Australasian Meat Industry Employees' Union v Coles Supermarkets Australia Pty Ltd [1998] FCA 166 (2 March 1998)

Last Updated: 10 March 1998

FEDERAL COURT OF AUSTRALIA

INDUSTRIAL LAW - interpretation of clause in a certified agreement - meaning of phrase "ordinary time rate" - payment for work on Saturday being a public holiday - issue of whether payment of "penalty" is in addition to "ordinary time earnings" in determining the "ordinary time rate".

Workplace Relations Act 1996 , s 178

Kucks v CSR Limited (1996) 66 IR 182

Scott v Sun Alliance Australia Limited [1993] HCA 46; (1993) 178 CLR 1

AUSTRALASIAN MEAT INDUSTRY EMPLOYEES' UNION v COLES SUPERMARKETS AUSTRALIA PTY LTD

VG 433 of 1997

NORTHROP J

MELBOURNE

2 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 433 of 1997

BETWEEN:	AUSTRALASIAN MEAT INDUSTRY EMPLOYEES' UNION Applicant
AND:	COLES SUPERMARKETS AUSTRALIA PTY LTD (ACN 004 189 708) Respondent
COURT:	northrop j
DATE OF ORDER:	2 MARCH 1998
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

The application be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 433 of 1997

BETWEEN:	AUSTRALASIAN MEAT INDUSTRY EMPLOYEES' UNION Applicant
AND:	COLES SUPERMARKETS AUSTRALIA PTY LTD (ACN 004 189 708) Respondent

court:	northrop j
DATE:	2 MARCH 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

This application is brought under s 178 of the Workplace Relations Act 1996 ("the Act"). Although the application is seeking the imposition of a penalty, in reality, the issue involves the interpretation of a clause in a certified agreement under the Act. The result of the interpretation will affect the amount of wages paid to a large number of employees entitled to the benefits of the agreement and who work on a Saturday being a public holiday.

The particular issue is the construction and application of the relevant provisions of the Coles Supermarkets Australia Pty Ltd Victoria and Australasian Meat Industry Employees' Union Agreement 1996 ("the Agreement"). The Agreement was entered into between the Australasian Meat Industry Employee's Union ("the Union"), an organisation of employees under the Act, and Coles Supermarkets Australia Pty Ltd Victoria ("the Employer"), and came into operation on the first pay period commencing on or after 25 October 1996. The Agreement was certified by the Australian Industrial Relations Commission on 26 February 1997. The Agreement was to continue in force for a period of 3 years. The Agreement is stated to be binding on the Union and the Employer in respect of all the employees of the Employer eligible to be members of the Union employed in the State of Victoria. The Agreement applies with respect to two classifications only, that of Butcher and that of Cabinet Attendants and Packers; see Cl 3 of the Agreement. In broad terms the Agreement applies with respect to persons employed in the meat section of the Employer's supermarkets in Victoria.

The particular issue before the Court is the construction and application of Cl 4.4.8 of the Agreement. Cl 4.4 is headed "Public and Other Holidays" Cl 4.4.1 provides that permanent employees are entitled, without loss of pay, "to public holidays as observed in Victoria as follows". One of the days mentioned is Easter Saturday. The parties to this application have agreed as a fact that in 1997 Easter Saturday was a "public holiday as observed in Victoria". It is not necessary, therefore, to consider the problems discussed in Ophel v Yarra City Council, Federal Court of Australia, Northrop J, 23 February 1998 (unreported). Clause 4.4.8 is headed "Rate of Pay". The clause is set out in full:-

"If the employee also works on the prescribed substitute day the employees shall do so at ordinary time rates.

(i) All full-time and part-time employees working on a public holiday shall be paid at the rate of 300% of the ordinary time rate with a minimum payment as for 4 hours worked.

(ii) All casual employees working on a public holiday shall be paid at the rate of 325% of the ordinary time rate with a m(sic) minimum payment as for 4 hours of work."

The dispute between the parties relates to the construction and application of Cl 4.4.8(i) and in particular the meaning to be given to the words "ordinary time rate".

By its application the Union is seeking the imposition of a penalty upon the Employer for a breach of Cl 4.4.8(i) and an order that the Employer pay to Judy Wallis amounts the Employer has not paid her but was required to pay her for working on a holiday being Easter Saturday 1997.

In order to understand the issue, reference must be made to other provisions of the Agreement. The phrase "ordinary time rate" is not defined in the Agreement. Clause 1.7.10 refers to ordinary time earnings as follows:-

"1.7.10 "Ordinary Time Earnings" means each employee before going on leave shall be paid the amount of wages he/she would have received in respect of rostered hours which he/she would have worked had he/she not been on leave during the relevant period due to him/her for the period for which he/she is entitled to leave.

Provided that commencing 12 months after the ratification of this agreement, the following shall apply: such payment for leave shall not be less than the average of all earnings, including any penalties but excluding overtime and locality loadings, earned within rostered hours during the period for which the annual leave accrued."

The phrase "ordinary time earnings" appears to be used twice only in the Agreement namely in Cl 2.5.1(f)(i) and (ii). These provisions will be mentioned later.

Clause 2 is headed "Conditions of Employment". Under Cl 2.1 a person is to be employed as a full-time weekly employee, a part-time weekly employee or as a casual employee and, at the time of engagement is to "be advised of their classification and wage rates". Ms Wallis was engaged as a cabinet attendant and packer on a full-time weekly basis. Under Cl 2.2 her employment was by the week. She was deemed to be employed full time by the week She was entitled to payment of wages on a weekly basis. Under Cl 2.3, the "ordinary hourly time rate of pay" of a part time employee was 1/38th of the appropriate weekly rate. Under Cl 2.4 "the ordinary time rate of pay" of a casual employee was 1/38th of the appropriate weekly rate plus 25% loading in lieu of certain other entitlements including public holidays. They are employed by the day.

Clause 2.5 relates to hours of work and in particular Cl 2.5.1 relates to full time employees. A full time employee is required to work a five day shift unless otherwise agreed in which case the employee shall work a four day shift; Cl 2.5.1(a). Clause 2.5.1(c) and (d) provide:-

"(c) Full-time employees working a five day shift shall be paid at any (sic an) hourly rate of one fortieth (1/40th) of their applicable weekly rate as specified in Clause 3.

(d) Full-time employees working a four day shift shall be paid at an hourly rate of one thirty-eighth (1/38th) of their applicable weekly rate as specified in Clause 3."

These provisions illustrate the additional financial benefit offered to full time employees working a five day shift Monday to Saturday. The Agreement contains a number of inducements to entice an employee to accept this basis of employment.

Clause 2.5.1(e) and (f) are accepted by the parties as constituting true alternatives. The weekly wage rates payable under Cl 3 for each of the first and second years of the agreement are less for those employees working a 4 day shift than those working a five day shift. Clauses 2.5.1(e) and (f) are set out in full:-

"(e) Hours of work for full-time employees shall be rostered on a regular and predetermined basis. Ordinary rostered weekly hours for a full time employee shall be up to ten (10) hours per day and shall be worked between 6am and 6pm and between Monday to Friday inclusive.

(f) In lieu of 2.5.1.e, an employee may agree to be rostered on a regular and predetermined basis with the ordinary hours for a full-time employee being between 6am and 9pm Monday to Friday and between 6am and 5pm Saturday whereby the following provisions shall apply:

(i) Employees in respect of hours worked between 6pm and 9pm Monday to Friday shall be paid a 50% penalty in addition to their ordinary time earnings notwithstanding that such hours are counted as part of the employees ordinary weekly hours.

(ii) Employees in respect of hours worked between 6am and 5pm Saturday shall be paid a 75% penalty in addition to their ordinary time earnings notwithstanding that such hours are counted as part of the employees ordinary weekly hours.

(iii) The hours of work are subject to the provisions of clause 2.5.5."

Ms Wallis was employed pursuant to Cl 2.5.1(f). Note the use of the phrase "ordinary time earnings" appearing in Cl 2.5.1(f)(i) and (ii). This is to be contrasted with the phrases "ordinary hourly time rate of pay" and "ordinary time rate of pay" used in Cl 2.3 and Cl 2.4 respectively and the words "shall be paid at an hourly rate" used in Cl 2.5.1(c) in relation to full time employees engaged under Cl 2.5.1(c). Under each of Cl 2.5.1(f)(i) and (ii), an employee is paid a penalty in addition to their ordinary time earnings. This penalty gives rise to the issue between the parties. Under Cl 2.5.1(f)(ii) a penalty is paid in addition to ordinary time earnings even though the hours worked are counted as part of the employee's ordinary weekly hours. Counsel for the Union has contended that the payment of 75% is to be added to the "ordinary time earnings" to determine the employee's "ordinary time rate" for the calculation of the additional amount paid to an employee working on a Saturday which is a public holiday. Counsel for the Employer has contended that in determining the "ordinary time rate" the 75% payment is not to be added to ordinary time earnings for the purpose of calculating the additional amount paid to an employee working on a Saturday which is a public holiday.

It is not necessary to refer to all the other conditions of employment contained in Cl 2. Provision is made with respect to rostering procedures. Rosters provide for 152 hours over any 4 week cycle and normally are to be worked on 5 days in any one week. It follows that normally, a full time employee under Cl 2.5.1(f) does not work on every Saturday. Provision is made for overtime, rostered days off normally being one day off in each 20 day, four week cycle.

Clause 3 is headed "Weekly Wage Rates". Clause 3(a) applies where the employee is a full time employee under Cl 2.5.1(e) and prescribes "the applicable wage rates" which are expressed on a weekly basis, the amounts increasing in the second and third year of the agreement. Clause 3(b) applies where the employee is a full time employee under Cl 2.5.1(f) and prescribes "the applicable wage rates" which are expressed in a similar manner to that in Cl 3(a). For each of the first and second years of the agreement, the weekly wage rates are greater under Cl 3(b) than under Cl 3(a). They are the same for the third year.

Clause 3(c) provides that in addition to the "weekly wage rates" all employees are to be paid $3.00 per week "cold preparation area allowance".

Clause 4 is headed "Leave". Clause 4.1(g) provides for payment of wages for the period of annual leave before going on leave. An unusual feature is that instead of making use of the phrase "ordinary time earning" including the proviso, as defined in Cl 1.7.10, the clause repeats the words of the definition including the proviso.

Reference has been made already to Cl 4.4 which relates to "Public and Other Holidays". Under Cl 4.4.5 a full time employee whose non-working day falls on a "Public Holiday" is entitled to either an additional days wages or one of two alternatives. Of necessity, this provision applies only to employees employed under Cl 2.5.1(f).

Clause 4.4.8 has been set out in full earlier in these reasons. The issue between the parties is the meaning of the phrase "ordinary time rate" where it appears in Cl 4.4.8(i), and, for that matter, Cl 4.4.8(ii). That phrase is not defined. The phrase must be construed having regard to the structure of the Agreement and the other relevant provisions of the Agreement. In this respect, reference is made to Cl 3(b) which provides, for present purposes, that the appropriate "weekly wage rate" was $449.30 but "paid at an hourly rate of one fortieth (1/40th) of (the) applicable rate as specified in Clause 3"; see Cl 2.5.1(c). By calculation, therefore, the "hourly rate" of $11.231/4. In addition to the weekly wage rate, the employee is entitled to "a $3.00 per week cold preparation area allowance".

Clause 2.5.1(f) prescribes the spread of hours to be counted as part of the employee's ordinary weekly hours. The ordinary weekly hours can be spread between 6am and 9pm Monday to Friday and between 6am and 5pm Saturday. Any roster must be for periods between those spread of hours. Work done within those spread of hours but outside the rostered hours as well as work done outside those spread of hours is treated as overtime. Clause 2.5.1(f) makes provision for what is described as "penalty" for work done within the specified spread of hours and thus within the "ordinary weekly hours". Under Cl 2.5.1(f)(i) for hours worked between 6pm and 9pm an employee is to be paid a 50% penalty in addition to (the) ordinary time earnings (as defined) even though that period is part of the employee's ordinary weekly hours. The amount of the penalty is to be calculated on the hourly rate calculated in conformity with Cl 2.5.1(c).

A similar provision is contained in Cl 2.5.1(f)(ii). There the penalty is in addition to the ordinary time earnings (as defined) notwithstanding that the hours come within the employee's ordinary weekly hours of between 6am and 5pm on a Saturday. The amount of the penalty is to be calculated on the hourly rate calculated in conformity with Cl 2.5.1(c).

The increase in the number of certified agreements gives rise to an area of possibly greater dispute as to the construction of provisions contained in the agreements. The parties may adopt a multitude of different structures and methods of terminology. No common pattern may develop. Nevertheless certified agreements are to be construed adopting the same methodology as that used in construing awards. In Kucks v CSR Limited (1996) 66 IR 182 Madgwick J, sitting as a judge of the Industrial Relations Court of Australia, at 184 expressed his opinion on the legal principles to be applied in construing awards under the Act. I agree with that statement of principles. They have even stronger application to certified agreements. They are set out:-

"Legal Principles

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning".

The last paragraph has particular application here. Counsel for the Union continued to contend that the penalty provision was designed to recompense an employee for working on a public holiday especially if that holiday was on a Saturday. Therefore, it was contended that it was only fair that the employee should be paid the largest amount.

It is noted that the amount to be paid under Cl 4.4.8(i) is to be paid where the employee works on a public holiday, whether a Saturday or not, and that if the holiday falls on a non-working day, then under Cl 4.4.5(i), the employee is entitled to an "additional days wages" or one of the alternatives in Cl 4.4.5(ii) or (iii). The latter constitutes a benefit to the employee of a payment at 200% of the hourly rate; see Cl 2.5.1(c).

Counsel for the Union contended that a full time employee coming within Cl 2.5.1(f) could be rostered to work between the hours of 6am and 5pm on a Saturday as part of ordinary hours and that Cl 2.5.1(f)(ii) created a rate of pay for ordinary time worked on holidays. He contended that the entitlement to be paid a 75% penalty created a rate of pay for ordinary time worked on a Saturday. Despite the use of the word "penalty" in the sub-clause, the provision did not require a penalty to be paid but merely constituted a rate of pay for ordinary time worked on a Saturday.

This contention is rejected. For an employee working on a roster under Cl 2.5.1(f), the weekly wage rate of pay is determined by Cl 3(b). Other amounts are added to that weekly wage rate:-

(a) The cold preparation allowances under Cl 3(c) is paid.

(b) Under Cl 2.5.1(f)(ii) the penalty of 75% calculated on the hourly rate of pay in respect of hours worked between 6am and 5pm on Saturdays is paid. Similarly, a penalty is to be paid where Cl 2.5.1(f)(i) applies.

The allowance and the penalty do not form part of the applicable weekly wage rate. They constitute additional payments of an allowance and/or a penalty respectively.

The same principle applies when considering Cl 4.4.8(i). The word penalty is not used in this sub-clause. The additional amount is in the nature of a penalty. An amount is to be paid "at the rate of 300% of the ordinary time rate". The words "ordinary time rate" are not defined but in this context must refer to the weekly wage rate prescribed by Cl 3(b). The weekly wage rate is paid for the time worked by the employee under the roster provisions referred to in Cl 2.5.1(f)

The words "ordinary time rate" co-relate to a worker's ordinary working week. By Cl 1.7.5 the word "week" is defined to mean the worker's ordinary working week. Under the roster system specified in Clause 2, an employee engaged under Cl 2.5.1(f) does not work on every Saturday. When the worker's roster requires the worker to work on a Saturday, the ordinary working week does not change. The ordinary time rate does not change. A penalty is to be paid calculated in conformity with Cl 2.5.1(f)(ii).

Accordingly, in calculating the amount of the weekly wage to be paid to an employee employed under Cl 2.5.1(f)(ii) of the Agreement, the appropriate ordinary time rate is the base figure. To this is added the following amounts:-

(a) the cold preparation area allowance;

(b) a penalty being 75% of the hourly rate of the applicable weekly rate as specified in Cl 3(b) for the hours worked between 6am and 5pm on a Saturday;

(c) where the employee works on a public holiday, the payment in the nature of a penalty being 3 times the ordinary time rate the employee would receive by reference to the weekly wage rate is to be calculated on the hourly rate of the applicable rate. This amount is to be calculated on the ordinary time rate irrespective of what day of the week the public holiday is observed. Where the holiday is observed on a Saturday, the employee is already entitled to the penalty for the hours worked on that day. The payment of the 300% is in addition to that penalty and is based on the same hourly rate as the penalty for working on Saturday.

Counsel for the Union sought support from the following passage of the High Court constituted by Mason CJ, Brennan, Dawson, Toohey and McHugh JJ, in Scott v Sun Alliance Australia Limited [1993] HCA 46; (1993) 178 CLR 1 at 5:-

"The expression "ordinary time rate of pay" is well known in the industrial relations field in Australia and New Zealand. It and similar terms have long been used in legislation. Unless the context otherwise requires, "ordinary time rate of pay" means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours."

On its face, this opinion seems to be adverse to the submissions of counsel for the Union. When regard is had to the statute then under consideration by the High Court and the whole of the relevant passage of the judgment of the Court from which the extract is taken, it is obvious that the authority supports the contentions of counsel for the Employer and the views expressed in these reasons. I can do no better than quote what was said by Madgwick J in Kucks at 185-6:-

"The genesis of the main argument for the applicant is that, prima facie, "ordinary" means "usual", and usually Mr Kucks' rate of pay included his shift allowance. However terms like "ordinary rate of pay" and "standard hours" have well-known meanings in the sphere of industrial relations in this country, as is shown by what was said, admittedly in a different context, in Scott v Sun Alliance Australia Ltd [1993] HCA 46; (1993) 178 CLR 1. That case involved the interpretation of a Tasmanian workers compensation statute which provided for compensation for incapacity to work at the:

"ordinary time rate of pay of the worker for ...... work ...... engaged in immediately before the period of incapacity."

Immediately before the worker was injured he had worked a 16 hour week. The relevant award provided for an ordinary week of 38 hours. It was held by the High Court that "ordinary time rate of pay" referred to a rate fixed by an industrial award and not to the hours agreed by an individual employment contract. The Court said (at 5):

The expression `ordinary time rate of pay' is well known in the industrial relations field in Australia and New Zealand. It and similar terms have long been used in legislation. [See for example, Annual Holidays Act 1944 (NSW), s 2(1); Workers' Compensation Act 1956 (NZ), s 15(1) (now repealed); Accident Compensation Act 1985 (Vic), s 95(1) (now repealed)]. Unless the context otherwise requires, "ordinary time rate of pay" means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours [Catlow v Accident Compensation Commission [1989] HCA 43; (1989) 167 CLR 543 at 555-556, 560)].

In some contexts, `ordinary time' may mean `regular, normal, customary, usual' time. [See Kezich v Leighton Contractors Pty Ltd [1974] HCA 50; (1974) 131 CLR 362 at 365.] Thus in Kezich v Leighton Contractors Pty Ltd [....] this Court held that the words `the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury' in cl 2 of the Schedule to the Workers' Compensation Act 1912 (WA) referred to the hours during which it was usual for the employee to work. In that case, Gibbs J considered that it was not legitimate to construe the statute by reference to the meaning which the words bore in industrial awards and agreements (ibid, at 364.). However, in this case, unlike Kezich the relevant expression `ordinary time rate of pay' has an established and special meaning in the context of employment and industrial relations. Accordingly, it is that meaning which the words must bear in s 69(1)(a) in their application to employment governed by an industrial award or agreement. In such an award or agreement, the expression `ordinary time' cannot mean the customary or usual hours of work. That being so, no justification exists for interpreting the expression in its application to an individual employment contract as meaning the customary or usual hours of work. In s 69(1)(a)(ii), `ordinary time' means the fixed standard hours as opposed to overtime or usual or customary time. However, just as individual employment contracts usually fail to distinguish between `ordinary time rates' of pay and other rates of pay, so do the majority of them fail to distinguish between the fixed standard hours and other working time. Consequently, s 69(1)(a)(ii) would seem to have little scope for operation in relation to private employment contracts. By itself, this factor could not be decisive, but it is strong confirmation of the construction which flows from the presence of s 69(3) in the Act." [Emphasis added.]

The same observations apply with respect to the words "ordinary time rate" in Cl 4.4.8 of the Agreement. The submissions made on behalf of the Employer are accepted.

That the amounts involved are substantial is illustrated by the fact that the Union claims that the employee should have been paid $471 excluding the allowance, for working 8 hours on Easter Saturday while the employer paid her $272. The claim was for payment of the difference, $202.

For the reasons given the application is dismissed.

I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R M Northrop

Associate:

Dated: 2 March 1998

Counsel for the Applicant:	Mr E White
Solicitor for the Applicant:	Gill Kane & Brophy
Counsel for the Respondent:	Mr M McDonald
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	16 February 1998
Date of Judgment:	2 March 1998