cth), the Commonwealth industrial relations scheme was constituted under the Workplace Relations Act 1996 (Cth). The Workplace Relations Act provided for awards and, by Part VIB, enterprise bargaining. By s 170LT, the Australian Industrial Relations Commission (the Commission)[35] could certify an agreement which passed a "no disadvantage test"[36] and met other requirements.
[44] Section 170LY of the Workplace Relations Act governed the relationship between a certified agreement, an award, an order of the Commission and other certified agreements.
[45] Section 170LZ governed the relationship between a certified agreement and State and Commonwealth laws and State industrial instruments. It provided:
"170LZ Effect of a certified agreement on Commonwealth laws or State laws, awards or agreements
(1) Subject to this section, a certified agreement prevails over terms and conditions of employment specified in a State law, State award or State employment agreement, to the extent of any inconsistency.
(2) Provisions in a certified agreement that deal with the following matters operate subject to the provisions of a State law that deals with the matter:
(a) occupational health and safety;
(b) workers' compensation;
(c) apprenticeship;
(d) any other matter prescribed by the regulations.
(3) If a State law provides protection for an employee against harsh, unjust or unreasonable termination of employment (however described in the law), subsection (1) is not intended to affect the provisions of that law that provide that protection, so far as those provisions are able to operate concurrently with the certified agreement.
(4) To the extent of any inconsistency, a certified agreement displaces prescribed conditions of employment specified in a Commonwealth law that is prescribed by the regulations.
Commonwealth law means an Act or any regulations or other instrument made under an Act.
prescribed conditions means conditions that are identified by the regulations.
State law means a law of a State or Territory (including any regulations or other instrument made under a law of a State or Territory), but does not include a State award or a State employment agreement." (emphasis added)
[48] Provisions in Commonwealth industrial legislation purporting to give primacy to Commonwealth industrial instruments over inconsistent State laws have been held to be effective.[39]
[49] Therefore, by force of s 170LZ, to the extent that the 2006 agreement is inconsistent with Chapter 2 of the 1999 IR Act, the 2006 agreement prevails. That means, given my construction of clause 13.1 of the 2006 agreement, s 170LZ operates so that Ms Sato's service is not counted towards any entitlement to long service leave.
[50] However, the Commonwealth Parliament passed the Workplace Relations Amendment (Work Choices) Act 2005 which commenced a reform of the Commonwealth industrial relations system. Upon the commencement of the amendments, Schedule 7 of the Workplace Relations Act contained transitional provisions, including clause 2 relevantly in these terms:
"2 Continuing operation of pre-reform certified agreements - under old provisions
(1) Subject to this Schedule, the following provisions of the pre-reform Act continue to apply in relation to a pre‑reform certified agreement, despite the repeals and amendments made by the Workplace Relations Amendment (Work Choices) Act 2005:
(a) ...
(g) sections 170LY and 170LZ; ...
(r) any other provision relating to the operation of the provisions mentioned in the preceding paragraphs. ..."
[52] Therefore, s 170LZ of the Workplace Relations Act would continue to operate so as to give primacy to clause 13.1 of the 2006 agreement over the long service leave entitlements granted by the provisions of Part 3 of Chapter 2 of the 1999 IR Act.
[53] In 2006, the Work Choices case[40] was decided which led to the Fair Work Act 2009 (Cth). The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 provided:
"5A Transitional instruments continue to be subject to the same State and territory interaction rules
(1) The same State and Territory interaction rules that applied in relation to WR Act instruments of a particular kind immediately before the WR Act repeal day continue to apply in relation to instruments of that kind that become transitional instruments.
(2) State and Territory interaction rules are provisions of a law of the Commonwealth, as in force immediately before the WR Act repeal day, the effect of which is that:
(a) an instrument prevails over, or excludes, a law of a State or Territory; or
(b) an instrument has effect subject to a law of a State or Territory.
Note: Most of the state and Territory interaction rules were in the WR Act."
"7 No loss of accrued rights or liabilities when transitional instrument terminates or ceases to apply
(1) If a transitional instrument terminates, or ceases to apply in relation to a person, that does not affect:
(a) any right or liability that a person acquired, accrued or incurred before the transitional instrument terminated or ceased to apply; or
(b) any investigation, legal proceeding or remedy in respect of any such right or liability.
(2) Any such investigation, legal proceeding or remedy may be instituted, continued or enforced as if the transitional instrument has not terminated or ceased to apply.
(3) This item has effect subject to a contrary intention in this Act or in the FW Act."
[55] MAM relied on s 7(1)(a) for the proposition that the covenant in clause 13.1 of the 2006 agreement was an accrued right which survived the various legislative amendments and the termination of the 2006 agreement.
[56] The Fair Work Act set up a different regime of interaction between State and Commonwealth laws.
[57] Sections 26 and 27 of the Fair Work Act provide, relevantly here:
"26 Act excludes State or Territory industrial laws
(1) This Act is intended to apply to the exclusion of all State or Territory industrial laws so far as they would otherwise apply in relation to a national system employee or a national system employer.
(a) a general State industrial law; or
(b) an Act of a State or Territory that applies to employment generally and has one or more of the following as its main purpose or one or more of its main purposes:
(i) regulating workplace relations (including industrial matters, industrial activity, collective bargaining, industrial disputes and industrial action) ...
(3) Each of the following is a general State industrial law:
(a) the Industrial Relations Act 1996 of New South Wales;
(b) the Industrial Relations Act 1999 of Queensland;
(c) the Industrial Relations Act 1979 of Western Australia;
(d) the Fair Work Act 1994 of South Australia;
(e) the Industrial Relations Act 1984 of Tasmania...
(1A) Section 26 does not apply to any of the following laws:
(a) the Anti-Discrimination Act 1977 of New South Wales;
(b) the Equal Opportunity Act 2010 of Victoria;
(c) the Anti-Discrimination Act 1991 of Queensland;
(d) the Equal Opportunity Act 1984 of Western Australia;
(e) the Equal Opportunity Act 1984 of South Australia;
(f) the Anti-Discrimination Act 1998 of Tasmania;
(g) the Discrimination Act 1991 of the Australian Capital Territory;
(h) the Anti-Discrimination Act of the Northern Territory.
(1) Section 26 does not apply to a law of a State or Territory so far as:
(b) the law is prescribed by the regulations as a law to which section 26 does not apply; or
(c) the law deals with any non-excluded matters; or
(d) the law deals with rights or remedies incidental to:
(i) any law referred to in subsection (1A); or
(ii) any matter dealt with by a law to which paragraph (b) applies; or
(iii) any non-excluded matters.
Note: Examples of incidental matters covered by paragraph (d) are entry to premises for a purpose connected with workers compensation, occupational health and safety or outworkers.
(a) superannuation;
(b) workers compensation;
(c) occupational health and safety;
(d) matters relating to outworkers (within the ordinary meaning of the term);
(e) child labour;
(f) training arrangements, except in relation to terms and conditions of employment to the extent that those terms and conditions are provided for by the National Employment Standards or may be included in a modern award;
(g) long service leave, except in relation to an employee who is entitled under Division 9 of Part 2-2 to long service leave..." (emphasis added)
[58] Section 26 excludes the operation of State laws, specifically here, the 1999 IR Act.[42] It then exempts certain State laws from the general exclusion. Those laws are defined by s 27 as "non-excluded matters".
[59] By s 27(2)(g), a non-excluded matter is "long service leave, except in relation to an employee who is entitled under Division 9 of Part 2-2 to long service leave". Division 9 contains s 113A to which I will later return.
[60] The effect of s 27(2)(g) is that to determine an entitlement to long service leave, one refers to State laws on that topic, relevantly here, the 1999 IR Act and then to Division 9 of Part 2-2 of the Fair Work Act.
[61] Section 29 of the Fair Work Act concerns the interaction between modern awards and enterprise agreements with State and Territory laws. It provides, relevantly, as follows:
"29 Interaction of modern awards and enterprise agreements with State and Territory laws
(1) A modern award or enterprise agreement prevails over a law of a State or Territory, to the extent of any inconsistency.
(2) Despite subsection (1), a term of a modern award or enterprise agreement applies subject to the following:
(a) any law covered by subsection 27(1A);
(b) any law of a State or Territory so far as it is covered by paragraph 27(1)(b), (c) or (d)..." (emphasis added)
[62] An enterprise agreement prevails over State or Territory laws except in relation to "non-excluded matters" which includes long service leave.[43]
[63] Section 29(1) is of similar structure to s 170LZ of the Workplace Relations Act. Section 29(2) of the Fair Work Act, like s 170LZ(2) and (3), makes exceptions to the general interaction rules. Section 29(2) excludes from the primacy of Commonwealth enterprise agreements over State laws "any law of a State ... so far as ... the law deals with long service leave".[44] Relevantly, that State law is Part 3 of Chapter 2 of the 1999 IR Act.
[64] Section 27(2)(g) defines long service leave as not to include employees' entitlements under Division 9 of Part 2-2. Division 9 contains two sections, s 113 and s 113A. They provide:
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).
(a) a workplace agreement, or an AWA, that came into operation before the commencement of this Part applies to the employee; or
(b) one of the following kinds of instrument that came into operation before the commencement of this Part applies to the employee and expressly deals with long service leave:
(i) an enterprise agreement...
(3) Applicable award-derived long service leave terms, in relation to an employee, are:
(a) terms of an award, or a State reference transitional award, that (disregarding the effect of any instrument of a kind referred to in subsection (2)):
(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, or the State reference transitional award, that are ancillary or incidental to the terms referred to in paragraph (a)...
Entitlement in accordance with applicable agreement-derived long service leave terms
(4) If there are applicable agreement-derived long service leave terms (see subsection (5)) in relation to an employee, the employee is entitled to long service leave in accordance with those terms.
(5) There are applicable agreement-derived long service leave terms, in relation to an employee if:
(a) an order under subsection (6) is in operation in relation to terms of an instrument; and
(b) those terms of the instrument would have applied to the employee immediately before the commencement of this Part if the employee had, at that time, been in his or her current circumstances of employment; and
(c) there are no applicable award-derived long service leave terms in relation to the employee.
(a) any of the following instruments that was in operation immediately before the commencement of this Part contained terms entitling employees to long service leave:
(i) an enterprise agreement;
(ii) a collective agreement;
(iii) a pre-reform certified agreement;
(iv) an old IR agreement; and
(b) those terms constituted a long service leave scheme that was applying in more than one State or Territory; and
(c) the scheme, considered on an overall basis, is no less beneficial to the employees than the long service leave entitlements that would otherwise apply in relation to the employees under State and Territory laws;
the FWC may, on application by, or on behalf of, a person to whom the instrument applies, make an order that those terms of the instrument (and any terms that are ancillary or incidental to those terms) are applicable agreement-derived long service leave terms.
(7) References in this section to a kind of instrument (other than an enterprise agreement) are references to a transitional instrument of that kind, as continued in existence by Schedule 3 to the Transitional Act.
113A Enterprise agreements may contain terms discounting service under prior agreements etc. in certain circumstances
(a) an instrument (the first instrument) of one of the following kinds that came into operation before the commencement of this Part applies to an employee on or after the commencement of this Part:
(i) an enterprise agreement...
(vi) a pre-reform certified agreement...
(b) the instrument states that the employee is not entitled to long service leave; and
(c) the instrument ceases, for whatever reason, to apply to the employee; and
(d) immediately after the first instrument ceases to apply, an enterprise agreement (the replacement agreement) starts to apply to the employee.
(2) The replacement agreement may include terms to the effect that an employee's service with the employer during a specified period (the excluded period) (being some or all of the period when the first instrument applied to the employee) does not count as service for the purpose of determining whether the employee is qualified for long service leave, or the amount of long service leave to which the employee is entitled, under this Division or under a law of a State or Territory.
(3) If the replacement agreement includes terms as permitted by subsection (2), the excluded period does not count, and never again counts, as service for the purpose of determining whether the employee is qualified for long service leave, or the amount of long service leave to which the employee is entitled, under this Division or under a law of a State or Territory, unless a later agreement provides otherwise. This subsection has effect despite sections 27 and 29.
(4) References in this section to a kind of instrument (other than an enterprise agreement) are references to a transitional instrument of that kind, as continued in existence by Schedule 3 to the Transitional Act." (emphasis added)
[65] Section 113 can be ignored. There is an enterprise agreement which expressly deals with long service leave: the 2006 agreement, clause 13.1. Therefore, subject to s 113A, the 1999 IR Act gives a right to Ms Sato to long service leave. That entitlement arises when there has been 10 years continuous service, which she has achieved.
[66] Subsections 113(4)-(7) deal with enterprise agreements that are on foot which include long service leave provisions. Provided the terms pass a no disadvantage test in comparison to the relevant State or Territory provisions for long service leave, the Fair Work Commission may order that the agreement prevails.[45]
[67] Mr Murdoch KC, counsel for MAM made two significant submissions about s 113A. Firstly, he submitted that s 113A does not apply here because clause 13.1 of the 2006 agreement does not "state that the employee is not entitled to long service leave".[46] He submits that the 2006 agreement recognises a potential claim for long service leave and deals with it other than by denying the entitlement.
[68] Ms Murdoch's second submission is that s 113A is permissory. He points to s 113A(2) and the words "the replacement agreement may include terms to the effect that an employee's service ... does not count as service for the purpose of determining ... long service leave".[47] He submits that the use of the term "may" suggests that s 113A provides one avenue, but not the only avenue, through which an employer can preserve any provision in an earlier enterprise agreement compromising an employee's entitlement to long service leave. He submits that pursuant to the 2006 agreement, MAM have paid the loading and therefore satisfied the claim for long service leave.
[69] Relevantly to Mr Murdoch's submissions, the position can, for the reasons explained, be summarised as follows:
[70] That construction is consistent with the supplementary explanatory memorandum to the Fair Work Bill 2008 which is terms:
It does this by allowing a replacement agreement to provide that some or all of the period of service during which the first agreement applied does not count as service for the purposes of determining long service leave entitlements.
the ability for a replacement agreement to discount periods of service does not apply where long service leave entitlements may have been excluded by implication - the exclusion must be in express terms;
the period of service that may be discounted in an enterprise agreement may not exceed the period during which the first instrument applied (i.e., the effect of previous agreements cannot be included);
the replacement agreement must commence immediately after the first instrument for the exclusion to have effect.
[71] Mr Murdoch's first submission is therefore contrary to MAM's interests. In order to avail s 113A, which is the only way of preserving any right it has under clause 13.1 of the 2006 agreement, the exclusion must be one caught by s 113A. The explanatory memorandum suggests that it must be in express terms, but it is unnecessary to decide the issue.
[72] Mr Murdoch's second submission should be accepted to the extent that s 113A is permissory. The employer "may" enter into a subsequent agreement which accords with the terms of s 113A, and is not obliged to do so, but if it does not, then the State long service leave provisions will apply and time served under the 2006 agreement will count towards long service leave.
[73] Here, there is no provision in the 2010 agreement which seeks to preserve the long service leave provisions in the 2006 agreement. Ground 3 has no substance.
[74] The case was put before the Industrial Commissioner on the basis of a set-off. A set‑off may arise where a payment is made for one purpose and is sought to be attributed to another.[50]
[75] That is not the case here. MAM agreed to pay a loading in satisfaction of a number of entitlements which includes long service leave. They are:
[76] Long service leave is expressly one of the entitlements sought to be extinguished by the payment of loading.
[77] The 2006 agreement could not have been certified unless it passed the no disadvantage test.[51] The no disadvantage test is applied to the agreement as a whole so it cannot be concluded merely from the 2006 agreement passing the test that the loading mathematically satisfies all the entitlements which may otherwise arise under some other industrial instrument.
[78] As explained, the long service leave entitlement is a statutory one which has primacy over the 2006 agreement. The question then is whether it has been proved that the long service leave entitlement which has been quantified at $8,253.55 has been paid.
[79] Neither before the QIRC nor this Court was there evidence quantifying the value of the loading over the term of Ms Sato's employment, nor quantifying the value of the various entitlements (including long service leave) over the period of the 2006 agreement.
[80] The Industrial Commissioner was correct to find that the long service leave had not been proved to have been satisfied.
Ground 5 - Should the remedy be denied to Ms Sato on discretionary grounds?
[81] The Industrial Commissioner accepted that upon an application for the recovery of unpaid long service leave entitlements he had a discretion to refuse to make an order in favour of Ms Sato even if he found that she was legally entitled to the payment.[52] There may be doubt as to whether such a discretion exists.[53] However, it is not necessary to decide that issue. The sole reason for the exercise of discretion in favour of MAM has been put on appeal as:
"...Ms Sato has been paid a casual loading in lieu of her entitlements such that she would unfairly obtain a windfall were long service leave to be paid. Accordingly, the Commission erred in making an order for MAM to pay an amount of long service leave to Ms Sato."[54]
[82] As I have already found, there is no basis upon which it could be concluded that the casual loading in fact satisfied the long service leave entitlements.
[83] Ms Sato has established her legal entitlement to payment and there is, in my view, no logical reason why her remedy ought to be denied as a matter of discretion.
[84] All grounds of appeal have failed so the appeal should be dismissed.
[1] The Flight Attendants' Association of Australia Domestic/Regional Division Casual Flight Attendants Enterprise Agreement 2006
[2] The Flight Attendants' Association of Australia Domestic/Regional Division Casual Flight Attendants Enterprise Agreement 2010 and the Flight Attendants' Association of Australia Domestic/Regional Division Casual Flight Attendants Enterprise Agreement 2015.
[4] Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213.
[6] Industrial Relations Act 1999, s 43.
[7] Industrial Relations Act 2016, Chapter 2, Part 3, Division 9.
[8] Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213 at [33]- [35].
[15] See generally Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 at 145.
[16] In Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, Crennan and Heydon JJ did not distinguish, in approach to construction, between statutes, contracts and testamentary instruments.
[17] R v A2 [2019] HCA 35; (2019) 269 CLR 507 at [32] - [44] and [162] - [163].
[18] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [53], followed in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104.
[19] See generally Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29; (2020) 271 CLR 495 at [3].
[20] Under the Workplace Relations Act 1996 (Cth).
[21] For a history of modernisation of awards in Queensland, see Queensland Services, Industrial Union of Employees v Moreton Bay Regional Council [2022] ICQ 23 at [63]- [84].
[22] Compass Group (Australia) Pty Ltd v Bartram [2007] FCAFC 26; (2007) 161 IR 307 at [19].
[23] See, for example, Programmed Integrated Workforce Pty Ltd v Fox [2022] ICQ 32 at [36]- [42], [53]-[77] and as to the concept of casual employment generally, see WorkPac Pty Ltd v Rossato (2021) 271 CLR 456.
[25] Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213 at [38]- [43].
[26] Queensland Independent Education Union of Employees v Beerwah and District Kindergarten Association Inc (2008) 188 QGIG 169.
[27] Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213 at [45].
[28] See, for example, Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94; (2014) 222 FCR 1 at [42]- [43].
[29] Ex parte McLean [1930] HCA 12; (1930) 43 CLR 472 at 479 and Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 419-421.
[30] Probably this is a typographical error and the clause should read 'It replaces in its entirety all the other certified agreements...'
[31] Other than the 2006 agreement, and the later 2010 agreement and the later still 2015 agreement which were attached to the statement of agreed facts.
[34] See clauses 15, 16, 18 and 19, being overtime, meal break penalty payments, accommodation away from home and parental leave, are all examples.
[35] Constituted under the Workplace Relations Act 1996, s 61 and see s 62, and earlier equivalent provisions.
[36] Workplace Relations Act 1996, Part 8, Division 5A, and earlier equivalent provisions.
[37] Constitution of Australia 2009.
[38] Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 224 CLR 508 at [11].
[39] See generally Compass Group (Australia) Pty Ltd v Bartram [2007] FCAFC 26; (2007) 161 IR 307.
[40] New South Wales v Commonwealth of Australia [2006] HCA 52; (2006) 229 CLR 1.
[41] Fair Work (Traditional Provisions and Consequential Amendments) Act 2009, s 2(3)(a).
[43] The combined effect of s 29(2)(b) read with s 27(1)(d)(iii) (excluded matters) and s 27(2)(g) (long service leave).
[44] Section 29(2)(b) read with s 27(1)(c) and s 27(2)(g).
[48] "cease[d] ... to apply to the employee"; Fair Work Act 2009, s 113A(1)(c).
[49] And also consistent with dicta in Conroy's Smallgoods v Australasian Meat Industry Employees Union [2023] FCAFC 59 at [275] and [276], a case which turned on the contraction of s 113.
[50] WorkPac Pty Ltd v Rossato [2020] FCAFC 84; (2020) 278 FCR 179, reversed on other grounds in WorkPac Pty Ltd v Rossato (2021) 271 CLR 456.
[52] Sato v Maurice Alexander Management Pty Ltd [2020] QIRC 213 at [91].
[54] Appellant's written submissions, paragraph [52].
Maurice Alexander Management Pty Ltd
Sato [2023] ICQ 14
(2014) 251 CLR 640
(1930) 43 CLR 472
(2014) 222 FCR 1
(2015) 256 CLR 104
(2019) 269 CLR 507
(2020) 278 FCR 179
(1995) 185 CLR 410
(2011) 224 CLR 508
(2020) 271 CLR 495
(2006) 229 CLR 1
(2021) 271 CLR 456
(2011) 243 CLR 253
(2007) 161 IR 307
(1986) 161 CLR 141