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.