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[2023] FWCFB 66
General information, not legal advice.
Fair Work Commission (Full Bench)
2023-03-28
Original judgment source is linked above.
s.604 - Appeal of decision
Construction, Forestry, Maritime, Mining and Energy Union
Appeal against decision [2022] FWC 2013 of Deputy President Binet at Perth on 21 October 2022 in matter number C2022/2121.
[1] The employees relevant to this matter are covered by the Qube Ports Pty Ltd Port of Fremantle Enterprise Agreement 2020 (the Agreement). The employees work and are paid under annualised salary arrangements. Full-time employees must be available to work 1820 hours per year inclusive of annual leave. The 1820-hour requirement can be adjusted to take into account certain absences.
[2] In 2021 employees took protected industrial action over a 78-day period. The employer, Qube Ports Pty Ltd (Qube), did not pay the employees their regular annual salary during the period of protected industrial action and Qube did not reduce the number of hours the employees must be available to work over the rest of the year. The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) disputed Qube's approach.
[3] In a decision published on 21 October 2022 in Construction, Forestry, Maritime, Mining and Energy Union v Qube Ports Pty Ltd T/A Qube Ports and Bulk [2022] FWC 2013, Deputy President Binet found that Qube was required to reduce the number of 'ordinary' hours full-time salaried employees and provisional full-time salaried employees are required to work when their annualised salary is withheld because they are engaging in protected industrial action (at [71]).
[4] Qube appealed the Deputy President's decision.
[5] Permission to appeal is granted and the appeal is dismissed for the reasons that follow. In brief terms, we agree that the Deputy President's conclusion was correct but for slightly different reasons.
[6] Qube submit that permission to appeal is not required because clause 49.1 of the Agreement gives each party a right to appeal. Clause 49 of the Agreement contains a 5-step procedure for resolving disputes arising in the workplace. Step 5 in clause 49.1 is as follows:
"Where the dispute has not been resolved despite the foregoing procedures being followed and subject to there being no stoppage of work in relation to the issue at hand, either party may refer the matter to the FWC for conciliation/arbitration pursuant to section 739 and section 595 of the Act, if necessary, in which case the decision will be accepted by the parties, subject to any appeal rights."
[7] The CFMMEU argued that clause 49.1 does not establish an independent right of appeal and that an appeal lies under s.604(1) only with the permission of the Full Bench (citing DP World Brisbane Pty Ltd v Maritime Union of Australia (2013) 237 IR 180, [2013] FWCFB 8557 at [48] (DP World) and AMWU v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305, [2015] FCAFC 123 at [51]).
[8] Section 604 of the Act provides, in effect, that an aggrieved person may appeal a relevant decision with permission of the Commission.
[9] The key words in clause 49.1 are relevantly identical to those considered by the Full Bench in DP World and do not confer a right of appeal that modifies the operation of s.604 (per DP World [24], [38]-[39] and [46]-[53]).
[10] We are nonetheless satisfied that permission to appeal should be granted. The appeal raises issues of substance and potentially wider application for other agreements that cover Qube, as well as agreements more generally that contain salary annualisation provisions.
[11] The decision against which the appeal has been brought concerns the proper construction of clauses 8 and 9 of the Agreement. The decision did not involve the exercise of discretion. The answer given by the Deputy President to the proper construction of the Agreement is either correct or incorrect. In this regard the appeal is to be determined by the 'correctness standard' (per Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 at 563, 591-593, [2018] HCA 30 at [48]- [49] and [150]-[154]).
[12] The current Agreement replaced the Qube Ports Pty Ltd Port of Fremantle Enterprise Agreement 2016. The terms of the earlier agreement and the current agreement are relevantly identical. Employees can be employed as Full Time Salaried Employees (FSE) or as Provisional Full Time Salaried Employees (PFSE). For the matters in dispute there is no relevant difference between FSEs and PFSEs. The Agreement allows Qube to engage employees on other arrangements but those other arrangements are not relevant to the present matter.
[13] FSEs and PFSEs are entitled to payment of a minimum annual salary. In return for the annual salary, the Agreement imposes an Annualised Accumulated Hours (AAH) requirement that employees must be available to work for 1820 hours per year.
[14] There are significant consequences for properly applying the AAH provisions. Once FSEs/PFSEs reach the AAH target in each financial year they can decline additional work. Any additional hours worked over 1820 each year are paid at overtime rates.
[15] The immediately relevant provisions in the Agreement are clauses 8.9 and 9.1 to 9.4:
8.9 An Employee is not entitled to any payment for any period during which the Employee commits any of the following breaches of the contract of employment:
9.2 Provisional Full Time Salaried Employee (PFSE)
9.3.1 Each yearly AAH requirement will stand alone.
9.3.2 The parties agree to monitor the achievement of AAH on a monthly basis.
9.3.3 Where it is obvious that the AAH will not be reached in a particular year:
9.3.4 Once the agreed measures have been implemented, any remaining shortfall will be rolled over on 1 July, provided that the Company has fully implemented the agreed measures and has done all things reasonably necessary to make that implementation effective.
9.3.5 For avoidance of doubt, where all the measures are not effectively implemented, then any shortfall in hours will not be rolled over and the following Year will commence at zero hours
9.3.6 Any shortfall of reaching AAH will cease at the nominal expiry date of this Agreement.
9.4.1 PTO for non-rostered FSEs and PFSEs will be provided subject to the provisions below:
9.4.2 When an application for PTO is received, the Company will respond within seven days of the application.
[16] As can be seen from the above provisions, approved paid leave and approved leave of absence without pay have similar but different effects on the AAH target:
(a) time taken on approved paid leave is credited as time that the employee has made themselves available (towards achieving the AAH target); and
(b) time taken on approved leave of absence without pay reduces the AAH target itself.
[17] The important difference between the two concepts is that when an employee is on a period of approved leave of absence without pay their annual earnings, quite logically, are reduced (all other things being equal). Where this occurs, Qube must necessarily reduce the AAH target so that over the whole year the amount paid by way of annualised salary corresponds to the number of hours the employee worked (or was required to be available to work as the case may be). This operates subject to the roll-over arrangements in clause 9.3 of the Agreement.
[18] As referred to above, employees took protected industrial action over approximately 78 days. The Statement of Agreed Facts filed by the parties below included the following:
"During the protected action, employees who were rostered on to work and did not work, instead engaging in the protected industrial action in accordance with the notice of protected industrial action, had their salaries deducted in accordance with s.470 of the Act.
No adjustments were made to the AAH requirement of 1820 hours as a consequence of the protected industrial action."
[19] The Deputy President described the dispute and the submissions of the parties as follows:
"[26] The demand for labour in the stevedoring industry is highly variable. In order to secure a stable core workforce by offering a consistent weekly wage the 2016 and 2020 Agreements guarantee a minimum annual salary to FSEs and PFSEs. In return for this minimum annual salary FSEs and PFSEs must be available to work 1820 hours per year. This sum is calculated by multiplying 52 weeks x 35 hours over a defined 12 month period. The 1820 hours is inclusive of annual leave which accounts for 175 hours of the 1820 hours.
[27] While the average worked hours is 35 hours per week, employees can be required to work for over 80 hours in a week. In other weeks they may be engaged for as few as 20 hours. Qube is responsible for managing the hours allocated to FSEs and PFSEs to ensure they meet the total of 1820 hours in the relevant 12 month period.
[28] Clause 9.1.1 of the 2020 Agreement sets out the terms of the engagement of a FSE and relevantly provides as follows:
a. An FSE has an AAH requirement of 1820 hours, inclusive of all forms of approved leave.
b. FSE hours and salary will be adjusted on a pro rata basis for any approved leave of absence without pay."
[32] Pursuant to clause 30.1 of Part A of the 2020 Agreement once FSEs have reached the 1820 AAH target in a financial year, they are entitled to decline to accept additional hours of work. If they do accept additional hours of work they are entitled by clause 30.5 of Part A of the 2020 Agreement to be paid overtime at a double time rate for all hours worked beyond 1820.
[33] During the protected action, FSEs and PFSEs who were rostered on to work and did not work, instead engaging in the PIA had their salaries deducted in accordance with section 470 of the FW Act. No adjustments were made to their AAH requirement of 1820 hours.
[34] As a consequence FSE's and PFSEs either didn't reach their AAH Target or did so later in the year as compared to a year when no PIA occurred, as a result they performed none or more limited hours of work at an overtime rate as compared to other years.
[49] The MUA argue that PIA is a form of 'approved leave without pay" and submit that AAH Target required to be worked by FSEs and PFSEs should be reduced to account for the 78 days of PIA because a plain reading of clause 9.1.1 of Part A of the 2020 Agreement requires that the AAH Target must be reduced to account for "approved leave of absence without pay".
[50] In the alternative, the MUA submit that if the 2020 Agreement is silent on whether the 1820 AAH target should be reduced in circumstances where PIA is taken, that fairness dictates the 1820 AAH target should be reduced to account for any time taken by FSEs and PFSEs as PIA and that therefore the FWC should read such a provision into the 2020 Agreement.
[51] Qube argue that PIA is not a form of "approved leave without pay" nor is it analogous to "approved leave without pay" and a plain reading of the text of clause 9.1.1(a) Part A demonstrates that it does not apply to PIA. Qube argue that the Agreements are not silent with respect to the treatment of PIA but in fact expressly deal with when the AAH target can be reduced and that those circumstances do not include PIA."
[20] The Deputy President's reasons for finding that Qube was required to reduce the AAH targets because of the protected industrial action are found in the following paragraphs:
"[54] The demand for labour in the stevedoring industry is highly variable. Clause 9.1.1 of Part A allows Qube to secure a stable core workforce by offering a consistent weekly wage while rostering employees only for the hours they are needed each week. Depending on Qube's business needs employees may be required to work more than 80 hours in a week.
[55] In return for this minimum annual salary FSEs and PFSEs must be available to work 1820 hours per year. This sum is calculated by multiplying 52 weeks x 35 hours over a defined 12 month period. The calculation includes within five weeks annual leave of 175 hours.
[56] Once FSEs and PFSEs complete 1820 hours they have the option of declining further work or performing additional work at overtime rates.
[57] Clause 9.1.1(b) sets the circumstances in which those hours and salary can be adjusted. The circumstances are "any approved leave of absence". The clause provides that the adjustment is to be made on a pro rata basis. So for example if an employee took unpaid leave to travel for six months they would be required to only work half of the 1820 hours and only be entitled to half the minimum annual salary.
[58] As a consequence of the Qube's refusal to adjust the AAH Target in light of the withholding of salary as a result of the PIA:
a. FSE's and PFSEs either didn't reach their AAH Target or did so later in the year as compared to a year when no PIA occurred, as a result they performed none or more limited hours of work at an overtime rate as compared to other years; and
b. FSEs and PFSEs lost pay for not working during the PIA but were then required to work those hours later in effect for no pay."
[59] The drafters of the Agreements are not lawyers. The language contained in the Agreements is familiar to those working within the industry and in some cases is peculiar to the industry. The Agreements were not drafted with an eye to detail or to legal technicalities and contain phrases which may have a different legal effect when used in a different context.
[60] Qube argue that 'approved leave of absence' is limited to leave approved by Qube. The parties could have, but did not, expressly so confine the words. The context and purpose of clause 9.1.1 of Part A and the 2020 Agreement more broadly does not suggest that the term was intended to be so confined.
[61] Absences from work may be approved, or legally or formally sanctioned, other than by an employer. Under the Agreements employees are entitled to be absent for the purpose of taking personal leave for 13 days per year. Absence on personal leave is not approved by the employer. It is approved by the Agreements. The Agreements are not approved by the employer. They are approved by the FWC.
[62] Similarly, the 2020 Agreement approves employees' absence on Family and Domestic Violence leave in clause 37. Such leave does not require the approval of the employer. It includes periods of unpaid leave. Absence on Family and Domestic Violence Leave is not approved by the employer. It is approved by the 2020 Agreement. The 2020 Agreement is not approved by the employer. It is approved by the FWC.
[63] Another example of absence that does not require employer approval is worker's compensation. Such absence must be due to a compensable injury. Whether an injury is compensable is determined by the relevant workers' compensation legislation. The absence from work is authorised by the relevant legislation not by Qube.
[64] A Full Bench of the predecessor to the FWC in WorkPac Pty Ltd v Bambach dealt with the similar concept of an "authorised absence" and found that it means nothing more than an absence that is "legally or formally sanctioned".
[65] In the circumstances of protected industrial action, the employee's absence is approved by the FW Act. Part 3-3 of the FW Act. Those provisions were recently described by the Full Federal Court in Construction, Forestry, Maritime, Mining and Energy Union v Boggabri Coal Operations Pty Ltd as follows:
"Protected industrial action" is a species of industrial action established under Div 2 of Pt 3-3 of the FW Act. It is industrial action that may be organised and taken to support claims that are advanced during bargaining for a proposed enterprise agreement. In order that industrial action might qualify as "protected industrial action", various statutory requirements must be met. Key amongst them (for present purposes) are that:
(1) the action must be authorised by a "protected action ballot" that was conducted pursuant to Div 8 of Pt 3-3 of the FW Act: FW Act, s 409(2); and
(2) before a person may partake in it, his or her bargaining representative must provide to the relevant employer written notice of the action to be taken: FW Act, ss 413(4), 414(1)."...
[66] Consequently, absence on protected industrial action, to use the expression used in WorkPac Pty Ltd v Bambach, is legally or formally sanctioned or 'approved'.
[67] An interpretation of clause 9.1.1 that provides that an absence from work must result in an adjustment to AAH is consistent with clauses in the balance of the Agreements. Both Agreements are explicit in linking leave and approved absences without pay (which is deducted from an annualised salary) to the equivalent hours being deducted from an FSE's/ PFSEs annual 1820 AAH target.
[68] See for example the provisions dealing with personal leave. Clause 35.2 of Part A of the 2020 Agreement provides for an entitlement of 13 days paid personal leave per year. Clause 2.1.4 of Part B of the 2020 Agreement provides that an employee who is absent on personal leave will have seven hours or part thereof deducted from his or her AAH for each day of leave. See also the provisions in relation to public holidays.
[69] The interpretation of clause 9.1.1 proposed by the MUA is also consistent with the statutory context in which the deductions from salary were made by Qube and with the purpose of those provisions.
[71] The statutory scheme provides that the payment is withheld only in relation to the day on which the industrial action occurs. It does not authorise the withholding of pay for work performed on other days. For example, an employee who produces 10 widgets per day takes industrial action they are not entitled to payment for the day on which they withheld their labour however they are entitled to pay the following day when the employee returns to work and produces 10 widgets.
[72] The words contained in the Agreements are not to be interpreted in a vacuum divorced from industrial realities.
[73] If the interpretation of clause 9.1.1 of Part A proposed by Qube is adopted an employee who took protected action for six months from 1 July could be required to work 1820 hours in the remaining 26 weeks of the year. They could therefore be rostered for up to an average of 70 hours every week for 26 weeks. However, they would only be paid $63,144.12 of their salary of $126,288.26. Reducing their hourly rate of pay from $69.39 to $34.69 per hour. The industrial reality is that a majority of the workforce would not have voted to approve such a term in either Agreement.
[74] When the words of the relevant clauses are read as a whole and in context, understood in the light of the customs and working conditions of the stevedoring industry I am satisfied those words require that the number of 'ordinary' hours FSE's and PFSEs are required to work when their annualised salary is withheld because they are engaging in PIA must be reduced on a pro rata basis.
[21] The grounds of appeal can be condensed to the following:
The Deputy President erred by finding, including at [67] and [74] of the Decision, that the proper construction of the phrase "approved leave" in clauses 9.1.1(a) and (b) of the Agreement included a reference to periods in which employees took protected industrial action.
The Deputy President erred by misconstruing the phrase "approved leave" in clause 9.1.1(a) and (b) of the Agreement and giving the phrase a different meaning to its ordinary meaning.
The Deputy President erred in the Decision in that she took into account irrelevant considerations or acted on the wrong principle having regard to the following:
the Deputy President incorrectly found at [58] of the Decision that Qube "refused to adjust the AAH Target in light of the withholding of salary as a result of the PIA" ...
the Deputy President incorrectly found at [58(b)] of the Decision that as a consequence of Qube's construction of the Agreement, employees "lost pay for not working during the PIA but were then required to work those hours later in effect for no pay" in circumstances where there was no evidence that Qube's employees ever worked hours for which they were not paid;
the Deputy President based her construction of clause 9.1.1(a) and (b) of the Agreement on a hypothetical situation, described at [70] of the Decision, in which employees could have been rostered for "up to an average 70 hours every week for 26 weeks" ...
the Deputy President found that the Agreement was to be interpreted in light of the industrial realities and the Deputy President went on to find at [73] that the relevant industrial reality was that "a majority of the workforce would not have voted to approve such a term" in circumstances where there was no evidence before the Commission regarding how employees did or would have voted on that issue or any issue; and
the Deputy President incorrectly found that the relevant industrial reality in which an agreement is formed includes speculation as to how the workforce would have voted on hypothetical provisions of an agreement.
[22] Qube relied on the ordinary meaning of the words in clause 9.1.1 and said that its construction of the clause is consistent with the provisions in the balance of the agreement. Qube said the Deputy President erred in holding that the words "approved leave" included periods when employees were taking protected industrial action. Qube disputes that a plain reading of these words can give rise to such a meaning.
[23] Rather, Qube said the "intuitive meaning" of approved leave, used in an industrial instrument, is that the leave in question has been approved by the employer.
[24] This assumption is said to arise from a range of notorious facts including the power relationship between employees and their employer, Qube's burden of managing and planning staffing logistics and the dearth of other entities that are likely to be in a position to "approve" an employee's period of leave. Qube said:
"... as a matter of logic it is reasonable to expect that if the parties to an industrial instrument wished to refer to forms of leave which are approved by an entity other than the employer, they would clarify who can approve the "approved leave" in question. In circumstances, where there is no such clarification and the reference is simply to "approved leave", Qube submits that it is reasonable to understand the Agreement as referencing a period of leave approved by the employer."
[25] There is said to be a logical difficulty in treating protected industrial action as "leave" at all. Qube said that traditionally courts have understood leave and industrial action is being inconsistent states - either an employee is on leave or they are taking industrial action (citing Chambers v Toll Transport Pty Ltd [2020] FWC 5819 at [75(a)]; Australian Building and Construction Commissioner v Ingham [2020] FCA 1632 at [110]- [111] and Eric Pickering v Linfox Australia Pty Ltd T/A Linfox [2020] FWC 6595 at [114]).
[26] Moreover, s.19(2) of the Act provides that "industrial action" does not include "action by employees that is authorised or agreed to by the employer of the employees".
[27] The Deputy President's interpretation is said to be inconsistent with the plain words of the text when read in context. Qube refers to other provisions in the Agreement that require employees to either notify Qube of their intention to take leave or be absent from the workplace and to seek approval for periods of leave. These provisions are said to demonstrate that the usual arrangement in place at Fremantle Port when employees take leave is that they notify or obtain approval from Qube rather than any other entity.
[28] Qube relied on the fact that the Agreement does not provide for AAH targets to be reduced in respect of periods of unauthorised absences to argue that:
"... It would be surprising for an employer to agree to an employee deriving any benefit, whether in the form of pay or through the reduction in their AAH target, in exchange for them taking a period of unauthorised absence. This aspect of the Agreement supports Qube's view that the words "approved leave" in clause 9.1.1 do not refer to periods of industrial action."
[29] Qube argued that the Deputy President's reliance on the Full Bench's analysis of the term "authorised absence" in Workpac v Bambach (2012) 220 IR 313, [2012] FWAFB 3206 was an error.
[30] Qube challenged the analogies, illustrations and hypothetical examples provided by the Deputy President as either erroneous or irrelevant.
[31] At the appeal hearing Qube referred to the "work-wage bargain" that underpins the Agreement. By this work-wage bargain employees worked variable hours per week, and were guaranteed their income on the proviso that they would work 1820 hours in total over the course of the year. In this bargain Qube agreed to provide 1820 hours of work, less leave, and the employees agreed to make themselves available to work for the stated period.
[32] Numerous scenarios were discussed at the appeal hearing and Qube maintained that if an unauthorised absence occurs during a year Qube is entitled to reduce the salary payments for the period of the absence and is entitled to require the employ to work the full number of hours for the year despite the employee no longer receiving the full annual salary. In this regard Qube submitted:
"...the nature of the bargain is that there is an annualised salary. The nature of the law is that you cannot pay employees during periods of industrial action, and as a consequence, they must be docked their usual pay and so they are. In those circumstances, there is nothing requiring Qube, we say, in the terms of the agreement to reduce the AAH hours. It's not a fairness question and that's the point I'm trying to develop in this vast argument that we have, which is, it's not a fairness question; it's a question of what the parties signed up to under the terms of the agreement."
[33] The CFMMEU emphasised that a strict or literal approach to construction of industrial instruments is rarely appropriate. The CFMMEU submits that Qube's submissions adopt a narrow approach which fails to have sufficient regard to the context of the agreement as a whole or the consequences of the interpretation for which it contends.
[34] To the extent that Qube's argument relies upon "approved leave" being approved by Qube, the CFMMEU relies upon other provisions in the Agreement (clauses 8.3, 9.4(b) and 43.2) that expressly require Qube's approval, and say "those provisions demonstrate that where the Agreement intended to refer to an absence approved by Qube, it said so expressly."
[35] Qube's focus on the words "approved leave", the CFMMEU said, ignores the fact that the other term used in clause 9.1 is broader and a different expression: "any approved leave of absence without pay". The phrase "any approved leave of absence without pay" should be construed to incorporate any period that an employee is entitled to be absent from work. In this sense the Deputy President correctly applied the concept of an "authorised absence", drawing from the Full Bench's views in WorkPac Pty Ltd v Bambach (2012) 220 IR 313, [2012] FWAFB 3206 that the concept of an "authorised absence" means nothing more than an absence that is "legally or formally sanctioned".
[36] Protected industrial action is sanctioned by a protected action ballot (per Part 3-3 of the Act) and, the CFMMEU submitted, properly falls within the phrase 'approved leave of absence without pay.'
[37] The CFMMEU also relies upon other provisions in the Agreement that provide for various forms of absence that do not expressly require the approval of Qube, such as personal leave, family and domestic violence leave and workers compensation.
[38] The CFMMEU said that it is inherent within the annualised accumulated hours regime that a reduction in the salary as a result of the period of authorised absence must result in an adjustment to the AAH "otherwise, the employee will be required to work the same number of hours for a lower rate of pay."
[39] The CFMMEU submitted that Qube's criticisms of the Deputy President's analogies, illustrations and hypothetical examples are immaterial. Because the correctness standard applies rather than the discretionary standard, any error in the decision-making process or the reasoning of the Deputy President, if there were one, would be immaterial. The CFMMEU submits that in any event there was no such error.
[40] The CFMMEU submitted that the Deputy President correctly found that employees had not been paid for days they had worked at [58] and [71] - being additional make-up days that employees were required to work for no additional payment.
[41] The CFMMEU's submissions at the appeal hearing emphasised the relationship between the time worked across a year and the amount the employee is entitled to be paid. The definition of "worked hours" in clause 2 of the Agreement was said to reinforce the relationship, viz:
"Worked hours includes any period of paid leave, training, public holidays and any other paid arrangement contained in this Agreement."
[42] Similarly, the CFMMEU argued that clause 11 - Classification and rates of pay, included a notation that clearly connects the annual salary to the hours worked, viz:
"11.4 The salaries and composite hourly rates in this Agreement were implemented when the Stevedoring Industry Award 1999 applied. The composite hourly rate was based on a 35-hour week averaged over a 12-month period (which equates to 1820 Worked Hours per Year) inclusive of wage related allowances, shift penalties, overtime, public holidays, weekend penalties and a meal allowance. For the avoidance of doubt, a 35-hour week averages over a 12-month period e.g. an Employee may work 20 hours in one week and 60 hours in the following week. Over the course of 12 months, the average Worked Hours will be 35 hours per week."
[43] The CFMMEU made the following submission about the 'inherent relationship' between the salary and the hours worked:
"Where the paid time reduces the AAH, whether it be worked or some other entitlement to be paid for a period, the logical corollary of which, acknowledged in various parts of the agreement, is that where pay is reduced, where the annual salary is reduced, there must be a corresponding adjustment to the AAH, otherwise the inherent inter-relationship between those two matters is disrupted.
It would break that bargain, in short, and the employee would be required to work the 1820 hours at either a lower rate of pay or, in circumstances in which some of those hours are in effect worked without pay at all, in the context in which clause 11.4 makes clear that that is the way in which the salary was determined.
When construed in the context, particularly the context that I've endeavoured to explain, of this inherent inter relationship between the number of hours and the amount of the salary, properly construed that phrase is intended to encompass at least any period that the person is absent without pay where that absence is permitted by some source, whether it be approval by the employer, allowance in the agreement or some other statutory or other basis upon which the employee is able or permitted to be absent."
[44] The CFMMEU submitted that the Deputy President's examples and analogies were "no more than a familiar approach to interpretation which looks at the consequences of different interpretations where there is ambiguity in the text."
[45] In relation to the operation of s.470 and Qube's decision to reduce salary payments for the period of protected industrial action, the CFMMEU submitted:
"If the 1820 hours still have to be worked, the payment of the annualised salary is for working the 1820 hours. The payment may not be - if our learned friends are correct and there is no reduction in the 1820 hours, then the annualised salary ought still be paid notwithstanding the period of industrial action was taken, because the payment is not for the duration of the industrial action because they still have to do the 1820 hours in the remainder of the year."
Annualised salary provisions/the wage-work bargain
[46] The "wage-work bargain" referred to by Qube provides a helpful framework to consider the effect of the annualised salary provisions of the Agreement. In considering the terms of the Agreement as a whole we accept that there is a wage-work bargain that underpins the Agreement.
[47] The annualised salary provisions are a mechanism to allow employees to receive regular wage payments throughout the working year, even though hours worked might fluctuate. By this arrangement there is not necessarily a direct connection between the hours worked in any particular week or fortnight and the salary paid for that same period. Workers are paid regular payments on the basis that they will work a certain number of hours across the whole year, adjusted for leave. Employees must make themselves available for work and Qube can allocate the work according to its needs.
[48] In a standard year, and subject to the roll-over arrangements in clause 9.3 of the Agreement:
(a) an employee is available for work for 1820 hours; and
(b) Qube allocates 1820 hours of work, less applicable paid leave; and
(c) the employee receives their full annual salary, equivalent to 1820 hours pay.
[49] In this context there are three variables that are inextricably linked: the number of hours over the year the employee is available to work, the number of hours over the year the employee actually works, and the amount the employee is paid over the year. The links between the variables are in essence the wage-work bargain referred to by Qube, and also the "relationship" emphasised by the CFMMEU in its case. The parties do not agree on what the precise links are, but both parties recognised that there is a link.
[50] The Accumulated Annual Hours concept in the Agreement contains two slightly different elements: it is referred to in the Agreement as both a target and a means of measuring whether the target has been met. The AAH target is another way of referencing the number of hours that an employee must be available to work in a year. For example a reference to a reduction in the AAH target is another way of referring to a reduction in the number of hours an employee must be available to work.
[51] The Agreement contains provisions for measuring how and whether the AAH target has been met. For example, clause 9.4.1 refers to employees being "on track with AAH".
[52] Relevant provisions of the Agreement regulate the interaction between the three variables. When one variable changes, the terms of the Agreement determine the effect (if any) on the other two variables:
(a) if there is a shortfall in the hours allocated by Qube: the AAH target is not reduced, the annual salary does not change and the shortfall may or may not be rolled over into the next year (per clause 9.3);
(b) if an employee works more than 1820 hours in a year: the employee receives their annual salary, plus additional overtime payments, and the employee has met the AAH target (per clause 30.5);
(c) if an employee takes approved paid leave: the hours actually worked over the year are reduced, the salary is not reduced, and the period of the leave is credited towards meeting the AAH (per clauses 9.1.1(a) and 9.2.1(a)); and
(d) if an employee takes approved unpaid leave of absence: the hours actually worked over the year are reduced, the salary is reduced, and the AAH target is reduced (per clauses 9.1.1(b) and 9.2.1(c)).
[53] Clause 9.4 refers to "Planned Time Off" and allows employees to ask for approval to be unavailable for work for a specified period. If approval is granted the salary is not reduced, the AAH target over the year is not reduced, and the number of hours worked over the year is not reduced.
[54] Other examples can be found within the Agreement: clause 13.3.3 allows for a reduction of the AAH target in negative economic circumstances with a commensurate salary reduction. If this provision is activated then the number of hours worked are reduced, the AAH target is reduced, and the salary payments are reduced.
[55] The only provision in the Agreement that refers to unauthorised absences is clause 8.9. Unfortunately, clause 8.9 does not specify whether the AAH target is affected by unauthorised absences, nor does it specify whether the period of unauthorised absence counts towards meeting the AAH target.
[56] However, the Agreement's approach to the establishment and adjustment of the AAH target informs the proper approach to be adopted to clauses 9.1.1b. and 9.2.1c, which lies at the heart of the present controversy.
[57] The parties presented their case below, and the Deputy President decided the case, largely on the assumption that only approved leave or approved absences of some kind can reduce the AAH. The contest between the parties, and the findings of the Deputy President, focused on whether a period of protected industrial action is either approved leave or an approved leave of absence without pay. We observe that these two notions are not necessarily two sides of the same concept. Further, the absence of any express provisions in clause 8.9 does not mean that no reduction in the AAH target may occur where otherwise authorised or required by the Agreement.
[58] The construction of provisions of an enterprise agreement begins with a consideration of the ordinary meaning of the words, read in context, taking account of the evident purpose of the provisions or expressions being construed. Context may be found in the provisions of the Agreement taken as a whole, or in their arrangement and place in the agreement. The statutory framework under which the Agreement is made or in which it operates may also provide context, as might an antecedent instrument or instruments from which a particular provision or provisions might have been derived. The industrial context in which an agreement is made and operates is also relevant. Thus, the language of an agreement is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. However, context is not itself an end, and a consideration of the language contained in the text of the Agreement being considered remains the starting point and the end point to the task of construction. A purposive approach to interpretation is appropriate, not a narrow or pedantic approach (per WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 280 IR 191 at 235, [2018] FCAFC 131 at [197]).
[59] It is apposite to make some brief observations about the nature of "leave". In the employment context leave can be understood to be relief from the requirement to attend or perform work. Generally, employees are required to work as part of the work-wages bargain. To the extent that an employee does not attend for work, or otherwise does not perform their work, they require some kind of "leave". Awards, agreements and the National Employment Standards include various forms of "leave" by which employees can legitimately be absent from work - either leave to be physically absent from a workplace or leave to be excused of their obligation to perform work.
[60] Generally, for these kinds of leave the employer's consent is of passing relevance because the employer is required to allow employees access to these leave benefits. Whilst references to approved leave in an Agreement intuitively would refer to the approval of the employer, the reality is that in many instances an employer does not have discretion to approve or reject particular leave.
[61] The Deputy President found that the term "approved leave of absence" is not limited to leave approved by Qube, referring to personal leave not being approved by the employer (at [61]), as well as family and domestic violence leave (at [62]) and workers compensation (at [63]). We agree with the Deputy President's reasoning in this regard.
[62] There is force in Qube's submission, supported by authorities, that if an employee is on "leave" as conventionally understood and applied, they cannot partake in protected industrial action. As Rangiah J found in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The North Queensland Stadium Case) (2020) 297 IR 151 at 175-6, [2020] FCA 947 at [129]:
"I accept that there is no "failure or refusal" to "attend work" or "perform any building work at all" within s 7(1)(c)(ii) of the BCI Act where there is no legal obligation on employees to attend or perform work. There are many circumstances in which employees may have no legal obligation to attend or perform work, and indeed have legal authorisation to so refuse. For example, under the National Employment Standards, employees may be entitled to take annual leave, personal/carer's leave, parental leave, community service leave and long-service leave. Under an award or an enterprise agreement, employees may be entitled to be absent on certain days of the week, or to take certain breaks between, or within, periods of work. They are entitled to refuse to attend work and perform work during such periods. It may be noted that in Adams, it was held at [91] that s 19(1)(c) of the FW Act (the equivalent of s 7(1)(c)) applies only to action taken by more than one employee (as it refers to "employees"). Section 7(1)(c) cannot be sensibly interpreted such that employees are taken to have engaged in "industrial action" if they refuse to attend work during periods of leave or breaks they are entitled to take under statute, awards or enterprise agreements, even if they engage with each other in so refusing (I leave aside any potential application of paras (a) or (b) of s 7(1)) in particular circumstances."
[63] Protected industrial action by employees is defined in s.409 and s.410 by reference to the term "industrial action", which is in turn defined in s.19. Section 19(2) states that "industrial action does not include ... action by employees that is authorised or agreed to by, or on behalf of, employees of the employer."
[64] Protected industrial action is not, by definition, a leave of absence approved by the employer.
[65] The Deputy President's central reasoning, upon which the remainder of her Honour's analysis largely stood, was that an employee's absence when taking protected industrial action is approved by Part 3-3 of the Act. There is force in that proposition which was also made by the CFMMEU on appeal; however, this requires a broad application of the notion of "approved leave of absence without pay".
[66] The "approval" by Part 3-3 of the Act referred to by the Deputy President (at [65]) and also the Full Court of the Federal Court in Construction, Forestry, Maritime, Mining and Energy Union v Boggabri Coal Operations Pty Ltd (2021) 310 IR 468 at 473, [2021] FCAFC 211 at [11], is the authorisation by a protected industrial action ballot when all of the conditions for taking protected industrial action are met. This is not authorisation or approval by Qube, or simply by the employees involved, given that much more than a protected industrial action ballot is required (including the common requirements for protected industrial action in Part 3-3 of the Act).
[67] How then should the term "approved leave of absence without pay" be understood and applied in its context, and in light of the other terms of the Agreement?
[68] Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 at 184 (Kucks) observed that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for but:
"[T]he task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.'"
[69] In our view the terms of clauses 9.1 and 9.2 should not be applied narrowly and the expression "approved leave of absence without pay" should be understood and applied having regard to the approach adopted in the Agreement more generally.
[70] Generally under the Agreement if an employee is absent from work or is otherwise unavailable for work Qube can either:
(a) treat the absence in the same way as approved unpaid leave: reduce salary payments, reduce the AAH target and reduce the number of hours worked over the year; or
(b) treat the absence in the same way as planned time off: not reduce salary payments, not reduce the AAH target, and not reduce the number of hours worked over the year.
[71] Qube cannot, in our view, reduce the salary payments unless Qube also reduces the AAH target (and consequentially the work performed by the employee over the year). Reducing the salary without reducing the AAH would be inconsistent with the express terms of the Agreement understood as a whole and would be inconsistent with the wages-work bargain that underpins the Agreement. It would also permit an absurdity (such as the situation where an employee took protected industrial action for 6 months and would still be required to be available to work 1820 hours in that year for 6 months pay). The alternative approach we prefer is open on the words of the Agreement and avoids the inconvenience and injustice that would otherwise arise (per Kucks at 184).
[72] As the CFMMEU submitted, the terms of the Agreement reveal and maintain a relationship between the salary paid to an employee over the year and the amount of work performed by the employee.
[73] In fact, it is important to recognise that no term of the Agreement severs or even alters the direct relationship between the "worked hours", as defined in the Agreement to include hours worked plus paid leave and any other paid arrangements - see [41] above, and the salary payments made.
[74] Reducing the salary without reducing the AAH would sever the direct relationship between worked hours and salary payments. To so do would not just be different to the other provisions of the Agreement, it would be inconsistent with those other provision. By contrast the surrounding provisions allow for adjustments to the three variables considered above (AAH target, hours worked and salary paid) in order to maintain the direct relationship between worked hours and salary payments.
[75] Moreover, in order to maintain the wages-work bargain, Qube must adjust the AAH if it adjusts the salary paid.
[76] Correspondingly, if Qube insists after an absence that an employee still be available and actually work the same number of hours over the whole the year, then Qube cannot reduce the employee's salary because of the same absence.
[77] Simply put, if an employee is absent Qube cannot reduce the employee's pay and also require the employee to make up the time without additional payment. In this regard the Deputy President was correct in her analysis of the outworking of Qube's interpretation:
"[58] As a consequence of the Qube's refusal to adjust the AAH Target in light of the withholding of salary as a result of the PIA:
[73] If the interpretation of clause 9.1.1 of Part A proposed by Qube is adopted an employee who took protected action for six months from 1 July could be required to work 1820 hours in the remaining 26 weeks of the year. They could therefore be rostered for up to an average of 70 hours every week for 26 weeks. However, they would only be paid $63,144.12 of their salary of $126,288.26. Reducing their hourly rate of pay from $69.39 to $34.69 per hour..."
[78] When Qube's employees took protected industrial action they did not work. Obviously they also did not make themselves available to work. Qube reduced or stopped salary payments during the protected industrial action due to the operation of s.470 of the Act. Section 470 is in the following terms:
"470. Payments not to be made relating to certain periods of industrial action
(1) If an employee engaged, or engages, in protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.
[79] The prohibition in s.470 applies to payments "in relation to the total duration of the industrial action on that day." Qube reduced salary payments according to the amount of time that Qube reasoned that employees would otherwise have worked if they had not taken protected industrial action.
[80] Qube was within its rights to treat the protected industrial action in this manner. We also observe that to do so is consistent with the treatment of "unauthorised leave" in clause 8.9, which disentitles employees from "any payment for any (such) period".
[81] As the CFMMEU said in their written submissions on appeal:
"During the period of protected industrial action, employees who were rostered to work and did not attend for work had their annualised salaries deducted purportedly in compliance with [s 470]. However, Qube did not make any corresponding adjustment to the AAH requirement of 1,820 hours over the year and contends that the employees must meet the target notwithstanding that the employees received the equivalent of 78 days less pay.
In practical terms, the consequence of Qube's approach is that the employees who were absent from the workplace for 78 days and received the equivalent of 78 days less pay in the year are nonetheless required to undertake the full 1,820 hours of work in the remainder of the year. As the Deputy President observed, the consequence of Qube's refusal to adjust the AAH target in light of the withholding of salary is that FSEs and PFSEs lost pay for not working during the period of protected industrial action but were then required to work those hours later in the year in effect for no additional pay."
[82] We agree with the Deputy President's observation at [71] that s.470 and the wider statutory scheme in relation to protected industrial action "does not authorise the withholding of pay for work performed on other days."
[83] Qube's case alluded to employees receiving some kind of benefit from taking protected industrial action if the AAH target was reduced. This notion is misplaced. Qube reduced salary payments for the duration of the protected industrial action, which means that employees lost pay. Reducing the AAH target so that the rates paid for other work outside of the protected industrial action are maintained, does not confer an additional benefit upon employees who take protected industrial action - it is merely taking steps to ensure that employees are not penalised twice.
[84] For these reasons, and applying the correctness standard on appeal, we find that the Deputy President correctly concluded at [71] that Qube was required to reduce the number of 'ordinary' hours FSEs and PFSEs are required to work when their annualised salary is withheld because they were engaging in the protected industrial action.
[85] The appeal is dismissed.
Ms H Millar of Counsel instructed by Mr N Ellery of Corrs Chambers Westgarth for the Appellant.
Mr M Gibian SC and Mr T Slevin of Counsel instructed by Mr L Edmonds and Mr W Tracey for the Construction, Forestry, Maritime, Mining and Energy Union.
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Qube Ports Pty Ltd T/A Qube Ports and Bulk
Construction, Forestry, Maritime, Mining and Energy Union [2023] FWCFB 66
(2018) 264 CLR 541
(2013) 237 IR 180
(2015) 235 FCR 305
(2018) 280 IR 191
(2020) 297 IR 151
(2021) 310 IR 468
(1996) 66 IR 182
(2012) 220 IR 313