1
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Mondelez Australia Pty Ltd
(AG2017/5020)
VICE PRESIDENT HATCHER SYDNEY, 13 APRIL 2018
Referral to a Full Bench - Fair Work Act 2009 (Cth) - ss 582, 615 and 615A.
Introduction
[1] On 16 October 2017 Mondelez Australia Pty Ltd (Mondelez) made an application
pursuant to s 185 of the Fair Work Act 2009 (FW Act) for the approval of the Mondelez
Australia Pty Ltd, Claremont Operations (Confectioners & Stores) Enterprise Agreement
2017 (Agreement). In an email to Mondelez dated 13 November 2017, the Commission raised
a concern that clause 24 of the Agreement provided for a personal/carer’s leave entitlement of
80 hours per annum, rather than 10 days per annum as provided for under the National
Employment Standards (NES) in s 96 of the FW Act. The Commission expressed concern
that employees covered by the proposed agreement working 12 hour days would not be
entitled to their full 10 day NES entitlement (contrary to the requirement in s 55(1) of the FW
Act that an enterprise agreement not exclude the NES or any provision of it), and requested an
undertaking to be provided to address this issue. Mondelez declined to provide any such
undertaking and made extensive written submissions (dated 4 December 2017) to the effect
that there was no inconsistency between the entitlement in clause 24 of the Agreement and
that in s 96 of the FW Act.
[2] In correspondence dated 19 January 2018 the Ai Group, which acted on behalf of
Mondelez, requested that the application for approval of the Agreement be referred to the
President of the Commission (Ross J) for consideration as to whether it should be referred to a
Full Bench of the Commission for determination. The Ai Group contended that two
differently-constituted Full Benches had given different interpretations of the expression “10
days of personal/carer’s leave” in s 96(1) in ASU v Hobson Bay City Council1 and RACV
Road Services Pty Ltd v ASU.2 It pointed to a number of practical difficulties in relation to the
interpretation adopted in RACV v ASU, and requested that a five-member Full Bench deal
with the matter in order to resolve the issue of the proper interpretation of s 96 of the FW Act.
[3] This application was the subject of a hearing before Commissioner Cirkovic on 30
January 2018. At that hearing the Ai Group, representing Mondelez, submitted that the
1 [2014] FWCFB 2823
2 [2015] FWCFB 2881; 249 IR 150
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DECISION
E AUSTRALIA FairWork Commission
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referral of the approval application would be in the public interest having regard to the
following matters:
The interpretation of s 96 of the FW Act was relevant to millions of employees
and thousands of employers.
The issue was whether the NES entitlement to 10 days’ personal/carer’s leave per
annum for someone who worked more than 7.6 hours a day meant that they
received 10 times 7.6 hours as their annual entitlement, or (for example in the case
of 12 hour shift workers) 10 times 12 hours.
There were inconsistent decisions of individual members of the Commission, and
the Full Bench decisions of ASU v Hobson Bay Council and RACV v ASU were
also inconsistent.
The interpretation of s 96 in RACV v ASU conflicted with the clear intent of the
section when it was drafted, would impose “huge additional cost on employers,
millions of dollars across industry every year”, and was unworkable in relation to
part-time employees.
Given the inconsistency between two different Full Bench decisions, the issue
should be looked at in detail by a five-member Full Bench.
[4] The Australian Manufacturing Workers Union (AMWU) and the National Union of
Workers (NUW), which supported the approval of the Agreement, appeared at the hearing
before the Commissioner and submitted that:
Mondelez’s interpretation of s 96 was contrary to authority and wrong.
There was no inconsistency between ASU v Hobson Bay Council and RACV v ASU
because the two decisions dealt with different matters.
The Agreement, correctly interpreted, could be approved without undertakings.
Clause 3 of the Agreement provided that if there was any inconsistency between
the Agreement and the NES, the more beneficial provisions would take
precedence, so clause 14 did not exclude the NES.
The question raised for determination therefore simply did not arise in the matter.
[5] Subsequent to the hearing, the Commissioner administratively referred the matter to
the President for consideration as to whether it should be referred to a Full Bench.
[6] On 19 March 2018 the President delegated his functions and powers under ss 582, 615
and 615A of the FW Act in respect of Mondelez’s referral application to me pursuant to ss
582 and s 584 of the FW Act.
[7] In correspondence addressed to the President and dated 26 March 2018, an application
for Mondelez’s application for approval of the Agreement to be referred to a Full Bench was
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also made by the Honourable Craig Laundy MP, Minister for Small and Family Business, the
Workplace and Deregulation (Minister). Omitting formal parts, the Minister’s correspondence
stated:
“I refer to the application to approve the Mondelez Australia Pty Ltd, Claremont
Operations (Confectioners & Stores) Enterprise Agreement 2017 (Agreement).
I write to apply under section 615A(2)(b) of the Fair Work Act 2009 (Fair Work Act)
for you to direct a Full Bench to deal with the application to approve the Agreement.
I understand that submissions have been sought from the parties on whether the paid
personal/carer’s leave entitlements in the Agreement would provide employees
working 12-hour shifts with their full entitlements under the National Employment
Standards (NES). I understand that the authorities (including Full Bench and Federal
Court authorities) are unclear on this point.
I consider there to be strong public interest considerations in having this matter
considered by a Full Bench, and given the state of the authorities, perhaps a five-
member Bench would be most appropriate.
The Agreement approval application involves fundamental considerations
underpinning the interpretation of the provisions of the Fair Work Act dealing with the
accrual, taking, and deduction of paid personal/carer’s leave under the NES. Any
decision in this particular case is also likely to be generally relevant for the accrual,
taking, and deduction of annual leave under the NES.
Clarification of the correct principles to apply for the accrual, taking, and deduction of
NES leave entitlements is critically important for employers, employees and their
representatives.
If you agree to direct a Full Bench to deal with the Agreement approval application, it
is my intention to make submissions for the consideration of the Full Bench.”
[8] On 27 March 2018, the President delegated to me all his powers and functions under
the FW Act, except under s 581A(1)(b) and ss 620 and 625, for the period from midday on 27
March 2018 to 25 April 2018. The President had not dealt with the Minister’s referral
application (which was received by the Commission on the morning of 27 March 2018) prior
to the delegation taking effect, and accordingly it will also be necessary for me to deal with
the Minister’s referral application pursuant to the delegation.
[9] At a telephone directions hearing on 28 March 2018, the Ai Group confirmed on
behalf of Mondelez that it did not wish to make any further submissions in support of its
referral application, but relied on its earlier written submissions of 4 December 2017, its
correspondence dated 19 January 2018 and its oral submissions at the hearing before the
Commissioner on 30 January 2018. In an email dated 28 March 2018, the Minister’s
representative confirmed that the Minister did not wish to make any further written or oral
submissions in support of his referral application.
[10] The President’s powers to refer matters for determination by a Full Bench are
contained in ss 582, 615 and 615A of the FW Act, which provide:
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582 Directions by the President
The President may give directions
(1) The President may give directions under subsection (2) as to the manner in which
the FWC is to perform its functions, exercise its powers or deal with matters.
(2) The President may give a direction that is of a general nature, or that relates to a
particular matter, to one or more of the following persons:
(a) an FWC Member;
(b) a Full Bench;
(c) an Expert Panel;
(d) the General Manager.
(3) The direction must not relate to a decision by the FWC.
(4) Without limiting subsection (2), the direction may be a direction of the following
kind:
(a) a direction about the conduct of 4 yearly reviews of modern awards under
Division 4 of Part 2-3;
(aa) a direction about the conduct of 4 yearly reviews of default fund terms of
modern awards under Division 4A of Part 2-3;
(b) a direction about the conduct of annual wage reviews;
(c) a direction that 2 or more matters be dealt with jointly by one or more
single FWC Members or one or more Full Benches;
(d) a direction about the transfer between FWC Members (including a transfer
between Full Benches) of one or more matters being dealt with by the FWC.
Persons must comply with the President's directions
(5) A person to whom a direction is given must comply with the direction.
Note: For directions to the General Manager, see section 658.
Direction is not a legislative instrument
(6) If a direction is in writing, the direction is not a legislative instrument.
615 The President may direct a Full Bench to perform function etc.
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(1) A function or power of the FWC may be performed or exercised by a Full Bench if
the President so directs.
Note: The President gives directions under section 582.
(2) The President may direct that the function or power be exercised by a Full Bench
generally, or in relation to a particular matter or class of matters.
(3) To avoid doubt, a reference in this section to a Full Bench includes a reference to
more than one Full Bench.
615A When the President must direct a Full Bench to perform function etc.
(1) The President must direct a Full Bench to perform a function or exercise a power
in relation to a matter if:
(a) an application is made under subsection (2); and
(b) the President is satisfied that it is in the public interest to do so.
Note: The President gives directions under section 582.
(2) The following persons may apply to the FWC to have a Full Bench perform a
function or exercise a power in relation to a matter:
(a) a person who has made, or will make, submissions for consideration in the
matter;
(b) the Minister.
[11] The principles relevant to the determination of an application under s.615A were set
out in Collinsville Coal Operations Pty Limited as follows (footnote omitted):3
“[5] The issue for determination is whether I am satisfied that it is in the public interest
to refer the agreement approval application to a Full Bench. The expression ‘in the
public interest’, when used in a statute, imports a discretionary value judgment to be
made by reference to undefined factual matters and confined only by the subject
matter, scope and purpose of the relevant statute. [O'Sullivan v Farrer [1989] HCA
61; (1989) 168 CLR 210 at 216 per Mason CJ, Brennan, Dawson and Gaudron JJ]
[6] Sections 577 and 578 of the FW Act are relevant to the exercise of the President’s
powers under s 615A.
[7] Section 577 provides as follows:
The FWC must perform its functions and exercise its powers in a manner that:
3 [2014] FWC 3129, 246 IR 21
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(a) is fair and just; and
(b) is quick, informal and avoids unnecessary technicalities; and
(c) is open and transparent; and
(d) promotes harmonious and cooperative workplace relations.
Note: The President also is responsible for ensuring that the FWC performs its
functions and exercises its powers efficiently etc. (see section 581).
[8] Section 578 directs the Commission to take into account, among other things, the
objects of the FW Act and ‘equity, good conscience and the merits of the matter’.
[9] Section 581 is also apposite. It provides, relevantly, that the President is
responsible for ensuring that the Commission performs its functions and exercises its
powers in an efficient manner.”
[12] There are two critical issues which arise for consideration in respect of the referral
applications made by Mondelez and the Minister. The first is whether there is, as Mondelez
and the Minister contend, divided authority, in particular divided Full Bench authority, on the
interpretation of s 96(1) of the FW Act. Section 96(1) provides that “For each year of service
with his or her employer, an employee is entitled to 10 days of paid personal/carer's leave”.
The Ai Group submitted before the Commissioner that the reference to “10 days” is to be read
as meaning 10 periods of 7.6 hours each, or an entitlement to 760 paid hours of leave per
annum. A submission to this effect was rejected in RACV v ASU4 in the following terms:
“[82] Accordingly we conclude that in the NES provisions of the FW Act, a “week” of
annual leave is an authorised absence from work during the working days falling in a
seven day period, and a “day” of leave (whether of annual or personal/carer’s leave)
is an authorised absence from the working time in a 24 hour period. We reject
RACV’s submission that “week” and “day” are to be read as terms of art referring to
a specific number of working hours that may not constitute an actual week or day in a
given case. We further conclude that the amount of leave deducted from an
employee’s leave balance necessarily correlates with the amount of leave taken, so
that if a week’s annual leave is taken, a week is deducted from the employee’s accrued
annual leave balance, and if a day of annual leave or personal/carer’s leave is taken, a
day is deducted from the employee’s accrued annual leave or personal/carer’s leave
balance.”
[13] The Ai Group submitted that the earlier Full Bench decision in ASU v Hobson Bay
Council5 adopted an approach to s 96(1) that was inconsistent with that taken in RACV v ASU
. This cannot be accepted. ASU v Hobson Bay Council did not concern the interpretation of s
96(1), but rather the interpretation of the sick leave entitlement in a particular enterprise
agreement. That leave entitlement was relevantly expressed as being “twelve ordinary days
leave” per year.6 The Full Bench interpreted the expression “ordinary day” as connoting
unloaded or non-penalty time and, in the context of an agreement which provided for 38
ordinary hours to be worked from Monday to Friday, as meaning a period of 7.6 hours. No
question as to the interpretation of s 96(1) arose in ASU v Hobson Bay Council. However the
Full Bench did make reference to the single-member decision in Australian Rail, Tram, and
4 [2015] FWCFB 2881; 249 IR 150 at [82]
5 [2014] FWCFB 2823
6 [2014] FWCFB 2823 at [9]
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Bus Industry Union and Australian Federated Union of Locomotive Employees v QR Limited
t/a QR National.7 In that decision Commissioner Lee said, in the course of concluding that the
annual leave and carer’s leave entitlement of an enterprise agreement might, on their proper
construction, be inconsistent with the NES leave entitlements:
“[86] I do not think that this provision can be relied on define a week as the simple
aggregation of ordinary hours which an employee would have otherwise been rostered
to perform during a seven day period. In any case, it should be ignored as it is clearly
inconsistent with the unambiguous, ordinary meaning of the word ‘week’ and ‘day’ in
the Act. The NES refers to weeks and days and is based on accrual and payment for
ordinary hours. Employees are entitled to be absent from the workplace on annual
leave for a five week period if shiftworkers and be paid their ordinary hours and are
entitled to be absent for 10 days on carer’s leave and be paid their ordinary hours. A
day is a day and a week is a week and they should be given their ordinary meaning.”
[14] The conclusion in the above paragraph, insofar as it concerned s 96(1), is consistent
with the approach taken in RACV v ASU. The Full Bench in ASU v Hobson Bay Council
referred to the above paragraph in its decision8, and said: “While we agree with
Commissioner Lee’s observation, the circumstances in that matter differ from those in this
case in a number of respects”.9 The Full Bench went on to refer to the differences between the
agreement provision considered in QR National and the provision it was considering without
dealing further with the question of the interpretation of s 96(1). Thus, to the extent that the
interpretation of s 96(1) was considered at all in ASU v Hobson Bay Council, it was in a
manner consistent with RACV v ASU.
[15] There is one single-member decision which has approached s 96(1) in a manner
inconsistent with RACV v ASU, namely the decision of Commissioner Asbury (as she then
was) in AWU v BP Refinery (Bulwer Island) Pty Ltd.10 However that decision pre-dated RACV
v ASU, ASU v Hobson Bay Council and QR National, and may be regarded as having been
overtaken by them.
[16] Two Federal Court decisions issued since RACV v ASU have affirmed its approach to
NES leave entitlements. In the Full Court decision in CFMEU v Glendell Mining Pty
Limited11, the majority (Bromwich and White JJ) took an approach to the annual leave
entitlement in s 87(1) that was expressly stated to be consistent with RACV v ASU12 and,
arguably, took the same approach in relation to the personal/carer’s leave entitlement in s
96(1).13 In CFMEU v Anglo Coal (Drayton Management) Pty Ltd14 the Court (Buchanan J)
addressed directly the nature of the entitlement conferred by s 96(1), and said:
“[10] The period of “paid personal/carer’s leave” referred to in s 99, for which an
employee must be paid at the base rate of pay for ordinary hours, must necessarily be
7 [2012] FWA 3730, 221 IR 132
8 [2014] FWCFB 2823 at [39] and footnote 32
9 [2014] FWCFB 2823 at [39]
10 [2012] FWA 1197, 221 IR 237
11 [2017] FCAFC 35
12 [2017] FCAFC 35 at [131]-[135]
13 [2017] FCAFC 35 at [137]-[139]
14 [2016] FCA 689, 258 IR 85
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one or more of the “days” (or part of a day) of leave referred to in s 96. The number of
hours normally worked by, for example, an 8-hour day worker and a 12-hour shift
worker on a normal or rostered day of work are self-evidently different, by a margin
of 50%. Nevertheless, the entitlement to paid leave is not referable to an hourly
equivalent; it is expressed in days, and it necessarily follows, I think, that the
possibility exists that the statutory entitlement to 10 days leave (and pay) may result in
a greater hourly entitlement (and overall pay) in some cases than in others. That, it
appears to me, is the effect of the statutory arrangements, whatever position might
arise under the specific provisions of particular enterprise agreements.”
[17] Although no reference was made in the decision to RACV v ASU, the approach taken
to s 96(1) in the above passage is the same as in RACV v ASU.
[18] Therefore I do not consider that there is divided Full Bench authority on the question
of the proper interpretation of s 96(1), or that doubt arises from the authorities which have
considered it. The position to be applied by single members of the Commission is as stated in
RACV v ASU, which has comprehensively dealt with the question.
[19] The second issue is whether the interpretation of s 96(1) properly arises for
consideration in the application for approval of the Agreement. In this respect, I consider that
the submissions of the AMWU and the NUW advanced before the Commissioner must be
accepted. Although clause 24 of the Agreement expresses the personal/carer’s leave
entitlement in terms of hours, and therefore (particularly in the case of 12 hour shift workers)
might, considered in isolation, result in some employees receiving less that their NES
entitlement under s 96(1) (as interpreted in RACV v ASU), clause 3 requires any more
beneficial provision of the NES to “take precedence” where there is an inconsistency between
the Agreement and the NES. Therefore, to the extent that clause 24 might lead in some
circumstances to a shortfall in the personal/carer’s leave entitlement under the Agreement as
compared to the NES, clause 3 would require this to be “topped up” to the level of the NES
entitlement. That is, on any view of s 96(1), the Agreement does not exclude the NES in
respect of personal/carer’s leave, and there is no impediment to its approval on that score
under s 186(2)(c), nor is any undertaking required to address that issue.
[20] My conclusion in this respect is consistent with the approach taken to the enterprise
agreement there under consideration in RACV Road Service Pty Ltd v ASU (2).15 The Full
Bench in that matter said:
“[17] We accept RACV’s submission that clauses 15.1(a)-(c) and 16.1(a)-(b) of the
Agreement are to be interpreted as operating subject to the last paragraph of clause 4
of the Agreement. The effect of clause 4 is that no provision of the Agreement, in its
operation, may lead to a result whereby any employee receives less than his or her
entitlements under the NES. The practical effect of clause 4 is therefore that RACV
must “top up” the entitlement of an employee in any case where there would
otherwise be a detrimental outcome when compared to the NES. Therefore, on the
annual leave example set out in paragraph [88] of the initial decision and the
personal/carer’s leave examples set out in paragraph [89], no shortfall compared to the
15 [2015] FWCFB 8554
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NES could occur because clause 4 of the Agreement requires RACV to make good
any potential shortfall that might arise. There is no exclusion of the NES to which s.56
of the FW Act might apply because clause 4 ensures, as RACV submitted, that the
Agreement is “self-correcting” vis-à-vis the NES.”
[21] For the above reasons, I do not consider that the Ai Group, on behalf of Mondelez, or
the Minister have demonstrated a proper basis for the referral of the application for approval
of the Agreement to a Full Bench either on public interest or discretionary grounds. Referral
is not otherwise justified on the ground merely that the Ai Group, Mondelez or the Minister
disagree with RACV v ASU. The referral applications are rejected, and the Agreement
approval application is referred back to Commissioner Cirkovic for final determination.
VICE PRESIDENT
Appearances:
S. Smith for Mondelez Australia Pty Ltd.
L. Saunders of Counsel with G. Miller for the Australian Manufacturing Workers Union.
Printed by authority of the Commonwealth Government Printer
PR601995
OF THE FAIR WORK MISSION THE
