United Voice v Valspar

Section 50 18 The terms of the Agreement are given legal force and effect by the FW Act. Section 50 of the FW Act provides: 50 Contravening an enterprise agreement A person must not contravene a term of an enterprise agreement. Note 1: This section is a civil remedy provision (see Part 4-1). Note 2: A person does not contravene a term of an enterprise agreement unless the agreement applies to the person: see subsection 51(1). 19 Section 50 is a civil remedy provision. Contravention of the obligation it states may be remedied by the grant of civil penalties and other relief, under the FW Act. Contravention of, or failure to observe, a term of the Agreement will constitute a contravention of s 50 of the FW Act. 20 The learned primary judge said, in a number of places in the judgment under appeal: On a plain reading of s.50 of the Act, it is not possible to contravene it. The section is a statement creating an obligation. 21 I disagree with the first part of this declaration and I do not, with respect, understand how it is thought to follow from the second. 22 As s 50 is a civil remedy provision, the provisions of Part 4-1 of the FW Act apply. Sections 539 and 540 of the FW Act provide who may apply for an order in relation to the contravention of civil remedy provisions, including s 50. The appellant had standing to do so. 23 It is not easy to fully understand how this (erroneous) approach to the operation of s 50 may have affected an analysis of the respondent's liability under the Agreement. The preferable course, therefore, is to address those issues of liability directly.

Clause 34 24 Clause 34 of the Agreement provides as follows: ANNUAL LEAVE 34. ANNUAL LEAVE a. All full time weekly hired employees will be entitled to 4 weeks of annual leave for each 12 months service. Annual leave will accrue progressively during the year of service according to the ordinary hours of work. Annual leave accumulates year to year. Annual leave will be paid for at the ordinary time rate of pay as prescribed by this Agreement for the employee's classification. b. Subject to sub clause (c) of this clause, annual leave will be given and taken at such times and in such periods as are required by Wattyl provided that other than by mutual consent, annual leave will be given in one continuous period of 4 weeks or not more than 2 periods one of which will be not less than 2 weeks in duration. Colours and Chemicals: Notwithstanding any other provision is this agreement at Colours and Chemicals, Wattyl is entitled to direct employees to use 10 days of their annual leave per year to cover maintenance shutdown. Further, employees are entitled to take 10 days annual leave per year at a time convenient to them. In addition, employees may elect to accrue the 10 days per year annual leave to be taken at a later date at a time convenient to them. c. Where Wattyl intends temporarily to close (or reduce to nucleus) an establishment or a section thereof for the purposes (inter alia) of allowing annual leave to the employees concerned or a majority of them Wattyl may give in writing to such employees one month's notice (or in the case of any employees engaged after giving of such notice, notice on the date of the employee's engagement) that the employer elects to apply the provisions of this sub clause, and then: (i) any such employee who at the date of closing is entitled to annual leave will be given such annual leave commencing on and from the date of closing and, in addition, will be paid holiday pay and annual leave loading for any period of employment after the accrual of his or her right to the annual leave and up to but excluding the date of closing; (ii) any such employee who at the date of closing is not entitled to annual leave will be given leave without pay on and from the date of closing and will be paid holiday pay and annual leave loading for that period of employment since the date of commencement thereof or the accrual of his or her last annual holiday (whichever is the later) and up to but excluding the date of closing, together with pay for any public holiday during such leave for which the employee is entitled to payment; and (iii) the next annual leave qualifying period of employment for every such employee will commence as on and from the date of closing. d. In sub clause (c) "date of closing" in relation to each employee means the first day of annual leave or unpaid leave pursuant to sub clause (c). e. Annual leave will be in addition to public holidays provided for in this Agreement. f. An employee whose services are terminated will be entitled to all accrued leave or payment in lieu thereof. g. A shift worker permanently engaged on continuous rostered shifts or engaged on permanent night shifts for the whole of the year in respect of which leave is granted, will be entitled to five weeks leave in lieu of four as provided in sub clause (a) above and pro rata for any period less than one year. h. An employee will not accrue entitlement to an Allocated Day Off during Annual Leave. i. In addition to the annual leave entitlements of this clause, employees in NSW will be granted 2 additional annual leave days per calendar year and employees in Queensland, South Australia, Victoria and Western Australia will be granted one additional annual leave day per calendar year. The additional annual leave day for employees located in Victoria is in lieu of the union picnic holiday. 25 This clause is not easy to construe, but I am satisfied that it does not operate in the way decided by the primary judge. 26 There are a number of elements which require detailed attention. 27 Clause 34(a) appears to make it clear (in the second sentence) that annual leave accumulates progressively, so that in the ordinary course of events some annual leave (at least 1 day) would have accumulated after as little as 3 weeks employment. 28 This aspect of cl 34 was, however, only inserted in 2010. As will be seen, the clause has origins decades earlier, which seriously complicates efforts to understand its presently intended operation and effect. In order to make sense of cl 34 as it now appears in the Agreement, it is necessary to commence with its antecedents and then consider the changes made to it from its original form. The present is one of those cases, in my respectful view, where the observations of Burchett J in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 are apposite: Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. … 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, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. 29 The origins of cl 34(c) lie in a memorandum of agreement (The Australian Paint Industry (Manufacturing) Agreement 1975) ("the 1975 Award") certified as a consent award by Mr Commissioner Taylor on 30 December 1975 under the provisions of s 28 of the Conciliation and Arbitration Act 1904 (Cth), which was thereafter reflected in subsequent awards applying in the paint industry. 30 In 1975, the relevant provision (cl 26) read as follows: 26. ANNUAL LEAVE (a) All full time weekly hired employees shall on completion of 48 weeks of work of forty hours each with the employer, be entitled to four weeks leave paid for at the ordinary time rate of pay as prescribed by this agreement and the award for the employee's classification. (b) Subject to (c) hereof annual leave shall be given and taken at such time and in such periods as are required by the employer provided that other than by mutual consent annual leave shall be given in one continuous period of four weeks or not more than two periods one of which shall be not less than two weeks in duration. (c) Where the employer intends temporarily to close (or reduce to nucleus) establishment or a section thereof for the purposes (inter alia) of allowing annual leave to the employees concerned or a majority of them he may give in writing to such employees one month's notice (or in the case of any employee engaged after giving of such notice, notice on the date of the employee's engagement) that he elects to apply the provisions of this sub-clause, and thereupon - (i) any such employee who at the date of closing is entitled to his annual leave shall be given his annual leave commencing as on and from the date of closing and, in addition shall be paid holiday pay and proportionate annual leave loading for any period of employment after the and up to but excluding the date of closing; (ii) any such employee who at the date of closing is not entitled to his annual leave shall be given leave without pay as on and from the date of closing and shall be paid holiday pay and proportionate annual leave loading for that period of his employment since the date of commencement thereof or the accrual of his last annual holiday (whichever is the later) and up to but excluding the date of closing, together with pay for any public holiday during such leave for which he is entitled to payment and (iii) the next annual leave qualifying period of employment for every such employee shall commence as on and from the date of closing. (d) In sub-clause (c) 'date of closing' in relation to each employee means the first day of his annual leave of unpaid leave pursuant to sub-clause (c). 31 A feature of cl 26(b) was, in my view, that the right to require when annual leave was taken was subject to an overriding proviso that annual leave might not be required to be taken in more than two periods, one of which must be not shorter than two weeks. That conformed to the general arbitrated standard at the time. There was no comma after the opening words (as there is now in cl 34(b) of the Agreement) upon which to base an argument for a different construction. In my respectful opinion, it is inconceivable that in 1975 the clause would not have been construed as I have suggested in order to reflect the general standard of protection of annual leave rights, as referred to below. 32 At the time when the standard of annual leave was two weeks per year, there had been a general principle adopted by the Commonwealth Conciliation and Arbitration Commission to the effect that an employer could not require annual leave to be taken in multiple periods - see Metal Trades Annual Leave Case (1945) 55 CAR 595. 33 Shortly after the adoption of three weeks annual leave as a general standard there was a move by employers to seek approval for annual leave to be taken in more than one period. To begin with, the earlier general principle was initially confirmed (Re Metal Trades Award; Re Annual Leave (1963) 104 CAR 221) (the Metal Trades Award was, at the time, the general vehicle used for consideration of general industry standards). 34 In the 1963 decision the following was recorded (at 223 and 227): The essence of the application is that employers under this award should be permitted at their discretion to require employees to take annual leave in two periods. The claim contemplates that an employer could achieve this result by two close-downs (in which case employees would have two periods of leave en masse), or by rostering employees for leave in two periods, or by a combination of one close-down and rostering for the second period of leave. As finally pressed the claim was for the right to split an employee's three weeks leave into one period of seven and the other of 14 consecutive days. … We are not prepared to permit an employer at his discretion to decide whether the leave of his employees should be taken in more than one period because we do not consider that the employers have demonstrated the necessity for this and because there may be a great deal at stake for employees. 35 An exception to the rule was then made in the event of agreement to two periods of leave. However, even in such cases one period was to be for 14 consecutive days and the other for 7 consecutive days. Later, the position was further relaxed to give employers a greater measure of control, but the amenity of at least 2 weeks continuous annual leave (which had a long history) was generally preserved. 36 Clause 26 of the 1975 Award must be understood in the light of that general history. In that context, specific attention must be given to the discretions it afforded an employer. More recent amendments to the provisions should also be assessed with adequate reference to the same illumination. 37 Clauses of the type represented by cl 26 of the 1975 Award were generally concerned with facilitating an annual shutdown, often over the Christmas/New Year period. That, indeed, was the context and immediate cause for the 1963 application referred to earlier, after the annual leave standard was increased from two weeks to three weeks. 38 An annual shutdown provided a convenient period for plant maintenance. Annual shutdown provisions (when most employees took annual leave at the same time) also had the advantage for employers that difficulties arising from under-staffing as a result of employees taking annual leave, or the need to supplement with casual (and perhaps inexperienced) labour were more easily avoided. 39 It is also important to an understanding of the scheme in cl 26 of the 1975 Award (which has been substantially repeated in cl 34 of the Agreement) to appreciate that annual leave was then an entitlement which vested annually, normally after each period of 12 months service. The notion, therefore, of a "qualifying period" was an important one. 40 The fifth edition of C P Mills, "Nolan and Cohen" Federal Industrial Law (1975) (the leading text at that time) contains the following observation about annual close-down provisions (at [241]): [241] Annual leave during close-down period. It is usual for awards to permit annual leave to be given to all employees in a plant or part of the plant at the one time if the employer so desires. Conditions under which this may be done are usually set out in detail and include that the next twelve-monthly qualifying period for annual leave for all such employees shall commence from the day on which the plant or section is re-opened for work. 41 Clause 26(d) of the 1975 Award departed from that model in one respect (to the benefit of employees) - the next qualifying period commenced from the date of close-down, rather than the date of re-opening. That arrangement reflected the entitlement in this award of 4 weeks leave after 48 weeks service, rather than after 12 months service. 42 With all those matters in mind, the operation of cl 26 of the 1975 Award may be examined more closely. 43 Clause 26(a) provided for the standard of annual leave which had been achieved by 1975 - four weeks annual leave. As already mentioned, the entitlement arose after 48 (52-4) weeks of work at the standard 40 hours per week. 44 Clause 26(b) contained two important elements. The first element permitted an employer to say when annual leave might be taken. It guaranteed that annual leave could not be taken merely as it suited employees, and without regard for the needs of the business. However, control and direction by the employer was subject to two important qualifications. The first was that the employer's power of direction was "[s]ubject to (c) hereof". That is to say, it was subject to notice (one month), and employees were entitled also (if appropriate in their case) to payment for annual leave which was in the process of accruing, even though a full 48 week qualifying period had not been completed. The next qualifying period then started again (cl 26(c)(iii)). 45 The second qualification upon an employer's control over when annual leave was required to be taken was expressed in the general proviso in cl 26(b). That is to say, without mutual agreement annual leave could not be required to be taken in more than two periods, of which one was at least two weeks. That conformed as I have said, to a general level of protection of the annual leave amenity at that time. 46 It is in that context that the subsequent amendments to the provision must be assessed for significance and meaning. 47 The first change appears to have been the insertion (at some stage) of a comma in (b) after the reference to (c). The next change (or perhaps one made at the same time) was the insertion of what are now the second and third paragraphs of cl 34(b) dealing with "Colours and Chemicals". Although the possibility for confusion exists in the present clause, there was none at the time of introduction in 2003, when cl 39 of the Wattyl Group of Companies Certified Agreement 2003 (PR928897) provided: 39. ANNUAL LEAVE a. All full time weekly hired employees will on completion of 48 weeks of work of thirty five (35) hours each with the employer, be entitled to four weeks' leave paid for at the ordinary time rate of pay as prescribed by this Agreement for the employee's classification. b. (i) Subject to subclause (c) of this clause, annual leave will be given and taken at such times and in such periods as are required by the employer provided that other than by mutual consent annual leave will be given in one continuous period of four weeks or not more than two periods one of which will be not less than two weeks in duration. (ii) Colours and Chemicals. Notwithstanding any other provision in this agreement at Colours and Chemicals the employer is entitled to direct employees to use 10 days of their annual leave per year to cover maintenance shutdown. Further employees are entitled to take 10 days annual leave per year at a time convenient to them. In addition employees may elect to accrue the 10 days per year annual leave to be taken at a later date at a time convenient to them. c. Where the employer intends temporarily to close (or reduce to nucleus) an establishment or a section thereof for the purposes (inter alia) of allowing annual leave to the employees concerned or a majority of them the employer may give in writing to such employees one month's notice (or in the case of any employees engaged after giving of such notice, notice on the date of the employee's engagement) that the employer elects to apply the provisions of this subclause, and then: (i) any such employee who at the date of closing is entitled to annual leave will be given such annual leave commencing on and from the date of closing and, in addition, will be paid holiday pay and annual leave loading for any period of employment after the accrual of his or her right to the annual leave and up to but excluding the date of closing; (ii) any such employee who at the date of closing is not entitled to annual leave will be given leave without pay on and from the date of closing and will be paid holiday pay and annual leave loading for that period of employment since the date of commencement thereof or the accrual of his or her last annual holiday (whichever is the later) and up to but excluding the date of closing, together with pay for any public holiday during such leave for which the employee is entitled to payment; and (iii) the next annual leave qualifying period of employment for every such employee will commence as on and from the date of closing. 48 The new provisions for Colours and Chemicals involved a further restriction upon the right of the employer to direct when annual leave might be taken. Although not applicable to employees involved in the present case they emphasise, in my view, the overall restriction upon any right to direct annual leave - i.e. that it be taken in not more than two periods, of which one must be at least two weeks. 49 I do not regard the insertion of the comma in cl 39(b)(i) (whether at that time or earlier) as a circumstance which alters the construction of the provision dating from 1975. 50 The most recent change, which has had a much more significant effect on the textual harmony of the provision, has been the abandonment of the concept of a qualifying period of 48 weeks service. Annual leave is now accrued, and may be taken, progressively without the need for the earlier arrangement in cl 26(c) (now cl 34(c)). Most of cl 34(c) (apart from the requirement for one month's notice) appears to me to have little ongoing operation. That does not mean, however, that it may be construed (in an effort to give it meaning and contemporary relevance) in a way that ignores or repudiates its earlier meaning and history. 51 In my view, on a proper construction of cl 34 of the Agreement, the respondent did not have the right to direct annual leave to be taken as it did. Any right it had to direct when annual leave might be taken (if it complied with (c)) was subject to an overriding restriction preserving for employees at least one period of at least two weeks for an annual holiday unless, individually, that right was surrendered by agreement. The respondent's directions in the present case overrode the individual rights of employees and destroyed that basic entitlement. 52 Accordingly, in my respectful view, the appellant made out a case that the respondent contravened cl 34 the Agreement.

Long service leave 53 The appellant's complaint about the use of long service leave was not clearly articulated in the arguments pressed in the FCCA. In its written submissions on the appeal the appellant indicated that on the days of directed absence, after using "banked" rostered days off, and then annual leave, some employees elected to use long service leave credits (apparently with the consent of the respondent) rather than go unpaid. 54 The FCCA does not deal with any question concerning long service leave but it does not appear to me that any case was made out which depended upon a relevant direction by the respondent in relation to long service leave. 55 In my view, the appellant has not made out a case on appeal for relief related to any requirement to take long service leave.

Clause 47 56 Clause 47 of the Agreement (as modified by an agreed undertaking which accompanies it) is as follows: DISPUTES SETTLEMENT 47. DISPUTES SETTLEMENT PROCEDURE a. The parties recognise that there is a need to put in place a procedure that will allow dispute issues to be dealt will [sic: with] in a timely and efficient manner. The parties further recognise that for any dispute resolution procedure to work the parties must approach settlement of the matter in issue in an open manner. b. It is further recognised by the parties that once the dispute resolution procedure is invoked the status quo will remain until the dispute is settled. The status quo is defined as "the action giving rise to the dispute being withdrawn, and the situation immediately prior to the action giving rise to the dispute applying until the dispute is settled". c. At each stage of the dispute resolution procedure the parties involved will have the power to settle the dispute. d. The following dispute settlement procedure will apply to any matter in issue between Wattyl, its employees covered by this Agreement and the Union and will also apply to disputes over the National Employment Standards. An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term. (i) Where a dispute arises, discussions will first take place between the site Union Delegate and the relevant site Manager or their nominees; (ii) If unresolved, discussions will then take place between a state union official and the Wattyl site Manager or their nominees; (iii) If still unresolved, discussions will take place between a national union official or nominee and the Wattyl Employee Relations Manager or a nominated representative of Wattyl; (iv) If still unresolved, the matter may be referred to Fair Work Australia for determination; (v) Other than a dispute on a genuine safety issue the parties are committed to the resolution of all disputes without interruption to normal work. e. Where the dispute arises over a summary dismissal, Wattyl will arrest the termination and place the employee concerned on paid suspension for up to 10 days while discussions will [sic: with] the Union occur, but only if there is no ban or stoppage of work at site. The employee will not attend the work site while suspended. 57 The appellant's contention is that it invoked the dispute settlement procedure, whereupon the respondent was obliged to respect the status quo and refrain from enforcing the directed periods of annual leave. 58 The FCCA rejected this complaint saying: 47. As I understand the applicant's complaint, it is that the respondent contravened clause 47 when it went ahead with requiring employees to take annual leave notwithstanding that the applicant and the employees had indicated that it was opposed to that course. The applicant says that the status quo that existed prior to the announcement of the shutdowns should have continued until the dispute was settled. 48. Clause 47 of the Enterprise Agreement aims at getting the parties to settle any disputes. If the matter cannot be resolved, it may be referred to Fair Work Australia for determination (see clause 47(a)(iv)). In my opinion, this dispute settlement clause is not capable of being contravened as parties to the Enterprise Agreement cannot be forced to settle their dispute. The parties are not expected to remain in negotiations forever in the event that settlement cannot be reached. 49. The parties had had discussions about the dispute but had reached an impasse. Both parties had differing views about whether a temporary shutdown should occur. Nothing remained in clause 47 that could have led to a binding resolution of the impasse. 59 I do not think this summary accurately states the position. The dispute settlement procedure was invoked by the appellant on 26 April 2012, shortly before the first directed one day absence on 30 April 2012. On 27 April 2012 the respondent wrote to the appellant saying: We refer to your letter dated 26 April 2012, and respond as follows: 1. The proposed shutdown at Kilburn is in accordance with Clause 34(c) of the Wattyl Group Enterprise Agreement 2010 ("the Enterprise Agreement"). You have provided no reason indicating why the Company cannot invoke this clause. 2. The employees and the union have been aware of the shutdown since late March 2012. It is an abuse of the provisions of the Enterprise Agreement for the union to now assert that the parties are in dispute. Clearly, the purpose of the union trying to instigate a dispute is merely to delay the shutdown that has been notified especially considering that reference to a dispute was first raised in your 26 April letter. Your attempt to initiate a dispute is not genuine but is an improper use of the provisions of the Enterprise Agreement. 3. The decision taken by the Company to shutdown the Kilburn site will not have any significant effects on employees at the site. This means that the consultation provisions under the Enterprise Agreement are not triggered. We have indicated this to you in our previous correspondence and you have failed to provide any particulars of what significant effects, as defined by the Enterprise Agreement, the employees will sustain. 4. The issue at hand is not whether you or your members support the shutdown. The Company is acting in accordance with the Enterprise Agreement and so it is able to do as it has indicated. You cannot interfere with managerial prerogative. 5. You assert that the Company has altered its position after consultation with the employees. This is not correct. The Company has not agreed to an alternative to the shutdown and has not, as you alleged, altered its position. 6. The union and the employees have provided no genuine reasons why the shutdown should not proceed. Accordingly, the shutdown will take place as notified. (Emphasis added.) 60 On the appeal it was suggested that the appellant had abandoned reliance on cl 47 by seeking injunctive relief from the FCCA on 30 April 2012. In my view, this argument cannot be accepted as an answer to the claim based on cl 47. 61 It is obvious that the respondent did not maintain, or revert to, the status quo, but that is not the only consideration. 62 Insufficient findings of fact have been made to determine whether, as the respondent claimed, cl 47 was not properly invoked or whether, as the appellant claimed, cl 47 was properly invoked and then breached by the respondent. Rather, the primary judge appears to have regarded it as unnecessary to deal with the facts and has not done so. 63 I do not agree with the primary judge that cl 47 is effectively unenforceable and cannot be contravened. The difficulty, however, with dealing with this matter on appeal is that the reasons of the FCCA are not adequate to permit this Court to proceed upon the usual basis of findings of fact regularly made.

Summary of findings 64 In my view, for the reasons I have given, the primary judge proceeded upon significant misunderstandings about: the operation of s 50 of the FW Act; the proper construction and effect of cl 34 of the Agreement; the enforceability of cl 47 of the Agreement and the need to make appropriate findings of fact about the matters relied on to suggest contravention of cl 47. 65 The result of the foregoing analysis is that in my view the appellant made out a clear case of breach of s 50 of the FW Act by establishing a contravention of cl 34 of the Agreement with respect to the requirement to take annual leave in the manner identified in the agreed facts. 66 The appellant did not make out a case of breach of the FW Act with regard to the taking of long service leave. 67 It is not possible to say whether the appellant made out a case of breach of s 50 of the FW Act by reason of breach of cl 47 of the Agreement.

Relief 68 In my view there is not a proper or adequate foundation upon which this Court, on appeal, might satisfactorily assess the detailed facts to which the more general issues of law, discussed above, apply. The allegations of breach of cll 34 and 47 of the Agreement should be determined again, in the light of the reasons of this Court on the appeal. 69 There may need to be findings made in connection with the breach of cl 34, to permit the evaluation of outstanding entitlements. In the ordinary course it would be expected that the parties would attempt to co-operate about those matters, but if they do not those issues will require determination at first instance, perhaps on an individual basis. 70 Consideration also needs to be given to whether a penalty should be imposed for contravention of cl 34 of the Agreement. 71 Findings of fact must be made in connection with the alleged breach of cl 47, liability must be determined and, if appropriate, further relief about that issue also might arise for consideration. 72 None of those are matters convenient or appropriate to be dealt with on the appeal. 73 I would remit the matter to the FCCA to be dealt with in conformity with these reasons for judgment. 74 The constitution of the FCCA for that purpose should be a matter for the Chief Judge of that Court. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.