Meatpak Pty Ltd t/a as Holco Fine Meat Supplies v Moran

The Court: 1 This is an appeal from an interlocutory judgment of the Industrial Relations Court of South Australia ('IRCSA') constituted by Ms Farrell IM. Leave to appeal was sought. It was not opposed. We granted leave. 2 The case before her Honour related to claims by seven erstwhile piecework (or, as the relevant awards now say, 'incentive system') boners and slicers that they were underpaid in relation to their annual leave for a number of years. The respondents claimed that their employment by the appellant had been governed by the provisions of the Federal Meat Industry (Processing) Award 2000(the 'FMP Award'). 3 Whether the respondents were entitled to the benefits of the FMP Award is the main issue in this case. Clause 5.2.1 of the Award provides that '[t]his award will apply in meat processing establishments, as defined, in respect to employees employed by the employers bound and respondent to this award for whom rates of pay and general conditions of employment are prescribed herein'. 4 There was no dispute that the appellant was an employer 'bound [by] and respondent to' that award. In cl 3.4, the FMP Award included the following definition: 'Meat processing establishment shall include an abattoir, boning room or pre-packing operation but does not include a retail or country butcher shop, smallgoods factory or ham and bacon factory.' 5 The respondents had been employed in a discrete, though not walled-off, part of a 'production area', or large room, of a facility (or facilities - the reason for the possible distinction will shortly become apparent) operated by the appellant in South Australia. The respondents' claim was presented on the basis that this work involved boning in a room and that meant that they were employed in a 'boning room' within the meaning of cl 3.4 of the FMP Award. 6 The case for the appellant was not that the respondents were award-free but that they were covered by the Federal Meat Industry (Retail and Wholesale) Award 2000 ('the R and W Award') rather than the FMP Award. The appellant drew attention to the necessity, for the FMP Award to apply, that the relevant employees should be employed in a meat processing establishment. The appellant asserted this meant a 'stand-alone' establishment and, in the case of boning rooms, that there be an establishment constituted only by a boning room. The R and W Award was said to apply because the appellant carried out a 'wholesale operation' at the subject facility/facilities. The R and W Award applies (pursuant to cl 5.2): '… in respect of all employees employed in retail meat establishments, wholesalers, domestic and/or wholesale meat markets and abattoirs associated with a butcher shop and classifications contained in the award which are incidental to the principal business.' 7 Clause 3.20 provides: 'Wholesale or wholesaler are to be given their ordinary meaning and includes establishments that supply meat products for hospitality and catering outlets.' 8 The learned Industrial Magistrate assumed, as did the appellant and possibly the advocate for the respondents, that the FMP Award 'provides for a more favourable payment with respect to … [the respondents'] entitlement to annual leave'. We shall return to this later. 9 Her Honour's factual findings were: '[The appellant] operated retail butchers at various outlets. It operates its wholesale business on Churchill Road, Cavan. The [respondents] were employed at various times at a plant adjacent to the wholesale market of the respondent. In its production area the [appellant] has two areas: one is called "the food service area" and a smaller area is called "the boning area". There is no physical barrier between the boning area, where the seven [respondents] worked, and the food services area, where other employees prepared meat products for hospitality and catering outlets. The [respondents] were employed to perform specific boning and slicing duties. They boned out meat from quarters of meat as specified by the employer. They dispatched some of that meat to the other employees for processing. They did not at any time perform the work carried out in the food services area, although labourers who assisted them did do that. They were paid by the quarter until August 2003. They boned on average between 80 and 100 quarters per day. There is no retail outlet at the [appellant's] Cavan premises, although apparently members of the public have occasionally approached and requested to purchase meat there. The [appellant] operates a wholesale market outlet at the adjacent premises. In the processing area 30 per cent of the boned meat goes to the food services area for value-adding or further processing. 20 per cent goes to a retail operation and 50 per cent to wholesale sales. With reference to those figures, they are relating to the meat from the boners, who are the [respondents to the appeal].' 10 Her Honour concluded: 'In my view the [respondents'] arguments are correct; that is, that a boning room does not need to be defined by walls nor does it need to be a stand-alone establishment. I note there is nothing unusual about different awards applying within a single establishment. In my view the argument with respect to interpretation of the [FMP] Award is correct; that is, the [respondents'] argument is correct. The award-makers would have explicitly excluded businesses such as the [appellant's] business if it had intended that the award not apply to them. I therefore find that the [respondents] are entitled to consider themselves entitled to the benefits that exist under the [FMP] Award. Calculations however are insufficient evidence before this court and will need to get revised and possibly further evidence will need to be called in relation to that.' 11 In Wilkie v Gordian Runoff Ltd [2005] HCA 17, (2005) 214 ALR 410, 413 a majority of the High Court endorsed a succinct observation of Gleeson CJ, in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 589, as to the necessity for a business-like interpretation of commercial contracts such as insurance policies: 'Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.' 12 Federal awards are, of course, statutory instruments even when made by consent. Whether made by consent or by arbitral decision, they are generally drafted by persons with a close knowledge of the relevant industry, who have regard to the commercial and industrial circumstances in which the awards are to operate, and to practical considerations. The three considerations mentioned by Gleeson CJ are apposite. Further, the last 20 years have seen the practical acceptance in Australia of the primary role of 'purposive' but, nevertheless, text-based statutory interpretation. It is now trite that the circumstances and court-inferred purposes of a statutory instrument are to be examined at the outset, since they may alter an abstract impression of the language, even seemingly very plain language, of the instrument. 13 Upon such considerations, it is appropriate to infer that the FMP Award and the R and W Award were not intended to overlap in a single establishment. The respondents' union is the only union party to both awards; there is only one registered employer organisation party to both awards - indeed it is membership of that organisation which entirely defines employers bound by the R and W Award. The FMP Award says that it applies in 'establishments'. The R and W Award likewise applies 'in' 'establishments' and other species of industrial enterprises each apt to be thought of as establishments; and the awards plainly are intended to cover the 'blue collar' workforce in such establishments with the exception of specialist classifications such as mechanical or other tradespeople. It has been a settled principle of the Australian Industrial Relations Commission ('the Commission') that: 'It is obviously desirable that awards of the Commission not overlap in their operation': Metal Trades Industry Association of Australia v Electrical Trades Union (1991) 44 IR 141. There is, therefore, every reason to think that the awards in question were not intended to overlap in a single establishment even though, as her Honour observed, it is not uncommon, through oversight or otherwise (and despite the Commission's general policy), for two or more awards to apply in a single establishment. 14 If the only basis of the respondents' case, as they seem to have asserted, was that they did boning work in part of a room in which other employees did work unrelated to boning, a conclusion that the respondents were employed in an '… establishment', that was a 'boning room', would be to exalt literalism over the context and purpose of the FMP Award. That boning areas may be part of wholesale establishments is recognised by the R and W Award. Appendix A to that award indicated how a simplification of the pay structure into seven broad levels, from a large number of individual classifications, was to be effected in accordance with the Commission's 'Minimum Rates Adjustment Principles'. Under the old classification system (recited in Appendix A) there had been a group of classifications and pay rates prescribed as appropriate within 'Boning and/or pre-packing area, room or factory' situations. A boning area within a room was evidently not seen in industry parlance as a 'boning room' in the sense of an establishment. 15 The difficulty in this case is that a single establishment might fall within the ordinary meaning of the coverage clauses of both awards. An example would be a stand-alone boning room where the employer owned and sold by wholesale 90 per cent of the output and contract boned for other meat trade operators the remaining 10 per cent. In ordinary language, such an establishment might well be both a meat processing establishment and a wholesaler. 16 In the present case, boning and the various means of downstream industrial value-adding to raw meat adopted by the appellant might all, in ordinary language, be seen as 'meat processing', that is, preparing meat into a marketable form by a systematic series of actions performed by persons and/or equipment. However, the appellant's operation in at least part of its complex at Cavan would, on its face, appear to fall within the notion of a 'wholesaler' as defined by the R and W Award. 17 Given that the Commission should be regarded as not having intended that both awards should apply in the one establishment, we think that a 'dominant nature of the establishment' test should, if possible, be applied to give effect to the inferred purposes of the parties and the Commission. This is a common legal method used to determine which of competing characteristics should be used to categorise some activity or objective; see for example, in the field of town planning law, Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 at 161 per Glass JA of the New South Wales Court of Appeal; and, in the area of legal professional privilege, Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (1990) 201 CLR 49, 66 ff. Theoretically, that might produce a situation in which there is no dominant objective or nature of the establishment in question. In real-world industrial and commercial contexts, however, such a situation is unlikely. 18 In determining, in the present case, what was the dominant nature of the establishment it was necessary for the Industrial Magistrate to consider all surrounding circumstances. The Industrial Magistrate needed to consider: · exactly what was the establishment in question. It is possible that, here, there might have been two or more establishments in adjacent premises or parts of premises. · the relevant attributes of the establishment - the mainspring or dominant means whereby the employer derived (or intended to derive) a profit from the operations. For example, were boning and slicing and the other meat processes the essential value-adding mechanisms or were they mere enhancements of a concern fundamentally focussed on buying and selling meat? It is the objective attributes of the establishment, rather than self-serving ex post facto assertions about them, which must be examined. 19 A further point is that an understanding of the general context of the Australian meat industry might indicate that in the FMP Award the phrase 'meat processing', within the term 'meat processing establishments', ought to be ascribed a meaning other than its apparently plain one. 20 Some of these matters were not argued in the court below. The respondents' case was narrowly put. Their arguments were accepted, erroneously as it seems to us. The appellant asserted that the R and W Award applied within its establishment and this also was accepted. At no stage did the parties or the Industrial Magistrate address the fundamental question identified by us: the dominant nature of the establishment. 21 The appeal must therefore be upheld and the matter remitted for further hearing and determination in the IRCSA. 22 It is not clear to us that it was correct for her Honour, and possibly the parties, to assume that a correct computation of the respondents' annual leave entitlement under the R and W Award has been made or that, if made, it would result in the respondents being entitled to benefits less than those provided by the FMP Award. 23 The R and W Award provides in cl 27.10: '27.10.1 Unless otherwise agreed, each employee will be paid prior to the commencement of annual leave; 27.10.1(a) their ordinary time earnings that would have been earned during the period of leave; 27.10.1(b) their annual leave loading as provided by 27.11.' 24 Clause 27.11 provides: 'An employee before going on annual leave will receive a loading of 17.5% calculated on the appropriate classification rate. …' 25 Part 4 of the R and W Award (clauses 15 - 21 inclusive) deals with 'Wages and Related Matters'. Clause 12 provides for seven levels of weekly wage rates. Boners and slicers are to be paid respectively at Level 5 and Level 4. 26 However, cl 17 provides: '17. PAYMENT BY RESULTS 17.1 As an alternative to the time work system provided under this award, an employer may elect to operate under a payment by results or incentive system (including piece work). 17.2 In any such system employees will receive a weekly wage not less than that appropriate rate prescribed in 15.1. 17.3 The employer and each employee or a majority of employees may agree to modify or terminate the system in operation.' 27 Clause 22 provides: '22. HOURS OF WORK Summary 22.1.1 This clause describes the ordinary hours of work but is subject to other clauses in the award. 22.1.2 The ordinary hours of work shall not exceed 38 per week to be averaged over the period of the work cycle that applies in the particular enterprise. There is provision in this award for the employer, by agreement with employees, to arrange working hours to achieve maximum flexibility in order to suit the needs of both the enterprise and the employees. 22.2 Ordinary hours of work 22.2.1 The ordinary working hours shall not exceed an average of 38 per week Monday to Sunday inclusive. 22.2.2 Except for the meal times prescribed, all time between the actual commencing time and actual ceasing time on any one day shall count and shall be paid for as time worked. 22.2.3 For the purpose of establishing an average 38 hour week such average may be taken over a period not exceeding 152 hours within a work cycle not exceeding 28 consecutive days. 22.2.4 Employees may be rostered on the following basis: 22.2.4(a) The maximum number of ordinary hours, which may be worked on any one day, shall not exceed ten hours. 22.2.4(b) Once every four weeks, an employee who works ordinary hours on each Sunday over a 152 hour work cycle shall be given three consecutive days off which shall include Saturday and Sunday. By mutual agreement, in writing and signed, alternative arrangements may apply. 22.3 Ordinary hours - commencing times and ceasing times 22.3.1 Retail and wholesale establishments 4.00 a.m. and 9.00 p.m. - Monday to Friday. 4.00 a.m. and 6.00 p.m. - Saturday. 8.00 a.m. and 6.00 p.m. - Sunday. 22.3.2 Load out etc. Notwithstanding anything else contained in the award, the ordinary hours that may be worked in a workplace being a domestic meat market, a pre-packing area, or the receipt, storage, inspection, load out and delivery of meat, may be between 10.00 p.m. and 4.00 p.m. the following day Sunday to Saturday. Provided that all ordinary time worked between 10.00 p.m. and 6.00 a.m. shall be paid for at time and a quarter for all purposes of the award. 22.3.3 Cleaners Cleaners may be employed on ordinary hours between 6.30 a.m. and midnight provided that a maximum of ten ordinary hours per day may be worked Monday to Sunday inclusive. 22.4 Saturday and Sunday ordinary hours rates Notwithstanding any other clause in this award or subclause of this clause, the following rates apply for ordinary hours worked on Saturday and Sunday: 22.4.1 All ordinary hours worked on Saturday between 4.00 a.m. and 6.00 p.m. shall be paid at the rate of time and one quarter; 22.4.2 All ordinary hours worked on Sunday 8.00 a.m. and 6.00 p.m. shall be paid at the rate of time and one half. (Note: 22.4 is subject to 22.3.2 and 22.3.3) 22.5 Make-up time An employee may elect, with the consent of their employer, to work make-up time under which the employee takes time off ordinary hours and works those hours at a later time, during the spread of ordinary hours provided in the award.' 28 The unchallenged evidence was that the respondents boned '80 to 100 quarters' of carcases per day. However, their annual leave pay calculations were apparently made on the basis that they boned 60 quarters per day. There is no suggestion that any of their work was done outside the ordinary spread of hours. The inference is that their work was done on a 'job and finish' basis; that is, they ceased work when they had finished the quarters presented to them on the particular day, usually before the ordinary finishing time of their following labourers who did not share their piecework system. 29 In the absence of some contrary indication in the R and W Award, we think the correct interpretation of the provisions to which we have referred is that the respondents' actual earnings within the ordinary spread of hours, averaged over a reasonable period before the taking of the annual leave, should be the basis of their annual leave pay calculations. A time-worker paid above the award's weekly wage prescription for his/her ordinary work would have the excess taken into account in an annual leave calculation. In the absence of a strong contrary indication, it would not be reasonable to think that a different rule applied to the respondents, in respect of their ordinary hours earnings, simply because their earnings were calculated on a piecework basis. There might be a degree of ambiguity about their 'appropriate classification rate', for the purposes of the 17˝% loading prescribed by cl 27.11, but that would not affect the meaning to be accorded to cl 27.10.1. 30 That the FMP Award expressly spells out what appears by implication in the R and W Award does not matter. The average-over-12-months method prescribed by cl 16.12of the FMP Award appears to be a concession to employers, in determining the averaging period. For many years, it has been usual for award-regulated employees to receive at least one wage increase within any 12 months' period. 31 Unless there is more, the respondents may be entitled, on amendment of their summonses, to claim the amount they seek under the R and W Award, as an alternative to the FMP Award. If any such amendment were made, the appellant would no doubt be entitled to put further materials and argument, after proper notice, to seek to displace what we regard as the prima facie meaning of cl 27.10 of the R and W Award. 32 The appropriate order is for the decision of the Industrial Magistrate to be set aside and the matter remitted to the IRCSA for further hearing and determination according to law. No question of costs arises. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.