Fair Work Act 2009

s.739 - Dispute resolution

Alleged dispute regarding calculation of afternoon shift and casual loadings.

[1] This decision deals with an application made by the Transport Workers' Union of Australia (the applicant) under section 739 of the Fair Work Act 2009 (the Act). The respondent is SCT Logistics (the respondent).

[2] The matter involves a dispute under the SCT Logistics, Perth Enterprise Agreement 2009 [AE872159] (the Agreement).

[3] The dispute has been raised under Clause 13−Settlement of Disputes of the Agreement.

[4] There is agreement that the Fair Work Commission (the Commission) has the power to arbitrate the dispute under this provision.

[5] The dispute between the parties concerns the method of calculation for casual employees whom are working afternoon shift as part of their ordinary hours.

[6] The parties have different views as to how the payment for casual employees is calculated when they are working afternoon shift as part of their ordinary hours.

[7] The respective calculations the parties propose are explained below using the rate per hour from Clause 7.6 of the Agreement for a casual Driver Grade 4 from 1.07.11, which is an amount of $20.422.

[8] First the casual loading of 25% is applied to the pay rate of $20.422 to give the Ordinary Hourly Rate. Then the shift loading, e.g. 17.5 % for afternoon shift, is applied to this amount to give the amount payable.

$20.422 (pay rate) x 125% (casual loading) = $25.5275 (the Ordinary Hourly Rate)

$25.5275 (the Ordinary Hourly Rate) x 1.175% (afternoon shift loading) =

[10] First the casual loading, 25% on the Ordinary Hourly Rate of $20.422 is calculated.

[11] Then the shift loading, 17.5% for afternoon shift on the Ordinary Hourly Rate of $20.422 is calculated.

[12] The amount of each of these loadings is then added to the Ordinary Hourly Rate of $20.422 to give the amount payable.

$20.422 (the Ordinary Hourly Rate) x 25% (casual loading) = $5.1055

$20.422 (the Ordinary Hourly Rate) x 17.5% (afternoon shift loading) = $3.57385

$5.1055 + $3.57385 + $20.422 = $29.10135 (the amount payable)

[13] There are a number of clauses in the Agreement that the parties have referred to in their submissions which are set out below:

5.1 Except where the terms conflict with the terms of this Agreement or as otherwise provided by this Agreement or where such term might be an unlawful term contrary to section 194 of the Fair Work Act 2009 ("FWA"), the terms of Transport Workers Award 1998 (the Award") as at the date of lodgement of this Agreement are incorporated into this Agreement.

5.2 Where any inconsistency between the terms of this Agreement and the terms of the Award arise, then the terms of this Agreement shall apply. Any dispute regarding the interaction of the Award and the Agreement shall be dealt with in accordance with the dispute resolution procedure contained at clause 13 of this Agreement."...

"7.6 Structure and Pay Rates ("Ordinary Hourly Rate")

Level 1- Full Time & Casual employees 4% 4% 3%

7.7 Casual employees will receive a casual loading in accordance with the Transport Workers Award 1998 based on the Level 1 rates above."...

"9.1.8 Afternoon Shift and Night Shift Employees will subject to clause 9.1.13 receive the appropriate shift loading on the Ordinary Hourly Rate."...

[14] As can be seen from Clauses 5.1, 5.2 and 7.7 of the Agreement there is a need to consider some of the terms of the Transport Workers Award 1998 [AP799474] (the Award).

[15] The relevant terms of the Award are set out below:

12.5.1 A casual employee is an employee engaged as such and paid by the hour.

12.5.2 An employer shall wherever practicable notify a casual employee if services are not required the next working day.

12.5.3 A casual employee while working ordinary hours, shall be paid on an hourly basis one thirty-eighth of the appropriate weekly wage rate prescribed by the award, plus 25% of ordinary time earnings for the work performed. A minimum payment of four hours pay is to be paid.

12.5.4 In addition to normal overtime rates a casual employee while working overtime or outside of ordinary hours, shall be paid on an hourly basis one thirty-eighth of the appropriate weekly wage rate prescribed by the award, plus 10% of ordinary time earnings for the work performed.

12.5.5 A casual employee shall not be entitled to the benefits of clauses 13, 14 29, 32,38, 39, 40 or 42."...

For ordinary hours of shift, shift workers shall be paid the following extra percentages of the rate prescribed for their respective classifications.

Permanently working alternate night and afternoon shift:

[16] In terms of general principles it is well established that it is not usual that an industrial instrument will provide for the payment of a penalty on a penalty. For example the Australian Industrial Relations Commission in one of the primary Award Modernisation Decisions [[2008] AIRCFB 1000] where it was dealing with a large number of issues of general importance for the content of modern awards and, in particular, the content of standard clauses said:

"[50] In all the circumstances we have decided to confirm our earlier indication that we would adopt a standard casual loading of 25 per cent. We make it clear that the loading will compensate for annual leave and there will be no additional payment in that respect. Also, as a general rule, where penalties apply the penalties and the casual loading are both to be calculated on the ordinary time rate." (Underlining added)

[17] That is not to say that the parties to an agreement cannot have agreed to for example a shift penalty being applied to an hourly rate after that hourly rate had first been increased by a casual loading. That is a matter for the parties negotiating the agreement, however it would be hoped that if that was the parties' intention this departure from the general rule would be expressly made plain in the agreement.

[18] The submissions of the parties have appropriately been based on determining the plain meaning of the Agreement from a consideration of its terms and the terms of the Award.

[19] I will proceed on that basis applying the well understood principles of construction.

[20] The starting point is the text itself and its meaning may require consideration of the context including the general purpose and policy of the provision. Specifically for agreements in this jurisdiction the industrial purpose of the provision is to be considered.

[21] A narrow or pedantic approach to interpretation is to be avoided and it is to be borne in mind that the framers will likely have had a practical bent of mind and were more concerned with expressing their intent in ways likely to have been understood in the context of the relevant industry rather than with legal niceties.

[22] The question to be determined by the Commission in this matter is what is a casual employee who is working afternoon shift as part of their ordinary hours to be paid?

[23] First it is notable that Clause 7.6−Structure and Pay Rates of the Agreement includes as part of its heading the following:

[24] Further it should be noted that each of the words ordinary, hourly and rate used in the heading of Clause 7.6 are capitalised and the words are between inverted commas.

[25] Clearly the rate per hour for the respective Grades of Loader Forklift Driver and Driver set out under this heading in Clause 7.6 are intended by the drafters of the Agreement to be known as the "Ordinary Hourly Rate".

[26] Clause 7.6 of the Agreement contains two levels of pay rates. One of these levels is identified as follows:

[27] My conclusion from Clause 7.6 of the Agreement is that the rate per hour for the respective Grades set out under the sub-heading "Level 1 - Full Time & Casual employees", is the "Ordinary Hourly Rate" for a casual Loader Forklift Driver or casual Driver.

[28] For example the rate per hour from Clause 7.6 of the Agreement for a casual Driver Grade 4 from 1.07.11, $20.422, is that casual employees Ordinary Hourly Rate.

[29] It is further noteworthy that the words "Ordinary Hourly Rate", capitalised in this way, are also found in Clause 9.1.8 of the Agreement as follows:

"9.1.8 Afternoon Shift and Night Shift Employees will subject to clause 9.1.13 receive the appropriate shift loading on the Ordinary Hourly Rate." (Underlining added)

[30] There is no definition of afternoon or night shift employees in either the Agreement or the Award. Giving these words their plain meaning, employees who work on afternoon shift will receive the appropriate shift loading on the Ordinary Hourly Rate.

[31] The drafters of the Agreement have deliberately labelled the rates per hour set out in Clause 7.6 as the "Ordinary Hourly Rate" and used these same words only once further in the Agreement, when prescribing what the shift loadings are calculated upon.

[32] There is no reason to conclude as the applicant does that casual employees working afternoon shift receive the appropriate shift loading on the loaded casual hourly rate; i.e. on the product of applying the casual loading to the ordinary hourly rate first.

[33] Given my earlier conclusions the Ordinary Hourly Rate, for the purposes of calculating the afternoon shift loading in Clause 9.1.8 of the Agreement, is the rate per hour prescribed in Clause 7.6 of the Agreement for each Grade of Loader Forklift Driver or Driver.

[34] In terms of the calculation of the casual loading, Clause 7.7 of the Agreement provides that casual employees will receive "...a casual loading..." in accordance with the Award.

[35] The Award has no definition of "casual loading".

[36] However I accept the applicant and the respondent's approach that Clause 12.5.3 of the Award which prescribes that a casual employee "...while working ordinary hours, shall be paid on an hourly basis one thirty - eighth of the appropriate weekly wage rate prescribed by the award, plus 25% of ordinary time earnings for the work performed..." is prescribing a casual loading of 25% of ordinary time earnings. This casual loading prescribed in the Award is expressly for casual employees when working ordinary hours, and so is applicable in this case.

[37] Neither the Award nor the Agreement defines the term "ordinary time earnings" used in this provision.

[38] However guidance as to its meaning can be taken from the fact that the Agreement includes the following provision:

"11.5 Payments for periods of personal leave taken by afternoon and night shift workers will be paid at ordinary time earnings plus the appropriate shift penalties as specified in the Award."

[39] This provision clarifies that for shift workers "ordinary time earnings" do not include shift penalties.

[40] This strongly suggests that the casual loading of 25% should not be applied to an amount that includes shift penalties.

[41] This supports the conclusion that the casual loading of 25% in Clause 7.7 of the Agreement, which follows immediately under Clause 7.6 which prescribes the Ordinary Hourly Rates, should be applied only to this Ordinary Hourly Rate and not to the product that results from first applying the afternoon shift penalty/loading to the Ordinary Hourly Rate.

[42] This interpretation is consistent with the plain meaning of the words. For casual employees who are not shift employees the only rate included in the Agreement that the casual loading can be applied to is the rates per hour prescribed in Clause 7.6. Consequently I have no doubt that this is the correct construction. The words "Ordinary times earning" in the Award provision which prescribes the 25% casual loading is synonymous with the "Ordinary Hourly Rate" in the Agreement.

[43] The conclusions above as to how the shift loading and the casual loading are to be applied is consistent in my view with the industrial purpose of both the casual loading and the afternoon shift loading respectively.

[44] Casual loadings are payable largely to compensate for the fact that casual employees do not receive the same benefits in terms of notice of termination, redundancy, annual leave, personal leave, jury service and public holidays as do full-time or part-time employees. This is made plain in the Award (see Clause 12.5.5). Separately shift loadings are payable to employees working shift work, whether they are casual, full time or part time, as compensation for the inherent disabilities of working unsociable hours. The reasons for the two loadings are separate and distinct and do not interact.

[45] Having determined how the afternoon shift and casual loadings are applied I am satisfied that the respondent's interpretation in this case is correct. The afternoon shift loading is applied to a casual employees' Ordinary Hourly Rate, exclusive of the casual loading and similarly the casual loading is applied to the casual employees Ordinary Hourly Rate exclusive of the shift loading.

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