DECISION

Fair Work Act 2009
s.604—Appeal of decision

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia;
Construction, Forestry, Maritime, Mining and Energy Union
v
Carter Holt Harvey Woodproducts Australia Pty Limited
(C2018/609; C2018/611)

Appeals against decision [2018] FWC 6 of Deputy President Gostencnik on 16 January 2018 in matter numbers C2017/4529 and C2017/4791 – whether period of employer response action in the form of a ‘lockout’ is service for purpose of accruing annual leave – Fair Work Act 2009 (Cth) s.22 – no error – appeal dismissed.

[1] On 6 February 2018, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and the Construction, Forestry, Maritime, Mining and Energy Union (together the Appellants) appealed Deputy President Gostencnik’s decision of 16 January 2018 in matter numbers C2017/4529 and C2017/4791. In that decision, the Deputy President determined that a period of employer response action during which employees were ‘locked out’ of the workplace was not ‘service’ within the meaning of s.22 of the Fair Work Act 2009 (Cth) (the FW Act), and that therefore employees did not accrue annual leave during this period.

[2] The Deputy President’s decision concerned an application under s.739 of the FW Act, by which the Appellants sought to have the Commission determine a dispute under the Carter Holt Harvey Wood Products Australia Pty Limited Myrtleford Enterprise Agreement 2013 1 (Agreement). Clause 42 of the Agreement provides for the accrual of annual leave in accordance with the National Employment Standards (NES). Section 87 of the FW Act, which forms part of the NES, provides that employees accrue annual leave ‘progressively during a year of service’. ‘Service’ is defined in s.22 of the FW Act. Clause 13 of the Agreement allows disputes arising under the Agreement or in relation to the NES to be referred ultimately to the Commission for arbitration. It was common ground that the Deputy President had jurisdiction to determine the dispute.

[3] Directions for the filing of written submissions were issued and the matter was listed for hearing on 17 April 2018 in relation the merits of the appeal. Mr H Borenstein QC appeared with Mr E White of counsel for the Appellants. Mr P Wheelahan of counsel appeared with Mr D Farrant, solicitor, for Carter Holt Harvey Woodproducts Australia Pty Limited (the Respondent).

Appeal principles

[4] An appeal under s.604 of the FW Act is an appeal by way of rehearing. While normally there is no automatic right to appeal and an appeal may only be made with the permission of the Fair Work Commission (the Commission), in this case it was common ground 2 that there was an automatic right of appeal arising from the dispute resolution procedure in the Agreement.3

[5] The Commission may only exercise its powers on appeal if there is error on the part of the primary decision-maker, as an appeal cannot succeed in the absence of appealable error. 4 The approach of a Full Bench to the determination of an appeal depends on the nature of the decision below. In the present case, the Deputy President was resolving a dispute that involved the interpretation of an enterprise agreement and its interaction with the NES. This task did not involve the exercise of discretion. Accordingly, the Full Bench must determine whether the interpretation adopted by the Deputy President was correct.5

Submissions on appeal

[6] The crux of the Appellants’ submissions is that the Deputy President erred in finding that a ‘lockout’ period is an unpaid authorised absence for the purposes of s.22(2)(b) of the FW Act and therefore employees are not entitled to accrue annual leave during that period. The Appellants first sought to distinguish the concepts of ‘authorised’ and ‘directed’ absences, 6 submitting that a ‘lockout’ period is the latter and not the former, and therefore is not covered by s.22(2)(b).

[7] The Appellants then submitted that in interpreting s.22, the Deputy President failed to consider the corresponding sections in predecessors to the FW Act, and the object of the FW Act as set out in s.3. 7 They also submitted that the National Employment Standards were ‘beneficial legislation’8 and therefore the Deputy President should have construed s.22 of the FW Act in a ‘fair, large and liberal’9 way, but did not do so.

[8] The Appellants further submitted that the Deputy President’s decision was incorrect and unfair because it imposes an additional sanction 10 on employees who are already not receiving their usual remuneration during a ‘lockout’ period and the FW Act does not expressly contemplate that sanction.11

[9] The Respondent submitted that the words of the legislation are clear and capable of only one meaning, and therefore there is no reason to consider the explanatory memorandum to the FW Act or the statutory history of s.22. 12 It also submitted that even if we were to consider the statutory history of s.22, it was not always consistent with the Appellants’ position.13

[10] The Respondent further submitted that the appeal was of no utility because even if it were established that the absences were not ‘authorised’, that would mean they were unauthorised and therefore would still not count as service for the purposes of s.22(2)(a) of the FW Act. 14

[11] Finally, the Respondent submitted that the Deputy President’s decision was consistent with other recent decisions 15 that have considered s.22 of the FW Act.16

Consideration

[12] We have considered both parties’ submissions and conclude that the interpretation adopted by the Deputy President was correct. The Deputy President’s approach to statutory construction in his application of s.22 of the FW Act to the instance of a ‘lockout’ was orthodox and consistent with the relevant authorities. His comprehensive analysis of the question at issue led to the proper conclusion.

[13] We agree with the Respondent that the ordinary meaning of ‘unpaid authorised absence’ is quite clear and embraces the circumstance of a ‘lockout’ period. There is no need to have recourse to a consideration of the history of previous legislation relating to the accrual of annual leave during ‘lockout’ periods, and in any event we are not convinced it would assist the Appellants.

[14] Further, there are a number of other reasons to agree with the Deputy President’s interpretation of s.22. First, while it is true that ‘authorised’ and ‘directed’ are not synonymous, they are also not mutually exclusive. When employees are absent from work and the employer is not only aware of their absence, but also endorses it, or perhaps even initiates or requires it, that absence is authorised. Whether the employees want to be absent or not does not determine whether the employer has authorised the absence. If anything, the fact that the absence is at the employer’s direction strengthens the proposition that the employer must have authorised that absence.

[15] Secondly, we agree with the Respondent’s submission that if we were to accept that the period of absence due to employer response action was not authorised, as the Appellants assert, that absence would then be ‘caught’ by s.22(2)(a) of the FW Act because it would be unauthorised. This would have the same result as the Deputy President’s decision – the absence would not be counted as service and therefore would not attract the accrual of annual leave. We do not think it can be correct to say that there is a third category of absences which is neither authorised nor unauthorised.

[16] Thirdly, though we note the High Court authorities 17 advising caution when applying the expressio unius principle, in this case we think it is significant that there are clear ‘exceptions to the exception’ in s.22(2)(b) of the FW Act, and that a period of employer response action is not one of those. We think it is especially significant that periods of stand down are expressly provided for in s.22(2)(b)(ii), because employees are also absent during those periods at the employer’s direction. If Parliament had intended that ‘lockouts’ and other periods of employer response action were to count as service, this would be the obvious place to have said so.

[17] Finally, we think that the Deputy President’s interpretation of s.22 of the FW Act accords more readily with s.416 of the FW Act, which provides employers with the discretion to refuse to pay their employees for periods of employer response action. Effectively, this section permits employers to treat employer response action in the same way as protected industrial action by employees, and not pay them. 18 A key principle reflected in the scheme established by Part 3-3 of the FW Act is that employees who take protected industrial action should be aware that not only will they not be paid for the period of their own industrial action, but also that they may not be paid for any period of employer response action that follows as a result of their own industrial action. It would be disharmonious with that principle if employees were entitled to accrue annual leave for periods of employer response action because they counted as service. The employer would effectively be required to make a payment to the employees ‘in relation to the period of the action’, which sits uneasily with the discretion afforded to the employer by s.416.

Conclusion

[18] We dismiss the appeal.

SENIOR DEPUTY PRESIDENT

Appearances:

H Borenstein QC with E White of counsel for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Construction, Forestry, Maritime, Mining and Energy Union.

P Wheelahan of counsel with D Farrant, solicitor, for Carter Holt Harvey Woodproducts Australia Pty Limited.

Hearing details:

Melbourne.

2018.

April 17.

Printed by authority of the Commonwealth Government Printer

<PR607115 >

 1   AE406680.

 2   Respondent’s submissions [13]; PN59.

 3   AE406680 cl 13.11.

 4   Wan v AIRC (2001) 116 FCR 481 [30].

 5   Pawel v AIRC (1999) 94 FCR 231.

 6   Appellants’ submissions [31]-[35]; PN8-PN18.

 7   Appellants’ submissions [11]-[29], [37]; PN19-PN43.

 8   Appellants’ submissions [30]; PN44-PN48.

 9   IW v City of Perth & Ors (1997) 191 CLR 1, 12.

 10   PN49.

 11   Appellants’ submissions [37].

 12   Respondent’s submissions [8(c)].

 13   Respondent’s submissions [11]-[12]; PN91-PN92, PN124-PN129.

 14   Respondent’s submissions [5], [7]; PN85-PN102.

 15   Affinity Education Group Ltd v Kogler [2014] FWCFB 8752 [7]; WorkPac Pty Ltd v Bambach (2012) 220 IR 313 [31]; De Silva v Murphy Holdings (SA) Pty Ltd [2017] FWC 4926 [38].

 16   Respondent’s submissions [19]; PN110-PN123.

 17   O’Sullivan v Farrer (1989) 168 CLR 210, 215; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 575.

 18   With the exception of partial work bans; see Fair Work Act 2009 (Cth) s.470.