1
Fair Work Act 2009
s.604 - Appeal of decisions
Kentz (Australia) Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia
(C2016/2713)
SENIOR DEPUTY PRESIDENT WATSON
DEPUTY PRESIDENT WELLS
COMMISSIONER CIRKOVIC
SYDNEY, 28 APRIL 2016
Appeal against decision [2016] FWC 669 of Commissioner Bissett at Melbourne on
3 February 2016 in matter number C2015/7983 – jurisdictional issue – private arbitration –
not engaged in the exercise of judicial power – appeal dismissed re exercise of power;
construction and characterisation of R&R – raised broader implications to other Ichthys
agreements – error found – permission to appeal granted in the public interest – decision
quashed in part – findings substituted; proper construction of clause 8.6(a) – appeal
dismissed re characterisation of clause.
[1] This decision arises from an appeal by Kentz (Australia) Pty Ltd (Kentz) against a
decision by Commissioner Bissett on 3 February 20161 in relation to an application, pursuant
to s.739 of the Fair Work Act 2009 (the Act) by the Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) to
resolve a dispute in relation to notice of termination and rest and recreation (R&R) provisions
of the Kentz (Australia) Pty Ltd Ichthys Onshore Construction Greenfields Agreement (the
Kentz Agreement).2
[2] The Kentz Agreement covers and applies to the CEPU (and other unions), Kentz and
its employees performing specified work on the “Project”, which is defined as “the Ichthys
LNG Onshore Construction Project situated at Blaydin Point”3 (the Ichthys Project).
THE APPEAL BY KENTZ
[3] The Kentz appeal raised five grounds. These were characterised in its submissions as
raising three discrete main issues:
1. Jurisdiction (appeal ground 1)
Kentz contended that Commissioner Bissett erred in exercising powers that
were judicial in nature and outside the remit of the disputes procedure and
s.739 of the Act. Kentz submitted that if it succeeded in relation to this appeal
ground, it was unnecessary to determine the remaining appeal grounds.4
[2016] FWCFB 2019
DECISION
E AUSTRALIA FairWork Commission
[2016] FWCFB 2019
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2. The characterisation of R&R (appeal grounds 2–4)
Kentz contended that Commissioner Bissett erred in misconstruing and
mischaracterising R&R as akin to a leave entitlement that would be
undermined by a period of notice of termination (or payment in lieu thereof)
operating concurrently with it and in finding that the R&R entitlement would
be undermined by the employer giving notice which ran concurrently with
R&R (ground 2). Kentz contended that this led to consequential errors, in that
the Commissioner erred in misconstruing clause 7.3 of the Kentz Agreement
and the National Employment Standard (NES) in s.117(2) of the Act as subject
to a limitation that the period of notice (or payment in lieu thereof) could not
include R&R days (grounds 3–4). Kentz submitted that if it succeeded in
relation to these appeal grounds, it would be necessary to determine the
remaining appeal ground.5
3. The characterisation of clause 8.6(a) (appeal ground 5)
Kentz contended that Commissioner Bissett erred in misconstruing the last
sentence of clause 8.6(a) of the Kentz Agreement as preventing Kentz from
providing a period of notice of termination (or payment in lieu thereof) in
respect of a period of time that included R&R days under a predetermined
work cycle (ground 5).
OUTCOME OF THE APPEAL
[4] For the reasons stated below, we determine the appeal as follows:
1. Given the jurisdictional issue raised in the appeal, the broader implications of the
appeal in relation to other Ichthys agreements and the error found in relation to
grounds 2–4, we grant permission to appeal in the public interest.
2. In relation to the jurisdictional ground (ground 1), we find that the Commissioner, in
dealing with the dispute put before her under clause 18 of the Kentz Agreement,
properly undertook her role of private arbitration and was not engaged in the exercise
of judicial power, we dismiss the appeal in relation to the exercise of power.
3. We find that the Commissioner erred in her characterisation of R&R in the context of
the Kentz Agreement and in the application of relevant authorities to R&R in that
context (grounds 2–4). We quash that element of the Commissioner’s decision and in
particular the findings that:
“[83] . . . R&R is a form of regulated and approved leave.
[84] . . . on the basis of the authorities before me, that notice of termination
of employment cannot run concurrent with a period of leave.
[85] . . . pay in lieu of notice cannot assume that the employee would have
been on unpaid leave for part of the notice period and, consequently, reduce the
amount of payment in lieu of notice.
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. . .
[87] I am therefore satisfied that, in providing payment in lieu of notice
under the Agreement, notice cannot be given such that it runs concurrent with a
period of R&R.
[88] . . . any payment in lieu of notice cannot include a period of R&R in the
‘hours an employee would have worked . . . had the employment continued
until the end of the minimum notice period’ as specified in s.117(2)(b) of the
Act.”
Determining that aspect of the dispute ourselves, we substitute our findings at
paragraphs 114 to 116.
4. We are satisfied that the Commissioner was correct in her construction of the final
sentence of clause 8.6(a) of the Kentz Agreement and her conclusions in paragraphs
75, 76 and 89. There is no error by Commissioner Bissett in her decision in respect
of clause 8.6(a) of the Kentz Agreement. We dismiss the appeal in relation to the
characterisation of clause 8.6(a) (appeal ground 5).
PRELIMINARY MATTERS
[5] An order staying the whole of the decision made by Commissioner Bissett was made
by consent on 3 March 2016.6 In its terms, that order ceases to operate upon determination of
this appeal.
[6] Kentz and the CEPU (jointly the parties) were represented by Counsel in the appeal,
pursuant to permission being granted on 9 March 2016.7
[7] The Chamber of Commerce and Industry of Western Australia Inc (CCIWA) and the
Australian Mines and Metals Association (AMMA) sought permission to intervene in the
appeal pursuant to ss.589(1) and 590(1) of the Act. At the commencement of the hearing of
the appeal, on 17 March 2016, we granted permission to CCIWA and AMMA to intervene
and make oral submissions in support of written outline of submissions filed and granted
permission to CCIWA to be represented by Counsel.
[8] We granted permission to intervene having regard to Full Bench authority.8 We were
satisfied that both CCIWA and AMMA have a relevant interest in the appeal in circumstances
where each had members undertaking work on the Ichthys Project, subject to enterprise
agreements in relevantly identical terms to the Kentz Agreement. In this respect, it was
common ground that an “Ichthys Project agreement” was negotiated prior to work
commencing on the Ichthys Project and its terms and conditions were applied in agreements
between contractors and their employees working on the Ichthys Project, including the Kentz
Agreement.9 In that context, we believed that AMMA and CCIWA have a clear interest in
respect of members undertaking work on the Ichthys Project subject to the “Project
agreement”. Their interests are less clear in relation to their members in respect of other
projects given the matter before Commissioner Bissett involved the questions about notice
and R&R arising from the specific terms of the Kentz Agreement. Those questions, when
considered in respect of agreements applying in relation to other projects would not
[2016] FWCFB 2019
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necessarily relate to the different terms of the relevant agreements applying in respect of those
projects. As a clear example, clause 8.6(a) of the Kentz Agreement (and other agreements
applying in respect of work on the Ichthys Project) was in contention before the
Commissioner and on appeal. It is not apparent that clause 8.6(a) of the Kentz Agreement
appears in the same or similar terms in agreements applying to other projects. It follows that
the Commissioner’s decision in respect of the question of the application of notice and R&R
in the Kentz Agreement could not be determinative as it relates to different terms in
agreements applying to other projects.
[9] On the basis of the clear interest of AMMA and CCIWA in respect of its members
undertaking work on the Ichthys Project under agreements in the same terms as the Kentz
Agreement and a possible interest in respect of members working on other projects,
depending on the specific terms of the relevant agreement applying in respect of those
projects, we were satisfied that we should exercise our discretion to allow AMMA and
CCIWA to intervene and put submissions in the appeal.
[10] We note that the submissions of CCIWA and AMMA largely support the contentions
of Kentz in relation to grounds 2–5. We have had regard to those submissions but have not set
out a summation of the submissions in our decision in light of their overlap with the
submissions by Kentz.
THE DISPUTE BEFORE COMMISSIONER BISSETT
[11] In its dispute notification,10 the CEPU described the dispute as being about the
interaction of notice of termination and R&R, having regard to the Kentz Agreement
provisions in relation to these matters. It contended that Kentz had been notifying employees
that they were to be made redundant prior to them commencing a period of R&R and on a day
which meant R&R would form part of the notice period. The CEPU argued that this was
contrary to the intent of the termination provisions of both the Kentz Agreement and the Act.
The CEPU sought the assistance of the Fair Work Commission (the Commission) “in
ensuring that the employer pays employees appropriately when they are terminating their [the
employees’] employment”.11 In its outline of submissions to Commissioner Bissett, the CEPU
identified an example of an employee affected by the dispute.12 Before Commissioner Bissett,
the CEPU identified that dispute as relating to whether Kentz had complied with the Kentz
Agreement in respect of employees given notice after the dispute was notified.13
[12] The dispute was brought in accordance with the Dispute Resolution Process term in
clause 18 of the Kentz Agreement. That term is broad in its scope, relating to “[a]ny
disagreement or dispute in respect of any matters arising under the Agreement or the National
Employment Standards (NES)”.14 It provides for a number of steps,15 including if the dispute
remains unresolved after the earlier steps, an authority for the Commission to resolve the
dispute by “conciliation and/or arbitration”.16
[13] We note that Commissioner Bissett was confronted by a difficult task and was
provided with little evidence germane to the application of notice in respect of R&R periods.
The relevant terms in the Kentz Agreement in respect of the questions to be considered and
determined by the Commissioner are brief and some lack clarity. No evidence was put to the
Commissioner in relation to the negotiation of the “Ichthys Project agreement” or the Kentz
Agreement which adopted its terms that sheds light on a common intention of the parties or
the likely purpose of the relevant agreement provisions.
[2016] FWCFB 2019
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BACKGROUND TO AND PROVISIONS OF THE KENTZ AGREEMENT
[14] Several terms of the Kentz Agreement are directly relevant, other terms provide
relevant context to those terms and other background information provides relevant
background of the operation of the Kentz Agreement.
[15] Directly relevant terms of the Kentz Agreement are:
“7.3 Termination of employment
(a) Subject to the Act, the Employer may terminate the employment of an
Employee by giving written notice to that Employee as follows:
Where an Employee’s Period of
Continuous Service with the
Employer is:
The Period of Notice as qualified by
the Notes set out below this table
will be:
Not more than 1 year 1 week
More than 1 year, but not more than
3 years
2 weeks
More than 3 years, but not more than
5 years
3 weeks
More than 5 years 4 weeks
NOTES
(1) The period of notice is increased by one (1) week where the Employee
is over forty-five (45) years of age and has completed two (2) years of
continuous service with the Employer.
. . .
8.6 Rest and Recreation (R&R)
(a) The work cycle of each Employee will commence on his or her
commencement date on the Project. The Employer may choose to shorten or
lengthen the Employee’s first work cycle to align the Employee’s work cycle
with that of other Employees. The work cycle forms the basis for scheduling
the staffing of the Project. Employees will only receive R&R where
determined by the Employer and there are more than two (2) weeks’ work for
the Employee to complete on the Project.
(b) R&R is classified as authorised non-work time unless accrued RDOs are paid
out.
(c) The Employer may reschedule the taking of the R&R leave to meet operational
requirements. The Employee may then be required to work a shortened/
extended work cycle in order to regain their original work cycle. The Employer
must provide at least one (1) week’s notice of such change.
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(d) The Employer shall transport Non-Local Employees by economy air transport
to the High Capacity RPT airport nearest to the Employee’s Usual Place of
Residence when the Employee commences a period of R&R. A bus pick-up
and drop-off service will operate between Darwin airport and the Project
Village Site. Specific details of R&R travel arrangements will vary relative to
each individual Employee’s circumstances.
(e) Travel for R&R shall commence on the last working day of the Employee’s
work cycle.
(f) Local Employees will commence R&R at the end of Project Working Hours on
the final day of their roster.”
[16] Relevant context is found in clause 8—Hours of Work and Project Working Hours
and, in particular:
“8.1 Setting Ordinary Hours
(a) The Parties recognise that operational requirements or other circumstances
may arise on the Project where different methods of working Ordinary Hours
may be required to be implemented for an Employee or group of Employees.
. . .
(d) The Employer may implement any form of Ordinary Hours rosters (with
overtime to be determined within those rosters) which are required to meet the
needs of the Project. This may include implementation of 12-hour work days.
(e) Where the Employer wishes to vary the pattern of working the Ordinary Hours
of work, they shall seek the agreement of the affected Employees. Failing
agreement, the Employer shall give those Employees one (1) week’s notice of
the change to the new pattern of work.
. . .
8.2 Hours of Work
(a) Subject to clause 8.4, the hours of work on the Project will be the Project
Working Hours.
(b) The Parties agree that hours of work provisions will be operated in a flexible
manner. The following measures will be available to achieve the required
objectives:
(1) Unless otherwise provided, Ordinary Hours will be an average of
thirty-six (36) hours per week averaged over a fifty two (52) week
period, and will be worked between the hours of 6am and 6pm,
Monday to Friday inclusive.
[2016] FWCFB 2019
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(2) Employees (other than shift workers) will work within the start and
finish times defined in subclause 8.2 (b)(1). These times may be moved
up to one (1) hour either way without penalty by agreement between
the Employer and directly affected Employee(s).
(3) Application of an average of a thirty-six (36) hour Ordinary Hours
working week may vary from Employee to Employee or section or
sections of Employees, from time to time to suit the programming
requirements of the Project. This can be done provided that no more
than eight (8) hours of Ordinary Hours is worked per day.
. . .
8.4 Work Cycle and Project Working Hours
(a) Project Working Hours shall be arranged in accordance with the work cycle(s)
agreed as initially established by the Employer. The same cycle shall apply to
both Local Employees and Non-Local Employees.
(b) The Employer shall notify Employees of any change in the work cycle(s) or of
the need to introduce a new work cycle(s). The Employer shall consult with
affected Employees and provide a minimum of one (1) weeks’ notice before
introducing a new work cycle(s) or change between two (2) different work
cycles. Shorter periods of notice may operate, either by agreement of a
majority of affected Employee(s) concerned, or in the event of an emergency.
(c) For the purposes of this clause, the implementation or cessation of a night shift
is not considered as a change between two different work cycles.
(d) The Employer shall notify Employees of any change in Project Working
Hours. The Employer shall consult with affected Employees and provide a
minimum of one (1) week’s notice before introducing a change to Project
Working Hours. Shorter periods of notice may operate, either by agreement of
a majority of affected Employee(s) concerned, or in the event of an
emergency.”
[17] The term “Work Cycle” is not defined in the Kentz Agreement. However, it is
common ground that:
The work cycle agreed and initially established by Kentz was a 4/1 weeks or 28/7
days cycle, of four weeks work followed by one week’s R&R;
Employees work a 58 hour working week, equating to 40 hours ordinary time (with
accrual of rostered days off (RDOs)), 12 hours at time and a half and six hours at
double time, resulting in receipt of the equivalent of 66 hours ordinary pay and four
hours accrued to RDOs.17
[18] Also relevant is clause 18—Dispute Resolution Process which is in the following
terms:
[2016] FWCFB 2019
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“18.1 Objective of the Dispute Resolution Process
(a) The objective of this procedure is to:
(1) Avoid the escalation of disputes or grievances; and
(2) Provide prompt resolution of issues of concern.
18.2 Steps in the Dispute Resolution Process
(a) Any disagreement or dispute in respect of any matters arising under the
Agreement or the National Employment Standards (NES) will be dealt with as
outlined in this clause 18.2.
(b) Subject to clause 18.2(c), a disagreement or dispute will be dealt with as
follows:
(1) The Employee concerned shall raise the matter with the appropriate
team leader for resolution.
(2) If not resolved, the Employee may raise the matter with the
supervisor/superintendent of the Employer for resolution.
(3) If the matter remains unresolved, either the Employee or the
supervisor/superintendent shall request a formal meeting with the
Employer’s most senior manager on the Project Site, or that manager’s
representative.
(4) At any stage of this process the Employee may elect to have an
Employee representative in attendance.
(5) Once this dispute resolution process has been invoked, both the
Employee and the Employer shall attempt in good faith to resolve the
issue by utilising the above steps until resolution is achieved. In the
event that resolution is not achieved, any party or the Employee may
refer the matter to Fair Work Australia for conciliation and/or
arbitration.
(6) While the above process is being pursued, work shall continue as
normal. Failure to work within the process described in this subclause
and/or the failure of any Employee to continue work as normal shall
constitute a fundamental breach of the Agreement by the employees
involved.”
DECISION
[19] We will deal with the three broad issues identified by Kentz in its appeal grounds in
turn.
[2016] FWCFB 2019
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1. Jurisdiction (appeal ground 1)
The decision of Commissioner Bissett
[20] In her decision, Commissioner Bissett observed that:
“There is no dispute that the matter has been properly notified to the Commission and
the requirements of the dispute settlement procedure complied with.”18
[21] No issue was taken with those aspects concerning the Commission’s jurisdiction at
first instance (nor in the appeal).
[22] In the proceedings before Commissioner Bissett, Kentz raised two jurisdictional
matters in support of its proposition in the appeal that Commissioner Bissett erred in
exercising powers that were judicial in nature and outside the remit of the disputes procedure
and s.739 of the Act:
1. whether the Commissioner had “jurisdiction to deal with the application
because the employees to whom the dispute relates no longer work for Kentz,
having been given notice”;19 and
2. whether the Commissioner would be determining historical rights, which is an
exercise of judicial power. Kentz submitted that the Commissioner could only
determine historical rights and obligations as part of a process of determining
future rights and obligations and as there are no future employees to be
covered by the Kentz Agreement, no future rights could be created by the
arbitration.20
[23] In relation to the first issue the Commissioner found:
“[29] I am satisfied that the dispute was raised and referred to the Commission prior
to the termination of employment of the employees concerned. I am therefore satisfied
that the Commission’s power to deal with the dispute is not lost solely because the
employees to whom the dispute relates no longer work for Kentz. In this case the
employees to whom the dispute relates were employed by Kentz at the time the dispute
was notified.”
[24] In relation to the second point, the Commissioner found:
“[34] After considering the decision of the High Court in CFMEU v AIRC I am
satisfied that, in settling a dispute pursuant to a dispute settlement procedure agreed to
by Kentz, employees of Kentz and the CEPU, I am exercising a power of private
arbitration – regardless of whether there are employees still employed by Kentz (which
I note, in any event, there are). The dispute settlement procedure is not an arbitrated
dispute settlement procedure such that the limitation at [30] in the CFMEU v AIRC
applies, rather it is one the parties have freely entered into. The Commission is
empowered by the Act to deal with such disputes with the powers of the Commission
constrained by the terms of the dispute settlement procedure and the Act.”
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[25] In the appeal, Kentz did not challenge the decision of the Commissioner, at paragraph
29, in relation to the first point for the purposes of its appeal.21
[26] The appeal by Kentz was directed to the second jurisdictional issue before the
Commissioner, albeit extended beyond the proposition that the Commission did not have
jurisdiction to deal with the dispute, as the dispute required the exercise of judicial power by
the Commission in light of the absence of any on-going operation of the Kentz Agreement.
On appeal, Kentz also contended that the dispute resolution clause did not confer power on
the Commission to resolve the dispute on the basis that the word “arbitration” indicates that
the parties only intended to confer jurisdiction on the Commission to resolve disputes in
relation to future events and not in respect of past events. Notwithstanding the expansion of
the point on appeal and the failure of Kentz to advance it in its expanded form before
Commissioner Bissett, the Commission is obliged to satisfy itself of jurisdiction.22
Submissions on jurisdiction
[27] In the appeal, Kentz submitted that:
“The power of ‘arbitration’ contemplated by sub-clause 18.2(b)(5) is of a nature quite
distinct from judicial power. In exercising powers of arbitration, the Commission is
entitled to form and act upon opinions about legal rights and obligations, provided that
is for the purpose of taking some step in the exercise of the conferred arbitration
power. Otherwise, the expression of such an opinion is in the nature of judicial
power.”23
[28] Kentz submitted that even if the “procedure in clause 18.2(b) continued to be available
for the CEPU to progress such a dispute after the employees on whose behalf the CEPU
act[ed] had been retrenched . . . there remains the question as to whether, at the time the
Commission was being asked to exercise its powers, there was a dispute or disagreement: (i)
in respect of a matter arising under the Agreement (18.2(a)); and (ii) which was capable of
being resolved by conciliation and/or arbitration (18.2(5))”. When “the matter came on for
hearing on 29 January 2016, the dispute concerned past events only” and there was no dispute
arising under the Kentz Agreement of any ongoing application.24
[29] Kentz submitted that on the evidence at the time of hearing on 29 January 2016 (and
the date of the Commissioner’s decision of 3 February 2016), the part of the Ichthys Project to
which the Kentz Agreement applied was effectively coming to a close, no further employees
would be engaged under the Kentz Agreement and the dispute as to notice and R&R had no
application to the remaining employees who were given notice that their employment would
cease on 6 February 2016 and were working out their notice period.25 Kentz submitted that
the dispute concerned past events only26 and, as a result, extended beyond the remit of clause
18 of the Kentz Agreement.27 Kentz submitted that the “Commission may arbitrate if
expressly authorised by the parties under a term of an enterprise agreement to do so and must
do so within the limits of that term”.28
[30] Kentz submitted that in the “particular circumstances of the case and the facts in
existence at the time that the matter came on for hearing, there was no dispute” in relation to a
matter arising under the Kentz Agreement “that was capable of being arbitrated by the
Commission”. In effect the Commission was being asked to “step into another realm, namely
the exercise of judicial power”29 and to pronounce an opinion about the legal meaning and
[2016] FWCFB 2019
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effect of clauses 7.3 and 8.6 by reference to past events only, with no evident potential to
resolve any dispute about the current or future application of those clauses under the Kentz
Agreement.30
[31] Kentz, in addressing Construction Forestry Mining and Energy Union v Australian
Industrial Relations Commission31 submitted:
“The Court in that context said that exercising powers under the dispute resolution
clause, including making decisions resolving disputes about what the clauses in the
agreement mean, was capable of being considered in the nature of arbitral power . . .
whatever it might be saying in relation to private arbitration, is not authority for the
proposition that a dispute arising under an enterprise agreement includes a dispute that
only concerns compliance by reference to past events, as is the case here;32 and
Nor does it stand for the proposition to determine a disputes resolution procedure that
specifies the Commission’s role as conciliation and/or arbitration means the
Commission can determine a dispute that’s only related to past events by declaring its
opinion about the legal position and only doing that for its own sake, as is the case
here.”33
[32] In the appeal, the second jurisdictional point was recast to the effect that the nature of
the dispute had changed because as there were no future employees to be covered by the
Kentz Agreement, no future rights could be created by the arbitration, such that the dispute
moved beyond the scope of clause 18 of the Kentz Agreement and the decision of the
Commissioner took the character of a purported exercise of judicial power.
[33] The CEPU accepted that an “administrative body when exercising a statutory power
cannot determine past rights and liabilities” but argued that the “principle has no application
in the present circumstances”. The CEPU submitted that the “central and defining feature of
judicial power is that it is exercised independently” of the consent of the person against whom
the proceedings are brought. It is the “quintessential exercise of sovereign power”. It
submitted, however, the “power being exercised by the Commission when resolving a dispute
pursuant to a dispute settlement procedure is different. The power being exercised by the
Commission is not a statutory power, but a power conferred by the parties through their
agreement, namely the enterprise agreement”.
[34] Relying on High Court authority in TCL Air Conditioner (Zhongshan) Co Ltd v The
Judges of the Federal Court of Australia & Another, (TCL)34 the CEPU submitted that private
arbitration within a disputes provision of an enterprise agreement “involves the appointment
of an independent arbiter, often chosen by the parties, to rule on the parties’ dispute according
to the terms of reference that they give the arbiter. This can only be done by agreement,
before or after the dispute arises, but where it is done the arbiter has authority to make an
award which is binding on the parties and enforceable by the process of the Court”. The
CEPU submitted that the point that the High Court has made is that “where you are operating
by way of consent you are not in the field of the exercise of judicial power”.
[35] The CEPU submitted that, in this case, the parties have agreed by virtue of the
enterprise agreement, in language which could hardly have been broader, to allow the
“Commission to resolve any disagreement or dispute in respect of any matters” arising under
the Kentz Agreement or the NES. It submitted that there is “no warrant in the terms of the
[2016] FWCFB 2019
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dispute settlement clause to read down the scope of the disputes the Commission can
resolve”. In particular, the use of the broad expression “arbitration” does not provide a basis
for reading down the scope of the disputes the Commission can resolve.
[36] Our attention was also drawn to a number of authorities relevant to the jurisdictional
point, which we have considered.
Decision in relation to ground 1
A. The scheme of the Act in relation to dispute settlement terms (provisions) within
enterprise agreements
[37] Part 2–4 of the Act deals with enterprise agreements.
[38] Section 172 authorises the making of enterprise agreements between national system
employees and their employer(s),35 relying on the corporations power of The Constitution,36
to make an enterprise agreement that is about one or more of the following (permitted)
matters, in accordance with Part 2–4:
“(a) matters pertaining to the relationship between an employer that will be covered
by the agreement and that employer’s employees who will be covered by the
agreement;
(b) matters pertaining to the relationship between the employer or employers, and
the employee organisation or employee organisations, that will be covered by the
agreement;
(c) deductions from wages for any purpose authorised by an employee who will be
covered by the agreement;
(d) how the agreement will operate.”
[39] The general requirements for approval of an enterprise agreement in s.186 of the Act
include, in s.186(6) a requirement for a term about settling disputes that provides a procedure
that requires or allows the Commission, or another independent person to settle disputes about
any matters arising under an agreement and in relation to the NES.
[40] Section 186(6) of the Act sets out the minimum statutory requirement in relation to a
dispute settlement term. The parties to an enterprise agreement may agree to a term for the
settlement of disputes of broader compass, provided it relates to the permitted matters in s.172
of the Act.
[41] The Commission has a function set out in s.576(2)(a) of the Act dealing with disputes
as referred to in s.595. Section 595 of the Act provides a power on the Commission to deal
with a dispute if “expressly authorised to do so under or in accordance with another
provision” of the Act. In such a circumstance, s.595 provides that:
“(2) The FWC may deal with a dispute (other than by arbitration) as it considers
appropriate, including in the following ways:
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(a) by mediation or conciliation;
(b) by making a recommendation or expressing an opinion.
(3) The FWC may deal with a dispute by arbitration (including by making any
orders it considers appropriate) only if the FWC is expressly authorised to do so under
or in accordance with another provision of this Act.”
[42] Section 595 of the Act authorises the Commission to exercise any powers it has under
Subdivision A of Division 3 of Part 5–1 of the Act in dealing with a dispute.
[43] Subdivision B of Division 2 of Part 6–2 of the Act is “another provision of the Act”
which expressly authorises the Commission to deal with disputes (also conditioning the
manner in which the Commission can deal with them).
[44] Section 739 of the Act concerns disputes dealt with by the Commission. Section 739
applies if a term referred to in s.738 requires or allows the Commission to deal with a
dispute.37 Section 738(b) of the Act includes, a term in an enterprise agreement that provides a
procedure for dealing with disputes, including a term referred to in s.186(6).
[45] In dealing with a dispute, the Commission must not exercise any powers limited by the
term (which requires or allows the Commission to deal with the dispute (s.739(3)). The
Commission may deal with a dispute only on application by a party to the dispute (s.739(6)).
If, in accordance with the term, the parties have agreed that the Commission may arbitrate the
dispute, the Commission may do so (s.739(4)) but must not make a decision that is
inconsistent with the Act or a Fair Work instrument that applies to the parties (s.739(5)).
B. The Nature of the Commission’s role under a dispute settlement procedure of an
enterprise agreement
[46] In Construction Forestry Mining and Energy Union v The Australian Industrial
Relations Commission and Another38 (CFMEU v AIRC) the High Court of Australia
considered, in the context of the provisions of the Industrial Relations Act 1988 (the IR Act)
and the Workplace Relations Act 1996 (the WR Act), the distinction between the private
arbitration authorised by a dispute resolution process within an agreement and the exercise of
judicial power. The Court characterised the distinction as follows:
“[30] There is, however, a significant difference between agreed and arbitrated
dispute settlement procedures. As already indicated, the Commission cannot, by
arbitrated award, require the parties to submit to binding procedures for the
determination of legal rights and liabilities under an award because Ch III of the
Constitution commits power to make determinations of that kind exclusively to the
courts. However, different considerations apply if the parties have agreed to submit
disputes as to their legal rights and liabilities for resolution by a particular person or
body and to accept the decision of that person as binding on them.”
[47] The Court went on to characterise the decision giving effect to the agreement of
parties to submit their differences for a decision by a third party, as is the case in respect of
dispute settlement provisions of enterprise agreements, as a power of private arbitration:
[2016] FWCFB 2019
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“[31] Where parties agree to submit their differences for decision by a third party,
the decision maker does not exercise judicial power, but a power of private arbitration.
Of its nature, judicial power is a power that is exercised independently of the consent
of the person against whom the proceedings are brought and results in a judgment or
order that is binding of its own force. In the case of private arbitration, however, the
arbitrator’s powers depend on the agreement of the parties, usually embodied in a
contract, and the arbitrator’s award is not binding of its own force. Rather, its effect, if
any, depends on the law which operates with respect to it.
[32] To the extent that s 170MH of the IR Act operates in conjunction with an
agreed dispute resolution procedure to authorise the Commission to make decisions as
to the legal rights and liabilities of the parties to the Agreement, it merely authorises
the Commission to exercise a power of private arbitration. And procedures for the
resolution of disputes over the application of an agreement made by parties to an
industrial situation to prevent that situation from developing into an industrial dispute
are clearly procedures for maintaining that agreement. Parliament may legislate to
authorise the Commission to participate in procedures of that kind. Accordingly,
s 170MH of the IR Act is valid.
. . .
[34] The parties to an industrial situation are free to agree between themselves as to
the terms on which they will conduct their affairs. Their agreement has effect
according to the general law. If their agreement is certified, it also has effect as an
award. To the extent that an agreement provides in a manner that exceeds what is
permitted either by the Constitution or by the legislation which gives the agreement
effect as an award, it cannot operate with that effect. But the underlying agreement
remains and the validity of that agreement depends on the general law, not the
legislative provisions which give it effect as an award.”
[48] In TCL,39 the High Court of Australia, in the context of an application concerning the
UNCITRAL Model Law on International Commercial Arbitration, which was given legal
force in Australia through the International Arbitration Act 1974, dealt with the essential
distinction between the judicial power of the Commonwealth and arbitral authority.
[49] French CJ and Gageler J cited paragraph 31 in CFMEU v AIRC, observing:
“[29] . . . The context of that articulation puts its reference to ‘private arbitration’ in
appropriate perspective. The context was that of a challenge to the capacity of a
statutory body consistently with Ch III of the Constitution to exercise a statutory
function to settle a dispute where so empowered by an agreement entered into as a
result of statutory processes. The reference to ‘private arbitration’ was not to a private
function, as distinct from a public function, but rather to a function the existence and
scope of which is founded on agreement as distinct from coercion.”
[50] Hayne, Crennan, Kiefel, and Bell JJ held:
“[75] The exercise of judicial power is an assertion of the sovereign, public authority
of a polity. Whilst it is ‘both right and important to observe that the determination of
rights and liabilities lies at the heart of the judicial function’, parties are free to agree to
[2016] FWCFB 2019
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submit their differences or disputes as to their legal rights and liabilities for decision by
an ascertained or ascertainable third party, whether a person or a body. As will be
explained, where parties do so agree, ‘the decision maker does not exercise judicial
power, but a power of private arbitration’.” [Citations omitted]
[51] In Construction, Forestry, Mining & Energy Union v Wagstaff Piling Pty Ltd and
Others,40 the Federal Court of Australia Full Court, per Buchanan, Flick and Katzmann JJ
dealt with an appeal against decisions of the Commission in relation to the proper
interpretation of certain provisions of a “union collective agreement” relating to safety at the
workplace.
[52] Buchanan and Katzmann JJ found that the participation of the Commission in dispute
settlement procedures was an arrangement which was, generally speaking, constitutionally
effective, citing passages from CFMEU v AIRC.41 In the context of the distinction between
private arbitration and the exercise of judicial powers drawn in CFMEU v AIRC, Buchanan
and Katzmann JJ observed that:
“even an arbitrated dispute resolution procedure could not validly purport to confer
judicial power”;42
although the Commission “cannot exercise the judicial power of the
Commonwealth, it is well established that a federal industrial tribunal, exercising
powers of conciliation and arbitration, may legitimately form and act upon
opinions about legal rights and obligations as a step in the exercise of its own
functions and powers”.43 Simply expressing an opinion about the legal operation
and effect of an agreement does not necessarily involve the exercise of the
conferred power;44 and
a Member of the Commission can, by not observing the fundamental distinction
between private arbitration and the exercise of judicial power, stray into the
exercise of judicial power by expressing an opinion about a legal matter, but not for
the purpose of taking some further step within the Commission’s own power.
Indeed Buchanan and Katzmann JJ found, in the circumstances of the matter before
them, that a Commissioner in reviewing a Victorian Disputes Board decision did
so.45
[53] In a separate judgement, Flick J set out the dispute settlement term of the relevant
agreement and found:
“[61] . . . The reference in cl 10.2(g) to the exercise of ‘conciliation and/or
arbitration powers’ is a recognition of the fact that ‘[w]here parties agree to submit
their differences for decision by a third party, the decision maker does not exercise
judicial power, but a power of private arbitration’: Construction, Forestry, Mining and
Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645 at
[31] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. The
parties to the present industrial dispute could thus not be understood to be seeking a
conclusive or legally binding determination of the correct meaning to be ascribed to
cl 48.
[2016] FWCFB 2019
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[62] The manner in which the question for resolution was put to the Full Bench may
have suggested otherwise. But construed as but a question forming a part of a broader
industrial dispute – and as a question to be answered as but a step in the process of
resolving that dispute – no difficulty arises. Properly characterised, it is considered
that the Full Bench was doing no more than answering the question put to it as but a
step in resolving the more broadly expressed dispute between the parties. The mere
fact that the Full Bench was asked to resolve the question put to it – and in isolation
from such other matters as may have formed part of an industrial dispute – did not
propel the Full Bench into an exercise of anything other than its conciliation and
arbitration powers. No submission was advanced by any of the parties, nor could it
have been, that the Full Bench was exceeding its jurisdiction by even purporting to
answer the question. To have made such a submission would have been tantamount to
the parties inviting the Full Bench to answer a question which they did not believe it
had the jurisdiction to answer.”
[54] Flick J found that there was no impediment to the Full Bench expressing its own view
as to the proper interpretation of the relevant clause,46 citing a passage from Re Cram and
Others; Ex parte The Newcastle Wallsend Coal Company Proprietary Limited:
“The result is that the Authority had no jurisdiction to determine or enforce a legal right
to payment of wages on the part of employees in respect of a past period during which
they had been stood down or refused work or to enforce the provisions of an award
regulating the right to payment of wages of employees for such a period . . .
What this principle relevantly denies to the Authority is the power of judicial
determination which includes, to use the words of Kitto J. in Aberdare Collieries
[(1963) 37 ALJR at 43]: ‘the giving of decisions in the nature of adjudications upon
disputes as to rights or obligations arising from the operation of the law upon past
events or conduct.’ The making of a binding declaration of right is an instance of the
exercise of judicial power. It stands outside the arbitral function. But there is no
substance in the suggestion that an industrial tribunal cannot interpret laws, awards
and other legal instruments. A tribunal could not discharge its arbitral functions if it
were unable to form an opinion on a matter of interpretation. The formation of views
and opinions on matters of interpretation in arbitral proceedings does not in itself
amount to a usurpation of judicial power . . . Indeed, a tribunal may find it necessary
to form an opinion as to the existing legal rights of the parties as a step in arriving at
the ultimate conclusions on which the tribunal bases the making of an award intended
to regulate the future rights of the parties: Aberdare Collieries [at 44]. Of course, the
formation of such an opinion does not bind the parties and cannot operate as a binding
declaration of rights.” 47
C. Clause 18 of the Kentz Agreement
[55] The Kentz Agreement was made in accordance with Part 2–4 of the Act. The dispute
settlement process in clause 18 of the Kentz Agreement is a term, of the type contemplated by
s.738(b) of the Act, which includes a term referred to in s.186(6)(a), that provides a
“procedure that requires or allows the FWC, or another person48 who is independent of the
employers, employees or employee organisations covered by the agreement, to settle
disputes” about any matter arising under an agreement. In clause 18 of the Kentz Agreement,
the parties to the Kentz Agreement authorise the Commission to deal with a dispute within its
scope.
[2016] FWCFB 2019
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[56] Clause 18 of the Kentz Agreement is broad in its reach, relating to “[a]ny
disagreement or dispute in respect of any matters arising under the Agreement or the National
Employment Standards (NES)”.49 There is no limitation expressed — it applies to any dispute
in respect of any matters arising under the Kentz Agreement.
[57] In clause 18.2(b)(5), the parties agree that the Commission may arbitrate the dispute. It
provides that, following attempts in good faith to resolve the issue(s) in dispute through
earlier steps in the process:
“In the event that resolution is not achieved, any party or the Employee may refer the
matter to Fair Work Australia for conciliation and/or arbitration.”
[58] The processes within clause 18 are directed to avoiding the “escalation of disputes or
grievances” and providing “prompt resolution of issues of concern”.50
[59] Clause 18 of the Kentz Agreement confers the authority of the parties on the
Commission to arbitrate any disagreement or dispute in respect of any matters arising under
the Kentz Agreement for the purpose of resolving the dispute. It affords the Commission a
power of private arbitration in relation to such disputes. It does not limit the scope of an
arbitration to preclude the resolution of disputes in relation to past events or about rights and
obligations under an agreement. There is no basis for reading an unstated limitation on the
scope of the dispute resolution provision in the context of the broad scope which is expressed
in it – “[A]ny disagreement or dispute”. Clause 18 does not provide or purport to provide an
authority that exceeds what is permitted either by The Constitution or by the Act.
D. The application of the authority to arbitrate provided by clause 18 of the Kentz
Agreement by Commissioner Bissett
[60] The relevant dispute was brought before Commissioner Bissett in accordance with
clause 18.2(b)(5) of the dispute resolution process of the Kentz Agreement and in compliance
with s.739(6) of the Act.
[61] The dispute concerned the interaction of notice of termination and R&R, having
regard to the Kentz Agreement provisions in relation to these matters. The CEPU sought the
assistance of the Commission “in ensuring that the employer pays employees appropriately
when they are terminating their [the employees’] employment”.51 In its outline of submissions
to Commissioner Bissett, the CEPU identified an example of an employee affected by the
dispute.52 Before the Commissioner, the CEPU identified the dispute as relating to whether
Kentz had complied with the Kentz Agreement in respect of those employees given notice
after the dispute was notified.53 The dispute was clearly one in respect of a matter arising
under the Kentz Agreement, concerning the application of the Kentz Agreement.
[62] In the circumstances before her, Commissioner Bissett found that there was a dispute
between the parties, that the s.739 application had been properly notified and the requirements
of the dispute settlement procedure had been complied with.54
[63] The evidence of Mr Ong55 (Assistant Secretary of the CEPU) indicates that
compliance with the dispute procedure was apparent from the raising of issues in the dispute
by employees with their supervisors and escalation of the dispute by the CEPU to the level of
[2016] FWCFB 2019
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the Kentz HR/IR Superintendent without resolution. During the appeal, no issue was taken
with the Commissioner’s finding that the requirements of the dispute settlement procedure
had been complied with.
[64] Mr Ong’s evidence56 was that the dispute was raised by employees at a number of pre-
start meetings before and/or during November 2015 and he escalated the dispute to the Kentz
HR/IR Superintendent in or about November 2015. The dispute was notified to the
Commission on 3 December 2015. There was evidence that the employment of at least one
employee, Mr Andrikopoulos, who was employed until 17 December 2015, when he received
notice of termination with immediate effect, subject to payment in lieu of notice (which is the
subject of the dispute).57 An attachment to the Statement of Ms S Land (Project Human
Resources Advisor) suggests that another employee, Mr J Sewell, was confronted by the same
circumstances.58 The resolution of the dispute was relevant to at least those two employees.
[65] The continued existence of that dispute as it relates to persons employed at the time
the dispute was initiated under the dispute resolution process during the employment of the
relevant employees who were employed, and, on the authority of ING Administration Pty Ltd
v Jajoo59 (ING) and the subsequent Full Bench authorities,60 the right to progress the dispute
to resolution remains and provides the basis for the Commission to exercise the arbitration
powers afforded by the Kentz Agreement.
[66] Kentz submitted that the dispute, as it related to dismissed employees but raised
through the disputes process whilst employed, had changed and had to be characterised at the
time of the exercise of the power to arbitrate. It submitted that because of the particular
circumstances of the Ichthys Project effectively coming to a close and no employees being
within the scope of the dispute, the “evolution of the dispute effectively petered out”.61 This
submission is inconsistent with the decision of the majority in ING. The cessation of
employment under the Kentz Agreement did not have the effect of changing the character of
the dispute commenced in respect of former employees, whilst they were employed, or
extinguishing the right to have the dispute resolved under clause 18.
[67] In any case, we do not accept that the evidence established that no further employees
would be engaged under the Kentz Agreement. This proposition was put to and rejected by
Commissioner Bissett. Whilst the Commissioner accepted that the current scope of work of
Kentz on the Ichthys Project to which this Kentz Agreement applies would conclude on
6 February 2016, she also found there was nothing before her to establish that the “Agreement
might not have work to do at some point in the future”.62 The Commissioner noted that the
Kentz Agreement covers Kentz, the unions named and employees who perform specified
work within the scope of work on the Ichthys Project.63 The Commissioner then found that
the Ichthys Project was not complete, there was no suggestion that Kentz was being wound up
such that it could not seek and gain further work on the Ichthys Project and should it do so the
work would fall within the scope of work covered by the Kentz Agreement64 and the Kentz
Agreement would apply to future employees.65
[68] The only evidence as to future work on the Ichthys Project by Kentz is that found in
paragraph 30 of the outline of evidence of Ms Land and paragraph 19 of the outline of
evidence by Mr Geoghegan (Senior Project Manager). Ms Land’s evidence was that she had
not been told and did not believe that Kentz intended to employ employees under the Kentz
Agreement after 6 February 2016. This evidence provided no basis to find that no further
employees would be engaged under the Kentz Agreement. Mr Geoghegan’s evidence was that
[2016] FWCFB 2019
19
6 February 2016 would be the effective end of construction and the end of the scope of work
for Kentz under the Kentz Agreement. Equally, given the Ichthys Project continues and
Mr Geoghegan’s evidence went to the scope of work under the Main Civil Works E311-13-
CVL3 Electrical Underground Services Contract, his evidence in paragraph 19 provided no
basis to find that no further employees would be engaged under the Kentz Agreement. There
was no evidence that the remaining scope of work under the Ichthys Project did not include
work that could fall within the scope of the Kentz Agreement. The conclusion that there was
nothing before the Commissioner to suggest that the Kentz Agreement might not have work
to do at some point in the future was available to her and properly reached by the
Commissioner on the evidence. The evidence before Commissioner Bissett did not
substantiate Kentz’s proposition that no further employees would be engaged under the Kentz
Agreement.
[69] The Commissioner was authorised by the parties to the Kentz Agreement to conciliate
and/or arbitrate the matters in dispute. The power being exercised by the Commissioner was
not a statutory power, but a power conferred by the parties through their enterprise agreement.
The Commissioner was exercising a power of private arbitration afforded to the Commission
by the dispute resolution process within the Kentz Agreement.
[70] Where, as in this case, the parties agreed to submit their differences for decision by a
third party, the decision maker does not exercise judicial power, but a power of private
arbitration.
[71] In exercising the power of private arbitration afforded to the Commission, the
Commissioner had power to arbitrate an outcome to resolve the dispute over matters arising
under the Kentz Agreement. In doing so she was authorised to form conclusions as to the
legal rights and liabilities of the parties to the Kentz Agreement and give a decision
expressing a conclusion as to the operation of the relevant terms of the Kentz Agreement, in
order to discharge her role in the dispute resolution procedure to resolve disputes between the
parties to the Kentz Agreement, in furtherance of the objective of the parties of avoiding the
escalation and providing prompt resolution of disputes or grievances.
[72] Commissioner Bissett received submissions and evidence in relation to the issues in
contention, considered them and made findings in relation to the matters of fact and
interpretation in dispute, in order to discharge her responsibility in private arbitration to
resolve the dispute. The Commissioner was authorised to make findings in the course of the
private arbitration concerning the operation of the relevant provisions of the Kentz Agreement
for the purpose of resolving the dispute. The Commissioner was not “declaring [an] opinion
about the legal position and only doing that for its own sake”.66
[73] The Commissioner’s conclusions were not a binding declaration of rights. The
findings involved the formation of an opinion on a matter of interpretation required in
discharging the arbitral function afforded to her by the parties for the purpose of resolving the
dispute before her. The Commissioner did not seek to or purport to make a judicial
determination. The dispute was clearly one in respect of a matter arising under the Kentz
Agreement and, in our view, the Commissioner did not consider any matters outside the
jurisdiction reposed in the Commission by the dispute settlement procedure in clause 18 of the
Kentz Agreement.
[2016] FWCFB 2019
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[74] The decision of the Commissioner arising from the arbitration is not a conclusive or
legally binding determination of the rights and obligations of the parties in the Kentz
Agreement by way of a judicial determination reserved for a Chapter III Court. Having been
made on the basis of a power of private arbitration afforded to her by the agreement of the
parties, the Commissioner’s decision is not binding of its own force. Rather, its effect,
depends on the law which operates with respect to it, having regard to the terms of the Kentz
Agreement.
Conclusion in relation to Jurisdiction (appeal ground 1)
[75] We find that the Commissioner, in dealing with the dispute put before her under clause
18 of the Kentz Agreement, properly undertook her role of private arbitration and was not
engaged in the exercise of judicial power.
2. The characterisation of R&R (appeal grounds 2–4)
[76] Before dealing with the first substantive point in the appeal, we note that there is broad
agreement that the principles to apply in the interpretation of an industrial agreement are
appropriately summarised by the Full Bench in Australasian Meat Industry Employees Union,
The v Golden Cockerel Pty Limited.67 The substantive matters in the appeal concern the
application of those principles rather than a failure to apply them.68
The decision of Commissioner Bissett
[77] In her decision, the Commissioner considered all of the substantive issues together,
first considering the purpose of notice of termination. The Commissioner found that:
“[66] It is without dispute that the intention is that, where an employee is paid in lieu
of notice pursuant to s.117(2)(b) of the Act, the obligation is to pay the employee
everything the employee would have been entitled to had he or she remained working
during the notice period.”
[78] The Commissioner observed that whilst that conclusion does not resolve the question
of whether notice can be given so that it runs concurrent with R&R, it is clear from the Fair
Work Act Bill 2008 Explanatory Memorandum that the amount paid in lieu of notice must be
what the employee would have received had they continued to work, which enlivened the
question as to what an employee of Kentz would have been entitled to had they worked out
the notice period.
[79] The Commissioner considered that question after dealing with clause 8.6(a) of the
Kentz Agreement (in respect of which ground 5 is brought). In doing so, the Commissioner
found that:
There is no definition in the Kentz Agreement of what “rest and recreation” is and
is “defined only in relation to rosters” (presumably a reference to clause 8.6(b));69
“The hours of work of employees is 36 hours per week averaged over a 52 week
period”, worked over four weeks, followed by one week of R&R;70
[2016] FWCFB 2019
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R&R is an entitlement under the Kentz Agreement — “a period of time within
which, with the approval of Kentz, an employee is not required to be at work”.
Neither the inability of the employer to change the time off at will nor the fact that
R&R is not paid time does not alter the character of the leave.71
[80] The Commissioner characterised leave, generally, as “no more than a period of time
an employee can be absent from the workplace without risk to the security of his or her
employment”, identifying things that characterise leave:
“ It has a purpose (recreation, recovery from illness, birth of a child, emergency
response);
It is approved by the employer;
There is a set time for returning from the leave – that is, it is not open ended;
The absence does not affect employment security or continuity;
It may be paid (annual leave, maternity leave, emergency services leave) or unpaid
(parental leave, personal leave for casual employees, leave without pay);
It can be fixed in time (annual leave at Christmas close down); the timing negotiated
(annual leave) or be required by an unexpected event (personal leave brought on by
illness);
It is subject to regulation of some form.”72
[81] The Commissioner found that “not all non-working time is leave for example, the
weekend for five day workers” but did not believe that R&R could be equated to weekends.73
[82] The Commissioner found that R&R had each of the characteristics she earlier
attributed to leave.74
[83] Commissioner Bissett concluded that:
“[83] Given the absence of any construction or purpose of R&R to the contrary I am
satisfied that R&R is a form of regulated and approved leave.
[84] Having found that R&R is leave I am satisfied, on the basis of the authorities
before me – [Liquor, Hospitality and Miscellaneous Union and Another v Cuddles
Management Pty Ltd75 (Cuddles) and Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia and Others v
Silcar Pty Ltd76 (Silcar)] – that notice of termination of employment cannot run
concurrent with a period of leave.
[85] If notice cannot be given concurrent with leave, then pay in lieu of notice
cannot assume that the employee would have been on unpaid leave for part of the
notice period and, consequently, reduce the amount of payment in lieu of notice.
[86] Further, R&R is a benefit provided under the Agreement as part of the bargain
between the parties to the Agreement. That benefit would be lost without recompense
if notice, a different benefit, could override it. Certainly the Agreement does not say
notice cannot be served concurrent with a period of R&R but there are many other
things the Agreement does not say – this cannot mean they are permissible.”
[84] In relation to the issues canvassed in grounds 2–4, the Commissioner ultimately found:
[2016] FWCFB 2019
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“[87] I am therefore satisfied that, in providing payment in lieu of notice under the
Agreement, notice cannot be given such that it runs concurrent with a period of R&R.
[88] I am therefore satisfied that any payment in lieu of notice cannot include a
period of R&R in the ‘hours an employee would have worked . . . had the employment
continued until the end of the minimum notice period’ as specified in s.117(2)(b) of
the Act.”
Submissions about appeal grounds 2–4
[85] Kentz contended that Commissioner Bissett erred in misconstruing and
mischaracterising “R&R as akin to a leave entitlement that would be undermined” by a period
of notice of termination (or payment in lieu thereof) operating concurrently with it and in
finding that the R&R entitlement would be undermined by the employer giving notice which
ran concurrently with R&R (ground 2), resulting in consequential errors, in that the
Commissioner erred in misconstruing clause 7.3 of the Kentz Agreement and the NES in
s.117(2) of the Act as subject to a limitation that the period of notice (or payment in lieu
thereof) could not include R&R days (grounds 3–4).
[86] Kentz submitted that the Commissioner’s reasoning was the “treatment of R&R as
akin to a leave entitlement that would be undermined by notice of termination or payment in
lieu operating concurrently with it” was central to her decision.
[87] Kentz submitted that the Commissioner’s reasoning mischaracterised R&R at two
levels. First:
“24. . . . R&R was not akin to an entitlement to leave. Although clause 8.6
contained varying references to R&R as ‘R&R’, ‘period of R&R’, ‘R&R
leave’ and ‘R&R work cycle’, sub-clause 8.6(b) contained the most direct
attempt to define the status of R&R under the Agreement:
‘R&R is classified as authorised non-work time unless accrued RDOs are
paid out.’
25. The Agreement as a whole offers important context about the status and role of
R&R in the work cycle:
a) R&R was the rostered unpaid time off integrated in a 4 weeks’ on / one
week off work cycle where the rostered hours of work over the 5 week
roster was compressed into 4 weeks, and averaged out over the whole 5
week cycle;
b) employee leave entitlements arose separately and discretely under the
Agreement [in clause 17];
c) clause 13 calculated ‘weekly’ pay and allowances by reference to the
36 hours averaged over the whole cycle (including R&R).”77
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[88] Kentz submitted that an analysis of the text and consideration of the context of the
Kentz Agreement, R&R cannot be characterised as a leave entitlement:
“R&R is as 8.6(b) says authorised non-work time”.
“It’s an integral part of the work cycle”.
“Working hours and pay are compressed, time away from work while still
participating in the roster is banked for use”.78
[89] Kentz submitted that the Commissioner “failed to appreciate the role R&R had within
the Agreement as an integrated and necessary component of the work cycle. Although the
practical incidents of R&R bore resemblances to the practical incidences of leave
entitlements, the contextual differences were fundamental”. For that reason, Kentz submitted
that the Commissioner “erred in regarding R&R as in the nature of an entitlement to approved
and scheduled leave”.
[90] Secondly, “whether or not R&R was capable of being labelled as ‘leave’ in any sense,
it was not a leave entitlement of a kind that would be undermined by notice of termination or
payment in lieu operating concurrently with it”.
[91] Kentz submitted that the Commissioner’s reliance on the authorities cited was
misplaced. It submitted that, “[w]hatever label could be attached to R&R, the Commission
should not have equated R&R to annual leave or sick leave or other such forms of leave.
Those conventional forms of leave do not arise as rostered time off in a work cycle. They
entitle the employee to interrupt the work cycle by drawing upon an accrued entitlement to
paid time off out of the work cycle”.79 It submitted that the cases do not stand for the broad
proposition that if an employee has an entitlement to be absent from work, that entitlement
cannot be used to offset another entitlement such as the entitlement to notice of termination.80
[92] The CEPU submitted that the effect of the relevant authorities was that if an employee
has an entitlement to be absent from work, then an absence pursuant to that entitlement cannot
be used to offset another entitlement such as the entitlement to notice of termination.81 It
submitted that the authorities also include an understanding of the purpose of relevant
entitlements to enable an employee to seek alternative work whilst still working,82 reflected in
Silcar and the Termination, Change and Redundancy Case.83
[93] The CEPU submitted that in Cuddles, Lucev FM considered the question of whether
notice could be issued to an employee whilst they were on a period of unpaid maternity leave
provided for by the WR Act, and found, having reviewed authorities, that:
“An employer cannot give notice of termination of employment to an employee on
approved leave, or, at least, the notice cannot run concurrently with the approved leave
because to do so is to deprive the employee of their right to paid leave. The principle
has been established in cases concerning the interpretation of Awards and employees’
entitlements on termination.”84
[94] The CEPU submitted that in Silcar, Deputy President Gooley summarised a number of
the authorities relating to the question of whether notice of termination could run concurrently
with annual leave, holding that:
[2016] FWCFB 2019
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“In my view the authorities establish the right to notice and the right to annual leave are
independent and cannot be used to cancel out the other right. For example if an
employer gives an employee four weeks notice of termination and after one week the
employee is on approved annual leave for two weeks and returns to work out the notice
for one week then the two weeks on annual leave must be absorbed by the notice
period and the employee recredited with the annual leave or they must be given an
additional period of notice.”85
[95] The CEPU submitted that the Commissioner’s findings that, “in relation to the
application of the principle, there was no basis to distinguish the entitlement to be absent from
work conferred in respect of rest and recreation from any other form of leave” and that R&R
was an entitlement under the Kentz Agreement to be absent from work is given strong textual
support by the terms of the Kentz Agreement as a whole and provides support for the
CEPU’s submission:
Clause 8.4 provides that R&R forms part of the work cycle and provides that the
“work cycle will be initially agreed between the employer and the employees” and
once agreed that agreed work cycle can only be amended in accordance with its
provisions. The CEPU contended that the “requirement that employees be
consulted and that notice is required to be given before the work cycle is altered
strongly suggests that the employees have an entitlement to the arrangements
provided in the work cycle”.
Clause 8.6(b) of the Kentz Agreement provides that R&R is authorised non-work
time, the effect of which is to create an entitlement to be absent from work during
periods of R&R without sanction from the employer. The Commissioner was
correct to hold that periods of R&R were different to weekends.
The periods of R&R can only be rescheduled in accordance with clause 8.6(c) of
the Kentz Agreement. The conditioning on the employer’s right to reschedule R&R
demonstrates that the periods of R&R are an entitlement.
[96] The CEPU submitted that the entitlement to R&R was correctly recognised by
Commissioner Bissett who said that “there were a number of features of this which equated
with leave”, and identified what those matters were in paragraphs 80 and 81 of her decision.86
Decision in relation to grounds 2–4
[97] Appeal grounds 2–4 raise two substantive bases upon which Kentz contends that
Commissioner Bissett erred: mischaracterisation of R&R and misapplied relevant authority.
A. The Commissioner’s characterisation of R&R
[98] In her decision, Commissioner Bissett characterised leave, generally, as “no more than
a period of time an employee can be absent from the workplace without risk to the security of
his or her employment”87 and sets out incidents of leave, which she found to arise in respect
of R&R.88 The Commissioner characterised R&R under the Kentz Agreement as leave,
finding:
[2016] FWCFB 2019
25
“Given the absence of any construction or purpose of R&R to the contrary I am satisfied
that R&R is a form of regulated and approved leave.”89
[99] In addressing the proposition that the Commissioner erred in that characterisation of
R&R, it is necessary to consider the relevant terms of the Kentz Agreement and surrounding
circumstances, having regard to the context and purpose of the Kentz Agreement provisions.
[100] Whilst the parties drew different conclusions as to the proper characterisation of R&R
from the terms of the Kentz Agreement and their context, there was common ground as to the
relevant agreement provisions and their context.
[101] In its submissions, Kentz addressed the relevant agreement provisions and the context,
both of the Kentz Agreement and the working arrangements under it, in the following way:
Clause 7.3(a) sets out the written notice. It is by reference to the period of time,
expressed in weeks.90
Clause 7.3(f) provides for payment in lieu. It is silent as to how that is to be
calculated, requiring recourse to s.117(2)(b) of the Act.91
“The only explicit attempt to describe the character of R&R is to be found at clause
8.6(b) and it says that R&R is authorised non-work time”.92
Work cycle is not defined in the Kentz Agreement. Clause 8.4(a) deals with project
working hours agreement, providing that the “project working hours shall be
arranged in accordance with the work cycles agreed as initially established by the
employer”.93
R&R is part of the work cycle, which is a four weeks on, one week off work cycle,
in the context of fly-in fly-out arrangements.94
Clause 3(c)(9) sets out hours within the work cycle – generally “arranged as 10
hours Monday to Friday and eight hours Saturday and include ordinary hours and
rostered overtime pursuant to clause 8.4”.95
Leave is dealt with in a separate section of the Kentz Agreement, clause 17—
Leave.96
[102] Kentz summarised the working hours and payment of wages arrangements as follows:
“[Working hours and payment of wages are] compressed into four weeks with the one
week R&R rostered non-work time, 56 hours of work per week times four gives you
224 hours over the cycle. If you divide that by five, being the five weeks of the cycle,
that’s 44.8 work hours per week on average. Not including the banked RDO that was
paid out, this was 66 hours of pay per week of rostered work time times four gives you
264 ordinary time paid hours, divided by five, 52.8 paid ordinary hours per week on
average over the cycle.”97
[103] The CEPU accepted that Kentz had correctly described the effect and interaction of
various clauses within the Kentz Agreement and the work cycle arrangements, including the
[2016] FWCFB 2019
26
“notion that the R&R period was part of the work cycle and that the way it worked is that you
had a four and one, because that had been agreed, but the payment was compressed into the
four”.98
[104] In respect of notice of termination, clause 7.3(a) of the Kentz Agreement provides that
“[s]ubject to the Act, the Employer may terminate the employment of an Employee by giving
written notice to that Employee as follows” and sets out a scale of notice entitlements in
“weeks”, at the minimum level provided for in s.117(3) of the Act. Clause 7(3)(f) of the Kentz
Agreement provides that “(t)he Employer may pay an Employee in lieu of notice”, without
any specification of how payment in lieu of notice is calculated.
[105] Given, the introductory words of clause 7.3(a) “[s]ubject to the Act”, it may be
reasonably inferred that the payment would be calculated in terms of s.117(2)(b) of the Act:
“. . . payment in lieu of notice of at least the amount the employer would have been
liable to pay to the employee . . . at the full rate of pay for the hours the employee
would have worked had the employment continued until the end of the minimum
period of notice.”
[106] R&R is classified by clause 8.6(b) of the Kentz Agreement as “authorised non-work
time unless accrued RDOs are paid out”.
[107] Further guidance may be had from the broader context of the provisions, as set out
above and in the submissions by Kentz which were accepted as accurate by the CEPU.
[108] The working arrangements, and the work cycle at its heart, provide important context.
[109] The Ichthys Project working hours are arranged, consistent with clause 8.4(a) of the
Kentz Agreement, in accordance with the work cycles agreed as initially established by the
employer. R&R is part of the five week work cycle, of four weeks on and one week off, in the
context of fly-in fly-out arrangements. Hours within the work cycle are generally “arranged as
10 hours on Monday to Friday and 8 hours on Saturday, and include Ordinary Hours and
rostered overtime”. Working hours and payment of wages are compressed into four weeks of
the work cycle, with R&R rostered in a block of one week of authorised non-work time.
Leave is dealt with in a separate section of the Kentz Agreement, clause 17—Leave.
[110] R&R arises in relation to each work cycle, which is fixed by the employer following
initial consultation and agreement and subject to change constrained by the provisions in
clauses 8.6(a) and (c) of the Kentz Agreement.
[111] The R&R period is an incident of the working arrangements applicable to employees
working under the Kentz Agreement, involving the compression of working hours (and
associated income) into four weeks of the cycle, with non-work time within the Kentz
Agreement substantially compressed into a week of R&R, which is more practical and of a
greater utility given the fly-in fly-out arrangements and the geography of the Ichthys Project.
[112] In our view, having regard to the relevant agreement provisions and their context,
Commissioner Bissett erred in characterising R&R under the Kentz Agreement as a form of
regulated and approved leave.
[2016] FWCFB 2019
27
[113] The Commissioner characterised R&R by reference to a generalised concept of leave
and the context of work generally, rather than by reference to the specific context of R&R
within the work and rostering arrangements under the Kentz Agreement.
[114] In the context of the Kentz Agreement and the broader relevant working arrangements,
R&R is properly characterised as the block of authorised non-work time which forms an
integral part of the work cycle in which work is undertaken (and leisure time is taken).
[115] Payment in lieu in respect of an R&R period of that character, in accordance with
s.117(2)(b) of the Act would require payment in respect of the “hours the employee would
have worked had the employment continued until the end of the minimum period of notice”.
[116] In the context of the work cycle arrangements, an employee whose employment was
terminated with payment in lieu would have worked the working hours established in their
work cycle had their employment continued until the end of the minimum period of notice.
The employee would not have worked, or been paid in respect of, any R&R period which fell
within the work cycle over that period of time.
[117] Further, we think the Commissioner’s equation of R&R with leave overlooked one
important attribute of the various forms of leave that is not shared with R&R – unlike the
circumstances in respect of the taking of R&R, an employee taking one of the various forms
of leave is no longer participating in the work cycle.
[118] Characterised as the block of authorised non-work time which forms an integral part
of the work cycles, the entitlement of the relevant employees, had their employment
continued over the notice period, was to authorised unpaid non-work time in respect of the
R&R period and working of and payment for any work-time within the cycle. Termination
with immediate effect, subject to the payment made in lieu, was to the same effect – time off
without payment in respect of the R&R periods and payment for the “hours the employee
would have worked had the employment continued until the end of the minimum period of
notice”, save that the employees were not required to work the work-time hours within the
work cycle for which they were entitled to payment. The employees were paid what they were
entitled to be paid had they remained in their employment during the notice period. Further,
there was no practical inhibition of the opportunity of the employees to respond to changed
circumstances, re-organise their lives and seek alternative employment.
[119] We note that this decision is made in relation to the specific terms and context of the
Kentz Agreement and has no necessary application to other agreements. Any determination of
the interaction of notice and R&R would need to be determined in respect of other agreements
in accordance with their terms and context.
B. The application of the relevant authorities by the Commissioner
[120] In light of our finding that the Commissioner erred in characterising R&R as a form of
regulated and approved leave, it follows that the Commissioner also erred in applying
principles drawn from authorities in relation to the form of regulated and approved leave to
R&R under the Kentz Agreement.
[121] Further, we see no basis to draw a general principle that notice of termination of
employment cannot run concurrent with a period of leave from the authorities.
[2016] FWCFB 2019
28
[122] The authorities cited which found that notice cannot be concurrent with leave
concerned annual holidays,99 long service leave,100 maternity leave101 and sick leave.102 In The
Australian Institute of Marine and Power Engineers v Australian Coastal Shipping
Commission, Ludeke J decided that there was nothing in the relevant award which prevented
notice running concurrently with annual leave.103
[123] Each matter was determined by reference to the particular form of leave considered
and the relevant basis of that leave in applicable legislation or industrial instruments. In our
view, those authorities did not provide a proper basis to determine a general principle in
respect of leave and there was no basis to apply such a principle to the R&R arrangements in
the Kentz Agreement in the particular context in which it operated.
[124] We note that in the decision which dealt with similar roster arrangements in nature to
the Kentz work cycle arrangements, albeit not necessarily the same agreement terms or
context, Lucev FM, in Williams v Macmahon Mining Services Pty Ltd (No 2),104 in
calculating the payment, due to the applicant in the context of a two weeks on / one week off
roster, found:
“By reason of the roster arrangements in place during the time that Mr Williams was
employed the week period during the three week period when Mr Williams is not
required to attend for work is simply time not worked. It is not unpaid authorised
leave.”
Conclusion in relation to grounds 2–4
[125] We find that the Commissioner erred in her characterisation of R&R in the context of
the Kentz Agreement and in the application of relevant authorities to R&R in that context. We
quash that element of the Commissioner’s decision and in particular the findings that:
“[83] . . . R&R is a form of regulated and approved leave.
[84] . . . on the basis of the authorities before me, that notice of termination of
employment cannot run concurrent with a period of leave.
[85] . . . pay in lieu of notice cannot assume that the employee would have been on
unpaid leave for part of the notice period and, consequently, reduce the amount of
payment in lieu of notice.
. . .
[87] I am therefore satisfied that, in providing payment in lieu of notice under the
Agreement, notice cannot be given such that it runs concurrent with a period of R&R.
[88] . . . any payment in lieu of notice cannot include a period of R&R in the ‘hours
an employee would have worked . . . had the employment continued until the end of
the minimum notice period’ as specified in s.117(2)(b) of the Act.”
[126] Determining that aspect of the dispute ourselves, we substitute our findings at
paragraphs 114 to 116.
[2016] FWCFB 2019
29
3. The characterisation of clause 8.6(a) (appeal ground 5)
[127] Clause 8.6(a) of the Kentz Agreement is in the following terms:
“The work cycle of each Employee will commence on his or her commencement date
on the Project. The Employer may choose to shorten or lengthen the Employee’s first
work cycle to align the Employee’s work cycle with that of other Employees. The
work cycle forms the basis for scheduling the staffing of the Project. Employees will
only receive R&R where determined by the Employer and there are more than two (2)
weeks’ work for the Employee to complete on the Project.” [Emphasis added]
[128] Kentz contended that Commissioner Bissett erred in misconstruing the last sentence of
clause 8.6(a) of the Kentz Agreement (which we have underlined above) as preventing Kentz
from providing a period of notice of termination (or payment in lieu thereof) in respect of a
period of time that included R&R days under a predetermined work cycle (ground 5).
The decision of Commissioner Bissett
[129] Commissioner Bissett rejected the submissions of Kentz that “clause 8.6(a) is only
about work arrangements at the commencement of employment and hence the first work
cycle”.105 Her decision in that respect is not challenged in the appeal106 and the argument was
not put by Kentz in the appeal.
[130] The Commissioner found:
“[74] Contrary to the submissions of Kentz, it seems to me that clause 8.6(a) is better
read as:
The first sentence sets the commencement of the work cycle;
The second sentence allows for this first work cycle to be shortened of [sic]
lengthened to get the employee on to a work cycle, which includes the taking of
R&R, in sync with other employees;
Scheduling (rostering) is done on the basis of the established work cycles (ie not the
adjusted first work cycle of the employee); and
When an employee gets to end of that employee’s work on the Project, the work
cycle is again adjusted so that an employee is not put on R&R within the last two
weeks of work.
[75] For this reason I am satisfied that if, at the time of being given notice, the
employee had two weeks or less of work then the employee could not proceed on
R&R. This being the case had the employee worked the notice period they would have
been paid for the entire notice period. An employee paid in lieu of notice must receive
what he or she would have received had they worked the period of notice.
[76] For any employee who received two weeks’ notice or less there must have
been no more than two weeks’ work for the employee to complete. Such employees
[2016] FWCFB 2019
30
could not be put on R&R. In circumstances where such employees were paid in lieu of
notice they should have been paid as if they had worked the full period of the notice.”
[131] In relation to the issues canvassed in ground 5, the Commissioner ultimately found:
“[89] In addition I am satisfied that clause 8.6(a) of the Agreement does not allow
the employer to place an employee on R&R if there is two weeks or less work for the
employee to complete on the Project.”
Submissions in relation to clause 8.6(a) of the Kentz Agreement
[132] Kentz submitted that Commissioner Bissett erred in construing the last sentence of
clause 8.6(a) as “precluding Kentz from giving notice of termination to any employee at the
end of the Project, if the employee’s pre-determined work cycle meant that there was a period
of R&R due to fall in the notice period”, notwithstanding that to the extent that any employee
had “R&R days falling in their notice period, those R&R days arose in the course of their pre-
determined work cycle”.107
[133] It submitted that Kentz would need to “change the employee’s work cycle (eg by
lengthening rostered work time) or manipulate the timing of notice of termination to coincide
only with rostered work time” to avoid breaching that requirement found to arise from the
sentence by the Commissioner.108
[134] Kentz submitted that such a “construction is unlikely to have been intended by the
parties, especially in the context of the end of Kentz’s scope of works on the Project”. It
contended that if the R&R is not a leave entitlement then it is “difficult to see what purpose
would be served by the last sentence of clause 8.6(a) applying in this way”. It submitted that
such a “side-wind effect is unlikely to have been intended given the immediate context of the
rest of clause 8.6(a) which appears to be facilitative and focused on the establishment and
maintenance of the work cycle”.109
[135] Kentz submitted that the preferable construction of the last sentence is that:
“(1) Kentz has the right to schedule staffing under the work cycle;
(2) Kentz has some flexibilities in determining an employee’s work cycle, by
shortening or lengthening the employee’s first work cycle to align with that of
other employees;
(3) Kentz can at any point in time determine when an employee gets to take R&R,
subject to Kentz not deferring or bringing forward R&R unless the employee
has more than two weeks’ worth of work left.”110
[136] Kentz contended that such a construction is preferable because:
“a) it does not by way of a side-wind impose a significant limitation on the
capacity of the employer to provide notice of termination (or payment in lieu)
for no good reason;
[2016] FWCFB 2019
31
b) by reading the word ‘determined’ in a point-in-time sense, confirms that the
right of the employee to receive R&R will depend on what the employer
determines from time to time, subject to a sensible protection for the employee
against manipulation of R&R at the end of employment;
c) it would not affect the provision of notice of termination (or payment in lieu)
to an employee under clause 7.3 of the Agreement in respect of a period
including R&R days arising as part of the employee’s pre-determined work
cycle.”111
[137] Kentz submitted that resort to the conventional tools of construction and the adoption
of the preferable construction provides a sensible balance that is consistent with the objective
purposes of the Kentz Agreement.112
[138] The CEPU submitted that the Commissioner’s construction of clause 8.6(a) is entirely
unremarkable and is consistent with the plain words used. It submitted that:
clause 8.6 establishes the nature of R&R leave and follows clause 8.4 which
“establishes how the ‘work cycle’ will be developed and implemented at the
Project. The first sentence of clause 8.6 states that when the ‘work cycle’ will
begin”.
the second sentence “permits the employer to shorten or lengthen the first work
cycle to ensure that it aligns with other workers”.
the third sentence “explains the role that the work cycle plays at the Project”; and
the final sentence “conditions the employees’ entitlement” to R&R leave.113
[139] The CEPU submitted that the construction contended for by Kentz is undermined by
clauses 8.4(b), (d) and 8.6(c), as a result of which R&R can only be “moved in a manner
which is consistent with the restrictions imposed by those clauses or as expressly provided for
in the second sentence of clause 8.6(a)” of the Kentz Agreement. The “‘determination’
referred to in the last sentence of clause 8.6(a) refers to the determination by way of the work
cycle”. The CEPU submitted that, understood in this context, the “last sentence of clause
8.6(a) serves to condition the employee’s entitlement” to R&R; notwithstanding the “work
cycle, if there is not a further two weeks work to complete upon the conclusion” of a period of
R&R the employee is not entitled to R&R.114
[140] The CEPU submitted that if there was not an entitlement to R&R there would be no
need for provisions in the Kentz Agreement conditioned in the employee’s protection. It
submitted that R&R is a block of days that is subjected to conditions in terms of how it works.
One of those conditions is notice, expressly and another condition is found in the last sentence
of clause 8.6. It submitted that the final sentence in clause 8.6(a) is strongly suggestive of a
protection in circumstances where an employee’s last two weeks were R&R weeks.115
Decision in relation to clause 8.6(a)
[141] Whilst much debate occurred before us, and between the Full Bench and the parties, as
to the intention or purpose of clause 8.6(a), there was no evidence as to an intention of the
parties, let alone a common intent, or a commonly held purpose of the provision. In that
circumstance, we are left to interpret the provision, consistent with the principles in Golden
Cockerell, by the words within clause 8.6(a), having regard to the broader contextual
[2016] FWCFB 2019
32
considerations, most notably the broader context of the Kentz Agreement reflected in the
summary by Kentz, in paragraphs 101 and 102 above, which was accepted as accurate by the
CEPU.
[142] The last sentence of clause 8.6(a) provides:
“Employees will only receive R&R where determined by the Employer and there are
more than two (2) weeks’ work for the Employee to complete on the Project.”
[143] It appears to us that a plain reading of the sentence is available. The sentence
conditions the taking of R&R in two ways:
1. R&R is only available to an employee where determined by the employer in
accordance with the Kentz Agreement.
2. Employees will only receive R&R where there are more than two (2) weeks’
work for the employee to complete on the Ichthys Project.
[144] In our view, this is a further and clearly expressed restriction on the receipt of R&R by
employees. R&R is not available to an employee where there are less than two (2) weeks’
work for an employee to complete on the Ichthys Project. Whatever, the intention or purpose,
the words are plain – on their face they act to preclude the taking of R&R by an employee (or
scheduling of R&R for an employee) in the final two weeks for which work is available for
that employee on the Ichthys Project.
[145] The broader context does not detract from the plain meaning of clause 8.6(a). It
supports it. Read in the context of the Kentz Agreement as a whole and the operation of the
work cycle arrangements, the final sentence in clause 8.6(a) can be comfortably read as
conditioning the taking of R&R. Such conditioning is found in the other element of clause
8.6(a) – R&R is only available to an employee where determined by the employer in
accordance with the Kentz Agreement. The work cycle will operate in accordance with the
work cycle(s) agreed as initially established by the employer (clause 8.4(a)); subject to:
the right of the employer to shorten or lengthen an employee’s first work cycle to
align with that of other employees (clause 8.6(a));
the right of the employer to change the work cycle(s) or introduce a new work
cycle(s) (clause 8.4(b)) which is conditioned by the requirement (also in clause
8.4(b)) on the employer to consult with affected employees and provide notice; and
the right of the employer to reschedule the taking of the R&R leave to meet
operational requirements and shorten/extend work cycle(s) in order to re-establish
the original work cycle, subject to notice (clause 8.6(c)).
[146] In its broader context, clause 8.6(a) can be comfortably read in its terms as a limitation
upon the scheduling and taking of R&R.
[2016] FWCFB 2019
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Conclusion in respect of clause 8.6(a) (appeal ground 5)
[147] We think the Commissioner was correct in her construction of the final sentence of
clause 8.6(a) of the Kentz Agreement, as are her conclusions in paragraphs 75, 76 and 89.
There is no error by Commissioner Bissett in her decision in respect of clause 8.6(a) of the
Kentz Agreement.
[148] We dismiss the appeal in relation to the characterisation of clause 8.6(a) (appeal
ground 5).
DISPOSITION OF THE APPEAL
1. Given the jurisdictional issue raised in the appeal, the broader implications of the
appeal in relation to other Ichthys agreements and the error found in relation to
grounds 2–4, we grant permission to appeal in the public interest.
2. In relation to the jurisdictional ground (ground 1), we find that the Commissioner, in
dealing with the dispute put before her under clause 18 of the Kentz Agreement,
properly undertook her role of private arbitration and was not engaged in the exercise
of judicial power, we dismiss the appeal in relation to the exercise of power.
3. We find that the Commissioner erred in her characterisation of R&R in the context of
the Kentz Agreement and in the application of relevant authorities to R&R in that
context (grounds 2–4). We quash that element of the Commissioner’s decision and in
particular the findings that:
“[83] . . . R&R is a form of regulated and approved leave.
[84] . . . on the basis of the authorities before me, that notice of termination
of employment cannot run concurrent with a period of leave.
[85] . . . pay in lieu of notice cannot assume that the employee would have
been on unpaid leave for part of the notice period and, consequently, reduce the
amount of payment in lieu of notice.
. . .
[87] I am therefore satisfied that, in providing payment in lieu of notice
under the Agreement, notice cannot be given such that it runs concurrent with a
period of R&R.
[88] . . . any payment in lieu of notice cannot include a period of R&R in the
‘hours an employee would have worked . . . had the employment continued
until the end of the minimum notice period’ as specified in s.117(2)(b) of the
Act.”
Determining that aspect of the dispute ourselves, we substitute our findings at
paragraphs 114 to 116.
[2016] FWCFB 2019
34
4. We are satisfied that the Commissioner was correct in her construction of the final
sentence of clause 8.6(a) of the Kentz Agreement, and as are her conclusions in
paragraphs 75, 76 and 89. There is no error by Commissioner Bissett in her decision in
respect of clause 8.6(a) of the Kentz Agreement. We dismiss the appeal in relation to
the characterisation of clause 8.6(a) (appeal ground 5).
SENIOR DEPUTY PRESIDENT
Appearances:
R Dalton of Counsel for Kentz (Australia) Pty Ltd.
R Kenzie of Counsel with C Massey for Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia.
M Follett for Chamber of Commerce and Industry of Western Australia.
M Mansini for Australian Mines and Metals Association.
Hearing details:
2016.
Melbourne:
March 17.
Printed by authority of the Commonwealth Government Printer
Price code G, PR578554
1 [2016] FWC 669.
2 AE400022.
3 Clause 3(c)(7) of the Kentz (Australia) Pty Ltd Ichthys Onshore construction Greenfields Agreement (the Kentz
Agreement).
4 Transcript, at para 73.
5 Transcript, at para 78.
6 PR577662.
7 [2016] FWCFB 1501.
8 Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd and Kentz E & C Pty Ltd [2010] FWAFB
6021 and Australian Industry Group [2010] FWAFB 4337.
9 See Statement of Mr Ong, Appeal Book, at p. 128 at paras 8–10.
10 Form F10, Appeal Book, at pp. 111–114.
11 Relief sought in Form F10, Appeal Book, at p. 114; repeated in Kentz’s outline of submissions in matter C2015/7983
before Commissioner Bissett (Appeal Book, at p. 192 at para 15).
12 Mr Andrikopoulos, in the Statement of Mr Ong, Appeal Book, at p. 130.
[2016] FWCFB 2019
35
13 Transcript in matter C2015/7893 before Commissioner Bissett at para 66 in Appeal Book, at p. 29 .
14 Clause 18.2(a) of the Kentz Agreement.
15 Clause 18.2(b) of the Kentz Agreement.
16 Clause 18.2(b)(5) of the Kentz Agreement.
17 Statement of Mr Ong, Appeal Book, at pp. 128–129; Statement of Ms Land, Appeal Book, at pp.209–210 and para A.1 of
the Kentz’s outline of submissions.
18 [2016] FWC 669, at para 12.
19 [2016] FWC 669, at para 14.
20 [2016] FWC 669, at paras 17–18.
21 Paragraph C12 of Kentz’s outline of submissions in the appeal and Transcript, at para 92.
22 Goumas v Wattyl Australia Pty Ltd (2005) 145 IR 256 at 267.
23 Kentz’s outline of submissions at para C9.
24 Kentz’s outline of submissions at paras C12–13.
25 Kentz’s outline of submissions at para C13.
26 Kentz’s outline of submissions at para C13.
27 Kentz’s outline of submissions at para C16.
28 Transcript, at para 83.
29 Transcript, at para 92.
30 Kentz’s outline of submissions at para C17.
31 (2001) 203 CLR 645.
32 Transcript, at para 122.
33 Transcript, at para 123.
34 (2013) 252 CLR 533.
35 Section 170 of the Fair Work Act 2009 (the Act).
36 New South Wales and Others v Commonwealth of Australia [2006] HCA 52.
37 A comparable provision in respect of a disputes provision referred to in s.738 which requires or allows a person other than
the Fair Work Commission to deal with a dispute is found in s.740 of the Act.
38 [2001] HCA 16; (2001) 203 CLR 645.
39 [2013] HCA 5; (2013) 251 CLR 553.
40 (2012) 203 FCR 371; [2012] FCAFC 87.
41 (2012) 203 FCR 371 at paras 29–30.
42 (2012) 203 FCR 371 at para 31.
43 (2012) 203 FCR 371 at para 21.
44 (2012) 203 FCR 371 at para 17.
45 (2012) 203 FCR 371 at para 22.
46 (2012) 203 FCR 371 at para 65.
47 (1987) 163 CLR 140 at 148–149, for example, per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; [1987] HCA 29.
48 Section 740 of the Act.
49 Clause 18.2(a) of the Kentz Agreement.
50 Clause 18.1(a) of the Kentz Agreement.
51 Relief sought in Form F10, repeated in Kentz’s outline of submissions in matter C2015/7983 before Commissioner Bissett
(Appeal Book, at p. 192 at para 15).
52 Mr Andrikopoulos, in the Statement of Mr Ong, Appeal Book, at p. 130.
53 Appeal Book, at p. 29.
54 [2016] FWC 669, at para 12.
55 Appeal Book, at p. 129.
56 Appeal Book, at p. 129.
[2016] FWCFB 2019
36
57 Appeal Book, at p. 130.
58 Appeal Book, at p. 232.
59 PR974301.
60 Telstra Corporation Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia [2007] AIRCFB 374 at paras 11–13 and Deakin University v Rametta [2010] FWAFB 4387
at paras 32–34.
61 Transcript, at paras 96– 97.
62 [2016] FWC 669, at para 40.
63 [2016] FWC 669, at para 41.
64 As set out in clause 3(b) of the Kentz Agreement.
65 [2016] FWC 669, at para 42.
66 Transcript, at para 123.
67 [2014] FWCFB 7447 at paras 19–22.
68 See for example, Transcript, at para 175.
69 [2016] FWC 669, at para 77.
70 [2016] FWC 669, at para 78.
71 [2016] FWC 669, at para 79.
72 [2016] FWC 669, at para 80.
73 [2016] FWC 669, at para 81.
74 [2016] FWC 669, at para 82.
75 [2009] FMCA 463.
76 [2013] FWC 856.
77 Kentz’s outline of submissions at paras 24–25.
78 Transcript, at paras 208–209.
79 Transcript, at paras 218–219; Kentz’s outline of submissions at para 28.
80 Transcript, at paras 222–223.
81 Transcript, at para 418 and 419.
82 Transcript, at para 424.
83 (1984) 8 IR 34.
84 (2009) 183 IR 89 at p. 122 at para 116.
85 [2013] FWC 856 at para 46.
86 Transcript, at para 432.
87 [2016] FWC 669, at para 80.
88 [2016] FWC 669, at paras 80 and 82.
89 [2016] FWC 669 at para 83.
90 Transcript, at para 184.
91 Transcript, at para 184.
92 Transcript, at para 185.
93 Transcript, at paras 186–187.
94 Transcript, at para 190.
95 Transcript, at paras 198–201.
96 Transcript, at para 210.
97 Transcript, at para 201.
98 Transcript, at para 416.
99 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and
Others v Silcar Pty Ltd [2013] FWC 856; The Chief Secretary v The Hospital Employees’ Industrial Union of Workers of
W.A. (Coastal Branch) (1931) 11 WAIG 105; McSharer v The Hospital Employees’ Industrial Union of Workers, W.A.
[2016] FWCFB 2019
37
(1974) 54 WAIG 1545; Amalgamated Metal Workers and Shipwrights Union of Western Australia v Multicon
Engineering (W.A.) Pty Ltd (1980) 60 WAIG 1055; and Wanders v Richards Mining Services Pty Ltd [2012] SAIRC 46.
100 Swingler v Methodist Ladies College (2002) 82 WAIG 861 at para 42, per Smith C.
101 Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd (2009) 183 IR 89.
102 Reynolds v Swift and Moore Pty Ltd (1994) 74 WAIG 861.
103 (1972) 146 CAR 468.
104 (2009) 187 IR 426, at para 37.
105 [2016] FWC 669, at paras 71–73.
106 Transcript, at para 236.
107 Kentz’s outline of submissions, at para 40.
108 Kentz’s outline of submissions, at para 41.
109 Kentz’s outline of submissions, at paras 42–43.
110 Kentz’s outline of submissions, at para 44.
111 Kentz’s outline of submissions, at para 45.
112 Transcript, at para 298.
113 CEPU’s outline of submissions, at para 52.
114 CEPU’s outline of submissions, at para 53.
115 Transcript, at para 443.
