1
Fair Work Act 2009
s.739 - Application to deal with a dispute
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries
Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
RACV Services Pty Ltd
(C2016/195)
DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 10 MAY 2016
Alleged dispute about any matters arising under the enterprise agreement and the
NES;[s186(6)]; meaning of “penalty rates”; consideration of industrial and legislative
context in which agreement was made.
Introduction
[1] RACV Services Pty Ltd (RACV) has in its employ a number of persons who occupy
positions described as Surveillance and Incident Response Officers (SIROs). The employment
of SIROs is covered by the RACV Surveillance and Incident Response Officers’ Enterprise
Agreement 2013 – 2016 (Agreement). Some of the SIROs employed by RACV are members
of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union”
known as the Australian Manufacturing Workers’ Union (AMWU). The AMWU is also
covered by the Agreement.
[2] The Agreement variously makes provision for hours of work, shift work and shift
work hours, rosters and annualised salary.
[3] It is common ground, that in or about December 2015, RACV gave notice to affected
SIROs of the introduction of a 12 week rotating roster. This marked a change to the rostering
pattern, which had then been in place for some significant period and consisted of a nine week
rotating roster. The nine week rotating roster arrangement involved work on some weekends
and on some night shifts. The effect of the introduction of the 12 week rotating roster is that
affected SIROs will be rostered to work additional weekends and additional night shifts. The
SIROs affected by the introduction of the 12 week rotating roster are shift workers under the
Agreement, and are in receipt of an annualised salary pursuant to the Agreement.
[4] A dispute has arisen as a consequence of the introduction of the 12 week rotating
roster, but it does not concern consultation or the capacity of RACV to implement the 12
week rotating roster. The dispute concerns in effect, a claim for payments of a shift allowance
for shifts performed by SIROs on weekends, which is said to be an entitlement under the
Agreement.
[2016] FWC 2845
DECISION
E AUSTRALIA FairWork Commission
[2016] FWC 2845
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[5] By application lodged on 3 February 2016, the AMWU applied to the Fair Work
Commission (Commission) pursuant to s.739 of the Fair Work Act 2009 (Act) for the
Commission to deal with a dispute in accordance with the dispute settlement procedure of the
Agreement.
Question for determination
[6] There is no dispute that the Commission’s jurisdiction has been properly invoked and
that I am able to determine the dispute by arbitration. The parties have agreed that the dispute
is to be resolved by determining, by arbitration, the following question:
If an employee is a shift worker under clause 13.2 and is in receipt of an annualised salary
under clause 19.3, is the employee entitled to be paid a shift allowance under clause 13.4 for
work performed on a Saturday or Sunday?
[7] The resolution of this question turns ultimately upon the proper construction of various
provisions of the Agreement.
[8] The principles applicable to the proper construction of an enterprise agreement are not
in dispute and were canvassed at length in Australasian Meat Industry Employees Union v
Golden Cockerel Pty Limited.1 RACV submitted that, to the summary set out in Golden
Cockerel2 should be added the proposition, that evidence of the history and context of a
particular clause, may be relevant as part of the background of objective facts, and cited Short
v FW Hercus Pty Ltd,3 in particular the following passage, to make good its proposition:
“Context may also include, in some cases, ideas that gave rise to an expression in a document
from which it has been taken. When the expression was transplanted, it may have brought with
it some of the soil in which it once grew, retaining a special strength and colour in its new
environment.” 4
[9] It is sufficient for present purposes to note that the proposition advanced by RACV is
sound and, it seems to me, is contemplated by points 7 and 8 of the summary in Golden
Cockerel at [41], particularly when that summary is understood by reference to that which
appears at [19] – [22] of that decision.
Competing contentions
[10] The AMWU contends that the shift allowance provided for in clause 13.4 of the
Agreement is payable whenever ordinary hours are worked, relevantly on an afternoon or a
night shift. It contends that affected SIROs, whether working pursuant to a nine week rotating
roster or a 12 week rotating roster arrangement, are not paid penalty rates for work performed
as weekend shift work. The exclusion of a shift allowance in clause 13.4(d) in circumstances
where “penalty rates” apply is said to have no application because the affected SIROs are not
paid penalty rates for shift work performed on a weekend. The AMWU contends that the
obligation to pay to the affected SIROs a shift allowance pursuant to clause 13.4 arises,
1 [2014] FWCFB 7447.
2 Ibid at [41].
3 (1993) 40 FCR 511.
4 Ibid at [518].
[2016] FWC 2845
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notwithstanding that those employees are paid an annualised salary in accordance with clause
19.3 of the Agreement.
[11] RACV contends that clause 13.4(d) of the Agreement provides that a shift allowance
is not payable where, inter-alia, penalty rates apply. It contends that the annualised salary, for
which provision is made in clause 19.3 of the Agreement, incorporates penalty rates that
would otherwise be payable to affected SIROs for work performed on weekends. As such the
inclusion in the annualised salary of a payment for weekend work engages the concept of
penalty rates referred to in clause 13.4(d) of the Agreement. Consequently, penalty rates are
payable and included in the annualised salary and, it follows that shift allowances are
therefore not payable by reason of the exclusion clause 13.4(d) of the Agreement.
Consideration
[12] Clauses 13.4(a) to (c) of the Agreement set out additional loadings that are to be paid
to employees who work ordinary hours on an afternoon or night shift. The percentage of the
loading payable is dependent on whether employees work ordinary hours on a rotating basis
on afternoon and night shifts, or whether they are permanently assigned as an afternoon shift
worker, or as a night shift worker.
[13] Clauses 13.4(d) and (e) provide that shift allowance is not paid where penalty rates or
overtime apply, and is not paid on public holidays, annual leave or personal leave. These
provisions seem to me to be intended to avoid, inter-alia, that which is often described as
paying a penalty on top of a penalty.
[14] It is apparent, on the face of the Agreement, that it does not in express terms make
provision for “penalty rates” for ordinary hours of work performed on a Saturday or a Sunday.
The Agreement makes provision for double time to be paid for overtime work performed on a
Sunday, and double time and a half for overtime work performed on a public holiday.5 The
Agreement also provides, relevantly, that a shift worker shall receive double time and a half
for all hours worked on a public holiday, or time off in lieu.6
[15] Since the relationship between a shift allowance, and public holidays and overtime is
dealt with expressly and separately in clauses 13.4(d) and (e), it seems to follow that the
reference in clause 13.4(d) to “penalty rates” is a reference to penalty rates other than those
payable for overtime or for work on a public holiday. This then raises the issue of the
meaning of “penalty rates” in clause 13.4(d) of the Agreement. On the construction contended
for by the AMWU, those words have no meaning and have no work to do, because as I have
already indicated, save for the position of overtime and public holidays, the Agreement does
not make provision for the payment of penalty rates in any other circumstance, and in
particular, in relation to ordinary hours of work on a Saturday or a Sunday. I do not consider
that to be the case.
[16] To discern that which is meant by the words “penalty rates” in clause 13.4(d) it is
necessary to consider those words in context, having regard to the Agreement as a whole, the
statutory context in which the Agreement was made and the industrial and historical context
in which the Agreement was made.
5 Clause 17.1(b).
6 Clause 24.4.
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[17] To begin with, clause 19 of the Agreement deals with salaries and provides no rates of
pay other than a minimum annual salary for a full-time employee and then provides for a
1.6% salary increase in each of the years 2014, 2015 and 2016. These increases are to be
applied to the salaries that were applicable immediately before the Agreement commenced
operation, although there is no provision in the Agreement to that effect nor is the Agreement
accompanied by a salaries schedule.
[18] The Agreement provides for an annualised salary in the following terms:
“19.3 Annualised Salary
The total rate for a position under this agreement will be annualised to include an employee’s
1976 ordinary hours of work, annual leave loading of 17.5%, and any other allowances that
may apply. Salary will be deposited directly into the employee’s nominated bank account via
electronic funds transfer each fortnight.”
[19] There is no express reference in clause 19.3 to penalty rates for ordinary hours of work
performed on a weekend being included in the calculation of the annualised rate. It is not in
dispute that shift loadings are not included in the annualised salary. That is why the
Agreement makes express reference to shift loadings in clause 13.4(a) to (c). But it does not
so provide in respect of ordinary hours worked on a Saturday or a Sunday. This is curious
since the relevant modern award that covers the affected SIROs, the Vehicle Manufacturing,
Repair, Services and Retail Award 2010, makes express provision for ordinary hours that are
worked on a Saturday to be paid at time and a half and for ordinary hours that are worked on a
Sunday to be paid at double time.7
[20] That award also makes provision for shift work loadings, but provides that these are
not to be paid for ordinary time worked on a Saturday, Sunday or a public holiday.8
[21] How then could the Agreement, with no provision for penalty rates for ordinary hours
of work on a Saturday or Sunday, pass the better off overall test found in s.193 of the Act?
The answer must surely be that the annualised salary for which provision is made in clause
19.3 of the Agreement, includes as a component, the penalty rates which under the award
would be payable for ordinary hours of work performed on a Saturday or a Sunday.
[22] The agreement that operated immediately before the Agreement commenced operation
was the RACV Surveillance and Incident Response Officers’ Enterprise Agreement 2009 –
2012 (predecessor agreement). The predecessor agreement contained a shift allowance
provision in clause 13.4 which was, in terms the same as the shift allowance provision of the
Agreement, including relevantly a provision that “[S]hift allowance is not paid where penalty
rates or overtime apply”.
[23] Clause 19.3 of the predecessor agreement was in the following terms:
“19.3 Annualised Salary
The total rate for a position under this Agreement will be annualised to include an employee's
1976 ordinary hours of work, annual leave loading of 17.5%, and any other allowances that
7 See Vehicle Manufacturing, Repair, Services and Retail Award 2010 clauses 38.2 and 39.2.
8 Ibid at clause 42.2.
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may apply. Salary will be deposited directly into the employee's nominated bank account via
electronic funds transfer each fortnight.
EXAMPLE ONL Y
The following example explains how the fortnightly base rate and total rate are determined.
This example includes a pre-payment of overtime, as prescribed in sub-clause 17.2.
Note: the rates set out below are effective from 29 November 2009.
76 ordinary hours (including weekend
penalties, tool allowance, uniform
allowance, disability (traffic hazards and
weather conditions) allowance, safety
allowance (sunscreen and sunglasses),
cash handling allowance, first aid
allowance, tow driver allowance.
Fortnight
$2097.11
Annual
$54,524.92
Annual Leave Loading (5weeks) $35.28 $917.48
Base Rate for 76 hours $2,131.80 $55,426.80
Payment for pre payment of 1 hour's
overtime per week (where paid)
$76.05 $1,977.52
Total Rate (before tax) $2,207.85 $57,404.32
For further information on the calculation of these rates, please refer to Appendix 1 to this
Agreement.”
[24] Appendix 1 to the predecessor agreement was in the following terms:
[2016] FWC 2845
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“Breakdown of Salary - Year 1 (inclusive of 3% increase effective 29 November 2009)
Hourly Fortnightly Annually
Award Rate (Driver Tow Truck
Class 1-3)
$16.39 $1,245.43 $32,381.30
Over award payment $174.17
Tool $23.09
First-aid $31.10
Tow $35.65
Uniform $23.91
Disability $41.60
Safety $4.61
Cash handling $7.99
Base (excluding annual leave
loading/weekend penalties)
$20.88 $1587.56 $41,276.56
Weekend Penalties:
Saturdays - 423 hours per
annum @ 50%
$4,416.12
Sundays - 423 hours per annum
@ 100%
$8,832.24
Base Rate (including
weekend
penalties/underline
annual leave loading)
$27.59 $2,097.11 $54,524.92
Annual Leave Loading -
17.5%
$0.46 $35.28 $917.48
Annual Base Rate (including
weekend penalties/annual
leave loading)
$28.05 $2,131.80 $55,426.80
Pre payment of overtime
(where paid) based on
one hour per week
$1.00 $76.05 $1,977.52
TOTAL RATE
Total (including
Superannuation)
$29.05
$31.95
$2,207.85
$2,428.64
$57,404.32
$63,144.75
Explanatory Notes:
1. Weekend Penalties
Saturdays -423 hours p.a. = approx. 35Saturdays on average p.a.
Sundays - 423hours p.a. = approx. 35Sundays on average p.a.
If the number of hours walked on a Saturday and Sunday by a SIRO exceed 846 in any
year, this would entitle the SIRO to an additional salary payment.
2. Pre-paid Overtime Component
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Annual pre-paid overtime hours = 47 hours paid at time and a half = 47 x 1.5 x annual
base rate divided by 26 weeks = fortnightly amount.
3. Calculation of Payments
Calculation of payments for all ordinary hours (including sick leave and annual leave)
are based on the total rate.
Calculation of payments for all additional hours (eg overtime) and penalty payments
are based on the annual base rate (including weekend penalties and annual leave
loading).”
[25] It seems clear from the provisions of the predecessor agreement that penalty rates for
ordinary hours of work performed on weekends were included in the calculation of the
annualised salary. Substantially similar provisions are to be found in the agreement that was
in operation immediately prior to the predecessor agreement commencing to operate.9
[26] There could be no doubt, in light of the provisions in clause 19.3 and Appendix 1 of
the predecessor agreement, that which was meant by the words “penalty rates” in clause 13.4
of that agreement. It seems to me clear enough that clause 13.4(d) of the predecessor
agreement had the effect that a shift allowance was not paid to an employee who was in
receipt of penalty rates that had been included as part of the annualised salary set out in clause
19.3 of that agreement.
[27] Clause 19.3 of the Agreement does not contain the example referred to above nor the
reference to further information about the calculation being set out in Appendix 1. The
Agreement does not have any appendices. But it does not follow that the reference to penalty
rates in clause 13.4 of the Agreement should now be given a meaning devoid of the history of
that clause and clause 19.3 of the Agreement.
[28] There is no material before me which suggests that the parties, in concluding the
Agreement intended that clause 13.4 and clause 19.3 of the Agreement operate in a manner
that was different to the operation of those provisions under the predecessor agreement. Such
evidence as there is points the other way.10
[29] I consider that clauses 13.4 and 19.3 of the Agreement, and in particular the
expression “penalty rates” in clause 13.4 carries with it, to borrow from Burchett J in Short,
the soil in which it once grew and retains its character and colour when used in the new
environment of the Agreement. The words “penalty rates . . . apply” in clause 13.4 of the
Agreement, mean those penalty rates which pertained to ordinary hours of work performed on
a Saturday or a Sunday and which have been included in the calculation of annualised salary
for the purposes of clause 19.3 of the Agreement. To conclude otherwise, results in the words
having no meaning in the context of the Agreement, ignores relevant contextual
considerations and undermines the very principle that the modern award and the predecessor
agreement sought to reinforce, that is, the avoidance of the payment of a penalty upon another
penalty. Such a result would, in my view, be manifestly absurd.
9 See RACV Surveillance and Incident Response Officers' Union Collective Agreement 2006 – 2009, particularly clause 13.3
(Shift Allowances) clause 19.3 (Annualised Salary) and Appendix 1 and the explanatory notes of thereto.
10 Exhibit 2 at [7] – [9] and attachments WP–1, WP–2 and WP–3.
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Conclusion
[30] The answer to the question is no. The dispute is resolved accordingly. No orders are
necessary.
DEPUTY PRESIDENT
Appearances:
Mr D Vroland on behalf of the Applicant.
Mr M Follett of Counsel on behalf of the Respondent.
Hearing details:
Melbourne.
2016.
20 April.
Printed by authority of the Commonwealth Government Printer
Price code A, PR580071
WORK COMMISSION THE SEAL OF
