Fair Work Act 2009
s.739 - Application to deal with a dispute

Enterprise agreement – dispute about matters arising under the Nurses and Midwives (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2012-2016 and the Nurses and Midwives (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2016-2020 – accrual of paid leave entitlements whilst on a period of workers compensation.

[1] On 6 October 2016, the Australian Nursing and Midwifery Federation (“the ANMF”) lodged an application with the Commission pursuant to section 739 of the Fair Work Act 2009 (Cth) (“the FW Act”) in relation to matter number C2016/5980. The matter was listed for conference before Commissioner Cribb on 15 November 2016. On 16 November 2016, the ANMF sent correspondence to the Commission seeking that the matter be listed for arbitration.

[2] On 2 February 2017, the ANMF lodged a further application with the Commission pursuant to section 739 of the FW Act in relation to matter number C2017/591. The matter was listed for teleconference before Commissioner Cribb on 10 February 2017. No agreement was reached at the teleconference and the parties requested that the matter be joined with the application in C2016/5980 for arbitration. This request was acceded to and the matters were subsequently joined.

[3] The application under C2016/5980 relates to a dispute regarding clauses 14 and 18 of the Nurses and Midwives (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2012-2016 (“the 2012 Agreement”). In particular, the dispute relates to whether ANMF member, Ms Elizabeth McNamara, is entitled to take or accrue annual leave and personal leave under the 2012 Agreement during periods when she was absent from work due to a workplace injury for which she received workers compensation.

[4] The application under C2017/591 was lodged in relation to clauses 57 and 61 of the Nurses and Midwives (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2016-2020 (“the 2016 Agreement”) which now supersedes the 2012 Agreement. The dispute under the 2016 Agreement is synonymous with that under the 2012 Agreement.

[5] We heard the applications pursuant to section 739 of the FW Act on 15 June 2017 and reserved our Decision. We also heard a separate matter (C2017/759) concurrently for which a separate decision will be issued. The matters were heard concurrently as they dealt with similar issues in relation to whether employees under the respective enterprise agreements were entitled to take or accrue annual leave and personal leave whilst in receipt of workers compensation.

[6] At the hearing, Mr J. McKenna, of Counsel, sought permission to appear for the ANMF. Mr J. Bourke, of Queen’s Counsel, and Mr G. McKeown, of Counsel, sought permission to appear for Alfred Health. Given the complexity of the matter and having regard to section 596 of the FW Act, permission was granted to both parties to be represented.

The Legislative Framework

[7] Section 739 of the FW Act provides as follows:

“Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[8] In relation to the above section, we note there is no dispute regarding the jurisdiction of the Commission to arbitrate the dispute.

[9] Clause 14.1 of the 2012 Agreement relevantly provides as follows:

“14.1 Full Time Employees

(a) All Employees shall be granted 190 hours of annual leave with ordinary pay on completion of 12 months service with their Employer.

(b) A full-time Employee who is required to work and who worked ordinary hours on week days and on weekends throughout the qualifying twelve months period of service shall be allowed an additional seven consecutive days leave including non-working days. A full-time Employee with twelve months continuous service so engaged for part of the qualifying twelve month period shall have the leave prescribed in this paragraph increased by half a day for each month during which engaged as aforesaid.”

[10] Clauses 18.3 and 18.4 of the 2012 Agreement relevantly provide as follows:

“18.3 Amount of Paid Personal Leave

(a) An Employee is entitled to the following amount of paid personal leave:

(i) up to 7 hours and 36 minutes for each month of service in the first year of service;

(ii) up to 106 hours and 24 minutes in each year in the second, third and fourth years of service;

(iii) up to 159 hours and 36 minutes in the fifth and following years of service.

(b) In respect of part-time Employees, the entitlement shall be on a pro rata basis of time worked.”

“18.4 Accrual of personal leave

(a) The balance of personal leave entitlements which have not been taken in any , shall be cumulative from year to year

(b) Where the one day absences referred to in clause 18.8(b) are not taken for a period of five years, an additional 38 hours sick leave shall be added to the Employee’s accrued entitlement.”

[11] Clause 57.1 of the 2016 Agreement states:

“57.1 Entitlement to Annual Leave

(a) An Employee is entitled to 190 hours paid annual leave for each year of service.
(b) A weekend worker is entitled to a further 38 hours paid annual leave for each year of service. For the purposes of this clause 57 “weekend worker” is a full time Employee required to work ordinary hours on weekdays and weekends throughout the year of service, save that an Employee required to work ordinary hours on weekdays and weekends for part of the year of service will accrue the additional leave under this clause at the rate of half a day for each month so worked to a maximum of 38 hours.

(c) Annual leave accrues progressively during a year of service according to the Employee’s ordinary hours of work and accumulates from year to year.”

[12] Clause 61.1 of the 2016 Agreement relevantly provides that:

“61.1 Amount of Paid Personal Leave

(a) An Employee is entitled to the following amount of paid personal leave:

(i) 91 hours and 12 minutes in the first year of service;

(ii) 106 hours and 24 minutes in each year in the second, third and fourth years of service;

(iii) 152 hours in the fifth and following years of service.

(b) Paid personal leave accrues progressively during a year of service according to the Employee’s ordinary hours of work (excluding overtime) and accumulates from year to year.”

The Submissions

ANMF’s submissions dated 9 March 2017

[13] The ANMF contended that the National Employment Standards (“NES”) provide for the accrual of annual leave and long service leave. Section 55(1) of the FW Act provides that an enterprise agreement must not exclude the NES or any provision of the NES. The ANMF highlighted that, for each year of service, an employee is entitled to accrue paid annual and personal leave under sections 87(2) and 96(1) of the FW Act respectively. “Service” is defined by section 22(1) of the FW Act to mean a period during which the employee is employed by the employer, but does not include an excluded period. The ANMF asserted that Ms McNamara remained employed by Alfred Health during periods when she was off duty and in receipt of workers compensation. As such, the ANMF submitted that the pertinent issue is whether Ms McNamara’s time off duty whilst in receipt of workers compensation amounted to unpaid leave or unpaid authorised absence. In dealing with the question of whether workers compensation leave amounts to unpaid leave or unpaid authorise absence, the ANMF had regard to WorkPac Pty Ltd v Bambach 1 and Hall v Medical Imaging Queensland Pty Ltd.2

[14] The ANMF also had regard to section 130 of the FW Act which refers to a restriction on taking or accruing leave or absence while receiving workers compensation. It contended that the proper construction of section 130 of the FW Act was considered in Anglican Care v NSW Nurses and Midwives’ Association 3 (“Anglican Care”). The ANMF submitted that the Full Federal Court accepted that taking or accruing leave during a compensation period was permitted by the applicable New South Wales workers compensation legislation in the sense that the legislation did not prevent the worker from accruing leave.4 Thus, the ANMF contended that when Ms McNamara was off duty and in receipt of workers compensation, she was not on unpaid leave or an unpaid authorised absence. Rather, she was completing service with Alfred Health for the purpose of accruing annual leave and personal leave. Accordingly, the ANMF submitted that Ms McNamara had and has a NES entitlement to accrue annual leave and personal leave during an absence from work while receiving workers compensation.

[15] Further, the ANMF submitted that clauses 57 and 61 of the 2016 Agreement supplement the NES entitlements outlined above. The ANMF also had regard to clauses 14 and 18 of the 2012 Agreement in contending that annual leave and personal leave accrue for all “service”, including during an employee’s absence from work while receiving workers compensation.

[16] For these reasons, the ANMF contended that the Commission should make a determination that Ms McNamara was and is entitled to accrue:

(a) Annual leave during periods of workers compensation under clause 57 of the 2016 Agreement and section 87 of the FW Act; and

(b) Personal leave during periods of workers compensation under clause 61 of the 2016 Agreement and section 96 of the FW Act.

Alfred Health’s submissions dated 31 May 2017

[17] Alfred Health adopted paragraphs 8 to 38 of the submissions filed by the Emergency Services Telecommunications Authority (“ESTA”) dated 31 May 2017 in matter C2017/759, which was heard concurrently by us for which a separate decision will be issued. We summarise those submissions from Alfred Health’s perspective as follows.

[18] Alfred Health contended that the effect of section 130 of the FW Act is that an employee is not entitled to take or accrue any leave of the type provided to employees under Part 2-2 of the FW Act, unless an applicable State or Territory compensation law “permits” the taking or accrual of such leave. Further, Alfred Health submitted that, in reference to the decision in Anglican Care, it appears the reference to employees being entitled to the simultaneous receipt of compensation and any “benefit” for holidays/annual holidays was sufficient to countenance employees accruing annual leave during a workers compensation period. Alfred Health contended that, applying the reasoning of the joint judgment in Anglican Care, the provisions of the relevant Victorian workers compensation legislation, being the Accident Compensation Act 1985 (Vic) (“the AC Act (Vic)”) and the Workplace Injury Rehabilitation and Compensation Act 2003 (Vic) (“the WIRC Act (Vic)”), are distinguishable from the provisions of the Workers Compensation Act 1987 (NSW) (“the WC Act (NSW)”) referred to in Anglican Care. In particular, Alfred Health submitted that there is nothing in sections 97 and 114 of the AC Act (Vic), (which are effectively replicated by sections 174 and 185 of the WIRC Act (Vic)) or elsewhere in the AC Act (Vic) or the WIRC Act (Vic) which contemplates employees accruing (as distinct from taking) leave during workers compensation periods. Alfred Health posited that the plurality in Anglican Care make it clear that it is not sufficient that a compensation law does not prevent the accrual of leave. Instead, Alfred Health submitted that to permit the accrual of leave for the purpose of section 130(2) of the FW Act, the AC Act (Vic) and WIRC Act (Vic) would need to “sanction, condone or countenance” such accrual. In this regard, Alfred Health submitted the AC Act (Vic) and the WIRC Act (Vic) do not do so.

[19] Alfred Health also asserted that the above interpretation of sections 97 and 114 of the AC Act (Vic) and sections 174 and 185 of the WIRC Act (Vic) is reinforced by the Explanatory Memorandum that accompanied the Bill which ultimately became the Accident Compensation Amendment Act 2010 (Vic). Alfred Health submitted there is no reference in the Explanatory Memorandum to any intention to permit the accrual of leave during workers compensation periods. Therefore, Alfred Health posited that there was no basis to conclude that the accrual of leave during workers compensation periods is permitted by either the AC Act (Vic) or the WIRC Act (Vic) for the purpose of section 130(2) of the FW Act.

[20] Moreover, Alfred Health contended that the Victorian workers compensation laws are specific to annual leave and long service leave, which suggests that the Victorian legislature did consider what other categories of leave can be taken by a worker in receipt of workers compensation payments. That is, Alfred Health submitted that personal leave was intentionally excluded from sections 97(1)(d) and 114(2D) of the AC Act (Vic) and sections 174(1)(d) and 185(4) of the WIRC Act (Vic).

[21] Alfred Health further contended that the broad references to employees being entitled to the specified periods of leave upon the completion of 12 months service are intended to reflect and otherwise supplement the provisions of the NES in certain respects. Alfred Health asserted that the provisions are otherwise intended to be read in conjunction with the provisions of the NES.

[22] Alfred Health asserted that the provisions of the 2012 Agreement and the 2016 Agreement are broad descriptions of employees’ entitlements to accrue a specified amount of leave per year of service. In this regard, Alfred Health submitted that these provisions are intended to be read together with applicable provisions in the NES (including section 130 of the FW Act) and are not intended to displace the framework that applies to the accrual of leave under the NES. Alfred Health asserted that this is supported by the fact that the 2012 Agreement and the 2016 Agreement expressly state that the agreements are not intended to exclude any part of the NES (clause 6.3 of the 2012 Agreement and the 2016 Agreement). Alfred Health submitted that the alternative construction by the ANMF would result in employees being entitled to accrue leave in a range of circumstances in which they would not ordinarily accrue leave under the NES on the basis that the accrual of annual leave during those periods is not expressly excluded by the 2012 Agreement and/or the 2016 Agreement.

[23] Alfred Health also noted it was significant that the ANMF acknowledged that prior to the decision in Anglican Care it had been assumed that, because State legislation does not actively authorise or permit the accruing of annual leave and long service leave while in receipt of workers compensation, a worker is not permitted to do so. Alfred Health asserted that if the parties had intended the Agreement to have a different meaning to that which was assumed to apply as a matter of law, it was to be expected that they would have expressly provided for any such alternative meaning in the Agreement. Therefore, Alfred Health posited that, in the absence of an express indication to the contrary during the negotiation of the 2012 Agreement or the 2016 Agreement, it should be inferred that the parties did not intend to give the equivalent clause a new meaning under the new Agreements.

[24] Additionally, Alfred Health noted that when the dispute arose in or around December 2016, the ANMF’s contention was that the effect of the decision in Anglican Care changed the previously understood interpretation of section 130 of the FW Act in a manner that gave rise to an entitlement to accrue leave during workers compensation periods. Alfred Health contended that, prior to Anglican Care, there was no suggestion that the Agreement independently provided for the accrual of leave during such periods. Thus, Alfred Health submitted that this history is reflective of the fact that the Agreement does not provide for the accrual of leave during the periods in issue.

[25] For the above reasons, Alfred Health submitted that the leave provisions in each of the 2012 Agreement and 2016 Agreement are to be read together with applicable provisions in the NES (including section 130 of the FW Act) and are not intended to displace the framework that applies to the accrual of leave under the NES. Alfred Health asserted that the application of section 130 of the FW Act to the AC Act (Vic) and the WIRC Act (Vic) does not create an entitlement to the accrual of annual personal leave during workers compensation periods. Therefore, no such entitlement arises under the 2012 Agreement or the 2016 Agreement.

ANMF’s submissions in reply dated 13 June 2017

[26] The ANMF contended that Alfred Health, by its submissions, sought to inflate the difference:

(a) In the meaning attributed to the term “permitted” as between Jessup J and the joint judgment of Bromberg and Katzmann JJ in Anglican Care; and

(b) As between the WC Act (NSW) and the applicable Victorian workers compensation laws.

[27] The ANMF contended that the Full Bench should favour an interpretation of section 130 of the FW Act which would not deprive Ms McNamara of an entitlement to accrue leave. The ANMF noted that the language adopted by the joint judgment for determining whether the accrual of leave is “permitted” by a compensation law was whether such a course is “sanctioned, condoned or countenanced”. In this regard, the ANMF asserted that the language of “sanctioned, condoned or countenanced” as adopted by the joint judgment is broad. The ANMF contended that the distinction between the test adopted by Jessup J and the joint judgment is a fine one, and submitted that the head note as it appears in the Industrial Reports accurately identifies the principle to be distilled from the judgment as follows:

“Held (dismissing the appeal; by the Court) (by Bromberg and Katzmann JJ; Jessup J agreeing): “Permitted” in s 130(2) of the FW Act should be construed in the sense of not prevented, prohibited or restrained. The section does not require that the source of the entitlement to accrue leave be found in the compensation law in order for an employee to be able to enjoy the benefit of both compensation and leave over the same period. The purpose and effect of s 130 is to remove the entitlement to take or accrue leave for employees in receipt of workers compensation unless there is a law relating to compensation in the relevant jurisdiction which countenances the simultaneous receipt of workers compensation while the employee is absent from work. Section 49 of the WC Act is such a law.” 5

[28] The ANMF noted paragraph [28] of ESTA’s submissions dated 31 May 2017 in matter C2017/759, where it was contended that the provisions of the Victorian compensation laws do not contemplate accruing (as distinct from taking) leave during a workers compensation period and, in that respect, are narrower than section 49 of the WC Act (NSW). However, the ANMF asserted that neither the WC Act (NSW) nor the Victorian legislation provisions prevent, prohibit or restrain the accrual of annual leave, nor personal leave whilst on workers compensation. Further, the ANMF noted Alfred Health’s contention that section 49 of the WC Act (NSW) countenances an employee accruing annual leave whilst on workers compensation by reason of the reference to a “benefit for holidays”. In this regard, the ANMF submitted that there is no meaningful distinction between the phrase “benefit for holidays” in the WC Act (NSW) and a sum “payable … in lieu of accrued annual leave” as it appears in the Victorian legislative provisions.

[29] The ANMF accepted that the Victorian compensation laws do not expressly refer to personal leave. However, the ANMF posited that these legislative provisions “permit” the accrual of personal leave whilst in receipt of workers compensation in the sense that it is:

(a) Not “prevented, prohibited or restrained”; 6 and

(b) Not forbidden. 7

[30] The ANMF noted Alfred Health’s assertion that section 130 of the FW Act is incorporated into the 2012 and 2016 Agreements to limit an employee’s right to accrue leave. The ANMF contended that Alfred Health relied upon sections 55 and 56 of the FW Act as they relate to the interaction between the NES and an enterprise agreement. The ANMF contended that the NES are defined by sections 12 and 61 to be limited to Divisions 3 to 12 of Part 2-2 of the FW Act. The ANMF noted that section 130 arises in Division 13 and, as such, the restriction on taking or accruing leave or absence while receiving workers compensation prescribed by section 130 falls outside the NES as defined by the FW Act. The ANMF also asserted that the reference to there being no intention to exclude any part of the NES in clause 6.3 of the 2012 and 2016 Agreements should be read as reflecting an intention to not exclude any of the ten minimum standards contained in Part 2-2 of the FW Act. Additionally, the ANMF submitted that clauses 14 and 18 of the 2012 Agreement and clauses 57 and 61 of the 2016 Agreement provide comprehensive and detailed provisions relating to the accrual and taking of annual and personal leave. In this regard, the ANMF submitted it is inherently unlikely that the parties intended to impose a limitation upon the accrual of leave beyond the terms specified, especially one as complex as section 130, without expressly stating such a limitation.

[31] Further, the ANMF noted there are limited circumstances in which the past conduct of parties can be relied upon as an aid in the construction of an enterprise agreement. 8 The ANMF asserted there is no evidence of any such common understanding, common intention, common contemplation or common assumption in these proceedings for three main reasons.

[32] First, the ANMF submitted Alfred Health adopted an inconsistent practice of enabling employees to accrue leave whilst in receipt of workers compensation. In this regard, the ANMF noted the Statement of Agreed Facts makes clear that Ms McNamara accrued leave for some periods whilst absent from work and in receipt of workers compensation.

[33] Second, the ANMF highlighted that Alfred Health contended at paragraph [31] of its submissions that the ANMF acknowledged, prior to the decision in Anglican Care, that it had been assumed that, because the State legislation does not actively authorise or permit the accruing of leave whilst in receipt of workers compensation, a worker is not permitted to do so. In this regard, the ANMF asserted that Alfred Health did not identify the source of this acknowledgement. The ANMF also noted the letter from Ms Megan Reeve, Industrial Officer at the ANMF, to Mr John Wildes, Return to Work Coordinator at Alfred Health, dated 2 December 2015 and contended this was not reflective of a common understanding.

[34] Third, the ANMF asserted that Alfred Health should be refused permission to rely on the evidence of Ms Louise Vecchi. The ANMF highlighted that Ms Vecchi’s evidence related to a practice adopted by Alfred Health during a period prior to Ms Vecchi’s employment and hearsay evidence about what happened during bargaining in the course of the 2012 and 2016 Agreement negotiations. In this regard, the ANMF submitted that this does not amount to “clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision.” The ANMF, therefore, asserted that Ms Vecchi’s evidence is irrelevant and inadmissible in these proceedings.

Alfred Health’s & ESTA’s supplementary submissions dated 19 June 2017

[35] On 16 June 2017, Alfred Health and ESTA sent correspondence to the Commission in relation to the separate matters referred to above, requesting leave to file a brief submission in relation to the meaning of “payable” as referred to by Counsel for the ANMF at the hearing on 15 June 2017. On 19 June 2017, the Commission sent correspondence in reply notifying Alfred Health and ESTA that the Full Bench had acceded to its request and to file and serve its submissions. Noting Alfred Health and ESTA adopted the same submissions, we summarise those submissions from Alfred Health’s perspective as follows.

[36] Alfred Health contended that an entitlement is only “payable” if the liability to pay it has already accrued. In this regard, Alfred Health submitted that, to suggest the reference to “payable” is to countenance the accrual of annual leave in the future is to read something into the word that is simply not there. Alfred Health asserted that the ANMF seek to read the word “payable” in isolation, ignoring its reference to section 97(1)(d) of the AC Act (Vic). Alfred Health posited that this error is compounded by failing to recognise that something is not payable unless a liability has first accrued and the ANMF’s submission should be rejected.

Consideration

Are the 2012 and 2016 Agreements ambiguous and do they restrict employees from accruing leave whilst in receipt of workers compensation?

[37] The approach to be taken in interpreting industrial instruments was set out in the Full Bench decision of The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited 9 (“Golden Cockerel”). At [41] of the Decision, the Full Bench outlined ten principles for the interpretation of enterprise agreements as follows:

“From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[38] However, the recent decision in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Berri Pty Limited 10 (“Berri”) has modified the approach to construing enterprise agreements previously adopted in Golden Cockerel. In Berri, the Full Bench held at [114] that:

“The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties. 

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties. 

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations. 

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement. 

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement. 

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning. 

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists. 

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement. 

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstances will be admissible to aide the interpretation of the agreement. 

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement. 

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was. 

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

[39] We have adopted the modified approach outlined in Berri in construing the enterprise agreements before us.

[40] As stipulated in Berri, the starting point for interpreting an enterprise agreement is to have regard to the ordinary meaning of the words used. Further, the text must be interpreted in the context of the agreement as a whole. Principles 7 and 10 elicited in Berri emphasise that ambiguity in a provision within an enterprise agreement must be identified before one is to have regard to evidence of the surrounding circumstances. However, principle 8 makes it clear that, in determining whether ambiguity exists, one may have regard to evidence of the surrounding circumstances. That is, such evidence can be used to identify and resolve any ambiguity.

[41] The application of clause 4.5 of the 2016 Agreement and clause 6.3 of the 2012 and 2016 Agreements were in dispute between the parties. Relevantly, clause 4.5 of the 2016 Agreement provides as follows:

“Where this Agreement refers to a condition of employment provided for in the NES, the relevant definitions in the Act apply unless otherwise defined in this Agreement.”

[42] Clause 6.3 of the 2012 and 2016 Agreements states:

“This Agreement is not intended to exclude any part of the NES or to provide any entitlement which is detrimental to an Employee's entitlement under the NES. For the avoidance of doubt, the NES prevails to the extent that any aspect of this Agreement would otherwise be detrimental to an Employee.”

[43] We note that sections 55 and 56 of the FW Act relate to the interaction between the NES and an enterprise agreement. In particular, section 55(1) states:

“A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.”

[44] Thus, clause 6.3 of the 2012 and 2016 Agreements closely reflects the language utilised in section 55(1) of the FW Act.

[45] We have fully considered the competing submissions made in relation to the above clauses in reaching our conclusion. In doing so, we are satisfied that the references to a “condition of employment” in clause 4.5 of the 2016 Agreement and to there being no intention to exclude any part of the NES in clause 6.3 of the 2012 and 2016 Agreements, is referable to the ten minimum standards outlined in Divisions 3 to 12 of Part 2-2 of the FW Act. Alfred Health argued, in effect, that there was an implied intention of the parties to incorporate the limitation contained in section 130(1) of the FW Act pursuant to clause 6.3. The limitation in section 130 of the FW Act is that an employee is not entitled to take or accrue any leave or absence during a compensation period.

[46] We do not agree with this submission. Section 130 is not a “condition of employment” provided for in the NES pursuant to clause 4.5, rather, it is a miscellaneous provision. Nor does it form part of the NES referred to in clause 6.3 as section 61 of the FW Act specifically states that the NES are the ten minimum standards outlined in Divisions 3 to 12 of Part 2-2 of the FW Act. Noting this, we are not satisfied that section 130 is caught by clause 4.5 or clause 6.3 of the Agreements.

[47] In light of the above principles elicited in Berri, we are not satisfied that the 2012 and 2016 Agreements are ambiguous. In this regard, as section 130 of the FW Act is not caught by the Agreements, we are not satisfied that the Agreements impose a restriction on taking or accruing leave whilst in receipt of workers compensation.

Was there a common understanding between the parties?

[48] Having found there is no ambiguity in the Agreements, the issue of a common understanding does not arise. Nevertheless, we note Alfred Health’s submissions that there was a common intention or common understanding between the parties that the 2012 Agreement and the 2016 Agreement would operate so as to exclude the accrual of leave whilst an employee is receiving workers compensation. In particular, at paragraph 31 of its submissions, Alfred Health asserted that the ANMF acknowledged prior to the decision in Anglican Care, it had been assumed that because State legislation does not actively authorise or permit the accruing of annual leave and long service leave while in receipt of workers compensation, a worker is not permitted to do so. There is no citation in Alfred Health’s submissions to support such a contention. We also note the letter from Ms Megan Reeve, Industrial Officer at the ANMF, to Mr John Wildes, Return to Work Coordinator at Alfred Health, dated 2 December 2015. In that letter, Ms Reeves states:

“It had been assumed by employers that because the state legislation does not actively authorize or permit the accruing of annual and long service leave while on compensation, that a worker is not permitted to do so …”

[49] This statement was not indicative of a common understanding between the parties that the Agreements would operate so as to exclude the accrual of leave whilst an employee is receiving workers compensation. Rather, it was merely the subjective view of Ms Reeve regarding past assumptions of employers. This is corroborated by the fact that, in the same letter, Ms Reeve stated Ms McNamara was entitled to accrue leave:

“We therefore consider that Ms McNamara should be accruing personal, annual and long service leave while on workers compensation …”

[50] Such a statement contradicts Alfred Health’s contention that there was a common understanding between the parties that employees were not entitled to accrue leave whilst in receipt of workers compensation. Further, Alfred Health relied upon the statement of Ms Louise Vecchi dated 31 May 2017 in asserting there was a common understanding between the parties as noted above. We note paragraph 5 of Ms Vecchi’s statement effectively stipulates that employees ceased to accrue leave during any period in which they were in receipt of workers compensation and that the accrual of leave during workers compensation periods was not a previous issue raised by the parties or during the bargaining for the 2012 Agreement or the 2016 Agreement. However, we note the following excerpt from the extract in Berri outlined above:

“Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

[51] On Alfred Health’s own evidence, at paragraph 8 of Ms Vecchi’s witness statement, reliance was placed upon absence of a complaint in relation to the accrual of leave. As such, this evidence is insufficient to establish a common understanding in accordance with Berri. Further, at paragraph 5 of Ms Vecchi’s statement, reference is made to the practice in relation to the accrual of leave since 2007. However, Ms Vecchi was only employed by Alfred Health as early as May 2014. Therefore, any evidence by Ms Vecchi in relation to Alfred Health’s practices prior to May 2014 is hearsay evidence. Noting the above, we are not satisfied that Ms Vecchi’s statement can be utilised to establish there was a common understanding between the parties as the evidence sought to be tendered lacks probative value. Consequently, we are of the view that Ms Vecchi’s statement is inadmissible.

[52] Having regard to the above factors, we are not satisfied there was a common understanding between the parties in relation to accrual of leave whilst an employee is in receipt of workers compensation.

Are employees permitted to take or accrue annual leave and personal leave whilst in receipt of workers compensation under the Victorian workers compensation legislation?

[53] Having been satisfied that the Agreements do not impose a restriction on an employee taking or accruing leave whilst in receipt of workers compensation, we now turn to consider whether Ms McNamara is permitted to take or accrue annual leave and personal leave while in receipt of workers compensation under section 130 of the FW Act pursuant to the Victorian workers compensation legislation.

[54] We note that Ms McNamara’s entitlement to take or accrue annual leave and personal leave whilst in receipt of workers compensation is dependent on her “service” with Alfred Health. In this regard, there was no dispute between the parties as to the definition of “service”, which is outlined in section 22 of the FW Act. That is, when an employee is in receipt of workers compensation, that employee is deemed to be performing “service” in accordance with the FW Act.

[55] Section 130 of the FW Act imposes a restriction on taking or accruing leave or absence while receiving workers compensation:

“Restriction on taking or accruing leave or absence while receiving workers' compensation

(1) An employee is not entitled to take or accrue any leave or absence (whether paid or unpaid) under this Part during a period (a compensation period) when the employee is absent from work because of a personal illness, or a personal injury, for which the employee is receiving compensation payable under a law (a compensation law) of the Commonwealth, a State or a Territory that is about workers’ compensation.

(2) Subsection (1) does not prevent an employee from taking or accruing leave during a compensation period if the taking or accruing of the leave is permitted by a compensation law.

(3) Subsection (1) does not prevent an employee from taking unpaid parental leave during a compensation period.”

[56] Thus, we must determine whether section 130 of the FW Act permits an employee to take or accrue annual leave and personal leave whilst in receipt of workers compensation pursuant to the relevant compensation laws.

[57] In accordance with section 130(2) of the FW Act and as alluded to in the parties’ submissions, the relevant compensation laws are the AC Act (Vic) and the WIRC Act (Vic). The question of whether section 130 of the FW Act permits employees to take or accrue leave whilst in receipt of workers compensation pursuant to the relevant compensation law was dealt with in Anglican Care. In that case, the relevant compensation law was the WC Act (NSW). In particular, section 49 of the WC Act (NSW) states:

“49 Weekly compensation payable despite holiday pay etc

(1) Compensation is payable under this Division to a worker in respect of any period of incapacity for work even though the worker has received or is entitled to receive in respect of the period any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment.

(2) The amount of compensation so payable is the amount which would have been payable to the worker had the worker not received or been entitled to receive in respect of the period any such payment, allowance or benefit.”

[58] In Anglican Care, it was held that an employee “is permitted by” section 49 of the WC Act (NSW) to take or accrue annual leave whilst absent from work and in receipt of compensation. In particular, we note that, in relation to the word “permitted” in section 130(2) of the FW Act, Jessup J found at [16] as follows:

“What this amounts to is that the word ‘permitted’ in s 130(2) of the FW Act should be construed in the sense of not prevented, prohibited or restrained.”

[59] However, the plurality judgment of Bromberg and Katzmann JJ held at [64] that:

“The purpose of s 130(2) is to enable employees who are absent from work and in receipt of compensation to retain their entitlements to leave over the same period as long as that course is sanctioned, condoned or countenanced by the relevant compensation law. Put another way, employees in this position are entitled to both compensation and leave benefits provided that permission is given by the compensation law for dual receipt. While it is no longer sufficient that the compensation law does not prevent the simultaneous enjoyment of the two, it is not necessary that the compensation law provides for the payment of the leave benefit.”

[60] Further, at [65] Bromberg and Katzmann JJ held:

“But s 130 of the FW Act does not require that the source of the entitlement be found in the compensation law in order for an employee to be able to enjoy the benefit of both compensation and leave over the same period. The purpose and effect of s 130 is to remove the entitlement to take or accrue leave for employees in receipt of workers compensation unless there is a law relating to compensation in the relevant jurisdiction which countenances the simultaneous receipt of workers compensation while the employee is absent from work.”

[61] Nevertheless, we note that the decision in Anglican Care was made in relation to the relevant compensation law in New South Wales. The matter before us involves the Victorian legislation referred to above. Thus, the question for determination before us is whether the Victorian workers compensation legislation is significantly different from the New South Wales legislation such to warrant a different conclusion to that reached in Anglican Care, which binds us.

[62] Sections 97(1)(d) of the AC Act (Vic) provides as follows:

“Provisions relating to the payment of compensation

(1) Except as provided in section 96, regard shall not be had, in respect of the entitlement to, or amount of, compensation under this Part, to any sum paid or payable—

…

(d) in lieu of accrued annual leave or long service leave.”

[63] Section 114(2D) of the AC Act (Vic) states:

“If the current weekly earnings of a worker are reduced because the worker is on paid annual leave or long service leave, the Authority or self-insurer must not, by reason only of that reduction, alter the amount of compensation in the form of weekly payments.”

[64] We note that these sections are effectively replicated in the WIRC Act (Vic) at sections 174(1)(d) and 185(4).

[65] Alfred Health contended that relevant provisions in the AC Act (Vic) and the WIRC Act (Vic) are distinguishable from section 49 of the WC Act (NSW) referred to in Anglican Care. In particular, Alfred Health asserted that in Anglican Care, the reference to employees being entitled to the simultaneous receipt of compensation and any “benefit” for holidays or annual leave was sufficient to countenance employees accruing annual leave during a workers compensation period. That is, Alfred Health contended that the reference to a “benefit” in the WC Act (NSW) broadens the provision, such that it is distinguishable from the Victorian workers compensation legislation. We do not agree with this submission. Section 49 of the WC Act (NSW) is limited to a payment, allowance or benefit paid in respect of the period referred to in subsection 49(2). However, section 97 of the AC Act (Vic) contains no such time limitation. Thus, in our view, section 97 confers a broader entitlement than that afforded by section 49 of the WC Act (NSW) by placing no time limitation upon which leave can be accrued. As a result, we are not satisfied that the reference to a “benefit for holidays” in section 49 of the WC Act (NSW) can be meaningfully distinguished to the phrase “payable … in lieu of accrued annual leave or long service leave” under section 97(1)(d) of the AC Act (Vic) and section 174(1) of the WIRC Act (Vic).

[66] Alfred Health contended that section 97 does not countenance the accrual of leave. Specifically, it asserted that while the Victorian workers compensation legislation countenanced the “taking” of leave, there was no countenancing of the accrual of leave during the workers compensation period. 11 Further, Alfred Health asserted that to suggest that the reference to “payable” in section 97 is to countenance the accrual of annual leave in the future is to read something into the word that is simply not there.12

[67] We do not agree with these submissions. The term “payable” must be given its ordinary meaning. The Oxford Dictionary defines payable as “required to be paid; due.” The fact that a payment is “due” denotes that such payment is to occur at a future point in time. Further, as noted above, section 97 confers a broader entitlement by not placing restrictions on the time period in which leave can be accrued. Having regard to these factors, we are satisfied that section 97 countenances the accrual of leave. In this respect, we are not satisfied there is a material difference between these New South Wales and Victorian legislative provisions as both sanction, condone or countenance the accrual of leave.

[68] Further, we are not satisfied there is a significant difference between the New South Wales workers compensation legislation and the Victorian workers compensation legislation such as to warrant a departure from the general construction in Anglican Care that is binding upon us. As a result, we are of the view that, pursuant to section 130 of the FW Act, the Victorian workers compensation legislation permits the taking and accrual of leave. However, unlike the New South Wales legislation which was applicable in Anglican Care, we note the Victorian legislation, which was enacted after the commencement of section 130 of the FW Act, makes specific reference to annual leave and long service only. Noting this specific reference, we are satisfied that the Victorian legislature considered the categories of leave that could be accrued by an employee in receipt of workers compensation payments. As a result, we are of the view that personal leave was intentionally excluded from sections 97(1)(d) and 114(2D) of the AC Act (Vic) and sections 174(1)(d) and 185(4) of the WIRC Act (Vic).

[69] Thus, applying the construction of the plurality in Anglican Care which binds us, we are satisfied that an employee is permitted to take or accrue annual leave during a workers compensation period pursuant to section 130(2) of the FW Act and the Victorian workers compensation legislation. However, we are not satisfied that an employee is permitted to accrue personal leave whilst in receipt of workers compensation under the Victorian legislation.

Conclusion

[70] Ms McNamara is permitted to take or accrue annual leave whilst in receipt of workers compensation payments pursuant to section 130(2) of the FW Act.

[71] Alfred Health is required to accrue Ms McNamara’s annual leave entitlements for the periods in which she was in receipt of workers compensation pursuant to section 130(2) of the FW Act.

VICE PRESIDENT
Appearances:

J. McKenna, of Counsel, for the ANMF.
J. Bourke QC and G. McKeown, of Counsel, for Alfred Health.

Hearing details:

2017
Melbourne:
15 June.

 1   [2012] FWAFB 3206.

 2   [2015] FCCA 326.

 3   [2015] FCAFC 81.

 4   Ibid [40] and [64] per Bromberg and Katzman JJ.

 5   (2015) 250 IR 106. We note, however, the headnote is inaccurate in so far as it attributes the definition of “permitted” articulated by Jessup J, to the plurality.

 6   Ibid [16] and [19] (Jessup J).

 7   Ibid [47] and [48] (Bromberg and Katzmann JJ).

 8   Shop Distributive and Allies Employees’ Association v Woolworths Ltd (2006) 152 IR 95, [31].

 9   [2014] FWCFB 7447.

 10   [2017] FWCFB 3005.

 11   Transcript dated 15 June 2017, PN280.

 12   Alfred Health’s and ESTA’s Supplementary Submissions dated 19 June 2017, [3].

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