Fair Work Act 2009

s.185 - Application for approval of a single-enterprise agreement

Referral to a Full Bench - Fair Work Act 2009 (Cth) - ss 582, 615 and 615A.

[1] On 16 October 2017 Mondelez Australia Pty Ltd (Mondelez) made an application pursuant to s 185 of the Fair Work Act 2009 (FW Act) for the approval of the Mondelez Australia Pty Ltd, Claremont Operations (Confectioners & Stores) Enterprise Agreement 2017 (Agreement). In an email to Mondelez dated 13 November 2017, the Commission raised a concern that clause 24 of the Agreement provided for a personal/carer's leave entitlement of 80 hours per annum, rather than 10 days per annum as provided for under the National Employment Standards (NES) in s 96 of the FW Act. The Commission expressed concern that employees covered by the proposed agreement working 12 hour days would not be entitled to their full 10 day NES entitlement (contrary to the requirement in s 55(1) of the FW Act that an enterprise agreement not exclude the NES or any provision of it), and requested an undertaking to be provided to address this issue. Mondelez declined to provide any such undertaking and made extensive written submissions (dated 4 December 2017) to the effect that there was no inconsistency between the entitlement in clause 24 of the Agreement and that in s 96 of the FW Act.

[2] In correspondence dated 19 January 2018 the Ai Group, which acted on behalf of Mondelez, requested that the application for approval of the Agreement be referred to the President of the Commission (Ross J) for consideration as to whether it should be referred to a Full Bench of the Commission for determination. The Ai Group contended that two differently-constituted Full Benches had given different interpretations of the expression "10 days of personal/carer's leave" in s 96(1) in ASU v Hobson Bay City Council[1] and RACV Road Services Pty Ltd v ASU.[2] It pointed to a number of practical difficulties in relation to the interpretation adopted in RACV v ASU, and requested that a five-member Full Bench deal with the matter in order to resolve the issue of the proper interpretation of s 96 of the FW Act.

[3] This application was the subject of a hearing before Commissioner Cirkovic on 30 January 2018. At that hearing the Ai Group, representing Mondelez, submitted that the referral of the approval application would be in the public interest having regard to the following matters:

• The interpretation of s 96 of the FW Act was relevant to millions of employees and thousands of employers.

• The issue was whether the NES entitlement to 10 days' personal/carer's leave per annum for someone who worked more than 7.6 hours a day meant that they received 10 times 7.6 hours as their annual entitlement, or (for example in the case of 12 hour shift workers) 10 times 12 hours.

• There were inconsistent decisions of individual members of the Commission, and the Full Bench decisions of ASU v Hobson Bay Council and RACV v ASU were also inconsistent.

• The interpretation of s 96 in RACV v ASU conflicted with the clear intent of the section when it was drafted, would impose "huge additional cost on employers, millions of dollars across industry every year", and was unworkable in relation to part-time employees.

• Given the inconsistency between two different Full Bench decisions, the issue should be looked at in detail by a five-member Full Bench.

[4] The Australian Manufacturing Workers Union (AMWU) and the National Union of Workers (NUW), which supported the approval of the Agreement, appeared at the hearing before the Commissioner and submitted that:

• Mondelez's interpretation of s 96 was contrary to authority and wrong.

• There was no inconsistency between ASU v Hobson Bay Council and RACV v ASU because the two decisions dealt with different matters.

• The Agreement, correctly interpreted, could be approved without undertakings.

• Clause 3 of the Agreement provided that if there was any inconsistency between the Agreement and the NES, the more beneficial provisions would take precedence, so clause 14 did not exclude the NES.

• The question raised for determination therefore simply did not arise in the matter.

[5] Subsequent to the hearing, the Commissioner administratively referred the matter to the President for consideration as to whether it should be referred to a Full Bench.

[6] On 19 March 2018 the President delegated his functions and powers under ss 582, 615 and 615A of the FW Act in respect of Mondelez's referral application to me pursuant to ss 582 and s 584 of the FW Act.

[7] In correspondence addressed to the President and dated 26 March 2018, an application for Mondelez's application for approval of the Agreement to be referred to a Full Bench was also made by the Honourable Craig Laundy MP, Minister for Small and Family Business, the Workplace and Deregulation (Minister). Omitting formal parts, the Minister's correspondence stated:

"I refer to the application to approve the Mondelez Australia Pty Ltd, Claremont Operations (Confectioners & Stores) Enterprise Agreement 2017 (Agreement).

I write to apply under section 615A(2)(b) of the Fair Work Act 2009 (Fair Work Act) for you to direct a Full Bench to deal with the application to approve the Agreement.

I understand that submissions have been sought from the parties on whether the paid personal/carer's leave entitlements in the Agreement would provide employees working 12-hour shifts with their full entitlements under the National Employment Standards (NES). I understand that the authorities (including Full Bench and Federal Court authorities) are unclear on this point.

I consider there to be strong public interest considerations in having this matter considered by a Full Bench, and given the state of the authorities, perhaps a five-member Bench would be most appropriate.

The Agreement approval application involves fundamental considerations underpinning the interpretation of the provisions of the Fair Work Act dealing with the accrual, taking, and deduction of paid personal/carer's leave under the NES. Any decision in this particular case is also likely to be generally relevant for the accrual, taking, and deduction of annual leave under the NES.

Clarification of the correct principles to apply for the accrual, taking, and deduction of NES leave entitlements is critically important for employers, employees and their representatives.

If you agree to direct a Full Bench to deal with the Agreement approval application, it is my intention to make submissions for the consideration of the Full Bench."

[8] On 27 March 2018, the President delegated to me all his powers and functions under the FW Act, except under s 581A(1)(b) and ss 620 and 625, for the period from midday on 27 March 2018 to 25 April 2018. The President had not dealt with the Minister's referral application (which was received by the Commission on the morning of 27 March 2018) prior to the delegation taking effect, and accordingly it will also be necessary for me to deal with the Minister's referral application pursuant to the delegation.

[9] At a telephone directions hearing on 28 March 2018, the Ai Group confirmed on behalf of Mondelez that it did not wish to make any further submissions in support of its referral application, but relied on its earlier written submissions of 4 December 2017, its correspondence dated 19 January 2018 and its oral submissions at the hearing before the Commissioner on 30 January 2018. In an email dated 28 March 2018, the Minister's representative confirmed that the Minister did not wish to make any further written or oral submissions in support of his referral application.

[10] The President's powers to refer matters for determination by a Full Bench are contained in ss 582, 615 and 615A of the FW Act, which provide:

(1) The President may give directions under subsection (2) as to the manner in which the FWC is to perform its functions, exercise its powers or deal with matters.

(2) The President may give a direction that is of a general nature, or that relates to a particular matter, to one or more of the following persons:

(3) The direction must not relate to a decision by the FWC.

(4) Without limiting subsection (2), the direction may be a direction of the following kind:

(a) a direction about the conduct of 4 yearly reviews of modern awards under Division 4 of Part 2-3;

(aa) a direction about the conduct of 4 yearly reviews of default fund terms of modern awards under Division 4A of Part 2-3;

(b) a direction about the conduct of annual wage reviews;

(c) a direction that 2 or more matters be dealt with jointly by one or more single FWC Members or one or more Full Benches;

(d) a direction about the transfer between FWC Members (including a transfer between Full Benches) of one or more matters being dealt with by the FWC.

Persons must comply with the President's directions

(5) A person to whom a direction is given must comply with the direction.

Note: For directions to the General Manager, see section 658.

(6) If a direction is in writing, the direction is not a legislative instrument.

615 The President may direct a Full Bench to perform function etc.

(1) A function or power of the FWC may be performed or exercised by a Full Bench if the President so directs.

Note: The President gives directions under section 582.

(2) The President may direct that the function or power be exercised by a Full Bench generally, or in relation to a particular matter or class of matters.

(3) To avoid doubt, a reference in this section to a Full Bench includes a reference to more than one Full Bench.

615A When the President must direct a Full Bench to perform function etc.

(1) The President must direct a Full Bench to perform a function or exercise a power in relation to a matter if:

(a) an application is made under subsection (2); and

(b) the President is satisfied that it is in the public interest to do so.

Note: The President gives directions under section 582.

(2) The following persons may apply to the FWC to have a Full Bench perform a function or exercise a power in relation to a matter:

(a) a person who has made, or will make, submissions for consideration in the matter;

[11] The principles relevant to the determination of an application under s.615A were set out in Collinsville Coal Operations Pty Limited as follows (footnote omitted):[3]

"[5] The issue for determination is whether I am satisfied that it is in the public interest to refer the agreement approval application to a Full Bench. The expression 'in the public interest', when used in a statute, imports a discretionary value judgment to be made by reference to undefined factual matters and confined only by the subject matter, scope and purpose of the relevant statute. [O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 at 216 per Mason CJ, Brennan, Dawson and Gaudron JJ]

[6] Sections 577 and 578 of the FW Act are relevant to the exercise of the President's powers under s 615A.

The FWC must perform its functions and exercise its powers in a manner that:

(b) is quick, informal and avoids unnecessary technicalities; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

[8] Section 578 directs the Commission to take into account, among other things, the objects of the FW Act and 'equity, good conscience and the merits of the matter'.

[9] Section 581 is also apposite. It provides, relevantly, that the President is responsible for ensuring that the Commission performs its functions and exercises its powers in an efficient manner."

[12] There are two critical issues which arise for consideration in respect of the referral applications made by Mondelez and the Minister. The first is whether there is, as Mondelez and the Minister contend, divided authority, in particular divided Full Bench authority, on the interpretation of s 96(1) of the FW Act. Section 96(1) provides that "For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer's leave". The Ai Group submitted before the Commissioner that the reference to "10 days" is to be read as meaning 10 periods of 7.6 hours each, or an entitlement to 760 paid hours of leave per annum. A submission to this effect was rejected in RACV v ASU[4] in the following terms:

"[82] Accordingly we conclude that in the NES provisions of the FW Act, a "week" of annual leave is an authorised absence from work during the working days falling in a seven day period, and a "day" of leave (whether of annual or personal/carer's leave) is an authorised absence from the working time in a 24 hour period. We reject RACV's submission that "week" and "day" are to be read as terms of art referring to a specific number of working hours that may not constitute an actual week or day in a given case. We further conclude that the amount of leave deducted from an employee's leave balance necessarily correlates with the amount of leave taken, so that if a week's annual leave is taken, a week is deducted from the employee's accrued annual leave balance, and if a day of annual leave or personal/carer's leave is taken, a day is deducted from the employee's accrued annual leave or personal/carer's leave balance."

[13] The Ai Group submitted that the earlier Full Bench decision in ASU v Hobson Bay Council[5] adopted an approach to s 96(1) that was inconsistent with that taken in RACV v ASU . This cannot be accepted. ASU v Hobson Bay Council did not concern the interpretation of s 96(1), but rather the interpretation of the sick leave entitlement in a particular enterprise agreement. That leave entitlement was relevantly expressed as being "twelve ordinary days leave" per year.[6] The Full Bench interpreted the expression "ordinary day" as connoting unloaded or non-penalty time and, in the context of an agreement which provided for 38 ordinary hours to be worked from Monday to Friday, as meaning a period of 7.6 hours. No question as to the interpretation of s 96(1) arose in ASU v Hobson Bay Council. However the Full Bench did make reference to the single-member decision in Australian Rail, Tram, and Bus Industry Union and Australian Federated Union of Locomotive Employees v QR Limited t/a QR National.[7] In that decision Commissioner Lee said, in the course of concluding that the annual leave and carer's leave entitlement of an enterprise agreement might, on their proper construction, be inconsistent with the NES leave entitlements:

"[86] I do not think that this provision can be relied on define a week as the simple aggregation of ordinary hours which an employee would have otherwise been rostered to perform during a seven day period. In any case, it should be ignored as it is clearly inconsistent with the unambiguous, ordinary meaning of the word 'week' and 'day' in the Act. The NES refers to weeks and days and is based on accrual and payment for ordinary hours. Employees are entitled to be absent from the workplace on annual leave for a five week period if shiftworkers and be paid their ordinary hours and are entitled to be absent for 10 days on carer's leave and be paid their ordinary hours. A day is a day and a week is a week and they should be given their ordinary meaning."

[14] The conclusion in the above paragraph, insofar as it concerned s 96(1), is consistent with the approach taken in RACV v ASU. The Full Bench in ASU v Hobson Bay Council referred to the above paragraph in its decision[8], and said: "While we agree with Commissioner Lee's observation, the circumstances in that matter differ from those in this case in a number of respects".[9] The Full Bench went on to refer to the differences between the agreement provision considered in QR National and the provision it was considering without dealing further with the question of the interpretation of s 96(1). Thus, to the extent that the interpretation of s 96(1) was considered at all in ASU v Hobson Bay Council, it was in a manner consistent with RACV v ASU.

[15] There is one single-member decision which has approached s 96(1) in a manner inconsistent with RACV v ASU, namely the decision of Commissioner Asbury (as she then was) in AWU v BP Refinery (Bulwer Island) Pty Ltd.[10] However that decision pre-dated RACV v ASU, ASU v Hobson Bay Council and QR National, and may be regarded as having been overtaken by them.

[16] Two Federal Court decisions issued since RACV v ASU have affirmed its approach to NES leave entitlements. In the Full Court decision in CFMEU v Glendell Mining Pty Limited[11], the majority (Bromwich and White JJ) took an approach to the annual leave entitlement in s 87(1) that was expressly stated to be consistent with RACV v ASU[12] and, arguably, took the same approach in relation to the personal/carer's leave entitlement in s 96(1).[13] In CFMEU v Anglo Coal (Drayton Management) Pty Ltd[14] the Court (Buchanan J) addressed directly the nature of the entitlement conferred by s 96(1), and said:

"[10] The period of "paid personal/carer's leave" referred to in s 99, for which an employee must be paid at the base rate of pay for ordinary hours, must necessarily be one or more of the "days" (or part of a day) of leave referred to in s 96. The number of hours normally worked by, for example, an 8-hour day worker and a 12-hour shift worker on a normal or rostered day of work are self-evidently different, by a margin of 50%. Nevertheless, the entitlement to paid leave is not referable to an hourly equivalent; it is expressed in days, and it necessarily follows, I think, that the possibility exists that the statutory entitlement to 10 days leave (and pay) may result in a greater hourly entitlement (and overall pay) in some cases than in others. That, it appears to me, is the effect of the statutory arrangements, whatever position might arise under the specific provisions of particular enterprise agreements."

[17] Although no reference was made in the decision to RACV v ASU, the approach taken to s 96(1) in the above passage is the same as in RACV v ASU.

[18] Therefore I do not consider that there is divided Full Bench authority on the question of the proper interpretation of s 96(1), or that doubt arises from the authorities which have considered it. The position to be applied by single members of the Commission is as stated in RACV v ASU, which has comprehensively dealt with the question.

[19] The second issue is whether the interpretation of s 96(1) properly arises for consideration in the application for approval of the Agreement. In this respect, I consider that the submissions of the AMWU and the NUW advanced before the Commissioner must be accepted. Although clause 24 of the Agreement expresses the personal/carer's leave entitlement in terms of hours, and therefore (particularly in the case of 12 hour shift workers) might, considered in isolation, result in some employees receiving less that their NES entitlement under s 96(1) (as interpreted in RACV v ASU), clause 3 requires any more beneficial provision of the NES to "take precedence" where there is an inconsistency between the Agreement and the NES. Therefore, to the extent that clause 24 might lead in some circumstances to a shortfall in the personal/carer's leave entitlement under the Agreement as compared to the NES, clause 3 would require this to be "topped up" to the level of the NES entitlement. That is, on any view of s 96(1), the Agreement does not exclude the NES in respect of personal/carer's leave, and there is no impediment to its approval on that score under s 186(2)(c), nor is any undertaking required to address that issue.

[20] My conclusion in this respect is consistent with the approach taken to the enterprise agreement there under consideration in RACV Road Service Pty Ltd v ASU (2).[15] The Full Bench in that matter said:

"[17] We accept RACV's submission that clauses 15.1(a)-(c) and 16.1(a)-(b) of the Agreement are to be interpreted as operating subject to the last paragraph of clause 4 of the Agreement. The effect of clause 4 is that no provision of the Agreement, in its operation, may lead to a result whereby any employee receives less than his or her entitlements under the NES. The practical effect of clause 4 is therefore that RACV must "top up" the entitlement of an employee in any case where there would otherwise be a detrimental outcome when compared to the NES. Therefore, on the annual leave example set out in paragraph [88] of the initial decision and the personal/carer's leave examples set out in paragraph [89], no shortfall compared to the NES could occur because clause 4 of the Agreement requires RACV to make good any potential shortfall that might arise. There is no exclusion of the NES to which s.56 of the FW Act might apply because clause 4 ensures, as RACV submitted, that the Agreement is "self-correcting" vis-à-vis the NES."

[21] For the above reasons, I do not consider that the Ai Group, on behalf of Mondelez, or the Minister have demonstrated a proper basis for the referral of the application for approval of the Agreement to a Full Bench either on public interest or discretionary grounds. Referral is not otherwise justified on the ground merely that the Ai Group, Mondelez or the Minister disagree with RACV v ASU. The referral applications are rejected, and the Agreement approval application is referred back to Commissioner Cirkovic for final determination.

L. Saunders of Counsel with G. Miller for the Australian Manufacturing Workers Union.

[1] [2014] FWCFB 2823

[2] [2015] FWCFB 2881; 249 IR 150

[3] [2014] FWC 3129, 246 IR 21

[4] [2015] FWCFB 2881; 249 IR 150 at [82]

[5] [2014] FWCFB 2823

[6] [2014] FWCFB 2823 at [9]

[7] [2012] FWA 3730, 221 IR 132

[8] [2014] FWCFB 2823 at [39] and footnote 32

[9] [2014] FWCFB 2823 at [39]

[10] [2012] FWA 1197, 221 IR 237

[11] [2017] FCAFC 35

[12] [2017] FCAFC 35 at [131]- [135]

[13] [2017] FCAFC 35 at [137]- [139]

[14] [2016] FCA 689, 258 IR 85

[15] [2015] FWCFB 8554

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