REGISTERED CLUBS ASSOCIATION OF NSW v AUSTRALIAN LIQUOR, HOSPITALITY AND MISCELLANEOUS WORKERS' UNION, NSW BRANCH

APPLICANT: Mr J Murphy of counsel SOLICITORS Mr J Oakes Minter Ellison LEGAL REPRESENTATIVES: RESPONDENT: Mr A Hatcher of counsel SOLICITORS Mr C Staff Jones Staff & Co

JUDGMENT:

• 36 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: GLYNN J

THE REGISTERED CLUBS ASSOCIATION OF NEW SOUTH WALES V THE AUSTRALIAN LIQUOR, HOSPITALITY AND MISCELLANEOUS WORKERS' UNION, NEW SOUTH WALES BRANCH Application for declarations and orders under section 154 of the Industrial Relations Act 1996

1 The Registered Clubs Association of New South Wales (the RCA/the applicant) seeks the following declarations pursuant to s 154 of the Industrial Relations Act 1996 (the 1996 Act): 1. The loadings payable to employees pursuant to Clause 11 - Casual Employees, subclause (i), of the Club Employees (State) Award published 10 May 1996 (292 IG 582), namely: (a) 33 1/3% for casual work Monday to Friday; (b) 50% for casual work on Saturday; (c) 75% for casual work on Sunday; (d) 150% for casual work on public holidays, are amounts payable in respect of "shift work" or "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loading of 33 1/3% payable to 'existing' employees pursuant to Part B - Classifications and Hours, Clause 9.14.3 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loading of 25% payable to 'new' employees pursuant to Part B - Classification and Hours, Clause 10.3.3 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loadings payable to employees pursuant to Clause 12 - Part-time Employees, subclause (iii), of the Club Employees (State) Award published 10 May 1996 (292 IG 582) namely: (a) Monday to Friday - 15%; (b) Saturday - 50%; (c) Sunday - 75%; (d) Public Holidays - 150%, are amounts payable in respect of "shift work" or "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loading of 15% payable to employees pursuant to Part B - Classification and Hours, Clause 9.8.1 and Clause 10.2.12 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The weekend and public holiday penalty rates of half time extra for ordinary time worked on Saturdays and three quarter time extra for ordinary work worked on Sundays, as set out in clause 15 of the Club Employees (State) Award made on 2 July 1999, and of one and half times extra for ordinary time worked on public holidays, as set out in clause 16 of that Award are amounts payable in respect of 'shift work' or 'other penalty rates' for the purpose of section 3(2)(b) of the Long Service Leave Act 1955. (During the course of proceedings on 25 July 2000, the RCA was, by consent, granted leave to amend its application to include No 6 as an additional order.)

The payments made to employees pursuant to the award provisions referred to in Orders 1, 2, 3, 4, 5 and 6 above are to be excluded from the calculation of "ordinary remuneration" for the purpose of determining an employee's "ordinary pay" within the meaning of that term as defined in section 3(1) of the Long Service Leave Act 1955. 2 The grounds for seeking those declarations were: 1. In determining the amount of "ordinary pay" for the purposes of s4(1) of the Long Service Leave Act an employer is entitled to reduce the amount of remuneration for a worker's normal weekly number of hours by "any amount payable to that worker in respect of shift work, overtime or other penalty rates …" (see s3(2)(b) ).

The Loadings payable pursuant to Clause 11 of the Club Employees (State) Award published 10 May 1996 (292 IG 582) ('1996 Award') to casual employees and pursuant to Clause 12 of the 1996 Award to part-time employees constitute amounts "in respect of shift work, overtime or other penalty rates …". 3 The respondent to the application, and opposing it, is the Australian Liquor Hospitality and Miscellaneous Workers' Union, New South Wales (the respondent/union). 4 In these proceedings Mr J Murphy of counsel appeared on behalf of the applicant. Mr A Hatcher of counsel appeared on behalf of the union and of the Labor Council of New South Wales. 5 The proceedings went by way of documentary evidence and submissions. One affidavit only was tendered, that of John Barry, Industrial Research Director of the respondent, who was not required for cross examination. Submissions - Applicant/RCA 6 The structure of the submissions was that Mr Murphy dealt with casuals in one section and part-timers in another but much of what he had to say about casuals applied to both categories. 7 This case concerns the interaction of the Club Employees (State) Award 1996 (292 IG 582) (the 1996 Award), the Club Employees (State) Award 1999 and the Long Service Leave Act 1955 (the LSL Act). The specific issue before the Court can be shortly stated in these terms: Are the penalty rates or loadings paid to part-time and casual employees under the award excluded from the calculation of ordinary pay for the purposes of the Long Service Leave Act? The RCA's position is that by operation of law they are excluded. 8 In relation to s 3(1) and (2) of the LSL Act, the RCA submitted that it was the intention of the legislature to exclude any other amounts payable to an employee (such as shift work payments, overtime payments or penalty payments) from the employee's ordinary pay, when calculating an employee's entitlement to long service leave pursuant to the LSL Act. 9 This concept of specifically excluding payments in relation to overtime, shift work and other penalty payments came into the Act by way of an amendment that was enacted in 1963. Although the terminology is different, the provision inserted in 1963 is not relevantly different from the current provision and, if it was the current provision, would still lead to the same result. 10 The second reading speeches to the 1963 Amendment Act dated 20 March 1963, 21 March 1963, 26 March 1963 and 27 March 1963, evidence that it was the intention of the legislature that the "ordinary time rate of pay" is the employee's rate of pay less any payments for shift work, overtime or penalty rates. There is certainly nothing there to support an argument that casual or part-time loadings as such are not apprehended within the concept of "other penalty rates". Indeed in relation to casuals at least, they were not entitled to long service leave at this time. Casual employees became eligible to accrue long service leave entitlements from 8 May 1985. 11 A further amendment in 1977 brought the Act into the form that it currently is in relation to these particular provisions. 12 There were some significant alterations in the 1999 Award to the structure of the award and specifically the provisions dealing with part-time and casual employees. Those alterations in structure do not effect the RCA's case, and, if anything, in relation to the weekend penalty rates makes that case stronger and perhaps clearer. 13 Clause 11 of the 1996 award deals with casual employees. In the context of this clause the term "loadings" is entirely interchangeable with the term "penalty rates". The percentage amounts for Saturday, Sunday and public holidays are the standard weekend penalty rates that apply throughout industry regulated by awards of this Commission generally and reflect the standard weekend penalties established in In re Shift Workers Case, 1972 (Shift Workers Case) (1972 AR 633). 14 Subclause 9.8.1 of the 1999 Award is absent any reference to the 50 and 75 per cent weekend penalties or the 150 per cent public holiday penalty rate. There is a different approach taken to the structure of this subclause than that which appeared in cl 11 of the 1996 award which dealt with all four of those penalty rates. 15 For part-time employees, the word "loading" is used in cl 9.8.1 whereas the word "loading" did not appear in cl 12(iii) of the 1996 award. The two concepts are virtually if not totally interchangeable. They are certainly interchangeable for the purposes of this debate and the injection into the 1999 Award in relation to part-time employees of the word "loading" in cl 9.8.1 brings it closer in terminology to the provision dealing with casual employees in cl 9.14.3 and supports that approach. 16 Part B of the 1999 Award concerns part-time employees. Looking through cl 10.2 there is no reference to a part-time loading of 15 per cent for new part-time employees. 17 There is a reference in cl 10.3.3 to a loading of 25 per cent. The ordinary time rate of pay is a term that has some history to it and has some particular relevance in the context of this case. In fact it is a term that appears in the relevant sections of the Long Service Leave Act. This loading of 25 per cent is expressed to apply in addition to the ordinary time rate of pay. 18 Clause 15 of the 1999 Award has a heading "all employees". One takes that as meaning all employees both new and old, and all employees including casuals, part-time and full time employees. So it is a consolidation of the weekend penalty rate provision. In subcl 16.1.3 the use of the phrase "ordinary time rate of pay" again reflects the standard provision for public holiday penalty rates of two and a half times of the ordinary rate or 150 per cent in addition to the ordinary rate. The maths works out the same regardless of the formulation. 19 When one looks at the Long Service Leave Act and the history of Saturday, Sunday and public holiday penalty rates and to the consideration that has been given to that issue by the predecessors of this Commission, there can be absolutely no argument at all that those rates, or at least the penalty component which is the half time extra for Saturday, the three quarter time extra for Sunday and the time and a half extra for public holidays, are penalty rates which cannot on any view be taken into account for the purpose of calculating payments to be made when an employee takes long service leave. 20 The operative provision of the LSL Act is s 4. It uses the term "ordinary pay". In relation to ordinary pay that appears in s 3(1) that is a term that appears in the relevant sections of the 1999 Award. The applicant asked the Commission not to concern itself with subclause (ii). 21 Clearly what was contemplated by the legislature in enacting s 3 was the potential for a reduction in the amount that a worker would receive whilst on long service leave below that which he or she might otherwise receive as a result of overtime and payments in relation to shift work and other penalty rates. 22 The treatment of long service leave in terms of the rate of pay required by the LSL Act to be paid is quite different from the treatment, for example, of annual leave where it is quite common, if not universal, that employees proceeding on annual leave will receive a loading, normally 17 and a half per cent, or, in the case of those receiving shift penalties, would receive the shift allowances and weekend penalties in respect of ordinary time worked, penalties or which ever is the greater (cl 25(2)(b) ). 23 Long service leave has been treated by the legislature and by the Industrial Commission of New South Wales quite differently. It is prescribed that employees who receive as part of their normal pay, shift penalties and other penalty rates, do not have those rates factored into the calculation of what they receive when proceeding on long service leave. 24 As to the declarations sought, the RCA concedes that its argument is strongest when one focuses on the 50 per cent for Saturdays, 75 per cent for Sundays and 150 per cent for public holidays, contending that those rates can be regarded as nothing other than amounts payable in respect of "shift work … or other penalty rates". The same submission is made in relation to the 33 and one third per cent for Monday to Friday as well. 25 The respondent contends that those rates ought to be considered as part of ordinary remuneration for the purposes of calculating ordinary pay. Part of its case is that the concept of penalty rates is that they are essentially penal in nature against the employer rather than compensatory in terms of the employee. 26 That concept of penalty on the employer or on the industry seems to be erected by the respondent as a point of contrast to other elements in the employees' pay that might be said to be compensating employees for working at odd times, weekends, or not having the benefits of full-time employment. 27 That is a false dichotomy. The concept of penalty rates has been traditionally taken as containing either an element of penalty on the employer or an element of compensation in relation to the employee or in the normal case, elements of both and the fact that these rates or loadings or allowances contain elements of both or contain an element of compensation for employees does not mean that they are other than penalty rates properly understood. 28 The applicant's case does not depend on those loadings being designed as deterrence or deterrence only. Penalty rates sit quite comfortably with the compensatory elements of pay. The weekend penalty rates described in the Shift Workers' Case are in that field. Even if the union is right and there is no deterrent element in relation to any of these rates under consideration, so what? They are still compensatory payments appropriately and properly described as penalty rates. 29 The Shift Workers Case 1972 (1972 AR 633) is a well-known test case dealing with the Hospital Employees (State) Award but clearly having, in some respects at least, ramifications beyond that award. As extracted from the head notes, it was said: (7) Having given weight to the general trend in awards towards improving the standards of weekend penalty rates, to the fact that allowances have been progressively given to day workers who work Saturday morning as ordinary hours, and to the current value of both Saturday and Sunday as non-working days in the community, … (at p 634) 30 Just in those five lines is set out the concept of penalty rates, reference in the same context to allowances and reference to the current value of both Saturday and Sunday as non working days in the community. The Commission was looking at compensating employees for loss of amenity. 31 In the Shift Workers' Case terms are used interchangeably: shift allowances, shift loadings, shift penalty rates and the like. In that case the Commission stated that shift workers going on annual holidays should not suffer reduction in the rate they would normally expect to receive by way of shift penalty payments. However, the same claim concerning payment of shift workers whilst on long service leave was refused, the Commission saying it would reconsider that claim if requested to do so in 12 months time. The Commission has not been called upon to reconsider claims of that nature nor has the legislature moved to alter that position. 32 The consideration in that case given by the Commission to "shift allowances" is entirely one of a compensatory nature, compensating for aspects of shift work which are said to be undesirable and even impacting on people's health. There is no question that those allowances for shift work are in the nature of penalty rates but they have underpinning them the concept of compensating employees for loss of amenities as also is the case with weekend penalty rates, the term used by the Commission. 33 In terms of the shifts that are worked Monday to Friday, apart from day shifts, there is compensation by way of what is termed shift allowance. Nobody suggests that rate can be taken into account in the calculation of ordinary remuneration. It is clear on the view, as there most clearly set out, that shift allowances and weekend penalty rates are not to be included in the calculation of ordinary remuneration. 34 Generally, across various industries, awards and statutes, and when interpreted at common law, the 'ordinary time rate of pay' refers to payment to an employee for the normal number of hours worked taking into account any payments made in respect of loadings, see, e.g., Kezich v Leighton Contractors Pty Limited (Kezich) ( (1974) 131 CLR 362 at 368) where Mason J said "special problems arise in the case of a casual or shift worker whose hours of work are remunerated otherwise than by reference to the ordinary rate of pay". That statement by Mason J is an acceptance that when one is considering the term "ordinary rate of pay" in relation to a casual as identified here or a shift worker, one excludes the casual loading, the casual penalty, the shift allowance or weekend penalty, or whatever one wishes to term it. The ordinary rate is the unloaded rate. 35 In Markham v Crown Crystal Glass Pty Limited (Markham) [1961 AR 316 at 319] the term "loaded rate is payable" although perhaps not explicit in that, reference to a loaded rate being payable can quite comfortably accommodate part-time or casual loadings as they have been referred to at various points in the current debate. 36 The applicant also submits that loadings are paid to casual employees pursuant to the 1996 Award and the 1999 Award to 'penalise' employers. In particular, in an attempt to deter the adoption by employers of engaging casual labour as a standard practice by making it unprofitable for an employer who might seek to take unfair advantage of the circumstances in a manner not intended by the Commission, and to protect the position of weekly employees in the club industry (see: In re Clerks (State) Award (the Clerks Award 1953) [1953 AR 199]; and In re Watchmen, Caretakers, Cleaners, Lift Attendants &c. (State) Award (the Watchmen Award 1965) [1965 AR 268].) 37 The loadings paid to casual employees pursuant to the 1996 Award and 1999 Award for casual work performed on Saturdays, Sundays and Public Holidays are identical to the weekend and public holiday penalty rates for shift workers awarded by the Commission in In re Shift Workers Case 1972 [1972 AR 633] and are properly understood to be the amounts payable in respect of 'shift work' or 'other penalty rates'. 38 In the judgment of the then President, Mr Justice Taylor, in In re the Watchmen, Caretakers, Cleaners, Lift Attendants (State) Award [1965 AR 268], the term "loading" used for part-time workers clearly contains within it elements of compensation for employees and a deterrent factor or penalty for employers to attempt to ensure non over-utilisation of part-time employment. 39 The Shop Employees (State) Award [1977 AR 555 at 575], has the heading "Penalty Rates for Casual Employees" and that heading really says it all. That heading refers to the rates paid to casual employees for the nature of their work and those rates are caught within the concept of penalty rates. Part-time employee loading equates to shift work allowances or other penalty rates 40 In the Club Employees (State) Award [1981 AR 562] part-time employment was included and Mr Commissioner Pietracci in setting rates made no reference to the term "loading" or "penalty rate". He just set the rate for the classification plus a percentage, not dissimilar to the formulation in the 1996 award for part-time employees. When Liddy J was dealing with this aspect of the appeal against the Commissioner's decision he used the term "a penalty loading". That is a clear considered and intended use of the term "a penalty loading" in the context of this question of 15 per cent and Liddy J was perhaps stressing the penal aspect of it, the deterrent aspect of it, but that is not to say it does not have the other compensatory aspect as well, that is compensating part-time employees for some of the perceived disadvantages of that form of employment at that time. 41 This is one of the very rates the subject of these proceedings. It was introduced in 1981 and at the time of its introduction it was called a penalty loading. The language of the provision that was originally formulated in the decision of Pietracci C has not changed in any relevant way. If it was a penalty loading then, the RCA said it is a penalty loading today. 42 Loadings are paid to part-time employees pursuant to the 1996 Award and the 1999 Award to 'penalise' employers. In particular, in an attempt to 'discourage the unnecessary organisation of a business by using part-time labour only'. In addition loadings are paid to part-time employees because of the frequent use of part-time employees in the club industry, the lack of stability and the fact that part-time work involves some additional inconvenience and cost for employees (See: In re Watchmen, Caretakers, Cleaners, Lift Attendants &c. (State) Award [1965 AR 268]; and In re Clerks (State) Award [1953 AR 199]). 43 A part-time employee loading under the 1996 Award and the 1999 Award equates to a penalty rate as it is referred to as 'penalty loading': In re Club Employees (State) Award [1981 AR 562 at 571]. 44 In the State Part-time Work Case [(1998) 78 IR 172], the test case to establish minimum part-time employment conditions pursuant to the 1996 legislation, nobody involved, whether on the union's side or the employer's side or indeed the Commission that wrote the decision, seems to have any difficulty with the concept that the part-time loading is a penalty loading. 45 The weekend penalties casual and part-time employees receive pursuant to this Award cannot be taken into consideration for long service leave. They are clearly weekend penalty rates. The standard for them was set in the Shift Workers Case. They are amounts referable to shiftwork and/or other penalty rates. If the contrary were true casual employees who worked every Saturday and Sunday would have added into the calculations of their ordinary pay for long service leave purposes the 50 per cent/75 per cent rates. No one is suggesting that the full-time employees are entitled to that. It would be an absolutely absurd result. There is nothing about casual employment on Saturday and Sunday that ought result in a reward to employees working those shifts, which for working two shifts would amount to credit in terms of pay of effectively three and a quarter. 46 The same submission can be made in relation to part-time employees. When one looks at the evidence relied upon by the union, the affidavit of Mr Barry, it appears that the union does not even contend for that on the part of the casual employees. 47 No one is saying that the weekend penalty rates get calculated in. Nor could they be. If the RCA is right about the 50 per cent and 75 per cent weekend penalties, that only leaves consideration of the part-time and casual rates applying Monday to Friday, which for casuals was 33.3 per cent, it is now 25 per cent for new employees and part-timers it was 15 per cent. 48 The absurdity would arise that the casuals who worked only Monday to Friday would, on the argument against the applicant, have those penalty loadings incorporated into the calculation of their ordinary pay for long service leave purposes. Those not working on the weekend would have nothing incorporated into that calculation. The only non-absurd result consistent with the intention of the legislature as awarded by the Commission in the Shiftworkers Case 1972 is that none of these loadings are calculated in and "ordinary pay" means what it means: no shift loadings, no overtime payments and no other penalty rates at all taken into account. 49 The decision of the Chief Industrial Magistrate in Inspector Matchett v The Illawarra Catholic Club (unreported, 97/1436, 25/3/98) appears to take a different approach than that contended for by the applicant. It does not appear from that decision that the issue in that case was as fully argued as it has been in these proceedings or even argued at all. The applicant submitted that the decision is wrong on its face and ought not be followed. Submissions - Union 50 In determining whether the orders sought by the applicant should be granted, the Commission has fundamentally two tasks before it. Firstly, it must engage upon the task of statutory construction of the words used in the relevant provisions of the Long Service Leave Act and find out what was intended by the expression "penalty rates". Secondly, the Commission must then look at the relevant awards and ascertain whether the relevant loadings in those awards fall within the exclusionary provision of the statute when it is properly construed. 51 The issue in this case really turns around whether casual and part-time loadings in the relevant Awards fall within the term "penalty rates" as used in the LSL Act. The dividing line between the parties seems to be that the applicant contends that virtually any payment in addition to what it describes as the "ordinary time rate of pay" is a penalty rate. 52 Mr Murphy says in reference to documents, that anywhere where the word "penalty" appears in any context, that description proves that the relevant penalty is a "penalty" for the purposes of the statute. The union takes a different view. The proposition is that the words in the statute as a matter of ordinary English language have to be given their proper work to do. 53 The operative word is "penalty". The respondent's main contention is that a penalty rate must have as its intended purpose the idea that it is to penalise an employer such as to prevent the worker from doing something that is undesirable. Unless the relevant payment has that intended purpose or effect it is not a penalty rate as properly described but rather a different type of payment. This type of payment is referred to more as a compensatory payment which was not intended to be excluded by the phrase "other penalty rates". To say that a payment which is purely compensatory by nature is somehow a penalty rate is to deny the effect of the words used in the statute as a matter of ordinary English. 54 Secondly, there is some very specific discussion about penalty rates in the Debates leading up to the first amendment to the Long Service Leave Act which resulted in exclusions. Those Debates show firstly, it is an untenable proposition to say that the legislature intended to exclude any sort of payment at all on top of what might be called the ordinary time rate. The mere fact that some payment might have the word "penalty" attached is not sufficient by itself to bring it within the scope of the exclusion of the Long Service Leave Act. One needs to do more than that. 55 In the light of express statements of parliamentary intention in the Debates one would prefer a narrow rather than a broad definition of the exclusion provisions and in particular of the term "other penalty rates". That is there was a clear expressed intention that the Parliament wanted, in so far as long service leave for employees is concerned was for them to enjoy the rates of pay which they actually or ordinarily received. That includes casual loading. The Long Service Leave Act is a beneficial piece of legislation and, again in that context its benefits should be construed broadly and any exclusions should be construed narrowly. 56 One can see from the orders sought by the applicant that its case turns upon the words "shift work and other penalty rates" as they appear in s 3(2)(b) of the LSL Act. It seems to be accepted that but for those exclusions, the relevant casual and part-time loadings would fall within the general descriptors of the definitions of "ordinary pay" and "ordinary remuneration" and, therefore, would be part of long service leave. 57 The submissions made by the applicant seem to concentrate on the aspect of whether the casual and part-time loadings are penalty rates. There has been some brief reference to the idea that these payments are somehow payments with respect to shiftwork. It is hard to see how or why it was said that such loadings could be described as shift loadings. The Awards do not have a fully detailed shiftwork system. There is little evidence of shiftwork operating in those Awards at all. To the extent that there is reference to shift payments they are entirely separate to the loadings in question in these proceedings. 58 Section 3(1) (a) of the definition of "ordinary pay" sets out two different methods of calculating ordinary pay: One is the amount of the ordinary remuneration as on a prescribed date (s 3(1)(a)(i) ), and the second is an averaging process over a period of five years (s 3(1)(a)(ii) ). It seems to be accepted, therefore, by the applicant that a casual or part-time employee can be described as somebody remunerated wholly in relation to "an ordinary time rate of pay". 59 That by itself creates some difficulty for the applicant. It is hard to contend on the one hand that the rate of pay received by casuals or part-timers, because it is loaded, is not the "ordinary time rate of pay", but then to contend, in order to get to the definition of "ordinary remuneration", that casual and part-time employees are persons remunerated wholly in relation to "an ordinary time rate of pay"; there is an arrant contradiction in those propositions. 60 However, casual employees (and perhaps some part-time employees) who do not work regular or "normal" hours will fall within s 3(1)(b) rather than within s 3(1)(a) of the definition of "ordinary pay". This is because para (a) is founded on the notion of "ordinary remuneration", which in turn necessarily involves the worker having a "normal weekly number of hours" (s 3(2)(b) ). This obviously cannot have application to employees with irregular working hours. The declarations sought therefore do not say anything with respect to this class of employees. 61 The background facts to this case are relevant because they predate the making of the most recent 1999 Award, and therefore can be presumed to have played some part in the intentions of the parties in making that Award by consent. 62 The evidence of Mr Barry is that when the 1999 Award was made, the background factual situation was that clubs were paying as a matter of practice, the Monday to Friday rate loadings to all casuals and part-timers who took long service leave or took a proportionate payment and, secondly, that those categories of employees are a large proportion of or are in the majority of employees in the club industry. 63 In relation to the 1999 Award, which is probably the more important in the context of these proceedings of the two Awards, one does not see any indication of any intention by way of changing award provisions to alter the existing situation. 64 A penalty rate must have some penal or punitive intention behind it, to discourage some practice seen as undesirable. It cannot simply be contended in this industry that the purpose of the casual loading or the part-time loading is to discourage the use of casual and part-time employees. They have always been a large proportion, if not the majority of the industry, nothing has changed in that regard; and to suggest that these loadings are made year after year in award after award to discourage that situation, when in fact it has no such effect whatsoever, and these employees remain such a large group in the industry, is simply untenable. 65 In fact from the 1996 Award to the 1999 Award the loadings were reduced for new employees. In the case of casuals it has been reduced to 25 per cent and in the case of part-timers it has been abolished. None of that is consistent with an intention to penalise employers so that they use, or do not use casuals or part-timers, or use them to minimal extent. That is irrelevant to these loadings, which have the traditional purpose associated with loadings of that type, that is their compensatory nature. They are not penalty rates. 66 The other relevant background factor is that in Inspector Matchett v The Illawarra Catholic Club (supra), the decision by the Chief Industrial Magistrate was issued in March 1998 before the making of the 1999 award. The Registered Clubs Association, having been involved in that case, did not arrange any appeal from that decision in which it was held that the casual loading provided for in the Club Employees' Award did not fall within the generic words "in respect of shift work, overtime or other penalty rates" as found in s 3(2)(b) of the LSL Act. 67 There was no attempt in the Shift Workers Case by the Commission in Court Session to undertake a detailed analysis of the proper construction of the relevant LSL Act provisions. In that case the relevant union advanced a claim for certain shift work provisions, and, as part of a claim it wanted a provision, which was conceded by the applicant as being over and above the Long Service Leave Act, to allow shift loadings to be counted for the purpose of long service leave. The CICS, exercising its discretion, declined to grant the claim. It did not engage in nor did it need to engage in the task of construing what the words "payments in respect of shift work and other penalty rates" meant. 68 The respondent has located, it thinks, the only real example where an industrial tribunal has attempted to interpret the words "penalty rates" as they appear in a statutory instrument, albeit a different one. It is a decision which goes by the short title Re Rates of Pay for Work Performed on Saturdays and Sundays ( (1947) 58 CAR 610) (the Weekend Penalty Rates Case), a decision of the Commonwealth Court of Conciliation and Arbitration. 69 What that case clearly says, is that in industrial jurisprudence the words "penalty", "penalty rates" and "penalty loadings" have divergent meanings. They are used in different contexts. It was made clear that to assume that simply because on page X of a decision the word "penalty" was used, therefore the Commission in that case thought it was a penalty rate, was not a sound or proper basis in approaching the relevant task of statutory construction. That is the appropriate approach to follow in the absence of any other case which can be brought to the Commission's attention where the statutory construction of the words "penalty rates" has been undertaken in the detailed way it has in that case. 70 The conclusion in that case about the specific claim based on the above principles was that claims for rates of pay for Saturday and Sunday work was not within the jurisdiction of the Commission as claims for penalty rates, but they were within the jurisdiction as claims for shift loadings only with respect to shift workers. Insofar as they applied to day workers the court said they were not claims for penalty rates as such and were therefore not in the jurisdiction, and that supports the general submission the union makes in this case. Applying those principles to this case it is clear casual loadings and part-time loadings are not "penalty rates" as that term is used in the Long Service Leave Act and certainly not payments with respect to shift work. 71 In the 1996 Award there is no definition of shift work. The sort of shift work system where one has a relay of workers working substantially around the clock does not seem to be a feature in this particular industry. There are some discrete shift work loadings provided for in cl 6 and are described as penalties in the award. 72 In the 1996 Award the provisions with respect to casuals are found in cl 11 and those with respect to part-time employees are found in cl 12. There is no indication that the employment of casuals and part-time employees under the Award is other than normal and are a major feature of the industry. The Award itself does not treat them as undesirable or to be deterred from the industry. 73 Looking at cls 11 and 12, the loadings are not described as penalties in distinction to the shift loadings referred to earlier. That, of course, is not determinative of the matter. It is relevant to this extent, that if one can find a payment clause that is called a penalty rate, it is a penalty rate. Presumably that means if it is not called a penalty rate, it is not a penalty rate. On the applicant's argument, which the respondent has criticised, it would seem that the shift payments are penalty rates because they are described as such. It would seem to follow that the loadings are not penalty rates because they are not described as such, and one would have thought that if the parties had intended for them to be penalty rates, they would have described them as such, consistent with what they did with the shift loadings, but that did not occur. That is an embarrassing fact which the applicant cannot really come to grips with. 74 As to the 1999 Award, even though its drafting in some respects is different and the structure of the Award has been changed, presumably to make it more user-friendly, to use the modern parlance, there is no real change in the nature of the payments involved. In the 1999 Award shift allowances are retained and are still described as penalties; in fact, where the shift penalties are set out in cl 9.5, they have actually added a heading "Penalty payments" to brand these types of loadings. 75 In distinction to that, if one looks, for example, at cl 9.8, "Hours of work" where there is reference to the 15% payment, that is referred to as a loading and there is no specific reference to it being a penalty, so it is the distinction in language used and it could lead to the conclusion that that distinction was a deliberate one by the parties. It is a relevant factor but ultimately the Commission must look at the nature of the payments themselves, their intent and purpose. 76 The structure of the Award lends its support to the submissions that the casual and part-time loadings are not penalty rates because they are not prescriptions made in respect of work seen to be outside the norm, they are not prescriptions of work seen to be undesirable and therefore to be deterred. 77 The union also drew to the Commission's attention the fact that the part of the award that deals with superannuation, and in particular cl 31.1.1 par (d)(ii) and (iii), provide that for the purposes of superannuation, "ordinary time earnings" include part-time and casual loadings. 78 Ultimately whether or not casual and part-time loadings can be said to form part of the "ordinary rate of pay" is really not the relevant question. The relevant question is whether they are penalty rates or payment on a shift-work basis. 79 The applicant approached this question as if ordinary rates of pay and penalty rates were two mutually exclusive categories, which is not right. There are a number of categories. The mere fact that something may not fall within a description of an ordinary rate of pay does not automatically make it a penalty rate. A clear example is a meal allowance which is paid for a specific purpose; that is to reimburse or compensate a person for the cost of a meal while at work. Clearly that is not part of the ordinary rate of pay. Neither would it be regarded as a penalty rate. It is a category of its own. 80 It is really beside the point as to whether a casual or part-time loading is part of the ordinary time rate, but the union would say it is. That is when one looks for the ordinary rate for a casual, one does not just take the ordinary permanent rate. One takes it together with the casual rate and that gives a rate for casuals to which overtime rates apply. 81 In relation to the higher loadings which are payable to casual and part-time employees with respect to weekend work, the mere fact that the loadings Monday to Friday rate are 33 1/3 per cent might lead to the conclusion that there is some penalty element in the weekend loadings, but that is not conclusive of the matter, for these reasons: firstly, in both Awards working ordinary hours on weekends is clearly a normal part of work and not treated as something that needs to be deterred. Clubs do a substantial amount of their business on weekends and the Awards do not disclose any intention to deter the working of ordinary hours on weekends. 82 Instead, with respect to casuals, part-time and full-time employees, the Awards simply lay down options to work, one of which is to work these employees on the weekends. It would be a matter of judicial knowledge that from Friday night onwards through to Sunday is probably the peak period of work for clubs in this industry. There are other industries where work on the weekend is seen to be undesirable and where penalty rates would logically apply with that pattern of work but the club industry is not one of those industries. 83 The Award provisions with respect to loadings for Saturday and Sunday work, and for public holidays as well, would not satisfy the principles referred to in the Weekend Penalty Rates Case and for that reason they are not penalty rates. 84 As an alternative submission, even if the Commission was to come to the conclusion that at least part of those payments was in the nature of penalty rates, that is to the extent that they were higher rates, that they must have the penalty element in them, that does not lead to the conclusion that the entire loading is thereby to be discounted for the purpose of calculating long service leave entitlements. It is clearly the case that with respect to loadings paid for weekend work there is always going to be a compensatory element involved. That was recognised in the context of the Shift Workers Case. 85 Applying the same principles to the casual and part-time loadings in this case, there is no doubt that the same disabilities for which the casual loading on Monday to Friday basis is meant to compensate exist on weekends and still have to be compensated for. Therefore the Commission could safely reach the conclusion that even though it might find there is a penalty element in the 50% and 75%, that at least a 33 1/3%, which is the compensation for Monday to Friday workers would equally apply to weekend workers and would then be a compensation element of those higher allowances, rather than a penalty rate on them. 86 That would have the consequence that, if casual workers who usually worked on weekends, took long service leave, they would get not the full 50% or 75% but the 33 1/3% which is identified as at least the compensation element of those higher loadings. The statutory provisions permit that outcome. The words "any amount payable" in s 3(2)(b) of the LSL Act are words which were meant to have some flexibility in approach. They would not compel the conclusion that because a loading has a penalty in it that the whole loading thereby is discounted. 87 In normal circumstances, particularly Monday to Friday, shift loadings are not penalty rates. They are loadings as the Shift Workers Case makes clear, to compensate for the particular disabilities which attach to working hours outside of hours that are seen as day hours, and that case describes what those disabilities are: effects on health, social contacts etc. At least on a Monday to Friday basis those loadings are compensatory allowances, not penalty rates meant to deter the working of shift work. In fact the Shift Workers Case is all about permitting shift work to occur in a fair and efficient fashion. 88 The applicant makes the rather odd submission that because the loadings payable on weekends under the Club Employees Awards are of the same quantum as those established by the Shift Workers Case for shift workers working on weekends, that therefore those loadings are shift allowances or payments. That is a complete non sequitur. 89 The word "shift" by itself has a more divergent meaning than that of eight hours work in the middle of the day. If one is using the term "shift work" one is usually talking about a system which permits workers on a regular and rostered basis to work hours outside day hours, and it usually, although not always, has a connotation that in a system of work whereby one has eight hours, eight hours, eight hours as the workers succeed each other, or perhaps 12 hours and 12 hours, that is the feature of the general shift work system and it is not a feature of this award. 90 The concept which attaches itself to an establishment where the plant is being operated around the clock is not a concept which attaches itself readily to the club industry or the retail industry where the place of work is open for fairly normal hours, although perhaps extending into the night. There is nothing about the casual or part-time loadings in these Awards which could be described in some way as attaching itself by being payments "in respect of shift work", which is a relevant phrase in the Act. 91 The approach in relation to weekend loadings does not lead to the absurd consequences referred to by the applicant. The union suggested the way to deal with the higher weekend loadings is a lot more fair and is a construction which would permit an approach that is logical and fair. 92 With the exception of the one case in relation to the club industry which deals with part-time employees back in 1981, the Commission should note that the applicant has not been able to produce any relevant or admissible material in relation to these Awards which would demonstrate the penalty nature of the relevant loadings. 93 There are any number of examples of loadings being awarded to part-time employees on other bases but no decision which would support the notion there is a widespread practice of awarding penalty rates to deter their employment. 94 In the context of this case the part-time loading was used as a protection to ensure the three categories of employees should remain in balance. It was not the intention of the loading to work to deter employers from employing part-time employees at all. The Commission in 1981 found there was a need for part-time employees and that need had to be met. 95 As to the reference by Macken J in In re Shop Employees (State) Award (No.2) [1977 AR 555 at 575] to penalty rates for casual employees, it is not appropriate because the word "penalty" is used in a context where the use of that word was not an issue, to say that that that case is authority for the proposition the loading talked about was a penalty for the purpose of the LSL Act. 96 It is not useful to trawl through the various cases to find out if those loadings are referred to as penalty rates or penalty loadings. Clearly there are many divergent views and in the 1996 and 1999 Awards themselves the word "penalty" does not attach to the payments in question even though it attaches to other payments with respect to shift work. 97 For those reasons the approach of the applicant is not correct. An analysis of the decisions cited by the applicant show that casual loadings and part-time loadings are awarded to compensate for disabilities associated with casual and part-time work. They are not therefore "penalty" rates as that term is properly construed and particularly in the case of these Awards there is no indication, and the indications are all to the contrary, to suggest that the loadings in question were intended to be "penalty" rates. Casual work and part-time work and the loadings associated with that work are part of the ordinary methods of working in this industry. The declarations sought by the applicant should not be granted by the Commission. Applicant - In Reply 98 The alternative submission put by the respondent seems to be an abandonment of its case in relation to that portion of the weekend penalty rates and public holiday penalty rates in excess of the 33 1/3 per cent casual loading or 15 per cent part-time loading. There is no warrant in relation to casuals or part-timers for dissecting the payments they receive on weekends and apportioning part of it to a casual or part-time loading and the rest perhaps to be regarded as a penalty rate. It is either a penalty rate or it is not. 99 If the argument that the 33 1/3 per cent cannot be a penalty rate is that firstly, penalty rates can only be a deterrent and, if they had not achieved that effect, they are obviously not penalty rates, that is really a non sequitur. It is accepted by the RCA that casual employees form a large proportion of the work force the subject of these awards. It cannot be inferred that that loading has not had some deterrent effect in keeping, at least for the present time, the proportion of casual hours to total hours being worked less than half. 100 It is clear from the survey tendered that the 33 1/3 per cent loading is at the high end of casual loadings in awards. The Commission is entitled to infer that despite the large proportion of casuals now employed, that loading was initially introduced into the award as a deterrent. The Commission is entitled to also infer it still has some deterrent element in it. 101 In relation to the 15 per cent part-time loading which the applicant would characterise as a penalty rate, it was introduced in 1981 and the first judge of the Commission to consider it called it a penalty loading. Penalty rate/penalty loading is not a highly technical term and when a judge of this Commission refers to a particular aspect of an employee's remuneration as a penalty rate or penalty loading, one can accept the description is apt. 102 The 1947 Weekend Penalty Rates Case is an unusual judgment made in the context of the post-War situation. The consideration there was the National Security (Industrial Peace) Regulations and how that fact impacted on the powers of the then Court. Ultimately the Court takes the narrower view that is adopted that really only overtime could be described as an appropriate penalty rate. That concept does not sit with the LSL Act which refers to payments applicable to overtime, shift work and penalty rates. 103 The union relies on that Federal decision to say that anything paid for something outside the norm of industry is a penalty rate. If something is normal in the industry and there is a higher rate paid for it, it cannot be a penalty rate. In the 1972 Shift Workers' Case, a particular award there considered was the Hospital Employees (State) Award, in an industry which operates 24 hours a day, seven days a week. The weekend loadings were described as penalty rates. If the concept of penalty rates based upon the Commonwealth judgment is accepted, then in the health industry there cannot be such a thing as a penalty rate because it operates around the clock. That is not the way that industry has been regarded. 104 In the context of the Regulations there being considered it proposed far too narrow a view of what constitutes a penalty rate and has not been followed generally or perhaps at all elsewhere in the industrial jurisdictions. 105 It is not the applicant's case, as was put by the respondent, that a penalty rate is a penalty rate simply because somebody calls it such, including politicians and Parliamentarians. However, the applicant says that when judges of this Commission describe a particular element of someone's pay as a penalty loading, then that can readily be accepted as an accurate description. The attempt to water down the repeated references in authorities to which the applicant has gone really fails. 106 There seems to be some suggestion by the union that casuals and part-time employees under these Awards are not described within s 3(1)(a)(i) or in (ii) of the Act, in that it is put, they are not remunerated wholly in relation to an "ordinary time rate of pay". The basis of that submission is that because there is a loading, whatever it may be, it is not "ordinary time rate of pay". It really does not follow, because it is accepted within the structure of this section a person so described can also be in receipt of other amounts. Otherwise there would be no need for the definition of "ordinary remuneration" which appears in s 2(b). If the union is right in relation to that submission then the definition of "ordinary remuneration" has no work to do because everybody referred to there would only be receiving the ordinary time rate of pay and nothing else. Clearly that is not right because (b), in the definition of "ordinary remuneration" contemplates that there be a reduction. What is said in s 3(1)(a) "remunerated wholly in relation to an ordinary time rate of pay" stands in contradiction to someone who is remunerated otherwise such as by way of piece rates. It seems to be suggested casuals and part-time employees in this industry come within (b). It is said because the applicant does not seek orders in relation to (b) it loses. But (b) has the same exclusion. 107 This Commission has never been so confined that if an argument was run on the basis of one part of the legislation and it is found that is not correct but an identical exclusion appears in the correct part of the Act that the Commission turns away from it. The Commission is not confined in relation to the granting of the orders that are sought. It is really quite a desperate proposition to put that even if these amounts are penalty rates that the applicant pleaded the wrong section and therefore it loses. The submission is misconceived. The people do come within the description of s 3(1)(a). Union - In reply 108 As to the last part of the applicant's submission, what the union said was to the extent the applicant was submitting the casual loading is not part of the "ordinary time rate of pay" it was a self-defeating proposition because it thereby put them outside (a), and the term "ordinary remuneration" that requires one to get into the gateway to have employees remunerated. The union pointed out the applicant raises a self-defeating proposition that casuals do not receive the ordinary rate of pay because they get the loading and if that is right they do not fall within (a). 109 This is a case where the applicant has sought specifically drafted declaratory orders as to existing rights. If in fact the result of these self-defeating submissions by the applicant is that on a proper analysis casual and part-time employees fall within (b) rather than (a) then those declarations cannot be granted. Sub-section (b) raises different language as a whole. 110 With reference to the Weekend Penalty Rates Case, it arose out of a fairly unique situation. The importance of this judgment is it is the only case anyone cited which deals with the term "penalty rates". Its position is entirely consistent with the Shift Workers' Case. As identified before, the Court in the Commonwealth case said with respect to loadings payable to shift workers who work weekends, those loadings fall within the relevant phrase "penalty rate". What it did say, however, with respect to people who are not shift workers, weekend loadings do not fall within the phrase "penalty rates". That is entirely relevant to the issue of casuals and part-time employees. 111 There was some point made about the fact various decisions of members of this Commission and its predecessors have used the term "penalty" with respect to various loadings in various awards. None of these cases involve the consideration of those loadings or penalty rates within the terms of any statute. They do not involve any consideration as to the proper meaning of "penalty rates" or "penalty loadings" and they are entirely demonstrative of the correctness of the statement made in the Commonwealth case that "penalty rates" are used in widely divergent cases. The phrase does not appear with respect to the loadings now being considered. It is a self-defeating submission. 112 As the applicant conceded, in these cases, it is not known what the purpose of the casual loadings were by reference to any particular materials. The applicant cannot show anything which defines the purpose of the loadings. The union has suggested by reference to all of the authorities and the structure of the awards themselves it is clear casual loadings generally, and specifically in the case of this award, are meant to have a compensatory rather than a deterrent purpose. Nothing advanced by the applicant has supported a construction of the specific awards which would support the notion that these loadings are properly described as "penalty rates". Consideration 113 The Declaratory Orders sought by the RCA originally related only to the Club Employees (State) Award (292 IG 582). That Award was superseded by the Club Employees (State) Award (the 1999 Award) (unpublished) which was made following a review pursuant to s19 of the 1996 Act and which rescinded and replaced the Club Employees Award (292 IG 582) and a number of other awards. The new award took effect from 2 July 1999 and is to remain in force for a period of three years. 114 The application by the RCA for declaratory orders was made on 3 December 1999. 115 Both the 1996 and 1999 Awards need to be taken into account in these proceedings because in the restructured 1999 Award, provision is made for "existing" casual and part-time employees (i.e. employees employed prior to the commencement of the 1999 Award) to continue to receive loadings payable under the 1996 Award and for "new" casual employees (i.e. employees employed after the commencement of the 1999 Award) to receive a reduced loading. There was a 33 1/3% casual loading payable for casual work Monday to Friday under the 1996 Award. Under the 1999 Award that loading has been reduced to 25%. There was a 15 per cent loading paid to part-time employees under the 1996 Award, which loading is no longer payable under the 1999 Award, other than to "existing" employees. 116 Contrary to the submissions of the union, there are, in essence two issues before the Court: 1. What does the Long Service Leave Act 1955 intend when providing that a worker shall receive "ordinary pay" for the period of long service leave? 2. Are the casual and part-time loadings in the Club Employees (State) Awards 1996 and 1999, to be properly categorised as "penalty rates" or amounts payable in respect of "shift work" and so not to be taken into account in calculating "ordinary pay" for the purposes of s 3(2)(b) of the LSL Act? 117 In this decision I apply the purposive approach to the construction of the LSL Act as that approach has been described in decisions which include State of New South Wales v Macquarie Bank Ltd (1992) 30 NSWLR 307 per Kirby P at 319 and Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 per McHugh, JA at 423, and as discussed and adopted by Full Benches of this Commission, (Wright J, President, Walton J, Vice President and Hungerford J) in Drake Personnel Limited t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at 444-445 and, by that same Bench in Horizon Cold Storage Constructions Pty Ltd v WorkCover Authority of New South Wales (unreported; 99/2246; 25/11/99). 118 Furthermore, although the particular issue the High Court was concerned about in Kezich was the meaning of "ordinary hours", what Gibbs J had to say as to its respective meaning in an Act and in an award is instructive ([1974] 131 CAR 362 at 364 ff): The [ Workers' Compensation Act, 1912-1973 (WA)] Act deals with the compensation payable to workers generally; it is not confined in its operation to any particular trade.

It would not be legitimate to construe the schedule by placing upon the words "ordinary hours" the meaning which they may happen to bear in an industrial award governing employment of a particular kind.

Indeed, even if it could be established that many industrial awards use the phrase "ordinary hours" and that wherever it appears in any award it has the same meaning, that would not justify referring to a multitude of unrelated documents by different authors as an aid to the construction of a statute. What has to be determined is the meaning that those words have in the Act and since the words "ordinary hours" are common English words they should, in accordance with established principles of statutory construction, be understood in their natural meaning unless the context otherwise requires. 119 In this case the meaning of "ordinary pay" is defined in s 3(1) and (2) of the LSL Act. Long Service Leave Act 1955 120 Relevant provisions of the Long Service Leave Act 1955 are set out below: Long service leave

4 (1) Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer. Service with the employer before the commencement of this Act as well as service with the employer after such commencement shall be taken into account for the purposes of this section.

3 (1) In this Act, unless the context otherwise indicates or requires:

" Ordinary pay ", in relation to any worker, means the sum of:

(a) where the worker is, on the prescribed date, remunerated wholly in relation to an ordinary time rate of pay fixed by the terms of the worker's employment: (i) the amount of the ordinary remuneration of the worker, as on the prescribed date; or (ii) the average weekly amount of the ordinary remuneration which was earned by the worker as a worker during that part of the period of 5 years ending on the prescribed date during which the worker was so remunerated, whichever is the greater;

(b) where the worker is, on the prescribed date, remunerated otherwise than wholly in relation to an ordinary time rate of pay so fixed - the amount of the average weekly wage which was earned by the worker as a worker (being the average of the amounts received by the worker each week under those terms after excluding any amount payable to the worker in respect of shift work, overtime or other penalty rates) during the period actually worked by the worker during: (i) the period of 12 months; or (ii) the period of 5 years, ending on the prescribed date, whichever amount of average weekly wage is the greater;

(2) For the purposes of: (a) the definition of "ordinary pay" in subsection (1) and of subsection (2A), " prescribed date ", in relation to a worker: (i) means, except as provided in subparagraph (ii), the date immediately preceding the date on which that worker enters, or is deemed to have entered upon long service leave or the date of that worker's death, as the case may require; or (ii) [not applicable] (b) paragraph (a) of that definition, "ordinary remuneration", in relation to a worker, means the remuneration for that worker's normal weekly number of hours of work calculated at the time rate of pay fixed by the terms of that worker's employment for his or her work under the terms of that worker's employment reduced by any amount payable to that worker in respect of shift work, overtime or other penalty rates or, where 2 or more times rates of pay are so fixed, the amount of remuneration for that worker's normal weekly number of hours of work calculated at the higher or highest of those rates and so reduced; 121 The current definition of "ordinary pay" as set out above was inserted in the LSL Act by the LSL (Amendment) Act (NSW) 1977. Provisions of 1996 and 1999 Awards 122 Clause 3, definitions, of the 1996 Award, provides that: (ii) Casual Employee means a person, other than a weekly or part-time employee, who is engaged as such and paid as such.

(iv) Part-time Employee means a person other than a weekly or casual employee who is engaged and paid as such pursuant to clause 12, Part-time Employees.

(vi) Weekly Employee means a person, other than a casual or part-time employee, who is engaged as such and paid as such. 123 Clause 11 of the 1996 Award sets out the payments for casual employees for all ordinary hours worked: 11. Casual Employees (i) For all ordinary hours worked, casual employees shall be paid an hourly rate of pay of one thirty-eighth of the weekly rate prescribed for the classification in which the employee performs his/her work, with a minimum of three hours' pay for each engagement, plus the following loadings: (1) 33 1/3 per cent for casual work Monday to Friday; (2) 50 per cent for casual work on Saturday; (3) 75 per cent for casual work on Sunday; (4) 150 per cent for casual work on public holidays. 124 Clause 12, part-time employees, of the 1996 Award provides that: (iii) Part-time employees shall in respect of ordinary hours of employment be paid at the rate per hour of one thirty-eighth of the prescribed weekly rate for the appropriate classification plus - (a) Monday to Friday - 15 per cent; (b) Saturday - 50 per cent; (c) Sunday - 75 per cent; (d) Public Holidays - 150 per cent. 125 The 1999 Award contains provisions in cl 9 relating to "existing employees" those being employees employed prior to the commencement of this Award in the appropriate category. Any employee changing status (eg casual to full-time) shall be employed under the conditions of Clause 10, new employees. 126 Clause 9.8 of the 1999 Award which relates to existing part-time employees provides that: 9.8.1 Part-time employees shall receive a loading of 15% in addition to the ordinary hourly rate of pay for all ordinary hours worked on Mondays to Fridays inclusive (except for Public Holidays). 127 Clauses 9.14.3 and 9.14.4 of the 1999 Award provide as to existing casual employees: 9.14.3 A casual employee shall receive a loading of 33 1/3% in addition to the ordinary time rate of pay for all ordinary hours worked on Monday to Friday inclusive (except for Public Holidays).

9.14.4 A casual employee shall receive 1/12th of the Monday to Friday casual hourly rate for each hour of ordinary time worked (Monday - Sunday) as a pro rata annual leave entitlement. Such pro rata annual leave shall be paid weekly. 128 For existing employees, cl 9.17, penalties, provides: 9.17.1 An employee whose shift starts before 7.00 am or finishes after 8.00 pm shall be paid an allowance as set out in Item 1 of Table 2 per hour or part thereof with a minimum payment as set out in Item 2 of Table 2. This penalty shall not apply on Saturdays, Sundays or Public Holidays. (Items 1 and 2 of Table 2 set out the respective monetary rates for shift penalty and minimum payment.) 129 Clause 10 of the 1999 Award deals with new casual employees and, in particular, provides: 10.3.3 A casual employee shall receive a loading of 25% in addition to the ordinary time rate of pay for all ordinary hours worked on Monday to Friday inclusive (except for Public Holidays).

10.3.4 A casual employee shall receive 1/12th of the Monday to Friday casual hourly rate for each hour of ordinary time worked (Monday - Sunday) as a pro rata annual leave entitlement. Such pro rata annual leave shall be paid weekly. 130 The 1999 Award deals with weekend and holiday rates differently than did the 1996 Award. 131 Clause 15, Saturday and Sunday, Rates - All Employees, is in the following terms: 15.1.1 All ordinary time worked on Saturdays shall be paid at time and one half.

15.1.2 All ordinary time worked on Sundays shall be paid at time and three quarters. 132 Insofar as is relevant for public holidays, cl 16.1.3 provides, for all employees, that "all time worked on a Public Holiday shall be paid for at the rate of 2 1/2 times the ordinary rate of pay". 133 Clause 2.2, definitions, of the 1999 Award states that: 2.2 The ordinary hourly rate shall mean the appropriate classification rate of the work being done by a full time employee inclusive of the minimum classification rate, supplementary payments and the non-adjustable amount. "Ordinary Pay" 134 As teased out from s 3 of the LSL Act, the definition of "ordinary pay", relevant for consideration in the context of the declarations sought by the RCA, for a worker remunerated wholly in relation to an ordinary time rate of pay (s 3(1)(a) ) means the amount of the worker's ordinary remuneration (s 3(1)(a)(i) ), that ordinary remuneration being the worker's normal weekly number of hours of work calculated at the time rate of pay as fixed by the worker's terms of employment, reduced by any amount payable to that worker in respect of shift work, overtime or other penalty rates ... (s 3(2)(b) ). 135 In essence, the RCA contends that loadings payable under the 1996 and 1999 Awards to casuals and to part-time employees are not part of the employees' ordinary time rate of pay for all ordinary hours worked on Monday to Friday inclusive, but are amounts payable in respect of "other penalty rates" in terms of s 3(2)(b) of the LSL Act. The RCA contends that loadings payable to casuals and part-time employees under the two Awards for work on Saturday, Sunday and public holidays are amounts payable in respect of "shift work" or "other penalty rates" in terms of s 3(2)(b) of the LSL Act. 136 It is in that context that the union's submissions were made as to the alleged deficiencies in the declarations sought by the applicant, in that the applicant has not sought declarations with reference to s 3(1)(b), i.e. the situation where the worker is remunerated otherwise than wholly in relation to an ordinary time rate of pay (s 3(1)(b) ) so fixed by the terms of the workers' employment (s 3(1)(a) ). 137 In Markham (1961 AR at 319), the CICS said: An "ordinary time rate of pay" is a rate of pay fixed for work done on a time basis in ordinary time as distinct from in some special time, such as in overtime hours, or on shift work or on days when a loaded rate is payable. 138 There was no development by the Bench as to the term "loaded rate" and speculation as to its meaning is not a useful exercise. 139 In Brockhoff v Pinkerton and Son ( (1997) 64 SAIR 594 at 620; [1997] SAIRC 52 (31/10/97) at 18) the learned Industrial Magistrate held in the context of the Long Service Leave Act, 1987 (SA) that where the applicant's claim included the 20% loading that he was regularly paid as a casual: Section 8 of the State act prescribes that long service leave is to be paid at the employee's "ordinary weekly rate of pay". I do not think that this provision means to include in that calculation a loading that was, on any view of the matter, specifically related to the fact that the employment was daily or casual, notwithstanding the fact that the applicant did a full week's work at this rate on most weeks, and very nearly so on all the others. I think that the "weekly ordinary time" required by the State act requires me to calculate the long service leave on the applicant's base or unloaded rate, which I calculate to be $380.00 per week (four fifths of the rate claimed by the applicant). 140 That 20% loading was included in the following clause of the Meat Industry Award 1981: A casual employee shall be paid for each hour employed, one-fortieth of the weekly wage prescribed by this Award for the classification employed, plus a loading of 20 per cent for each hour employed. Such loading shall be in lieu of payment for annual leave, sick leave, public holidays, long service leave and compassionate leave . (emphasis that of above decision at 611) 141 There do not seem to be any reasons provided as to why that entire loading was unloaded from the weekly rate of pay the applicant usually received to determine his "base rate". From the emphasis by the Tribunal noted above, it may have been that the Tribunal perceived some possible double dipping of entitlements as to long service leave in the light of the stated purpose of the allowance. The specific clause had been amended in May 1987 to add long service leave to the list of benefits already there. 142 On this issue, the decision in Kezich (131 CLR 362) does not assist the applicant as to principle. The High Court (Menzies, Gibbs, Stephen and Mason JJ) in that case had before it for consideration a provision of the Workers' Compensation Act, 1912 - 1973 (WA). That provision in the Schedule to the Act was that: For the purposes of this Act, 'weekly earnings' means the amount of the ordinary wage or salary (including any over award payment) the worker would have received for the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury. 143 The relevant award under which the appellant worked fixed ordinary hours at 40 per week, worked over five days. At the time he was injured at work the appellant normally worked 60 hours per week, over 6 days. The appellant was remunerated: … as to forty hours at the ordinary rate and as to varying hours at a rate equal to time and a half, double time, and double time and a half, in accordance with the provisions of the award as to overtime.

It is conceded that the amount of $167.50 should be accepted as the amount ordinarily earned by the applicant in the employment of the respondent prior to the accident. (at p 367) 144 The Workers' Compensation Board (WA) had awarded him the amount ($167.50 per week) which was the amount he ordinarily earned under that 60hpw/6 days arrangement prior to the accident. On appeal, the majority of the Full Court of the Supreme Court of Western Australia held he could not receive more than $91.40, the pay he would have received if he had worked 40 hours per week. 145 The decision of Gibbs J, with which Menzies J and Stephen J agreed, makes it clear that the ordinary rate of pay in that case was not the unloaded rate: the weekly amount the appellant was found entitled to receive included overtime (at p 365). 146 In a separate judgment, Mason J agreed with the other members of the Bench, but expounded on the different constructions placed on the word "ordinary" in the relevant schedule. The approach of the respondent had been to read the word "ordinary" in the expression "ordinary hours that he would have worked" as referring to hours which attract no additional payment, i.e. for which overtime was not payable; it thereby avoided the conversion from "ordinary" to "ordinarily", as in the applicant's approach. In rejecting the respondent's approach, Mason J said: This approach [of the respondent] has the attraction of providing a measure of compensation easily calculated when the worker is working the ordinary hours each week under an industrial award. It is, however, a very different story when one moves away from this routine situation.

Special problems arise in the case of a casual or shift worker whose hours of work are remunerated otherwise than by reference to the ordinary rate of pay. Assuming that such a worker intended to continue casual or shift work it could not be said that, if he were not incapacitated, he would have worked any "ordinary hours" in the sense which the respondent gives to that expression. An endeavour was made to vault this yawning chasm by saying that the hours which would have been worked not exceeding the number in a week stipulated in the award should be treated as ordinary hours. However, there is no warrant for this course in the basic interpretation put forward by the respondent.

Faced with a choice between the two alternatives I prefer that advocated by the applicant. It is subject to grammatical criticism, but this so it seems to me is of less importance than the serious criticism that the competing construction does not enable one to calculate compensation for certain classes of workers, except by deserting that construction when that difficulty arises. 147 In my consideration of Kezich I have it in mind that the LSL Act (NSW) expressly excludes overtime from being taken into account as part of "ordinary pay" (s 3(1) and (2) ). 148 In the event of ambiguity in the terms of a statute, the Court may consider Hansard, and in particular the speech made to Parliament by a Minister on the occasion of the moving by that Minister, of a motion that the Bill for the Act be read a second time in that House (Interpretation Act 1987, s 34(2)(f) ) in order to determine the mischief that Parliament, in enacting the relevant piece of legislation, was seeking to remedy. 149 The Interpretation Act 1987 by s 34(2)(h) also provides that consideration may be given to "any relevant material in the Minutes of Proceedings or the Votes and Proceedings of either House of Parliament or in any official record of debates in Parliament or either House of Parliament". 150 Section 2(1)(a) of the LSL (Amendment) Act 1963 amended the Act to provide that in respect of "ordinary time rate of pay" and "average weekly wage" that those rates "do not include any amount payable to him in respect of shift work, overtime or other penalty rates". 151 In the course of moving on 20 March 1963 in the Legislative Assembly (at pages 3568-3569) that the Long Service Leave (Amendment) Bill be read a second time, Mr Landa, Minister for Housing and Minister for Co-operative Societies, explained: In 1955, during my second-reading speech on the Long Service Leave Bill, I expressed very clearly what the Government intended the term "ordinary pay" to mean. I stated that the Government's intention was for long-service leave granted by the bill to be taken by an employee at the rate of pay applicable to his employment at the time he enters upon the leave. I mention that the employee's rate of pay may include payments by way of commission and other over-award payments and stated that the definition was wide enough to include part-time workers and piece-workers and persons such as commercial travellers operating on a commission basis.

When the bill was introduced in another place the Government's intention was again made clear by the Minister responsible for the bill. In his second-reading speech the Minister stated that the definition of ordinary pay would ensure that persons normally covered by awards would receive the same rate of pay in respect of long-service leave as they normally received when in employment. It is quite clear from these statements that in calculating the value of long-service leave it was intended that such value be determined by relation to the workers' actual rate of pay. This concept of the meaning of the term ordinary pay was followed by the Industrial Commission in various cases of which, perhaps, the best known is Brain v Goodyear Tyre and Rubber (Aust.) Ltd. Reported in 1959 Arbitration Reports, at page 643.

The commission held that "ordinary pay in section 4 of the Act means the actual pay which a worker is entitled to be paid for his normal weekly number of hours." The worker concerned - Mr Brain - was substantially a piece-worker and since completing his period of training as a learner some twenty-four years prior to the case he had always received higher wages under the piece-work or task system than the rate prescribed by the award. The commission determined that he should be paid long-service leave calculated at the average weekly wage earned by him during the period of twelve months immediately preceding the date on which he entered on long-service leave.

In the same reported decision the case of Robinson v Goodyear Tyre and Rubber Co. (Aust.) Ltd was determined. The worker Robinson was a storeman and under a company scheme he received a rate of pay which was always in excess of the award rate and was stated to be related to the effort he put into his work. In this case also the Industrial Commission held that Robinson was entitled to have his long-service leave calculated on the basis of the pay he actually received.

In June 1962, however, in Lake George Mining Co. Pty Limited v Burton [1962 AR 170] the Industrial Commission took a different view as to the meaning of the term "ordinary pay". The commission reviewed Brian's and Robinson's cases and considered that although the judgment in Robinson's case was correct the decision given in Brain's case was incorrect. As regards Brain's case, the commission considered that as his work was identifiable with a classification in the award, his long-service leave payment should be calculated at the ordinary time rate fixed in the award and not related to his average weekly earnings. The anomalous position now exists that the permanent employee who receives a fixed over-award weekly payment receives long-service leave on his actual rate of pay, and on the other hand a piece-worker who regularly receives payments in excess of a time rate of pay in the award for the occupation, does not.

It has always been the legislature's intention that payment for long-service leave should be calculated at the worker's actual rate of pay. To clarify the position it is proposed that the definition of the term "ordinary pay" as given in subsection (2) of section 3 of the present Act be deleted and its place taken by paragraphs contained in clause 2(1)(a) of the bill under consideration. 152 Extracts from the further debate that occurred at pages 3630 and 3631 on 21 March 1963 in the Assembly are set out below: Mr WILLIS (Earlwood) [2.30]: I want to make a brief comment on the phrase used in the definition of ordinary time rate of pay. The bill states that this does not include any amount payable for shift work, overtime or other penalty rates. During the second-reading debate several hon. Members raised some doubts on this definition.

The Minister might give the Committee the benefit of his views on the meaning of "other penalty rates". It is obvious that some penalty rates would be excluded by such a definition. Their meaning would be quite clear; the meaning of others would not. The Minister might inform the Committee why the definition is phrased in that way. We on this side are in some doubt whether this clarifies the position or leaves it as difficult as it was. It might lead to litigation of the type that the Government claims to be trying to avoid.

Mr LANDA (Bondi), Minister for Housing and Minister for Co-operative Societies, Acting Chief Secretary and Acting Minister for Tourist Activities [2.32]: It is clear that no matter how well a bill is drafted litigation cannot be avoided. The Government tried to make some matters clear in the 1955 legislation and I spoke about what the clause meant. However, the courts have interpreted it differently. This provision may be interpreted differently from what the Government intends. This definition of "other penalty rates" might be the time and a half, or double time, that transport workers are paid when they work on a Sunday. It need not necessarily be overtime. The definition is intended to cover that. It is hoped that the courts will interpret the definition in that way.

Mr WILLIS (Earlwood) [2.33]: Will the Minister say what happens to the man who receives a permanent penalty rate for working in wet or dirty conditions? He receives a rate as a loading on his regular wages - a kind of permanent penalty rate for working in those conditions. If he did this work only once in a while, it would not apply, but if he did this work regularly some doubt might arise in view of the phrasing of the definition.

Mr WILLIS: I agree; but as the definition is drafted I do not think it would be included. Often these loadings are included in the award as penalty rates. If they are termed penalty rates in the award, they may well be excluded from the rate of pay by the definition.

Mr LANDA … I have referred to the officers in charge of the bill and they tell me - I believe they are correct in this - that when a man works in wet or dirty conditions the extra pay given for that type of conditions is a condition of his work and part of his regular wage. It may be called a penalty by some but in the courts it is not deemed to be a penalty rate. It is conditional pay for the type of work that the man is doing. 153 The last word on the issue may rest with Mr Willis (Earlwood) who, in the debate on that same Bill said on 20 March 1963 in the Legislative Assembly at pages 3587-3588 in relation to the definition of "ordinary rates of pay": … my colleagues and I are sympathetic with anyone who tries to define ordinary rates of pay; it must be almost indefinable because there is such a variety of methods of payment. 154 Prior to the 1963 amendment, s 3(1) of the LSL Act 1955 in defining "ordinary pay" specified remuneration for the worker's normal weekly hours of work calculated at his ordinary time rate of pay plus the cash value of board and lodging if that was supplied. There were no exclusions eg of penalty rates. 155 As the extract from Hansard set out above shows, Mr Landa had, in relation to the introduction of the 1955 legislation, described at that time what he understood the clause "ordinary pay" to mean rather than what "other penalty rates" meant. That understanding is set out in the following extract from Hansard (Assembly, 20/10/55 at 1182): I come now to the definition "ordinary pay". This is important as it shows what the worker will be entitled to at the time he takes his long service leave. The definition "ordinary pay", which is included in the bill is similar to that contained in the Annual Holidays Act. The intention of this definition is to provide that the long service leave granted by the bill will be taken by an employee at the rate of pay applicable to his employment at the time he enters upon the leave. This may include payments by way of commission and other over-award payments. In case of persons normally covered by awards the definition will ensure that such persons shall receive the same rate of pay in respect of long service leave as they normally receive when in employment. The definition is wide enough to include part-time workers and pieceworkers.

In the case of part-time workers and pieceworkers the ordinary pay shall be deemed to be the average weekly rate earned by them during the period of twelve months immediately preceding the date on which they enter upon their period of long service leave. 156 The intention of the LSL Act is to benefit employees. In my view, a general reading of the Act overall manifests an intention that an employee, entering on a period of long service leave, shall not, for the period of that leave, be financially disadvantaged when or as compared with moneys actually received for the 38 hours of work per week (or whatever other period) that constitutes the employee's ordinary weekly hours of work, or to use the approach of Mason J in Kezich, the hours the employee "ordinarily" worked each week. 157 My view of "ordinary time rate of pay" in the terms of the definition of "ordinary pay" as set out in s3(1) of the LSL Act, is fortified by examination of other factors that definition prescribes to be taken into account: bonuses (para (c) ) and board and lodging cash value (para (d) ). 158 I must say, however, that in trying to determine what is "ordinary pay" for the purposes of the legislation, I have not found of assistance the long standing legislative precept that, in the determination of "ordinary pay" for the purposes of the LSL Act, amounts payable to an employee in respect of shift work are not to be taken into account. That difficulty is compounded by the statements to be found in the extracts from Hansard set out earlier that it had always been the legislature's intention that payment for long service leave should be calculated at the worker's actual rate of pay (Hansard, Assembly, 20/3/63, pp 3568-3569). For workers in areas such as hospitals, public utilities, or industries necessarily running during 24 hours a day, not to take shift rates into account for the purpose of long service leave, would seem to have the result that such workers would not be receiving the actual rate of pay applicable at the time they entered upon their leave. 159 What I take from the decisions considered earlier and from the terms of s 3 of the LSL Act itself, is that the "ordinary pay" of employees entering into long service leave is not restricted to base rates of pay but may contain other elements, apart from those specifically excluded by the legislation. 160 The question to be determined is whether casual and part time loadings as provided for in the 1996 and 1999 Awards are elements of "ordinary pay" payable to casuals and part-timers on taking long service leave, or whether they are to be categorised as payments for shift work and/or "other penalty rates" so as to reduce the amount of "ordinary pay" due to a casual or part-time employee entering upon long service leave. 161 In determining whether the declarations sought by the RCA should be made, I shall consider separately the situation of loadings paid to casual employees and to part-time employees and their relationship to "ordinary pay" as defined in the LSL Act. 162 However, prior to doing that, I turn to the situation of shift work in these Awards, in the first instance in relation to work on Monday to Friday, and, secondly, as to work on weekends and public holidays. That approach is consistent with the terms of s 3 and as adopted in relevant cases considering penalty rates, in which questions as to weekend penalty rates and as to shift allowances have been regarded as, and dealt with, as two separate issues. That includes the Weekend Penalty Rates Case and the Shift Workers Case. It was said in the latter (at 654): WEEKEND PENALTY RATES FOR SHIFT WORKERS

Two issues arise here. The first is the quantum of these rates on Saturdays and Sundays and the second is whether or not such rates should be cumulative on shift allowances. Shift Work - Monday to Friday 163 The following clause applying to existing casual employees is to be found in the 1999 Award: 9.5 PENALTY PAYMENTS

9.5.1 These penalties do not apply on Saturdays, Sundays or Public Holidays.

9.5.2 SHIFT PENALTY An employee whose shift starts before 7:00am or finishes after 8:00pm shall be paid an allowance as set out in Item 1 of Table 2 per hour or part thereof with a minimum payment as set out in Item 2 of Table 2.

9.5.3 BROKEN SHIFT PENALTY An employee, who is required to work a shift where an interval(s) of more than one hour in the aggregate unpaid time occurs between the starting and finishing times of the shift, shall be paid a penalty as set out in Item 3 of Table 2.

9.5.4 NIGHT SHIFT PENALTY i) Where an employee works a shift which falls totally between 11:00pm and 8:00am, the employee shall be paid a penalty as set out in Item 4 of Table 2. ii) Instead of the meal period prescribed by Clause 9.6.2, the employee shall receive a paid 20 minute crib break. 164 A similar clause in the 1999 Award, but lacking reference to the "broken shift" penalty, relating to existing part-time employees, is contained in cl 9.11, penalties, for existing part-time employees. 165 Essentially, cl 9.5 and cl 9.11 of the 1999 Award replicate the provisions of the 1996 Award in cl 6, Hours, Section A - Standard Hours, paras (vii), (viii) and (ix) (292 IG 582 at 587). 166 The terms "penalty" and "shift rates" were considered in the Weekend Penalty Rates Case because such consideration was vital to a determination of the extent of the Court's powers under the National Security Regulations to be able to deal with applications before it for increases in rates of pay for work at weekends. Those applications while they involved, in the main, shift workers, were not so limited and extended to claims for work done on Saturdays and Sundays by day workers. 167 The power of the Commonwealth Court of Conciliation and Arbitration under the relevant Regulations was only to "adjust" existing penalty rates or shift rates. In a majority judgment, Drake - Brockman ACJ and Sugerman J, concluded (at 614 - 615) that the two phrases "penalty rates" and "shift rates" in the Regulation had the meaning that they included the whole amount payable in given circumstances and not merely the excess of that amount over ordinary rates: … "shift rates" are the rates at which shift work is remunerated, and "penalty rates" are the rates at which work done under conditions requiring the imposition of a penalty rate is remunerated.

[They then went on to consider "Penalty Rates" under that heading for a further two pages.] 168 On this point, Kelly J was not in dissent. He said that: There can be no controversy about the meaning of the phrase "shift rates" as used in the regulation. The phrase relates to the rates of remuneration prescribed for workers employed on shifts. 169 As already mentioned, the problem facing the Court in the Weekend Penalty Rates Case was that, by the terms of Regulation 18(3), the Court's power was only to "adjust" existing penalty rates and shift rates. 170 On that basis, and having discussed "penalty rates" as set out earlier, Drake-Brockman ACJ and Sugerman J, in relation to the claim for increased rates for work done on Sunday concluded (at p 620): We have power to deal with this claim so far as concerns shift workers as to all the awards in question. The rate involved is a "shift rate"" within the meaning of Regulation 18 (3), although, for the same reasons as those mentioned in connexion with Saturday work, it is not, as regards work not done in overtime, a "penalty rate".

With respect to day workers a distinction must be drawn between work done in overtime and work not done in overtime. With respect to the former the rate in question is a "penalty rate" and therefore within Regulation 18 (3); with respect to the latter it is not a "penalty rate" and is therefore not within Regulation 18 (3). 171 That statement, in my view, not only provides a concrete example of the working out of the principles as to "penalty rates" set out by them in that decision, but also clearly differentiates a "shift rate" from a "penalty" rate, a differentiation, of course, also made in the LSL Act. 172 The shift penalty payments prescribed in both the 1996 and the 1999 Awards do not apply on Saturdays, Sundays or public holidays. Those payments are for specific money amounts set out in the Wages/Allowances Table in each of the Awards. There is no suggestion in the Awards that such payments are in any way connected with either the casual or part-time allowances, either in lieu of or in addition to. The contention by the union that there is little evidence of shiftwork operating in these Awards at all was not disputed by the applicant. 173 There is nothing to suggest that either casual or part-time loadings payable under the 1996 and/or 1999 Awards are amounts payable in respect of "shift work". Indeed, the restructured 1999 Award would indicate to the contrary. The provisions of the 1996 and the 1999 Awards as to shift penalties for both casual and part-time employees remain in essence the same. However, the 1999 Award no longer provides for a loading for part-time work, other than for "existing" employees, but maintains the shift penalty for part-time employees. 174 I find that casual and part-time loadings payable under the 1996 and/or the 1999 Awards are not amounts payable in respect of "shift work" for the purpose of s 3(2)(b) of the LSL Act. Shift Work - Weekend/Holiday Rates 175 The only payments specifically designated in the Awards as "penalty" payments are the "shift" penalties applying to casual and part-time employees working Monday to Friday. Those payments have been considered above. However, the RCA also claims that loadings paid to casual and part-time employees on Saturday, Sunday and public holidays are amounts payable in respect of "shift work" or "other penalty rates" for the purpose of s 3(2)(b) of the LSL Act. 176 Although expressed differently in the 1996 and the 1999 Awards, the following loadings are payable to both casual and part-time employees for work on weekends and public holidays: Saturday: 50% Sunday: 75% Public Holidays: 150% 177 One outcome of the Shift Workers Case 1972 was that the standard of weekend penalty rates was raised by the adoption as a general minimum standard of time and a half for Saturdays and time and three-quarters for Sundays. It was said (at p 655): While it is true that the Saturday and Sunday penalty rates are fixed for reasons other than those which are the basis of shift allowances and that the shift worker on a Saturday and Sunday has his shift work disabilities as well as those specifically relating to working on those days, we have taken these matters into account in arriving at the new standards. We think that they have always been taken into account in the past when the weekend penalty rates have been made non-cumulative on shift allowances. Accordingly shift allowances will not be payable in addition to the weekend rates. 178 As already noted in relation to the discussion of the rates actually designated as "penalty" rates for shift work in the Awards, the RCA did not dissent from the union's proposition that there was little evidence of shiftwork operating in these Awards. There was none before the Commission in these proceedings. 179 The fact that loadings paid to casual, and to part-time, employees pursuant to the 1996 and the 1999 Awards are identical to the weekend and public holiday penalty rates for shift workers awarded in the Shift Workers Case 1972 does not, of itself, make those loadings amounts payable in respect of "shift work", as was submitted by the RCA. I find that they are not. Whether such rates are "penalty rates" is a different matter. Penalty Rates LSL Act - s 3: "Overtime" 180 The only penalty rate specifically mentioned in the definition of "ordinary pay" (s 3) in the LSL Act as an exclusion is overtime. (For the reasons set out earlier I deal with the term "penalty rates" separately from that of "any amounts … payable in respect of shift work.") 181 What are the characteristics of overtime that would assist in a determination of what "other penalty rates" might be? 182 The Industrial Arbitration Act 1940 (the 1940 Act) provided that overtime in any industry "may be permitted by the terms of any award or agreement" (s 66). However, notwithstanding the existence of such terms, the Commission could "for the purpose of distributing the work available in the industry so as to relieve unemployment or for any other purpose which appears … to be good and sufficient", prohibit or restrict to any extent the working of overtime (s 67). (According to comparative tables attached to the Industrial Relations Act 1991, this section was not carried over.) 183 The concept of overtime has been considered by industrial tribunals on many occasions, as can be seen from the extracts of decisions set out below: 184 In In re Steel Works Employees (Broken Hill Pty Co Ltd) Award [1936 AR 155 at 157] in dealing with an application by the company, the granting of which would make certain 6 day shift workers, 7 day shift workers, the judgment of the Full Bench included the following statement by Browne, J, President: I proceed therefore to deal with the question of the working of those mills regularly on Sundays in addition to working them ordinary working hours on week days. It seems to me that the present system of working systematic overtime renders the standard 44 hour week merely a farce. It is only playing with words to claim that the law provides a standard 44 hour week if regular overtime, systematic overtime, may in addition be worked on Sunday, so that in place of working 44 hours a week, or 88 hours a fortnight, employees regularly work as much as 104 hours in the fortnight, or an average of 52 hours a week. I regard such a system of systematic working of overtime as most pernicious, and in fact there is nobody who seems to advocate it here before the Commission at the present time. The company wishes to get rid of it, and the employees also claim that they have strong objection too. In those circumstances I think it should be forbidden. 185 In In Re Metalliferous Miners, etc, General (State) No 2 Conciliation Committee [1940 AR 249 at 255] Cantor J said: It is from every point of view undesirable that men should be called upon regularly to work overtime. I take the point of view that, if practicable, an award should be framed in such a manner as to secure a full working period for each man, but no more, and so bring it about that employment is available to the largest number of men possible. Unless special circumstances exist, the working of systematic overtime should always be discouraged. 186 In In re Steel Works Employees (Broken Hill Pty Co Ltd) and other Awards [1948 AR 544] (Taylor J, President, Cantor and Kinsella JJ), Kinsella J agreed with an overtime clause proposed by Cantor J but then stressed: I wish to make it clear, however, that I am not prepared to concede to any employer a right to compel his employees regularly to work overtime, and thus to extend the working week, which the Legislature has decreed to be normally of forty hours by adding an undefined number of hours and paying an overtime rate for them. The employees are entitled as of right, under the law of the State to have their employment based on a working week of forty hours. The fact that an employer may, with advantage to his business (or industry) require them to work for longer hours even at a higher hourly rate of pay does not in itself constitute a "reasonable need of the industry."

Cantor J has found as a fact in previous proceedings that in the case of the Company and of Australian Iron and Steel Ltd, that the policy of the employer is to avoid overtime.

In respect of compulsory overtime on Sundays and holidays which the clause provides for, I think that the right of the Company must be used very sparingly and that no employee should be compelled against his will, except for really cogent reasons to give up his Sunday to work which is not within the normal range of his employment. 187 In In re Iron & Steel Works Employees (Australian Iron & Steel Limited-Port Kembla) Award [1957 AR 429 at 444], a Full Bench of the then Industrial Commission stated: For many years the Legislature has concerned itself to limit the number of ordinary hours to be worked by employees over a weekly, fortnightly or monthly period and this Commission has always discouraged attempts to extend those hours by the working of regular overtime. As early as 1936 the President of the Commission ( Browne , J) in In re Steel Works Employees (Broken Hill Proprietary Company Limited) Award (1936 AR 155 at p 157) said:- [quotation set out earlier at para 184]. 188 It should also be noted that the above was a case in which the employees did not always see eye to eye with the Legislature on the matter of overtime as being an evil to be abated as much as possible. It was said by the Bench (at p 444): … we think that the fact that employees have become accustomed to working regular overtime does not provide a reasonable cause for their refusing to transfer to a system of working which will tend to eliminate the working of hours in excess of forty per week. (The new system of work, in reducing overtime worked, had the effect of reducing earnings.) 189 In The Metal Industries Association of South Australia v The Federated Moulders (Metals) Union of Australia ( (1963-64) 105 CAR 1015 at 1016), the Commonwealth Industrial Court (Spicer CJ and Eggleston J) had occasion to deal with a dispute involving the refusal of employees to work overtime. The MIA(SA) sought an order that would prevent the Union from directing its members not to work that overtime. In declining to make the order sought, Spicer CJ, with whom Eggleston J agreed, said: The circumstances, putting them shortly, in which the dispute in relation to this matter has arisen, are that the Hercus Manufacturing Company at present seeks to carry on its establishment on the basis that the moulders - 9 or 10 moulders engaged at the factory - are required to work, for an indefinite period apparently, 11 hours' overtime per week, and the effect - the practical effect at any rate - of the order which the Association seeks would be to prevent the Union from encouraging or directing its men not to work that amount of overtime.

It has been demonstrated, I think, in the cross-examination of the manager of the factory that the circumstances in which it has been found necessary to call upon the employees to work this amount of overtime are circumstances which the company has chosen not to meet in other ways. It seems to me on the evidence that the necessity for working this amount of overtime could be avoided - could have been avoided - by the company employing other methods of operation and by the use of its staff in ways other than those which in fact it has adopted. 190 In considering a notification by Australian Iron and Steel Pty Ltd under s 7 of the Employment Protection Act 1983, (unreported; 83/24; 14/1/83), Fisher P, in circumstances where a meeting of AI&S employees had voted for a preference to continue working overtime rather than abolish the overtime and re-distribute the work in favour of the retention in employment of 108 of their fellow workers threatened with retrenchment, said: I consider that the decision to prefer overtime to fellow unionists' employment is so contrary to the public interest that it should not be permitted to stand. 191 Some of the cases mentioned above are concerned with overtime per se and, others particularly in the steel industry, with overtime worked at the weekend. It can be seen from those cases that the issue of overtime has dimensions of public interest that give it an intensity not to be found to the same degree in many of the other workplace circumstances which require compensation for the employees affected. Compensation for overtime has underpinning it society's disapprobation of its being worked at all, it being seen not only as undermining the hard fought right to shorter hours enshrined in legislation but also as inimical to the fair sharing of employment opportunities. 192 It was also recognised in those cases and in the legislation (the 1940 Act, s 66) that there were circumstances where, although it was to be discouraged, the working of overtime would take place, and, indeed, might be necessary. The rates struck to compensate for working that overtime were aimed, not only to compensate the employees, but also to discourage management practices that were regarded as being subversive of public policy and of the public interest. 193 The working of overtime would appear to represent the essence of what the legislature sees as representative of situations in the workplace which call for "penalty" rates i.e. in respect of overtime, to call for rates which are primarily intended to discourage employers calling on employees to work overtime, other than for the most cogent reasons, and, if overtime must be worked, to suitably compensate the employees. 194 Those are the penalty rates specifically nominated by the legislature as not to be taken into account as "ordinary pay" in terms of s 3 of the LSL Act. They are rates whose primary purpose is deterrence against employers' activities that may impinge adversely on employees as individuals or as groups. The compensatory factor is secondary, and a punitive component dominant. Penalty Rates - General 195 In the Club Employees Award 1999, the only allowances specifically described as "penalty payments" are those in cl 9.5. They relate to the shift penalty for existing casual and part-time employees. Although cl 9.5 is headed "Shift Penalty", cl 9.5.2 refers to "allowance" to be paid. By way of contrast, cl 9.5.3, broken shift penalty, and cl 9.5.4, night shift penalty, provide employees shall be paid "a penalty". (This clause has been earlier considered in detail under the heading "Shift Work - Monday to Friday".) 196 There is a mixture of terms used in other clauses of the 1999 Award: existing part-time employees shall be paid a "loading" of 15% (cl 9.8.1); existing casual employees shall be paid a "loading" of 33 1/3% (cl 9.14.3); a new casual employee shall receive a "loading" of 25% (cl 10.3.3), and cl 9.17.1, penalties, provides that an employee whose shift starts before 7.00 am or finishes after 8.00 pm (c/f cl 9.5.2) shall be paid an "allowance", and that this "penalty" shall not apply on weekends or public holidays. However, as can be seen by reference to cl 12(iii) of the 1996 Award relating to part-time employees, the additional amounts to be paid to such employees for weekdays, weekends and public holidays are not described at all: it is provided that the employees shall be paid a rate plus a nominated percentage. 197 The RCA relied on a number of decisions as to the meanings of "loadings", "penalty rates" and various permutations of those terms to support its submissions that casual and part-time loadings payable under the Awards are "penalty" rates, referring to decisions such as that of Macken J in In re Shop Employees (State) Award (No 2) (1977 AR 555 at 575) in which the terms "penalty rates" and "loadings" are used interchangeably. 198 Before I consider the decisions relied upon, I note that the applicant tendered, over objection, in support of its submissions, a document published by the New South Wales Department of Industrial Relations and Employment entitled Part time and Casual Work (Information Paper No 5, May 1988). Mr Murphy described it as a survey document produced by the Department concerning the issue of part-time and casual work, and submitted the Commission could have regard to it in its consideration of the term "other penalty rates". In my view, that document did not provide assistance to the Commission additional to the direct reference to the authorities relied upon by the parties. 199 In In re Clerks (Sydney Daily Newspapers) Award [1961 AR 529 at 537] Kelleher J said: It is generally recognised that casual employees should receive some extra compensation for the disabilities associated with the intermittent nature of their employment and a guranteed [sic] minimum payment for each engagement. The loadings vary in particular awards and in an appreciable number of cases the average appears to be in the vicinity of twelve and a half per cent , although higher rates are provided in other cases. The general standard applicable in the clerical industry is fifty per cent but this rate appears to be more in the nature of a deterrent rather than a true assessment of the compensation called for by the factors involved. Casual work is a necessary incident of the newspaper industry and the employers should not be called upon to pay more than what is a reasonable sum in the circumstances.

I am not prepared to award an extra payment as high as fifty per cent with a minimum of a day's pay for each start, I think that the circumstances in this industry warrant an extra loading of twenty per cent … 200 It would seem that, in that case, while referring to "loadings", Kelleher J had unloaded by 30% the loading of 50% sought by the union, that 30% being attributable to deterrence, or, in other words, penalty. The 20% loading that was awarded was compensation for disabilities attached to the nature of the employment. 201 In the Watchmen etc Award (1965 AR 268), Taylor J, President was faced with the problem of setting margins and loadings for casual watchmen and for cleaners working part-time, the latter of whom were employed, on the one hand, by large cleaning companies, and, on the other, by very small employers, such as a local shop. 202 He was concerned that, on the evidence, there was, in the case of some employers, a quite undue number of part-time and casual employees engaged. In relation to casuals he said that that seemed to him to be an undesirable feature of the industry. In relation to the part-time employees, he said: On the one hand, I think the Commission must set its face against a growing tendency to conduct a business with part-time employees only. On the other hand, care must be taken to ensure that where part-time employees are genuinely necessary, the employer is not penalized. 203 In the case of the casual watchmen he addressed the problem by awarding them the same margin, "shift allowances and week-end penalty rates as provided for weekly watchmen" and providing that they would "also be entitled as at present to a loading of 10 per cent of the basic wage and margin for the casual nature of their employment." (at p 279). 204 Discussing part-time work, Taylor J said (at p 283): As I have already indicated the number of part-time employees engaged in certain parts of the industry is one which causes concern. So far as the employer with a small establishment or the employer with a number of small establishments such as the banking companies are concerned, I think provision should be made for part-time employment; but I think it proper that the rate fixed should be somewhat higher than that fixed for the full time employee. Female cleaners working part-time receive an additional rate which is approximately 8 per cent of their margin. It must be remembered this is a loaded margin. The other awards to which I have been referred provide varying percentages for part-time employees ranging up as high as 25 per cent . In some respects the part-time employee here is the equivalent of the casual under the watchmen's section of the award, and in all the circumstances I think part-time cleaners' wages should be loaded to the extent of 10 per cent . This should apply to employees of employers who employ at one establishment not more than two part-time cleaners. Such a provision will allow the employer who has only work for one part-time employee, such as a small shopkeeper, to continue to employ the part-time employee and will also allow an employer such as a banking company to employ a part-time cleaner in a branch. I think a different provision is necessary in the case of the employers of very large bodies of cleaners who now, it seems, are employing, almost solely, part-time labour; and in their case I think the wage should carry a loading of 20 per cent which will compensate the part-time employee for the fact that full time employment is not given him and will, in addition, serve to discourage the unnecessary organization of a business by using part time labour only. 205 From that decision it can be seen that the 20 per cent loading for employees of the large employers included 10 per cent as compensation to the employee, (by the reference to the casual watchmen) for the nature of his/her employment and an additional 10 per cent penalty to discourage the use of part-time labour only. The smaller employer paid only the 10 per cent loading. 206 The additional 10 per cent paid by the larger employers would appear to be a true penalty rate. Its existence emphasises the problems in trying to ascertain what are "penalty" rates for the purpose of s 3(2)(b) of the LSL Act. Different rates in respect of the same employment circumstances were to be paid to employees in the same classifications within the same award, dependent upon the size of their employer's business. 207 An example of where the terms "penalty rates" and "loading" were used in relation to the same rate was in In re Shop Employees (State) Award (No 2) [1977 AR 555 at 575] under the heading "Penalty rates for casual employees" where Macken J considered a union application for an increase in the loading for casual employees. The unions had argued: a 15 per cent loading was calculated to reimburse the casual employee for loss of certain of the advantages of permanent employment (eg, annual leave, long service leave and sick leave), and because it contains no element of deterrent to the employment of casuals it does not in any way protect weekly employees against encroachment on their employment by casuals. 208 The union's arguments were rejected on the basis that to increase the loading from 15 per cent to 33 1/3 per cent as sought would, far from acting as a deterrent, make the situation worse and not better, in that it would encourage the employment of casual juniors at a younger age, as employers simply ceased to employ older juniors because of the increased cost of those older juniors. 209 In Re Rates of Pay for Work Performed on Saturdays and Sundays ( (1947) 58 CAR 609 at 615), Drake - Brockman ACJ and Sugerman J, said: "Penalty rate" is not a term of art. It is used by those skilled in industrial law in widely divergent meanings. Usually an award provides for an ordinary rate of remuneration, payable for the ordinary work of a standard period performed under normal conditions, and for additional amounts to be paid where work is done under special conditions of time, place or circumstance. In one sense the use of the term "penalty" as applied to such additional amounts is a misnomer, there is no question of punishment about the matter. But in another sense it expresses accurately enough the operation of the requirement of additional payment as, inter alia , a deterrent against calling upon employees to work in the circumstances in which the additional payment is required to be made. Most, if not all, of such requirements combine the element of compensation with that of deterrence. In some cases the one element predominates; in other cases the other; while in yet other cases there is no marked predominance of either. Those skilled in industrial law use the term "penalty rates" in senses ranging from that which includes all such forms of additional remuneration to that which includes only those in which the element of deterrence appears to the exclusion, or almost to the exclusion, of the element of compensation - principally, if not solely, the extremely high rates sometimes imposed by way of deterring from work on Sunday in certain industries.

A similar diversity of usage is to be found in the awards of this Court. Some awards do not use the term "penalty rates" at all, although containing provisions for rates similar in amount to those which in other awards are referred to as penalty rates and required to be paid in similar circumstances. Awards and judgments which use the phrase do so in widely differing meanings.

Attempts to determine the matter by reference to the intention of the industrial authority by which the award or determination was made must, in most cases, fail. There is a great number of such authorities and their practices vary as to whether or not reasons are stated when making a determination or award and as to the degree of completeness with which such reasons are stated. Any many awards originate in the agreement of the parties.

It was suggested in argument that the matter may be determined objectively rather than subjectively, i.e. by an enquiry, as a question of fact, into the operation and effect of the provision rather than into the intention of its author. But such a method must fail in the absence of some general test to determine what is and what is not a penalty rate. And if a test is capable of formulation, its application may be found to involve no enquiry other than an examination of the terms of the award or determination itself.

Such a test, and a satisfactory one, may, we think, be found. If an award contains a prescription of conditions to be observed by the parties and goes on to provide for payments higher than normal to be made for work done outside the prescribed conditions, those payments may properly be regarded as "penalty rates". There are then both the express prescription of a normal course of conduct and the provision of a deterrent against infringing that prescription which, apart from special usages, are ordinarily involved in the idea of a "penalty". But if the award merely permits work to be done under varying conditions at varying rates, and there is no prescription of what is intended to be normal, rates of work done under some conditions are not to be said to be "penalty rates" merely because they are higher than rates for work done under other conditions. Thus, having regard to the usual framework of awards, rates for overtime will always, or almost always, be penalty rates, but additional rates, e.g. for work done in the wet or in great heat or great cold or confined spaces, will not generally be "penalty rates". Nor will rates payable for shift work, i.e. where the award provides the alternatives of working standard hours either within a fixed spread of hours or on shifts, either generally or under specified conditions. In effect, "penalty rates" on this view would be confined to overtime rates, although it may extend to some others. 210 In a separate judgment, Kelly J said: Some discussion has occurred, however, as to the proper meaning to be given to the phrase "penalty rates". I agree that the phrase cannot be construed as meaning all rates so described in awards, determinations or agreements. I regard as "penalty rates" rates which have been prescribed for work not found to be normally incidental to or necessary in the industry in respect of which an award is made. When such work is not found to be normally incidental to or necessary in that industry, it becomes a subject prima facie appropriate for discouragement or deterrence. The discouraging or deterring minimum rates prescribed therefore are penalty rates. As I understand the remarks of my brother judges, this is the view they also take of the meaning to be given to the phrase. (at p 633) 211 Contrary to the submission by counsel for the RCA, that the Weekend Penalty Rates Case had taken far too narrow a view of what constitutes a "penalty" rate and has perhaps not been followed elsewhere in the industrial jurisdictions, that case had a deep impact on industrial regulation in New South Wales. It was noted (at p 654) in the Shift Workers Case: In 1950 a Full Bench of the Commission laid down as a general standard that the appropriate allowances are time and a quarter for Saturday work and time and a half for Sunday work, in each case not cumulative on shift allowances ( Shell Case ) [1950 AR 260]. This was the same standard as had been awarded not long before by the Commonwealth Court in the Weekend Penalty Rates Case (58 CAR at 621).

Although the standard adopted in the Shell Case applies today [1972], the fact is that many awards, mainly by consent, have moved … 212 In respect of the discussion in the Weekend Penalty Rates Case, in the club industry, casual and part-time employees, and casual and part-time work are not something otherwise than normal. It was common ground between the parties in the instant proceedings that casuals and part-time employees are and have been a large proportion, probably the majority of all club employees, under the relevant award in New South Wales. That is the situation currently and it has been the situation for some time. A recent survey conducted by the applicant discloses that, from a sample group of 355 clubs within the industry, casual employees comprise 58% of the total employees and casual hours worked comprise 41% of the total hours. 213 I am not able to accept the applicant's submission that penalty rates sit quite comfortably with the compensatory elements of pay, and that even if there is no deterrent element in the compensatory payments such compensatory payments are properly and appropriately described as "penalty rates". The prime purpose of "penalty rates", as included in s 3(2)(b) of the LSL Act, is, by reference to the earlier consideration in this judgment of the only penalty rate specifically mentioned in it, viz. overtime, one of deterrence by means of the imposition of penalties on any employer seeking to impose what the legislature, or the industrial tribunals in implementing the will of the legislature, regard as unacceptable or avoidable or even, in some cases, unavoidable, demands on his/her employees. 214 It is clear from an examination of the authorities cited in these proceedings that tribunals have not in all cases, when referring to "penalty" rates, set out to distinguish an additional payment awarded as being a "penalty" payment or a "compensatory" payment or a mixture of the two. 215 It must also be said that the use of the term "penalty" in relation to loadings/allowances being inserted into awards has not always been subjected to the same scrutiny as to the appropriateness of the term as occurred in the Weekend Penalty Rates Case. Whether rates in an award are properly designated as "penalty" rates for the purposes of s 3(2)(b) of the LSL Act will often be able to be determined only after close examination of any particular award, its making and its history, a prime example being the Watchmen etc Award (1965 AR 268) discussed above. Casual Loadings 216 In relation to the declarations sought, the RCA claims that the loadings of 33 1/3 per cent and 25 per cent paid for casual work, Monday to Friday in the 1996 and 1999 Awards are amounts payable in respect of "shift work" or "other penalty rates" for the purpose of s 3(2)(b) of the LSL Act. I have already found that the loadings payable to casuals under the 1996 and 1999 Awards are separate from the provisions for the shift penalty/allowance found in cl 9.5 of the 1999 Award, or in the similar provision in the 1996 Award. 217 That leaves to be considered whether those loadings are comprehended within the term "other penalty rates" of s 3(2)(b) of the LSL Act. 218 It is common ground that the majority of employees in this industry are employed on a casual basis, and that a substantial proportion, but less than half, of hours worked are worked on a casual basis. 219 I accept the submission by the RCA that historically loadings are paid to casual employees because of disadvantages inherent in the nature of casual employment such as: (a) lack of job security - employers utilise casuals as and when they are required; (b) lack of benefits in relation to sick leave; (c) lack of benefits in relation to public holidays; (d) lack of 'award benefits' generally. Specifically as to club employees, examination of the 1999 Award shows a number of provisions that relate only to weekly and part-time employees. Those provisions may not necessarily be monetary in nature but they do provide benefits to weekly and part-time employees not available to casual employees eg subclauses 7.1 to 7.16 (terms of employment, including notice). (e) disabilities associated with intermittency inherent in casual work (see for instance, In re Clerks (Sydney Daily Newspapers) Award [1961 AR 529 at 537], In re Shop Employees (State) Award (No.2) [1977 AR 555 at 575] and Decision - Public Holidays (AIRC, Hancock SDP, MacBean SDP and O'Shea C; Print L9178; 20/3/95). 220 Some benefits for which casuals are compensated e.g. sick leave, are not penalty provisions when applied to full time employees. I do not see why they would become "penalty" payments when they become part of the compensatory loading paid to casuals. 221 I have nothing before me to sustain either of two inferences the RCA sought that I make, in relation to the casual loading. The first inference was that because the 33 1/3 per cent casual loading is at the higher end of such loadings, it had been initially introduced as a deterrent. It was conceded by the RCA that there was no evidence as to the basis on which the loading was introduced into the Award early in the century. No calculations were provided to me as to what the make up of that 33 1/3 per cent might take into account. The second inference sought was that the loading has had some deterrent effect, at least at the present time, in keeping the proportion of casual hours to total hours worked at less than half. No evidence was presented to support such an inference. 222 I do not make the inferences sought by the RCA. 223 I reject the submission by the RCA that loadings paid to casual employees pursuant to the 1996 Award and the 1999 Award are to penalise employers, with the particular intention of deterring the engagement of casual employees in order to protect the position of weekly employees in the club industry. The cases cited by the RCA in support of that submission, In re Clerks (State) Award [1953 AR 199] and In re Watchmen etc (State) Award [1965 AR 268], were concerned with different industries and particular circumstances in those industries. In this industry, the protection as demonstrated by the Club Employees Case 1980, has been directed at protecting the position of the weekly and casual employees. 224 In my view, the decision of the Chief Industrial Magistrate in Matchett v The Illawarra Catholic Club, which did not go on appeal, was, on the face of his decision, correct: the casual loading provided for by the Club Employees' Award does not fall within the exclusion "in respect of shift work, overtime or other penalty rates" found in s 3(2)(b) of the LSL Act. 225 The casual loading, it seems to me, is the compensation paid to casual employees as regards the integral exigencies of such work, e.g. lack of job security and lack of award benefits and other items set out earlier. The exigencies of casual work remain the same whether the employee is working on a weekday, at the weekend or on a public holiday. 226 I find that the loading of 33 1/3 per cent payable to existing casuals pursuant to cl 9.14.3 of the 1999 Award and the loading of 25 per cent payable to new casuals pursuant to cl 10.3.3 of the 1999 Award are not amounts that are "other penalty rates" in terms of s 3(2)(b) of the LSL Act. 227 In relation to the declarations sought as regards the loadings payable to casuals on Saturday, Sunday and public holidays, it seemed to me that the case was argued on the basis that the casual loading was not paid in addition to the additional rates payable for ordinary time worked on Saturday, Sunday and public holidays, but were subsumed into those additional rates. The following consideration is based on the premise that that is indeed the argument raised. Mr Barry's evidence was that the casual and part-time loadings payable Monday to Friday have been taken into account in at least twelve large clubs since 1995 in calculations of payments for long service leave. He did not specify whether those calculations take into account those casual loadings for weekends and public holidays, after the weekend/public holiday loadings have been excluded as "penalty" rates in accordance with s 3(2)(b). 228 If casual loadings provided for in the 1999 Award for "existing" employees (33 1/3 per cent) and for "new" employees (25 per cent) which are payable for ordinary time worked Monday to Friday are subsumed within rates payable for ordinary time worked on Saturday, Sunday and public holidays (cl 15), those rates being the equivalent of the following percentages respectively: 50 per cent, 75 per cent and 150 per cent, what is the effect, for the purpose of determining "ordinary pay" (s 3(1)(a)(i) ), of the removal, as "penalty" rates excluded by operation of s 3 (2)(b), of the weekend/public holidays loadings?. 229 In industry generally, rates additional to those paid for ordinary time hours worked Monday to Friday, are paid for work on weekends/public holidays. Such rates ordinarily would come within the term "penalty rates", and so not be taken into account in calculations of "ordinary pay" in terms of s 3(1)(a)(i) of the LSL Act. 230 I repeat what I have already said in determining that casual loadings paid for casual work undertaken from Monday to Friday are not amounts that are "other penalty rates" in terms of s 3(2)(b) of the LSL Act. The casual loading, it seems to me, is the compensation paid to casual employees as regards the integral exigencies of such work, e.g. lack of job security and lack of award benefits and other items set out earlier. The exigencies of casual work remain the same whether the employee is working on a weekday, at the weekend or on a public holiday. 231 I have already decided that the casual loading in the Club Employees' Award is not a "shift allowance". The Shift Workers Case and other cases dealing with weekend penalty rates do not appear to go beyond instancing "shift allowances" as allowances that are not payable in addition to weekend rates. 232 There would not seem to be anything in the authorities, certainly none were drawn to my attention, as to what account, for the determination of what is "ordinary pay", is to be taken of other allowances, for the purposes of s 3 of the LSL Act once weekend penalty rates, which may have been taken to subsume such allowances, are taken out of consideration. 233 The proposition that other rates, including the casual loading, should be taken into account even in addition to weekend penalty rates is not new. In In re Shop Employees (State) Award (No 2) (1977 AR 555 at 582, 584) Macken J said: I turn now to the question of the penalty rates payable to casual employees. The existing penalty rates provided for in the award have been designed to reward permanent employees with penalty rates for work performed in certain ordinary hours, weekend and holiday work. They have not been designed to regulate the situation which arises when casuals work in hours which are outside of the accepted ordinary hours of work.

I think it inappropriate that Sunday work be paid for at the rate of time and a half for a casual on the reasoning that a casual is working in his "ordinary" hours. I consider that the appropriate penalty to be paid to casual employees called upon to work on a Sunday should be double time in addition to the casual loading. 234 In Decision - Public Holidays a Full Bench of the Australian Industrial Relations Commission (Hancock SDP, MacBean SDP and O'Shea C) (Print L9178; 20/3/95 at p 24) decided, with reference to casual workers: Casual employees receive higher ordinary rates in recognition of their non-enjoyment of various benefits provided for other workers. We are in no doubt that this compensation recognises the lack of holidays, including public holidays. No party asks us to alter this arrangement. There is an issue, however, about the rate of payment of a casual worker who does work on a public holiday.

We do not think that the relevant " penalty " should itself be subject to the casual loading. The employee should, rather, receive the ordinary casual rate plus the applicable penalty. An example may assist. Assume that the casual loading is 25 per cent; and that the prescribed holiday rate for non-casual workers is double time. The casual would then be paid 2.25 times the ordinary-time rate for non-casual workers. 235 I do not see any legislative obstacle. The weekend penalty rates are removed from consideration in accordance with s 3(1)(a)(i) of the LSL Act. I have found that the casual loading is not a "penalty" payment. 236 To the extent argued in these proceedings, I find that, in relation to cl 11(2)(3) and (4) of the 1996 Award, the amount of 33 1/3 per cent substituted for the loadings there set out does not constitute "other penalty rates" in terms of s 3(2)(b) but is to be taken into account for the purposes of "ordinary pay" for the purposes of s 4. 237 To the extent argued in these proceedings, I find that, in relation to cl 15.1.1 and cl 15.1.2 and cl 16.1.3 of the 1999 Award, that for "existing" casual employees a loading of one third paid on Saturdays, Sundays and public holidays and a loading of one quarter paid to "new" casual employees, does not constitute "other penalty rates" in terms of s 3(2)(b) of the LSL Act, but is to be taken into account for the purposes of s 4. Part-Time Loading 238 It was contended on behalf of the applicant that in the State Part-Time Work Case ([1998] 78 IR 172) nobody involved, including the Commission, seemed to have difficulty with the concept that the part-time loading is a "penalty" loading. 239 The proceedings in that case involved setting minimum conditions of employment to which part-time agreements made under Pt 5 of Ch 2 of the 1996 Act were to be subject. It was stated (at pp 201-202) that: The 1996 Act ensures that while the hours of part-time work may be less in total number than those worked by full-time employees, part-time work under a part-time work agreement entitles employees to participate in the benefits which regular employment brings; those benefits include matters such as access to sick leave, personal/carer's leave, and the taking of annual and long service leave. No doubt for some employees, casual employment, although not attracting such benefits, will continue to have the alternative attraction of casual loadings. 240 Its decision as to payment for part-time work (at p 202) took into account that receipt of benefits: The trend of arbitrated decisions of the Commission over recent years has been to refuse to fix such loadings, particularly when part-time employees receive full-time benefits pro rata.

We consider that in the scheme adopted in Pt 5 of the 1996 Act for part-time work agreements, the hourly rates for part-time employees should be the same as those fixed by the applicable industrial instrument for full-time employees. The consequence of this approach will be that there will be no additional loadings attaching to Pt 5 part-time work agreements; loadings which would discourage employers from agreeing to part-time work arrangements which their employees seek. 241 The term "penalty" was not used. It was decided, in the context of that case, that additional loadings which would discourage employers from agreement to part-time arrangement would not be attached to Pt 5 part-time work agreements. 242 As a matter of interest the following observation was made (at p 201): In some industries the management of part-time work by award regulation remains contentious and largely unchanged for many years. The registered club industry governed by the Club Employees (State) Award is an example of this situation. Part-Time Loading: Club Employees' Award 243 In 1980, Mr Conciliation Commissioner Pietracci as Chairman of the relevant conciliation committee, inserted for the first time provisions for the employment of part-time employees into the Club Employees (State) Award. In his decision handed down on 11 August 1980 Pietracci C, did so subject to a number of conditions. The one of particular relevance in these proceedings was that: (2) A part-time employee shall be paid in addition to the normal rate of pay an amount equal to fifteen per centum of that rate.

( In re Club Employees (State) Award ; nos 76/705, 78/595 and 79/86; 11/8/80.) 244 The Commissioner also stated: It is understood that part-time employees in addition to the monetary remuneration granted in this decision will also have the benefit of other statutory and award conditions on a pro rata basis. 245 The Commissioner did not spell out the basis for that fifteen per cent loading. He set out in some detail the submissions made on behalf of the RCA and of the union. Those submissions addressed a number of concerns, prominent amongst them being the position of existing employees. 246 The advocate for the RCA, for instance, reiterated the terms of the undertaking given by the employing bodies that there would be no compulsion in the change from permanent weekly employment to permanent part-time employment nor from regular casual work to permanent part-time work. It was said by him that if part-time employees were employed in this industry, it would certainly assist a wide range of the smaller full sporting clubs in carrying on the service to their members and to provide employment of a kind to members of the union. 247 On behalf of the union, Mr James submitted that the application was simply a device to reduce cost and to transform casuals who had for years performed a certain working pattern into part-time employees who would continue to work the same pattern but get paid less. 248 That decision went on appeal, in the first instance to Liddy J, [1981 AR 563] and, in the second to the Commission in Court Session [1981 AR 562]. In rejecting the appeal against that part of the Commissioner's decision, Liddy J said (at p 571): In making a decision to introduce provision for the employment of permanent part-time employees in this industry, Commissioner Pietracci fixed a loading of 15 per centum in addition to the normal rate of pay.

The evidence before the committee and the cases show that it has been a widespread practice for industrial tribunals in this State to attach a penalty loading when authorising employees to engage in part-time labour.

In the club industry the permanent part-time employee will fill a need. This should be achieved without reducing the demand for and status of the weekly full-time employee and the casual. It therefore appears obviously necessary that a loading should be applied to the new category of employee as protection to the other two classes.

Having determined, correctly in my opinion, that a loading should be imposed the commissioner then decided its quantum. He fixed a percentage which is sufficiently substantial to mark a clear distinction between the three categories.

Fifteen per centum is, I feel, a loading both adequate and appropriate but not excessive. No loading at all, or even ten per centum, would leave the way open for employers to make too much use of part-time labour at the expense of weekly or casual labour. (Leave to appeal was not granted by the Commission in Court Session [1981 AR 562 at 575].) 249 It is notable that in inserting the part-time employment provisions into the Club Employees (State) Award for the first time [1981 AR 562], part of the reason for setting an adequate and appropriate but not excessive loading, to use the words of Liddy J at p 572, was to protect the position of weekly and casual labour. 250 The Commissioner had expressly noted that part-time employees were not only to receive an additional amount equal to fifteen per cent of their normal rate of pay, but that they received other statutory and award benefits on a pro rata basis. That additional amount was therefore not directed as compensation for benefits not received. 251 It was noted by the Commission in Court Session (Dey, Macken and Bauer JJ) on appeal from the above decision in In re Club Employees (State) Award [1981 AR 562 at 574] that in this industry, regular casual employment is an acknowledged feature. 252 I reject the contention of the respondent that in the Club Employees Award the part-time loading of 15 per cent was not a penalty rate but was awarded to compensate for disabilities associated with part-time work. An analysis of the 1980 decision at first instance (Pietracci C) and that of Liddy J on appeal shows that the loading was intended as a deterrent to the over-employment of part-time employees to the detriment of the situation of full time and casual employees. Declarations 253 Section 154 of the 1996 Act is in the following terms: 154(1) [Binding declarations] The Commission in Court Session may make binding declarations of right in relation to a matter in which the Commission (however constituted) has jurisdiction. The Commission in Court Session may do so, whether or not any consequential relief is or could be claimed.

… 254 Pursuant to s 154(1), I make the following declarations: 1. The loading payable to employees pursuant to Clause 11 - Casual Employees, subclause (i), of the Club Employees (State) Award published 10 May 1996 (292 IG 582), namely: (1) 33 1/3% for casual work Monday to Friday; is not an amount payable in respect of "shift work" or "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

2. The loadings payable to employees pursuant to Clause 11 - Casual Employees, subclause (i), of the Club Employees (State) Award published 10 May 1996 (292 IG 582), namely: (1) … (2) 50% for casual work on Saturday; (3) 75% for casual work on Sunday; (4) 150% for casual work on public holidays, are amounts payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955, only to the extent they exceed 33 1/3%.

The loading of 33 1/3% payable to 'existing' casual employees pursuant to Part B - Classifications and Hours, Clause 9.14.3 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is not an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loading of 25% payable to 'new' casual employees pursuant to Part B - Classification and Hours, Clause 10.3.3 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is not an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loadings payable to employees pursuant to Clause 12 - Part-time Employees, subclause (iii), of the Club Employees (State) Award published 10 May 1996 (292 IG 582) namely: (a) Monday to Friday - 15%; (b) Saturday - 50%; (c) Sunday - 75%; (d) Public Holidays - 150%, are amounts payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The loading of 15% payable to employees pursuant to Part B - Classification and Hours, Clause 9.8.1 and Clause 10.2.12 of the Club Employees (State) Award made on 2 July 1999 (not yet published) is an amount payable in respect of "other penalty rates" for the purpose of section 3(2)(b) of the Long Service Leave Act 1955.

The weekend and public holiday penalty rates of half time extra for ordinary time worked on Saturdays and three quarter time extra for ordinary work worked on Sundays, as set out in clause 15 of the Club Employees (State) Award made on 2 July 1999, and of one and half times extra for ordinary time worked on public holidays, as set out in clause 16 of that Award are amounts payable in respect of 'other penalty rates' for the purpose of section 3(2)(b) of the Long Service Leave Act 1955 only to the extent they exceed 33 1/3% for existing casual employees and 25% for new casual employees.

The weekend and public holiday penalty rates of half time extra for ordinary time worked on Saturdays and three quarter time extra for ordinary work worked on Sundays, as set out in clause 15 of the Club Employees (State) Award made on 2 July 1999, and of one and half times extra for ordinary time worked on public holidays, as set out in clause 16 of that Award are amounts payable in respect of 'other penalty rates' for the purpose of section 3(2)(b) of the Long Service Leave Act 1955, insofar as they apply to part-time employees.

The payments made to employees pursuant to the award provisions referred to in Orders 5, 6 and 8, but in Orders 2 and 7 only to the extent indicated, are to be excluded from the calculation of "ordinary remuneration" for the purpose of determining an employee's "ordinary pay" within the meaning of that term as defined in section 3(1) of the Long Service Leave Act 1955. *************************

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.