Together Queensland Industrial Union of Employees v State of Queensland

State of Queensland (Department of Health) v Australian Salaried Medical Officers' Federation Queensland, Industrial Organisation of Employees [2023] QIRC 061

Mr M. Thomas and Mr K. McKay for Together Queensland Industrial Union of Employees.

Mr C. Claydon for Australian Maritime Officers Union.

Ms T Cowburn, Ms A Rogers and Mr R Moxham for Department of Transport and Main Roads.

• [1] This dispute relates to the conversion of accrued leave entitlements for Vessel Traffic Service Operators ('VTSO') employed by Maritime Safety Queensland ('Department of Transport and Main Roads'). The Commission has been asked to decide the correct methodology[1] to convert accrued annual leave, long service leave and sick leave balances following a change to ordinary hours of work and entitlements for these workers resulting from the commencement of the Maritime Safety Queensland Maritime Operations Certified Agreement 2022 ('the 2022 Agreement').[2] The ordinary hours of work changed from a 38 hour week to a 36 and a quarter hour week to ensure the agreement would pass the no disadvantage test against the award.[3]

• [2] Under the current agreement and the predecessor agreements, VTSOs work 7 x 12 hour shifts each fortnight. Employees receive an aggregated salary which is for all purposes.[4]

• [3] The 2022 agreement does not contain a method for converting existing leave balances to conform to the new arrangement. The following sets out the previous (2018 Agreement) and current arrangements (2022 Agreement) for each of Ordinary Hours, Annual Leave, Sick Leave and Long Service Leave:[5]

• Ordinary hours of work
  • Vessel Traffic Service Operators (VTSOs) worked a 38-hour week under the Maritime Safety Queensland Maritime Operations Certified Agreement 2018 - CB/2019/110 (the previous agreement).
  • VTSOs now work a 36.25-hour week under the Maritime Safety Queensland Maritime Operations Certified Agreement 2022 - CB.2023/80 (the current agreement).
• Annual leave accruals
  • VTSOs accrued 190 hours of annual leave per year of service under the previous agreement. This enabled a full-time VTSO access to 19 shifts at 10 hours per shift.
  • VTSOs accrue 186.3 hours of annual leave per year of service under the current agreement. This enables a full-time VTSO access to 18 shifts at 10.35 hours per shift.
• Long service leave accruals
  • Leave is accrued in accordance with the Long Service Leave Directive applicable at the time of accrual.
• Sick leave accruals
  • Leave is accrued in accordance with the Sick Leave Directive applicable at the time of accrual.
• When a VTSO takes a days' leave, they are paid 12 hours pay and there is a debit applied to their leave balance as follows:
  • Annual leave debits
    • VTSOs were debited 10 hours annual leave under previous agreement.
    • VTSOs are debited 10.35 hours of annual leave under current agreement.
  • Long service leave debits
    • VTSOs were debited 7.6 hours of long service leave under previous agreement.
    • VTSOs are debited 10.35 hours of long service leave under current agreement.
  • Sick leave debits
    • VTSOs were debited 9.5 hours of sick leave under the previous agreement.
    • VTSOs are debited 10.35 hours of sick leave under current agreement.

• [4] The parties agree that VTSOs existing leave balances need to be converted to reflect the change to their hours of work and entitlements under the current agreement. While the parties previously agreed to a methodology proposed by the union for converting the leave balances to reflect the change to hours of work, it was found that the agreed methodology resulted in losses and gains for both parties and did not reflect the intention of the methodology. The parties are no longer in agreement about a methodology to convert existing leave balances and that is the basis of this dispute.

• [5] The parties agree that there is to be no loss or gain for employees or the Department when converting VTSOs existing leave balance to reflect the changes to the hours of work under the current agreement.[6]

• [6] It is useful to note that the 'recording of leave entitlements for this group of employees in hours is merely an administrative device to record the number of days leave for each type of leave'.[7] While historically, to represent a day of leave in hours, different figures were used (as set out above), the employees were paid 12 hours for each day of leave regardless of the debit amount.

• [7] Under the new agreement, the debit hours are 10.35 hours for all types of leave and the employees are still to be paid 12 hours. The predecessor agreement provided for 19 working days of recreation leave per year, 8 working days of sick leave and 6.5 working days of long service leave. Whereas the new agreement provides for 18 workings days of recreation leave, 10 working days of sick leave and 6.5 working days of long service leave.[8]

• [8] Together Queensland believes that the conversion formula should be such that if, for example, an employee had 10 days of leave available prior to the 2022 Agreement, the conversion formula to be used should result in that employee carrying across 10 days of leave after conversion. The union says the correct conversion formula, to ensure the employee has no more or no less leave entitlement than under the previous agreement, would be:

• [9] Together Queensland says this proposed methodology would mean that 10 hours of accrued leave would become 10.35 and the employee would be paid for 12 hours when they took leave, meaning they would receive no more and no less than they were entitled to under the predecessor agreement. By way of example, Together Queensland says that if a full years' entitlement of 19 days accrued leave was available, it would convert to 19 days under the new arrangement and the employee would be paid 228 hours for that period (19 days x 12 hours per day). This would result in no more and no less than the entitlement prior to the new agreement.

• [10] Put simply, Together Queensland's position is that:[9]

To convert the accrued days of leave recorded as hours in the department records, it is necessary to determine the number of accrued days for each type of leave and to convert it to hours utilising the new daily debit hours arrangement.

• [11] Together Queensland submits that 'during the negotiations there was no discussion whatsoever that the accrued daily leave entitlements would be reduced'.[10] The union also says that in all of the explanatory material provided by the employer in accordance with s 171(2)(b) of the Act, no mention was made of reducing the accrued days leave for annual leave, sick leave or long service leave.[11]

• [12] Together Queensland argues that during negotiations there was a shared understanding that between the parties that accrued entitlements would need to be adjusted to account for the different hours which would be debited for each day of leave.

• [13] Together Queensland notes that the Department 'has difficulty in comprehending how leave credits increase after moving from the 38 hr week to the 36.25hr week'. Together Queensland says that this is because along with the change in weekly hours, there was an increase in daily debits for all forms of leave to 10.35. Together Queensland says that this is a unique situation and it is unusual that daily debits would be modified in this manner.[12] It is submitted that the difference is that the 2022 Agreement has terms of the agreement specifying that the daily debits for all three types of leave shall be 10.35.[13]

• [14] Together Queensland says that the increase in hours is necessary because the hours to be deducted when an employee takes leave has increased. Together Queensland reiterates that under its proposed approach, 'the number of accrued days of leave is no more and no less' and the 'payment to the employee for taking accrued leave is no more and no less (except for the increase in wage rates provided for by the certified agreement)'.[14]

• [15] In its closing submissions, Together Queensland says:[15]

The Commission's task is to determine how those changes or the methodology that should be used to implement those changes to ensure the employees are neither disadvantaged nor advantaged in line with the intent of the parties. And that principle's agreed. The employees were not to be advantaged, they weren't to be disadvantaged. What apparently is in contention now is what the - what is that intended to mean?

So we would submit that at essence, this is an interpretation issue. When you look at the clauses in the agreement that changed the rates of daily hours and the rates of accrual, it's what's the interpretation of how that change was to be introduced in order to ensure the intent of the parties that employees would neither to be advantaged or disadvantaged is to be achieved.

• [16] Together Queensland directs me to the principles of interpretation of agreements traversed in State of Queensland (Department of Health) v Australian Salaried Medical Officers' Federation Queensland, Industrial Organisation of Employees[16] (citations omitted):[17]

[39] In James Cook University v Ridd ('Ridd'), Griffiths and SC Derrington JJ provided a convenient summary of the established principles in the interpretation of an enterprise agreement made and approved under the Fair Work Act 2009. Their Honours stated:

[65] The relevant principles applicable to the interpretation of an enterprise agreement may be stated as follows:

(i) The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 at [53]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 at [197]).

(ii) A purposive approach is preferred to a narrow or pedantic approach - the framers of such documents were likely to be of a "practical bent of mind" (Kucks v CSR Ltd (1996) 66 IR 182 at 184; Shop, Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 at [197]). The interpretation "turns upon the language of the particular agreement, understood in the light of its industrial context and purpose" (Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 at [2]).

(iii) Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 at [53]). It may extend to "... the entire document of which it is a part, or to other documents with which there is an association" (Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518; Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth [1998] FCA 249; (1998) 82 FCR 175 at 178).

(iv) Context may include "... ideas that gave rise to an expression in a document from which it has been taken" (Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518).

(v) Recourse may be had to the history of a particular clause "Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form ..." (Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518).

(vi) A generous construction is preferred over a strictly literal approach (George A Bond & Company Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 at [57]), but "Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties" (City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 380).

(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378-379; WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 at [197]).

[40] Recourse may be had to extrinsic material in the construction of a certified agreement where there is ambiguity. Ambiguity exists when a provision in an enterprise agreement is capable of more than one meaning. The matter of whether there is ambiguity must be considered objectively.

[41] In terms of recourse to extrinsic material in such circumstances, both parties referred to the decision of Berri where a Full Bench of the Fair Work Commission relevantly stated:

[61] Having identified ambiguity it is permissible to consider evidence of the surrounding circumstances as an aid to the task of interpreting the agreement. As Mason J observed in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (Codelfa):

... evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract where it has a plain meaning.

[62] The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties and the subject matter of the contract. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations. As Mason J observed in Codelfa:

... when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of contract, except insofar as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting.

[63] As noted in Golden Cockerel, evidence of relevance to the objective framework of facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

[64] As to category (i), evidence of prior negotiations will be admissible - but only for a defined purpose. As Mason J observed in Codelfa:

Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parole evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

[65] Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was. So much is clear from the oft-quoted statement of Madgwick J in Kucks v CSR Ltd: 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.60

• [17] Together Queensland submits that the evidence it has put before the Commission is admissible under the principles set out above and that it is 'evidence uncontradicted as to the intent of the parties. It's not a subjective view because it's not contradicted. It is the intent of the parties'...'at the first instances, we'd say there's no ambiguity. They weren't - their leave balances were to be adjusted so they were not disadvantaged'.[18]

• [18] The submissions of the AMOU set out a similar background and rationale for the suggested methodology which is the same as that proposed by Together Queensland. At hearing, the AMOU supported Together Queensland's evidence and oral submissions.

• [19] The AMOU suggests that Directive 04/17[19] provides guidance by way of formulas to ensure accrued entitlements are not reduced when daily hours change.[20]

• [20] The AMOU succinctly states its case as follows:[21]

Leave entitlements exist to provide employees with paid time away from the workplace. If as at 30 September 2022, the employee had accrued enough leave to have X number of days away from the workplace, the conversion must ensure they can still access the equal number of days away from the workplace on 1 October 2022, no more, no less.

• [21] The AMOU agrees with Together Queensland that the answer to the question for arbitration should be a formula that ensures there is no gain and no diminution to the already accrued entitlements of VTSOs. To that end, the AMOU sets out a proposed formula which mirrors that set out at [8] above.

Department of Transport and Main Roads (the Department)

• [22] The Department agrees with Together Queensland's submission that there is to be no loss or gain for employees or the Department when converting accrued leave balances to reflect the change to the hours of work under the current agreement.[22] However, the Department disagrees that the correct formula to be adopted is that suggested by the unions. The Department submits that the unions are incorrectly utilising leave debit figures contained in the 2018 Agreement instead of the daily hours to convert accrued leave balances.[23]

• [23] The Department submits that there was no discussion during bargaining about how the accrued leave balances were to be treated to reflect the change in ordinary hours. However, the Department submits that on 12 October 2022 there was a discussion during negotiations that any change to how leave is accrued would also adjust existing balances to align with the revised application of the provisions.[24]

• [24] Regarding the proposed methodology for annual leave conversion put forward by the unions, the Department says the unions have 'erroneously used 10 hours which represents the annual leave debit under the previous agreement. The correct figure should be 10.86 hours which represents the daily (ordinary) hours per shift under the previous agreement.'[25]

• [25] The Department submits that the unions are conflating the crediting and debiting of annual leave in its methodology for converting accrued leave balances. The Department says that leave debits can occur at a full rate (which in this case is 10.35 hours per 12 hour shift) or any other agreed amount (for example at half pay).[26]

• [26] The Department says that an employee has an entitlement to take annual leave at half pay or for half of a day and that when they do this, it does not impact on their accrual of annual leave, rather it impacts on the number of days or shifts they can take as leave.[27]

• [27] The Department disagrees with the unions' assertion that the number of accrued days under the previous agreement need to be determined for each leave type and that those days need to be converted into hours by utilising the leave debit arrangements in the current agreement.[28] The Department submits that debiting arrangements under the current agreement are not relevant to the accrual arrangements under the previous agreement. The Department asserts that it is only the leave accrual arrangements under the previous agreement and the leave accrual arrangements under the current agreement that need to be considered when converting accrued leave balances for VTSOs.[29]

• [28] The Department submits that the unions' methodology results in increases to: both the amount of leave accrued (when expressed as weeks or years) and to the dollar value (compared to an employee having their leave paid out the day before the current agreement commenced versus the day after the current agreement commenced).[30]

• [29] The Department's proposed methodology to convert the leave balances is:[31]

Leave entitlement before change x daily hours after change (10.35 hours)/daily hours before change (10.86 hours) = leave entitlement after change.

• [30] The Department submits that applying the above conversion formula does not have the effect of reducing an employee's entitlements that were accumulated under previous agreements. The Department says that applying the conversion formula ensures the leave balances are adjusted to provide for financial equivalency in leave value for employees and the department because of the change in ordinary working hours.[32]

• [31] By way of further explanation, the Department says that:[33]

assuming the only increase in wages was due to the change in ordinary working hours, if two employees have the same leave balances on the last day of the previous agreement, and one employee ceased employment on the last day of the previous agreement and the other ceased employment on the first day of the current agreement, then both employees should have received the same amount of money for their accrued leave paid out.

• [32] The Department goes on to address the reasons why it recommends the same methodology for the conversion of sick leave and long service leave balances.

• [33] From [77]-[84] of its written outline of argument, the Department addresses what it has called its 'expert opinion'. The Department's expert opinion has been provided by an actuary who it says 'applied the key principles of financial equivalence, consistency, proportionality, and transparency to promote a fair and equitable outcome for the parties'.

• [34] The Department notes that if the formula suggested by the actuary is adopted, employees would be entitled to at least the same dollar value of payment, and in some instances more, for their accrued leave whether they took that leave under the previous agreement or under the current Agreement, and therefore VTSOs are in a 'no worse' financial position.

• [35] As Together Queensland put it in oral opening submissions, 'this is a simple matter that has been made very complicated'.[34] In response, the Respondent submits that this is a 'mathematical problem and it requires a mathematical solution'. Both are correct.

• [36] While there was no methodology for conversion of existing leave accruals included in the 2022 Agreement, it seems to me that an appropriate and practical starting point for determining the correct methodology to be applied would be relevant discussions had between the parties during the negotiations. The first question to be asked therefore is, what was the intent of the parties?

• [37] While answering the question for arbitration does not require the interpretation of a clause in the Agreement, I find that the principles set out in ASMOFQ provide a useful framework and guidance within which to consider the question. The notifier of the dispute has suggested such a course, and the Department did not object to the application of those principles.

• [38] It is uncontroversial that it was agreed between the parties that the changes to ordinary hours and the way that leave would be accrued and debited under the new agreement would not result in a detrimental outcome for the employees or the Department. This is reflected in the submissions above and the oral submissions at hearing.[35]

• [39] Together Queensland says that the concept of 'financial equivalence' put forward by the Department (and applied by the actuary it engaged to provide an 'expert opinion' as to the appropriate formula to be used) was 'simply never raised in bargaining and never discussed in bargaining'.[36]

• [40] Quite simply, Together Queensland is saying that if a VTSO had accrued enough leave to take a 12 hour shift off on 30 September 2022, they needed to have a converted leave balance that would allow them to take the same 12 hour shift off on 1 October 2022. Together Queensland says that if the VTSO does not have enough leave to take the same day off 24 hours after commencement of the agreement, they have been disadvantaged.

• [41] Having regard to the principles set out above (at [16]), it is necessary to look to the available evidence regarding the intent of the parties. Firstly, there are the minutes of the meeting of 12 October 2022.[37] Then there is the evidence of Mr Ken McKay, Director of Collective Bargaining for Together Queensland and Mr Roubicek, a VTSO and Together Queensland delegate, about discussions and negotiations related to the 2022 Agreement.

• [42] Mr McKay was involved in the negotiations for the 2022 Agreement. Mr McKay's evidence was that in preparing for negotiations, he discovered that the award for this group of workers had changed and the ordinary hours were to be 36 and a quarter hours per week instead of a 38-hour week. Mr McKay identified that as the award provided for a 36 and a quarter hour week, the aggregated salaries need to be recalculated to reflect that, otherwise the agreement would not pass the 'BOOT' or non-disadvantage test.[38] Mr McKay said that he had undertaken preliminary calculations which indicated that simply applying a four percent increase the aggregated salary would not pass the test, and there would be a need to recalculate the aggregated salary.[39]

• [43] Mr McKay's evidence went into some detail about the approach taken to calculating the aggregated salary for the VTSOs. Mr McKay stated that the pattern of work is that each employee works seven 12-hour shifts in a fortnight and so each shift was broken into a notional ordinary time of 10.35 hours and 1.65 hours of overtime to use in the calculations.[40]

• [44] Relevant to this matter before the Commission, and as canvassed in both evidence and submissions, is that the 2018 Agreement had three different accrual rates and three different debit rates for each of annual leave, sick leave and long service leave.

• [45] Mr McKay recalled that during the negotiations, there was a desire on the part of the employer to change the arrangement where different amounts were debited for each leave type so that regardless of the type of leave taken, a debit of 10.35 hours would occur for each day taken. Mr McKay recalled that the annual leave entitlement of 19 shifts under the 2018 Agreement changed to 18 shifts under the 2022 Agreement.

• [46] Mr McKay pointed to the minutes of a negotiation meeting held on 12 October 2022 which in part record that:[41]

It was also discussed and TMR advised that any change to how leave is credited and debited would also adjust existing balances to align with the revised application. No concerns were raised in relation to credits and debits providing the accumulation was the same and it was aligned with the future state.

• [47] Mr McKay said he recalled the conversation which led to that entry in the minutes. Mr McKay said that Mr Guy Roubicek, who was one of the delegates, raised concerns regarding the change to the debit of 10.35 hours and that it may potentially lead to changes to accrued entitlements and that leave entitlements would be diminished.[42]

• [48] Mr McKay said that during that conversation, he had said that if the accrual and the debits are the same, it doesn't matter what debit you are using, as long as they balance on each side of the ledger and that the accrued entitlements have to be adjusted in the same way. Mr McKay said that after he said that, Mr Langford, Deputy Chief People and Culture Officer replied, "Correct".[43]

• [49] Mr McKay said that the 'shared understanding' in respect of what would happen with leave accrual, was that 'as long as what was being debited matched what was being accrued, and as long as the accrued entitlement was adjusted accordingly, no one would lose any days' leave, and that was that the conversation was about'. Mr McKay recalled that the shared understanding from the negotiations was to ensure that if someone could take a day or shift off prior to the 2022 agreement, they could take a shift off after the agreement.[44]

• [50] Mr McKay said that after the agreement was certified, there were discussions about how a conversion would be applied to accrued leave entitlements. Mr McKay said that the union had been in error regarding calculating annual leave entitlements. Further, Mr McKay recalled that during conciliation, it was picked up that the approach being taken to converting sick leave accruals created an error in the employee's favour which would need to be corrected.[45]

• [51] Mr McKay said that under the 2018 Agreement, an employee would need to have accrued 10 hours to take a day of annual leave. Under the 2022 Agreement, that employee would need to have accrued 10.35 hours to take a day of annual leave. For long service leave, it was '7.6 under the 2018, 10.35 under the '22 agreement'. For sick leave it 'was 9.5 hours and under the '22 agreement 10.35'.[46] Under both agreements, the employee would be paid for 12 hours for a day off.

• [52] Mr McKay recalled a conciliation conference in the Commission where Mr Donovan of the Office of Industrial Relations was invited to attend and he had stated that the conversion calculation methodologies set out in the relevant Directives were not appropriate to apply in the 'special and unique circumstances' regarding the agreement as the workers are being paid 12 hours when they take a day of leave.[47]

• [53] Mr McKay also gave evidence that a number of the presumptions Mr Boal (the Department's actuary engaged to prepare and recommend a methodology for the conversion of leave) applied in preparing his report for the Department, were not correct. Mr McKay said that there was no increase to compensate for the reduction in the annual leave from 19 shifts to 18 shifts.

• [54] Mr McKay said that Mr Boal's report indicates that the methodology proposed by Together Queensland would be the correct formula to use so that employees are no worse in terms of number of shifts of recreation leave they would be entitled to at the date of the current agreement.[48]

• [55] With regard to Mr Boal's report applying a 'cost offset' for the cost of meeting the no disadvantage test by reducing the employee's accumulated leave entitlements, Mr McKay said that this was 'never, ever contemplated' as something that would be the case.[49]

• [56] Mr McKay was asked about Mr Boal's report as it related to 'financial equivalence'. Mr McKay referred to the minutes of the meeting on 12th October 2022 and his recollection of that part of the discussion:[50]

"TMR advise that it will incur an expense with the application of the annualised salary and naturally will need to consider offsets". In respect to this, that TMR acknowledge that the overtime currently being paid on overtime hours worked outside of that included in the aggregated salary are being paid on the aggregated salary rate, resulting in employees receiving payment well in excess of the Award rate for overtime. And TMR had a proposal to freeze that overtime amount at the current rate.

And I would say that that proposal didn't eventuate. But those, ah, were the issues and there was also - they were trying to look at issues with, ah, how casuals were paid to offset it, ah, and that was not adopted in the - in the final agreement. There as a change to when casuals would get paid - would be considered to get paid the overtime, ah, that was included in the agreement but, ah, those were the areas where TMR was seeking to offset the costs.

And, as I indicated, those issues with the overtime didn't, ah, come to fruition but they were the issues - the only issues raised by TMR in the negotiations, if you'd like, to try and offset the costs.

• [57] It was put to Mr McKay in cross-examination that his recollection of the shared understanding regarding the conversion of leave balances is not what is reflected in the minutes of 12 October 2022. Mr McKay disagreed with this proposition and said that the matter of adjusting existing leave balances was discussed at that meeting and that no concerns were raised provided accumulation was the same and there was alignment with a future state and the change in the debits from 10, 9.5 and 7.6 to 10.35.[51]

• [58] Mr McKay expanded on this point and said the precise formulas were not discussed prior to certification and that in the negotiation meetings the discussion was that there would be no disadvantage to employees. Mr McKay said the discussion was that employees would not suffer any loss or gain of how many shifts they could take off.[52]

• [59] It was put to Mr McKay that there were no in-depth discussions during the negotiations about any formulas for converting the leave entitlements. Mr McKay agreed and said that there was not discussion about the formulas but that the principle was that no one would lose any entitlement or gain any entitlement. He reiterated his understanding that 'if someone could take a day before...the agreement came into place, they would be able to take a day after'.[53]

• [60] Mr McKay reiterated his view that following the opinion expressed by the Office of Industrial Relations during conciliation, he did not believe the relevant directives have application for the conversion of leave accruals. It was put to Mr McKay that this was the view of the Office of Industrial Relations and not the Department. Mr McKay replied that the Department did not refute that view. Mr McKay said:[54]

They sat there - you - you were there. You sat there meekly and didn't say, "This is not correct". It's all in the transcript.

• [61] Mr McKay expressed a view that the time for the Department to raise a contrary position was during the conciliation conference with Commissioner Dwyer. Mr McKay said that if the Department had a contrary view and had expressed it, it could have been dealt with or resolved during subsequent conciliation conferences before the Commission.[55]

• [62] Mr Roubicek is the elected Together Queensland delegate for the VTS centre in Townsville and was involved in negotiations for the 2022 agreement.

• [63] Mr Roubicek explained his understanding that there was a need to review the aggregated salary to align with the Public Service Award and that there was a need for the 38-hour week to become a 36 and a quarter hour week with overtime to make up the additional hours worked.[56]

• [64] Mr Roubicek was asked about his recollection of the negotiations. Relevantly, Mr Roubicek recalled that there was discussion about leave debits from previous agreements to new agreements. Mr Roubicek recalled that under previous agreements, leave was debited at three different rates: recreation leave 10 hours, sick leave 9.5 hours and long service leave 7.6 hours.[57] Mr Roubicek says that part of the proposal put to employees when the aggregated salary was being worked out was that the government was trying to simplify leave debits and have all leave deducted at the same rate of 10.35 hours which would align with the ordinary hours under the new aggregate salary.[58]

• [65] Mr Roubicek said that this raised a concern for him that 'as a result of the increased hours which would be deducted, the accrued leave balance would result in less leave available for VTSOs.'[59]

• [66] Mr Roubicek's recollection of discussions around that was that when the concern was raised, 'we were assured there would be no disadvantage to VTSOs as a result of any change to our leave deductions'.[60] Mr Roubicek was asked when he was given this assurance and he said 'that was given to us verbally during...negotiation - or - during the negotiation meetings prior to the certification of the agreement'.[61]

• [67] Mr Roubicek was asked if he recalled any more detail about that discussion and he said that he could only recall that the change to how leave would be debited was raised, that the concern about the impact on the leave balances was raised and that there was an assurance that there would be no disadvantage to the employees as a result of the change.[62]

• [68] Mr Roubicek was asked what he understood the assurance to mean in practical terms, and he said, 'from my point of view...if I had 10 days' leave under the previous agreement, that I would have 10 days' leave under the new agreement'.[63]

• [69] Mr Roubicek was asked if this was a shared view or his own personal view. Mr Roubicek said that he believed it was a shared view from all of those in the meeting and that later it was the view shared in discussions with the VTSOs on the floor.[64]

• [70] Mr Roubicek was asked who shared the information with the VTSOs on the floor. He said that as the delegate he provided feedback from the meetings and that he expressed that to the other operators he works with but there were also other delegates within the room at the time from the AMOU and from Gladstone.[65]

• [71] Mr Roubicek said that he would generally carbon copy in his manager when he sent out information so that the manager would be aware of the changes as well.[66]

• [72] Mr Roubicek said that under the new arrangements,[67] some of his colleagues 'lost hours, which resulted in loss of days'.[68] Mr Roubicek agreed that some of his colleagues could not take as many 12 hour shifts off after the agreement that they had already accumulated before the agreement.[69]

• [73] Under cross-examination, Mr Roubicek agreed that the Department had implemented the formula to convert leave accruals which had been suggested by the union, but also said that after it was implemented, it was identified that there was a disparity in how accumulated leave was calculated. Mr Roubicek said that it was after this that concerns were raised.

• [74] Before Mr Roubicek was excused, I confirmed with him that his understanding of there being no disadvantage to employees under the new arrangements was that however many days leave he was entitled to under the 2018 Agreement would be the same amount of leave he would be entitled to under the 2022 Agreement.[70]

• [75] I asked Mr Roubicek if there was ever a thought in his mind that he would potentially end up with fewer days leave under the 2022 agreement but that he'd be getting paid more for those days and so it would all work out. He answered, 'No. Not - not during the discussions. It was - we were of the understanding it was going to be 'day for day'.[71]

The Department has not called any evidence about the intentions of the parties

• [76] In its opening submissions, the Department said that it would establish certain matters on the basis of the 'evidence from the Respondent's written submissions' and the filed statement of agreed facts. I made it clear that while I take note of the content of written submissions, they do not constitute evidence. At this point it was open to the Department to seek an adjournment with a view to calling some evidence to contradict that which was already before the Commission or to support the Department's submissions.

• [77] In oral closing submissions, the Department said that the evidence will show that Mr McKay's recollection of matters discussed at conciliation regarding the applicability of the leave directives was not shared by the Department. The problem with this submission is that the transcript of the conciliation is not in evidence and there is no evidence of anyone in attendance at the conciliation who holds a different view.

• [78] The Department disagrees with Together Queensland's submission about what the entry in the minutes of 12 October 2022 means. The Department says that the conversation Mr McKay recalled occurring at the meeting is not reflective of the Department's position. That may be the case, but again, there is no evidence to support such a submission.

• [79] As submitted by Together Queensland in its closing submissions, the meeting minutes and oral evidence of Mr McKay and Mr Roubicek is 'uncontradicted as to the intent of the parties. It's not a subjective view, because it's not contradicted'.[72]

• [80] As Together Queensland points out, 'If the respondent wants to claim there is an ambiguity in that, the onus is upon them to lead admissible evidence to demonstrate such ambiguity'. Together Queensland says that the Department have had 'ample opportunity to refute the evidence of Mr McKay and Mr Roubicek'.

• [81] Together Queensland says that it was open to the Department to call witnesses involved in the negotiations who still work with the State Government to contradict the evidence, but they chose not to do so. Together Queensland invites me to draw an adverse inference pursuant to Jones v Dunkel regarding the Department's failure to call as witnesses Departmental representative present during negotiations, and particularly the meeting of 12 October 2022. [73]

• [82] The Department had ready access to Departmental employees who were involved in the meeting on October 12, 2022, and more generally the negotiations leading to the 2022 Agreement. Following conciliation regarding the question of the correct formula to be applied; being served with a written outline of argument; and outlines of evidence for the witnesses Together Queensland intended to call for the hearing, it had to have been obvious to the Department that it would need to call evidence to contradict that which would be before the Commission. I can only conclude that the Department was of the view that the evidence of Departmental officers present at that meeting would not assist their case.

• [83] Together Queensland points out that Mr Boal has put forward three formulas to convert the leave accruals. Notably, one of those is that put forward by Together Queensland, which Mr Boal agrees is the correct formula in the event the intention is to ensure that leave accruals remain the same after the commencement of the 2022 agreement as they were prior:[74]

The formula proposed by Together Queensland would be the correct formula to use so employees are no worse off in terms of the number of shifts of recreational leave they would be entitled to as the date of the current agreement.

• [84] One of Mr Boal's suggested formulas provides for 'financial equivalence' as a response to the 'no disadvantage' approach the parties decided to take. As Together Queensland points out, if the Department wish to argue that the agreed intent of the parties was that the conversion would result in financial equivalence, they needed to lead evidence on this point and they have not. I find that Mr Boal's evidence demonstrates that 'financial equivalence' was a key principle he and his colleague determined to apply based on their professional skill and experience.[75] While the Department may have chosen to adopt this approach post-certification and post the dispute about the correct formula to use to convert leave balances, I am satisfied that it was not one that was in contemplation during negotiations.

• [85] To the extent that there were discussions on the part of the

Department as to how it might pay for wage increases and the necessary changes to ensure the new agreement aligned with the award, the evidence of Mr McKay was that any suggestions made were not actioned. In any case, there is no evidence that there was a discussion or any contemplation that the Department would offset other increases by decreasing the leave balances of the VTSOs.

• [86] Together Queensland says that the evidence demonstrates that the Department wanted to standardise leave balances or debits and that the union agreed, on the basis that employees don't get disadvantaged or advantaged. I agree. To now argue that leave entitlements or accruals should be reduced under the 2022 Agreement would undermine such discussions. And in any case, I just don't accept that this was what was ever discussed.

• [87] The Department submits that it's often the case that people's recollections of conversations and understandings may not be shared by others. The Department also notes that the discussions happened two and half years ago.[76] However, I note that the Department did not suggest to either Mr McKay or Mr Roubicek that they may not be properly recollecting matters due to the passage of time. Further to this, and as discussed above, no evidence has been led of anyone who held a different view.

• [88] The Department made detailed submissions that go to the dollar value of the accrued leave and what it says is a disadvantage to the Department. I will not further consider those submissions because on the basis of the evidence before me, I am satisfied that the intent of the parties was not with regard to financial equivalence, but with regard to preserving the amount of leave available to an employee before and after the commencement of the 2022 Agreement.

• [89] As I stated at the close of the hearing, it may be that the parties retreated from an agreement made post-certification of the 2022 Agreement about the formula to be applied to convert the leave accruals. It makes sense to retreat from the use of that formula if it was not working in practical terms. However, that does not open the gate to retreating from agreements reached through negotiations prior to certification.

• [90] I agree that the leave directives cannot directly apply to this particular group of workers, however the guiding principle of the directives and their practical effect is that if one had a particular accrual of leave and it is to be converted, it is done in a way that leaves one with access to an equivalent amount of leave one would have had before the conversion. The intent of the directive is to ensure that there is no loss of accrued leave.

• [91] Together Queensland says that the ordinary meaning of the term 'no disadvantage' in an industrial context and purpose is clear. I agree. Leave is precious to workers. The way people think about their leave is in terms of 'how many days do I have available?' or 'how many days do I have left?'. I simply do not accept that there is any way to consider the minutes of the meeting or the evidence of Mr McKay and Mr Roubicek and emerge with the answer that there was a shared understanding between the parties that 'no disadvantage' or 'no reduction in leave balances' referred to the dollar amount of the leave available or any other outcome than a conversion of the previously accrued balance to the same number of days' leave available to the worker prior to the commencement of the 2022 Agreement.

• [92] Regardless of the 10.35 hours deducted from the leave balance when a VTSO takes leave, they are paid for a 12-hour shift. The amount of leave in hours that the VTSO has access to is really a way of working out how many 12 hour shifts they can have off, noting that the debit from their accrued leave is not 12 hours but 10.35 hours.

• [93] The uncontradicted evidence before the Commission leads me to the view that the employees agreed to move to the proposed uniform 10.35 hour deduction for each type of leave on the basis that they would retain access to the same number of days or shifts of leave they had accrued prior to certification as they would after the 2022 Agreement commenced.

• [94] As I have determined that the intent of the parties leads to the implementation of the formula put forward by Together Queensland, I will not consider submissions, argument or the evidence of Mr Boal regarding the implementation of alternative formulas.

• [95] The correct methodology is the one proposed by Together Queensland. I note that this formula was also endorsed by the Department's witness Mr Boal in circumstances where the task was to identify a formula which would result in no loss of leave entitlement to the employees.

• [96] Pursuant to s 451(2)(c) of the Industrial Relations Act 2016, I make the following order:

In answer to the question for arbitration, namely:

What is the correct methodology to convert accrued annual leave, long service leave and sick leave balances for Vessel Traffic Service Operators as at 30 September 2022, to account for the change to ordinary hours of work and entitlements that commenced on 1 October 2022 under the Maritime Safety Queensland Maritime Operations Certified Agreement 2022?

Accrued Hours prior to certification/10 x 10.35

Accrued hours prior to certification/7.6 x 10.35

[1] The terms formula and methodology are used interchangeably.

[4] Together Queensland submissions filed 14 February 2025.

[5] Facts not in dispute document filed 17 October 2024.

[7] Together Queensland Written Outline of Argument ('Together Queensland submissions') [26].

[8] Together Queensland submissions [29].

[9] Together Queensland submissions [30].

[12] As Together Queensland points out at [40] of its submissions filed 14 February 2025, 'in most situations when employees move from a 38hr week to a 36.25hr week, the daily debits and corresponding credits change from 7.6 hrs to 7.25 hrs. The accrued leave expressed in hours would reduce accordingly. The employees in those cases have the same number of accrued days leave after the change in hours as they did under the longer weekly hours arrangement.'

[13] Together Queensland submissions [41].

[14] Together Queensland submissions [38].

[19] Superseded Directive: 04/17 (Recreation Leave).

[20] AMOU submissions filed 14 February 2025 [13]-[14].

[22] Department of Transport and Main Roads Written Outline of Argument filed 28 February 2025 ('Department submissions') [3].

[50] T1-20 ll35-T1-21 l7; referring to Exhibit 4, page 5.

[65] T1-32; Having regard to Exhibit 4, I take Mr Roubicek's reference to 'in the room' to be a reference to the 12 October 2022 meeting.

[67] I take this to be a reference to the conversion formula originally proposed by Together Queensland but eventually abandoned by the parties.

[73] [1959] HCA 8.

[74] Affidavit of Andrew Boal, Exhibit A, page 6.

[75] T1-50; I make no criticism of Mr Boal, he was simply undertaking the task the Department engaged him to undertake.