Scott v Sun Alliance Australia Pty Ltd

Legal principles It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

Considerations relevant to this award It will be seen from annexure "A" that the key expressions in the award, rearranged in order of occurrence, are these: from clause 18: ... from the date of [an employee's] termination ... the Company shall forthwith pay to the employee in full ordinary pay for [untaken long service] leave. ...Each employee shall be paid for each week of leave the employees ordinary rate of pay applicable at the date of taking the period of leave ...For the purposes of this Clause, rate of pay shall not include: ...[o]vertime, commissions, bonuses, allowances or the like ...Such rate of pay shall be for the standard hours prescribed by the award. from clause 13: Employees working a seven-day continuous roster shall be paid an allowance in lieu of afternoon and night shift allowances, weekend penalty rates and payment for any rostered overtime shift included in the cycle. ... Provided that employees working a 7 day continuous roster which operates over a 4 week, 38 hours per week, roster cycle shall be paid a shift allowance of 40% of ordinary salary for time worked. The essential question, therefore, is whether the phrase "allowances or the like" in cl.18(h) includes what is referred to in cl.13(g) as "shift allowance". I conclude that it does. The estimable Macquarie Dictionary, (2nd edn.) gives the relevant meaning of "allowance" as "an addition on account of some extenuating or qualifying circumstance". That meaning for the word, as used in each of the subclauses referred to, seems to me to be apt. To my mind, not only is there nothing in the award to indicate the necessity for a departure from the plain meaning of the word "allowance", but ample reason to confirm that such was what was intended. That shift allowances should not be included is consonant with the notions also expressed in cl.18 that employees should receive their "ordinary rate of pay applicable" and that such "rate of pay [should] be for the standard hours prescribed by the award". The genesis of the main argument for the applicant is that, prima facie, "ordinary" means "usual", and usually Mr Kucks' rate of pay included his shift allowance. However terms like "ordinary rate of pay" and "standard hours" have well-known meanings in the sphere of industrial relations in this country, as is shown by what was said, admittedly in a different context, in Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1. That case involved the interpretation of a Tasmanian workers compensation statute which provided for compensation for incapacity to work at the "ordinary time rate of pay of the worker for...work...engaged in immediately before the period of incapacity" Immediately before the worker was injured he had worked a 16 hour week. The relevant award provided for an ordinary week of 38 hours. It was held by the High Court that "ordinary time rate of pay" referred to a rate fixed by an industrial award and not to the hours agreed by an individual employment contract. The Court said (at 5): The expression "ordinary time rate of pay" is well known in the industrial relations field in Australia and New Zealand. It and similar terms have long been used in legislation. [See for example, Annual Holidays Act 1944 (N.S.W.), s.2(1); Workers' Compensation Act 1956 (N.Z.), s.15(1) (now repealed); Accident Compensation Act 1985 (Vic.), s.95(1) (now repealed)] Unless the context otherwise requires, "ordinary time rate of pay" means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours [Catlow v. Accident Compensation Commission (1989) 167 CLR 543, at pp 555-556, 560)] In some contexts, "ordinary time" may mean "regular, normal, customary, usual" time [See Kezich v. Leighton Contractors Pty. Ltd. (1974) 131 CLR 362, at p 365.] Thus in Kezich v. Leighton Contractors Pty. Ltd. [...] this Court held that the words "the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury" in cl.2 of the Schedule to the Workers' Compensation Act 1912 (W.A.) referred to the hours during which it was usual for the employee to work. In that case, Gibbs J considered that it was not legitimate to construe the statute by reference to the meaning which the words bore in industrial awards and agreements ((10) ibid, at p.364.). However, in this case, unlike Kezich, the relevant expression "ordinary time rate of pay" has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in s.69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression "ordinary time" cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work. In s.69(1)(a)(ii), "ordinary time" means the fixed standard hours as opposed to overtime or usual or customary time. However, just as individual employment contracts usually fail to distinguish between "ordinary time rates" of pay and other rates of pay, so do the majority of them fail to distinguish between the fixed standard hours and other working time. Consequently, s.69(1)(a)(ii) would seem to have little scope for operation in relation to private employment contracts. By itself, this factor could not be decisive, but it is strong confirmation of the construction which flows from the presence of s.69(3) in the Act. (emphasis added) There can be no doubt that "standard hours" prescribed by this award referred to a 38-hour week. In Australia, the term "ordinary pay" has, according to the Macquarie Dictionary, 2nd edn, entered the language, as meaning: "ordinary pay .... remuneration for an employee's normal weekly number of hours fixed under the terms of his employment but excluding any amount payable to him for shift work, overtime, or other penalty." That meaning of ordinary is even more apt in the context of the present award. It seems clear that the term "allowances or the like" as used in cl.18(h) must include allowances prescribed by the award as well as any other which might be paid by the employer. There is nothing in the concept of the cl.13 shift allowances as compared with other award allowances that would require or indicate that they were not to be within the ambit of that term. The award provides expressly for very few "allowances": only for weekend work (cl.12); as a possibility for overtime remuneration (cl.14.d.ii), and for meals when working overtime (cl.14.i). Other award payments which might be comprehended by the phrase are hard to find: the 20% loading for casuals would not be included because such employees do not receive long service entitlements (cl.9). When the framer(s) of the award wished to indicate that full, usual pay should be paid, they had no difficulty in making their meaning plain. For example, in cl.16, in relation to annual leave, it was provided: (a) ... annual leave shall be granted on full pay ... ... Loading on annual leave (i) An employee shall receive a loading of 20% on pay for annual leave subject to a limit of $1000 .... Unless otherwise agreed ...the payment will be ... calculated on the salary then applying. Except that seven day continuous workers, in place of the annual leave loading ... shall be paid for their annual leave at the average rate paid as if working, including the shift provisions prescribed in subclause 13(h). And under cl.17 employees are entitled to sick leave "on full pay". So far as the award's own provisions are concerned, no anomaly appears. The position of a regular shiftworker in relation to the rate of payment for long service leave is, for example, no harder than that of a regular overtime worker compensated for the overtime in the ways contemplated by cl.14(d)(ii) and cl 14(e), the latter being the default mode as it were in the computer age of compensation. Insofar as the award distinguishes between long service leave and annual and sick leave in the quantum of payment, this can readily be accounted for by the different purposes, likely extent and cost, and industrial history of the different kinds of leave. It might be felt rather hard on a longtime permanent shiftworker like Mr. Kucks that his long service leave or, upon retrenchment, his pay in lieu, should not include his everyday 40% shift allowance. Nevertheless, it is a long jump from there to the conclusion that, having regard to all of the award's provisions, the framer(s) of it were not content enough with that outcome, even if the words used in the award would permit such a conclusion to be arrived at in an interpretive process. Such a conclusion would require a weighing of the award's overall benefits to all employees and some comparison of those benefits with industrial standards. Such a task was essayed here by neither counsel, no doubt for the excellent reason that that is the job of an award-maker rather than an award-interpreter. In any case, in my view, the words of the award in their ordinary and "industrial context" meaning that there is no room for effect to be given to any such conclusion. As it happens, at my request, counsel did investigate whether, among the plethora of instruments across Australia that grant long service leave - State and Commonwealth Acts, Federal arbitrators and consent awards, State agreement, and so on there was any standard as to inclusion of shift allowances for permanent shift workers in the rate of pay for long service leave purposes. Counsel agreed that the picture was one of diversity, rather than uniformity.

SCHEDULE 1 "4. RATES OF SALARY ... (b) The award rate of annual salary for adult employees shall be ... in accordance with the following 5 level structure: ... 5. DEFINITIONS "Employee" shall mean a salaried employee of the Company employed at a yearly rate of pay in the Company ... 6. PAYMENT OF SALARIES (a) Salaries shall be paid monthly or at such other regular intervals as may be agreed ... 8. PART-TIME EMPLOYEES (a) Unless otherwise agreed between [the parties] ... (ii) part-time employees shall be paid in accordance with the annual salary provided for in Clause 4 of this award reduced on a pro-rata basis; (iii) the provisions of this award with respect to holidays, annual leave, sick leave, long service leave and maternity leave shall apply to part-time employees on a pro-rata basis; ... 9. CASUAL EMPLOYEES (a) Unless otherwise agreed between [the parties] ... (ii) the ordinary time rate of pay for a casual employee shall be calculated by adding 20% to the appropriate annual salary rate shown in Clause 4 of this award and dividing the result by 52 (weeks) and then by 38 (hours); ... 11. TERMINATION OF EMPLOYMENT Either the employee or the company may terminate the contract of employment by giving the appropriate notice, or the appropriate salary in lieu of notice may be paid or forfeited as the case may be. ... 12. HOURS (a) That ordinary hours of work will not exceed an average of 38 per week provided that: ... (iv) An employee working ordinary hours on either Saturday or Sunday but not both days will be paid an allowance of $54.41 per day worked on either Saturday or Sunday. (v) An employee working ordinary hours on both Saturday and Sunday will be paid an allowance of $106.11 per day... ... 13. SHIFT WORK The following conditions shall apply to shift work: ... (c) Employees working afternoon or night shift over a five day roster shall be paid the following shift allowances, calculated as a percentage of the ordinary rate of salary for the appropriate job classification: Afternoon shift 17% Night shift, rotating 20% Night shift, non-rotating 30% ... (g) Employees working a seven-day continuous roster shall be paid an allowance in lieu of afternoon and night shift allowances, weekend penalty rates and payment for any rostered overtime shift included in the cycle. ...Provided that employees working a 7 day continuous roster which operates over a 4 week, 38 hours per week, roster cycle shall be paid a shift allowance of 40% of ordinary salary for time worked. (h) Shift allowances prescribed by this clause will not be payable where the time worked attracts an overtime payment in accordance with this award. 14. OVERTIME (a) Employees may be expected to work reasonable hours in excess of ordinary working hours. (b) An employee who is requested to work in excess of the hours prescribed in Clauses 12 or 13 shall be paid in accordance with this Clause. ... (d) Compensation for overtime worked will be additional pay for specific hours worked or, alternatively and subject to agreement between the employee and the Company, compensation may take the form of: (i) equivalent ordinary time off in lieu; (ii) an allowance that realistically reflects the expected amount of overtime to be worked; (iii) an annual rate of salary set in recognition of the hours of work involved. (e) Except as provided for in subclause (d) above pay for specific hours worked outside ordinary working hours shall be as follows: Mon to Fri - Time and a half for the first two hours and Double time thereafter. Saturdays - Time and a half for the first two hours and Double time thereafter. Sundays - Double time. If rostered on seven day continuous shift work - Double time for all time worked in excess of ordinary working hours. ... 15. HOLIDAYS (a) The following public holidays, as they may be observed in a particular State or such other days as may be observed in lieu of any of them, shall be granted by the Company without deduction of pay: ... (b) All time worked by the direction of the Company on any of the above holidays shall be paid at the rate of double time and one half the ordinary rate of pay... ... 16. ANNUAL LEAVE (a) Employees shall be entitled to four weeks leave of absence annually. Such annual leave shall be granted on full pay ... ... (h) In addition to the leave prescribed above, seven day continuous shift employees shall be allowed one week's leave including non-working days. ... Loading on annual leave (i) An employee shall receive a loading of 20% on pay for annual leave subject to a limit of $1000 in... . Unless otherwise agreed ...the payment will be made in ... calculated on the salary then applying. Except that seven day continuous workers, in place of the annual leave loading ... shall be paid for their annual leave at the average rate paid as if working, including the shift provisions prescribed in subclause 13(h). 17. SICK LEAVE (a) All employees shall, subject to the production of a medical certificate or any other evidence satisfactory to the Company, be entitled to sick leave on full pay in accordance with the provisions of this clause. ..."

I certify that this and the preceding 13 pages are a true copy of the Reasons for Judgment of His Honour Justice Madgwick. Associate: Dated: 19 April 1996 APPEARANCES Counsel for the Applicant: J A Logan Solicitor for the Applicant: C A Sciacca & Associates Counsel for the Respondent: J Murdoch Agent for the Respondent: John Scoble of Change Leaders Pty Ltd Date of hearing: 8 November 1995