WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES NEKROS PTY LTD

APPELLANT

-and-

Rosanne Baker

RESPONDENT

CORAM FULL BENCH

  THE Honourable M T Ritter, Acting President

  Commissioner S J Kenner

  Commissioner J L Harrison

HEARD Tuesday, 17 October 2006, LATEST WRITTEN SUBMISSIONS FILED WEDNESDAY, 15 NOVEMBER 2006

DELIVERED THURSDAY, 23 NOVEMBER 2006

FILE NO. FBA 21 OF 2006

CITATION NO. 2006 WAIRC 05764

Catchwords Industrial Law (WA) – Appeal against decision made by Industrial Magistrate’s Court – Alleged failure to comply with Long Service Leave Act 1958 (WA) by not making a payment in lieu of long service leave upon termination of employment – Issue relating to quantum of amount appellant obliged to pay respondent – Issue of construction of Long Service Leave Act 1958 (WA) – Effect of Long Service Leave General Order – Meaning of the word ‘entitlement’ in s8A – Effect of repeal of s8A of the Long Service Leave Act 1958 (WA) and Long Service Leave General Order – “rate of pay” for real estate agent paid by commission - Method of calculation of payment to be made to respondent – Appeal upheld – Industrial Relations Act 1979 (WA), s81AA, s84(2) – Long Service Leave Act 1958 (WA), s4, s4(1) & (2), s8(1) & (3), s8A, s9(2), s11, s11(1) – Long Service Leave General Order, cl 1, cl 3, cl 4(5), cl 5(2) – Labour Relations Legislation Amendment Act 2006, s57, s63, s64, s65 – Interpretation Act 1984 (WA), s5, s37

Decision Appeal upheld, orders made by the Industrial Magistrate's Court varied

Appearances

Appellant Mr P Momber (of Counsel), by leave

Respondent Mr S Kemp (of Counsel), by leave

Reasons for Decision

THE ACTING PRESIDENT:

The Appeal

1          This is an appeal instituted under s84(2) of the Industrial Relations Act 1979 (WA) (as amended) (the Act).  The appeal is against a decision made by the Industrial Magistrate’s Court on 15 June 2006.  The notice of appeal which was filed on 5 July 2006 stated that it was an appeal against a decision of the Industrial Magistrate’s Court given on 14 June 2006.  This was the date on which the Court published its reasons for decisions.  The order of the Court was however issued on 15 June 2006.  During the hearing of the appeal the appellant’s counsel conceded that the notice of appeal should have referred to the date of the decision appealed against as being 15 June 2006.  The respondent’s counsel did not indicate any concern about this incorrect date and therefore the appeal proceeded as if the date contained in the notice of appeal was 15 June 2006.

2          The order made by the Industrial Magistrate’s Court was that the appellant pay to the respondent $37,598.62 within 14 days.  The Court made this order in determining the respondent’s claim that the appellant had failed to comply with the Long Service Leave Act 1958 (WA) by not making a payment to the respondent in lieu of long service leave upon the termination of her employment with the appellant.  In determining this claim the Industrial Magistrate’s Court was exercising the jurisdiction provided by s11 of the Long Service Leave Act and s81AA of the Act.

The Hearing before the Industrial Magistrate’s Court

3          In the hearing before the Industrial Magistrate’s Court the issue was the quantum of the amount which the appellant was obliged to pay to the respondent.  The determination of this issue depended upon an issue of construction of the Long Service Leave Act.  This issue of construction is also the heart of the appeal.  There was no dispute in the hearing before the Industrial Magistrate or on appeal about the background facts or that the appellant was obliged to make a payment to the respondent in lieu of long service leave, under the Long Service Leave Act.

4          The following summary of the facts is largely taken from the reasons for decision of the Industrial Magistrate.  On 9 June 1994 the respondent commenced working for the appellant as a real estate agent.  She continued in that employment until 31 December 2004.  The respondent’s income during her employment was derived from commissions earned from the sale of real estate and the letting of properties.  At times she also received performance bonuses.  The appellant credited all commissions earned by the respondent to an account.  The account was also debited with all the associated expenses incurred in her work as a real estate agent.  Also debited against the respondent’s account were compulsory and voluntary superannuation payments made by the appellant for the benefit of the respondent to her superannuation fund.

5          When the respondent left her employment with the appellant, she was not paid any amount in lieu of pro-rata long service leave.  The appellant initially took the view that it was not obliged to make such a payment.  At the time of the hearing before the Industrial Magistrate’s Court however, the appellant conceded that it was obliged to make a payment in lieu of long service leave to the respondent pursuant to the provisions of the Long Service Leave Act.  (It was common ground that the respondent was the employee of the appellant, as defined in s4 of the Long Service Leave Act).  As stated, the issue for determination by the Industrial Magistrate was the quantum of the payment to be made to the respondent.  This in turn depended upon whether the quantification of the sum was calculated by reference to a formula contained in the Long Service Leave Act or, because of the terms of s8A of the Long Service Leave Act, the General Order made by the Commission with respect to long service leave as consolidated at the hearing before the Commission in Court Session on 15 December 1977 and made on 27 January 1978; published in volume 58 of the Western Australian Industrial Gazette at pages 1-6 (the LSL General Order). 

6          Between the decision of the Industrial Magistrate’s Court and the hearing of the appeal, the Long Service Leave Act was amended by the Labour Relations Legislation Amendment Act 2006, Part 7 Division 2.  These amendments commenced on 4 July 2006.  The Labour Relations Legislation Amendment Act repealed s8A of the Long Service Leave Act and the LSL General Order.  Whether this has any impact upon the appeal will be considered later.  For present purposes I simply note that the sections of the Long Service Leave Act which will be referred to and quoted below will be to those sections in the form that they appeared in the Long Service Leave Act prior to amendment by the Labour Relations Legislation Amendment Act 2006.

The Long Service Leave Act

7          Part III of the Long Service Leave Act is headed “Entitlements to long service leave or to payment in lieu thereof”.  Sections 8(1) and (3) are relevant to the present appeal and provide as follows:-

“8. Long service leave

(1) An employee is entitled in accordance with, and subject to, the provisions of this Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer.

…

(3) Subject to subsection (5), where an employee has completed at least 10 years of such continuous employment since the commencement thereof, but less than 15 years, and the employment is terminated — 

(a) by his death; or

(b) for any reason other than serious misconduct,

the amount of leave to which the employee is entitled shall be a proportionate amount on the basis of 13 weeks for 15 years of such continuous employment.”

8          Section 8(5) of the Long Service Leave Act which is referred to in s8(3) is not relevant to the present appeal. 

9          Section 9 of the Long Service Leave Act is headed “Commencement of long service leave”.  Section 9(2) has relevance to s8(3) of the Long Service Leave Act and the position of the respondent to the present appeal and is as follows:-

“9. Commencement of long service leave

…

(2) In a case to which section 8(2)(c) or section 8(3) applies the employee shall be deemed to have been entitled to and to have commenced leave immediately prior to such termination. In such cases and in any case in which the employment of the employee who has become entitled to leave hereunder is terminated before such leave is taken or fully taken the employer shall, upon termination of his employment otherwise than by death pay to the employee and upon termination of employment by death pay to the personal representative of the employee upon request by the personal representative, a sum equivalent to the amount which would have been payable in respect of the period of leave to which he is entitled or deemed to have been entitled and which would have been taken but for such termination. Such payment shall be deemed to have satisfied the obligation of the employer in respect of leave hereunder.”

10       Section 8A of the Long Service Leave Act, the construction of which is at the heart of the present appeal, was in the following terms:-

“8A. Variation of qualifications and entitlement to long service leave

Notwithstanding any other provision in this Act in the event of a determination of the Commission in Court Session varying from time to time any of the provisions for qualifications or entitlement to long service leave as contained in volume 52 of the Western Australian Industrial Gazette at pages 16 to 21, both inclusive, for the majority of awards which those provisions have been incorporated in and form part of, the qualifications and entitlement of employees to long service leave shall forthwith thereafter be varied accordingly.”

11       One issue on the appeal was whether the LSL General Order varied the qualifications or entitlement to long service leave as contained in volume 52 of the Western Australian Industrial Gazette at pages 16 to 21 inclusive, for the majority of awards which those provisions had been incorporated in and formed part of.  The parties were at odds as to what was meant by the word “entitlement” in s8A of the Long Service Leave Act and in particular whether this included the method of calculation of the payment which was to be made to a former employee in satisfaction of the obligations contained in s8 and s9(2) of the Long Service Leave Act. 

12       Section 8(1) of the Long Service Leave Act provides subject to the other provisions of that Act for “long service leave on ordinary pay”.  The expression “ordinary pay” is defined in s4(1) and (2) of the Long Service Leave Act.  The respondent contended before the Industrial Magistrate and on appeal that her payment in lieu of long service leave should be made in accordance with the formula set out in s4(2)(b) of the Long Service Leave Act.  To understand this formula it is necessary to set out in full the definition of “ordinary pay” in s4(1) and (2) as follows:-

“4. Interpretations

(1) In this Act unless the context requires otherwise —

…

“ordinary pay” means subject to subsection (2), remuneration for an employee’s normal weekly number of hours of work calculated on the ordinary time rate of pay applicable to him, as at the time when any period of long service leave granted to him under this Act commences, or is deemed to commence, and where the employee is provided with board and lodging by his employer, includes the cash value of that board and lodging, where such board and lodging is not provided and taken during the period of leave, but does not include shift premiums, overtime, penalty rates, commissions, bonuses, allowances, or the like;

…

(2) For the purpose of the interpretation of “ordinary pay” in subsection (1) — 

(a) where the employee is employed on piece or bonus work or any other system of payment by results, he shall be paid during any period when he is on long service leave at the ordinary rate of pay which would be applicable to him if he was employed in the industry appropriate to his calling on a time basis and not on piece or bonus work or other system of payment by results;

(b) where no ordinary time rate of pay is fixed under the provisions of paragraph (a) the ordinary time rate of pay shall be deemed to be the average weekly rate earned by him while in employment during the period of 12 months —

(i) ending on the day immediately preceding that on which he commences long service leave or would but for payment in lieu of long service leave have commenced long service leave, if he is then in employment; or

(ii) ending on the day immediately preceding that on which he was last in employment, if he is not then in employment; or

(iii) ending on the day immediately preceding that of his death,

as the case requires; and

(c) where the normal weekly number of hours have varied over the period of employment of an employee the normal weekly number of hours of work shall, subject to paragraph (a), be deemed to be the average weekly number of hours worked by the employee during that period of employment (calculated by reference to such hours as are ascertainable if the hours actually worked over that period are not known); and

(d) the cash value of any board and lodging provided for an employee shall be deemed to be its cash value as fixed by or under the conditions of the employee’s employment, or, if it is not so fixed, shall be computed at the prescribed rate; and

(e) where by agreement between the employer and the employee the commencement of the leave to which the employee is entitled or any portion thereof is postponed to meet the convenience of the employee, the rate of payment for such leave shall be at the ordinary time rate of pay applicable to him at the date of accrual or, if so agreed, at the ordinary time rate of pay applicable at the date he commences such leave.”

13       The respondent’s position was and is therefore that her ordinary rate of pay was the average weekly rate earned by her whilst in her employment during the period of 12 months ending on the day immediately preceding that on which she was last in employment with the appellant.

14       In contrast, the appellant’s position was and is that the rate of pay should be calculated by averaging the respondent’s rate of pay for each week over the period of 3 months prior to the termination of her employment.  It was agreed before the Industrial Magistrate that this would result in a lesser amount being paid to the respondent than if the formula the respondent relied upon were to be used.  The appellant contends that the 3 month formula is to be used because of the contents of clause 4(5) of the LSL General Order which applied because of s8A of the Long Service Leave Act.

The LSL General Order

15       Clause 1 of the LSL General Order provides that a worker shall, as herein provided, be entitled to leave with pay in respect of long service.

16       Clause 3 of the LSL General Order sets out the period of leave.  Clause 3(3) of the LSL General Order is for present purposes indistinguishable from s8(3) of the Long Service Leave Act. 

17       Clause 4 of the LSL General Order is about payment for periods of long service leave.  Clause 4(5), which the respondent relies upon is in the following terms:-

“(5) In the case of workers employed on piece or bonus work or any other system of payment by results the rate of pay shall be calculated by averaging the workers rate of pay for each week over the previous three monthly period.”

18       The obligation upon an employer to make a payment to a former employee in lieu of long service leave upon the termination of employment is provided for in clause 5(2) of the LSL General Order.  For present purposes this obligation is indistinguishable from that contained in s9(2) of the Long Service Leave Act. 

19       The issue for the Industrial Magistrate and on appeal is whether the effect of s8A and the LSL General Order was that the method of calculation of the payment to be made to the respondent was in accordance with clause 4(5) of the LSL General Order.  This depends upon the meaning and impact of the LSL General Order and the construction of s8A of the Long Service Leave Act.  An important issue in this determination is whether the method of calculation of the rate of pay of an employee is part of the entitlement to long service leave. 

The Reasons of the Industrial Magistrate

20       The Industrial Magistrate commenced his consideration of the determination of the issue at page 8 of his reasons.  His Honour said that s8A was “aimed at maintaining consistency with respect to qualification and entitlement to long service leave between those employees whose employment is regulated by the IR Act and those employees whose employment is not so regulated”.  In making this observation his Honour no doubt had in mind s4(3) of the Long Service Leave Act which excluded from the definition of an employee in subsection 4(1) of that Act, a person who by virtue of an award, industrial agreement, workplace agreement, employee-employer agreement under Part VID of the Act or other agreement between the person and his employer entitled to, or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under the Long Service Leave Act.  His Honour then said that s8A is an enabling provision which facilitates the importation of changes to long service leave qualification and entitlements for the sake of consistency.  His Honour said that one could understand that it was desirable from a public policy perspective that all employees whether they be governed by awards or not be treated in the same way with respect to long service leave.  His Honour said that s8A facilitates the variation from time to time of the qualifications and entitlements of employees under the Long Service Leave Act without the need to amend that Act “each time there is a change made to the long service leave qualifications or entitlements of those employees regulated by” the Act.  (Page 9). 

21       His Honour then referred to s8 of the Long Service Leave Act.  His Honour said that the effect of s8(3) of the Long Service Leave Act was that it granted pay in lieu of long service leave on a pro-rata basis to employees who had been employed by the same employer for at least 10 years but less than 15 years in circumstances where their employment is terminated by death or for any other reason other than serious misconduct.  This statement is correct when s8(2) is read in conjunction with s9(2) of the Long Service Leave Act.

22       His Honour then said that it “necessarily follows that an employee’s entitlement is the amount of long service leave which the employee can take upon qualification or alternatively the pro-rata proportion of untaken leave where the employee’s employment is terminated after having completed 10 years of continuous service with the same employer.”  (Page 9).  His Honour then said the respondent’s entitlement to leave was 8.67 weeks using the formula set out in s8(2) of the Long Service Leave Act. 

23       At page 10 of his reasons the Industrial Magistrate said that an entitlement is that which a person has a right to.  His Honour referred to a definition of “entitlement” contained in the CCH Macquarie Dictionary of Employment and Industrial Relations as follows:-

“Entitlement: that which a person has a right to, e.g. that which is specifically provided for in industrial awards and contracts of employment as the rights of employees.  The term is used especially for the additional payment received when leaving employment, consisting of a pro rata amount for accrued annual leave, long service leave where applicable, etc.”

24       The Industrial Magistrate then said:-

“The Claimant’s entitlement as referred to in sections 8 and 8A can have no other meaning than the pro rata amount of long service leave measured in weeks and part thereof, with respect to which payment is to be made at the ordinary rate of pay.  The quantification of the entitlement measured in dollar terms does not relate to the Claimant’s entitlement.  The entitlement remains constant but the value thereof is dependant upon the statutory formula provided to give meaning to what is meant by ordinary pay.”  (Page 10)

25       The Industrial Magistrate then said that ss4(1) and (2) of the Long Service Leave Act and not clause 4(5) of the LSL General Order governed the quantification of the respondent’s entitlement.  His Honour said that clause 4(5) of the LSL General Order had no application because it was not a provision relating to “qualifications” or “entitlement” as envisaged by s8A of the Long Service Leave Act.  His Honour said that s8A of the Long Service Leave Act does not therefore facilitate the importation of clause 4(5) of the LSL General Order.  His Honour said that it was a discrete provision which creates the formula for calculation of payment in lieu of long service leave for employees who are employed on piece work or whose work is remunerated by the payment of bonuses or any other system of payment by results and whose employment is governed by the Act.  His Honour said that the Long Service Leave Act provides for its own method of calculation which differs from that provided in the LSL General Order for employees falling within the Long Service Leave Act who are employed on piece work or whose work is remunerated by the payment of bonuses or any other system of payment by results.  (Page 10).  His Honour concluded this aspect of his reasons by saying that s8A of the Long Service Leave Act did no more than provide for equality with respect to the issue of qualification in terms of years and entitlements in terms of weeks for all employees whether they are within the award system or not.  His Honour said it did not import the method of giving value in dollar terms to such entitlements.  (Page 11).

The Parties’ Position on Appeal

26       The essence of the appeal is contained in paragraph 6 of the schedule to the notice of appeal which is in the following terms:-

“6. The Appellant says that in reaching its decision the court erred in law in finding that entitlement to long service leave under the [Long Service Leave] Act did not include the quantification of that entitlement which is prescribed by sub-clause 4(5) of the General Order as varied.”

27       The respondent’s position was that the reasons and conclusion of the Industrial Magistrate were correct.

Analysis

28       In the appellant’s written submissions there was reference to a number of law dictionary and general dictionary definitions of “entitlement”.  There was no great variation between these definitions.  There was also little variation to the definition of “entitlement” quoted by his Honour in his reasons, from the CCH Macquarie Dictionary of Employment and Industrial Relations.  What is common to each of the definitions is that an entitlement is something which someone has a right to.  This is also consistent with a Macquarie Dictionary definition quoted by the respondent in her written submissions. 

29       The appellant’s argument is that in the context of the Long Service Leave Act, the entitlement to long service is to be construed as including the quantification of the payment to be made during actual or deemed long service leave.

30       The determination of the appeal depends upon the construction of the expression “entitlement to long service” in s8A of the Long Service Leave Act.  This exercise involves a consideration of the text of the section and Long Service Leave Act, as a whole, to endeavour to ascertain the intention of the legislature in enacting s8A of the Long Service Leave Act.  (Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]; Wilson v Anderson and Others (2002) 213 CLR 401 at [8]).

31       Section 8A of the Long Service Leave Act refers to a determination of the Commission in Court Session varying any of the provisions for qualifications or entitlement to long service leave as contained in volume 52 of the Western Australian Industrial Gazette at pages 16 to 21.  In these pages of the WAIG there are the provisions for long service leave as consolidated at a hearing before the Commission in Court Session on 23 September 1964 (the 1964 Long Service Leave Order).  Clause 1 of the 1964 Long Service Leave Order was in identical terms to clause 1 of the LSL General Order.  That is it provided a worker was entitled to leave with pay in respect of long service.  Clause 2 of the 1964 Long Service Leave Order set out the requirement for continuous service.  Clause 3 of the 1964 Long Service Leave Order set out the period of leave which a worker would be entitled or deemed to be entitled to.  Clause 3(3) contained an entitlement to pro-rata long service leave, after between 10 and 15 years’ service, upon termination of employment in similar although not identical terms to clause 3(3) of the LSL General Order.  Clause 5 of the 1964 Long Service Leave Order was about the taking of long service leave.  Clause 5(2) provided for the payment upon termination of a worker of a sum equivalent to the amount which would have been payable in respect of the period of leave to which they were entitled or deemed to have been entitled and which would have been taken but for such termination.

32       Clause 4 of the 1964 Long Service Leave Order was about payment for the period of long service leave.  Clause 4(1) provided that the worker shall be entitled to be paid for each week of leave to which he has become entitled or is deemed to become entitled, the ordinary time rate of pay applicable to him at the date he commences such leave.  Clause 4(2) provided that such ordinary time rate of pay shall be the rate applicable to him for the standard weekly hours which are prescribed by the award (or agreement), but in the case of casuals and part-time workers shall be the ordinary time rate for the number of hours usually worked up to but not exceeding the prescribed standard.  Clause 4(5) then provided that in the case of workers employed on piece or bonus work or any other system of payment by results payment shall be at ordinary time rates.

33       Clause 4(5) of the LSL General Order varies the method of calculation of payment to a worker employed on piece or bonus work or any other system of payment by results, on actual or deemed long service leave from that contained in clause 4(5) of the 1964 Long Service Leave Order.  In the 1964 Long Service Leave Order the payment was to be at what was simply described as ordinary time rates.  In the LSL General Order the rate of pay was to be calculated by averaging the worker’s rate of pay for each week over the previous three monthly period.  The question in terms of s8A of the Long Service Leave Act is whether this varied the entitlement to long service leave as contained in the 1964 Long Service Leave Order.  (It is clear that, in terms of s8A, the LSL General Order, as a general order of the Commission in Court Session varied more than “the majority of awards which” the provisions of the 1964 Long Service Leave Order “have been incorporated in and form part of.”)

34       Clause 1 of both the 1964 Long Service Leave Order and the LSL General Order entitle a worker to “leave with pay in respect of long service”.  In my opinion the “entitlement to long service leave” is a composite entitlement.  It is not an entitlement simply to leave, but importantly to leave with pay.  The fact that payment is to be received during the leave is in my opinion an integral part of the entitlement.  So too is the amount of the payment and therefore the method by which the amount of the payment is calculated.  A variation to the method of calculation of the payment therefore in my opinion varies the “entitlement to long service leave”.  This is because it varies the amount of pay which the worker is entitled to receive when on actual or deemed long service leave.  One integer of the entitlement, that of the payment, is varied.

35       In my opinion, this reflects a proper understanding of the entitlement to long service leave in the Long Service Leave Act.  The entitlement provided for in s8(1) of the Long Service Leave Act is to “long service leave on ordinary pay”.  This provides for the composite entitlement to which I have referred; to leave on ordinary pay. 

36       Accordingly in my opinion the variation to the method of calculation of the entitlement to pay for workers employed on piece or bonus work or any other system of payment by results, when on actual or deemed long service leave, effected by the LSL General Order did vary the entitlement to long service leave as contained in the 1964 Long Service Leave Order.  This then has the effect legislated for in s8A of the Long Service Leave Act.  This is that the “entitlement of employees to long service leave shall forthwith thereafter be varied accordingly”.  Consistent with what I have said above this means that the method of calculation of payment of an employee of the relevant type (including the respondent) during actual or deemed long service leave, as part of their entitlement, has been varied by the contents of clause 4(5) of the LSL General Order.  In my opinion therefore, and with respect, the Industrial Magistrate was in error in not coming to this conclusion. 

37       The respondent’s entitlement to long service leave “on ordinary pay”, provided for in s8(1) of the Long Service Leave Act, was as expressed in that subsection “subject to the provisions of” the Long Service Leave Act.  This includes s8A.  Section 8A has the effect that I have described above.  Where there has been a variation of the type described in s8A to the method of calculation of the payment to an employee on deemed or actual long service leave, this, by the terms of s8A and s8(1), varies the payment to that employee from “ordinary pay”, as defined in the Long Service Leave Act, to that determined by the Commission in Court Session, if there is any difference.  In the case of the respondent there is such a difference as set out above.  Accordingly, it is the method of calculation of the payment determined by the Commission in Court Session, and contained in the LSL General Order as part of the entitlement to pay whilst on long service leave, which applied.

38       Two other things may be noted about the Industrial Magistrate’s reasons.  The first is that the payment made to a person when leaving employment for pro-rata long service leave was said to be an “entitlement” in the definition quoted in his Honour’s reasons.  This was not then considered however by his Honour in determining whether a change in the method of calculation of this payment varied the entitlement to deemed long service leave.

39       Secondly, although his Honour noted the purpose of s8A as providing equality between employees irrespective of whether their long service leave entitlement was governed by the Long Service Leave Act, or industrial award, the effect of his decision was to create a difference between them.  This was with respect to the method of calculation of the payment to be made to the group of employees which included the respondent, when on actual or deemed long service leave.  This is contrary to the purpose of s8A and the public policy behind it, as articulated by his Honour in his reasons.

40       In attempting to uphold the decision of the Industrial Magistrate, the respondent made reference to the Second Reading Speech made by the Minister for Labour about the Long Service Leave Amendment Bill 1973 by which s8A of the Long Service Leave Act was inserted and s8 amended.  The Minister referred to a proposed repeal and re-enactment of s8 of the Long Service Leave Act, “which deals with entitlements”.  (Western Australia, Parliamentary Debates, Legislative Assembly 1973, page 980).  In my opinion this observation by the Minister does not assist the respondent.  The entitlement to long service leave is as described earlier set out in s8 of the Long Service Leave Act.  This contains however a composite entitlement to leave and payment whilst on leave.  The Minister’s observation does not support any conclusion that the payment whilst on leave and the method of calculation of that payment is not part of the entitlement to long service leave.  The same may be said of two authorities which the respondent referred to which make reference to the entitlements of employees under s8 and/or s9 of the Long Service Leave Act.  (United Construction Pty Ltd v Birighitti (2003) 83 WAIG 434 per Hasluck J at [53] and Davies v Youngs WA Pty Ltd (2002) 82 WAIG 1114 per Smith C at [25]). 

41       The respondent also referred to s11 of the Long Service Leave Act as demonstrating a legislative intention that the entitlement to long service leave and the calculation of payments to be made whilst on actual or deemed long service leave were conceptually different. 

42       Section 11 of the Long Service Leave Act is in the following terms:-

“11. Industrial magistrate’s courts

(1) An industrial magistrate’s court has jurisdiction to hear and determine all questions and disputes in relation to rights and liabilities under this Act, including without limiting the generality of the foregoing, questions and disputes — 

(a) as to whether a person is or is not an employee, or an employer, to whom this Act applies;

(b) whether and when and to what extent an employee is or has become entitled to long service leave, or payment in lieu of long service leave;

(c) as to the ordinary rate of pay of an employee;

(d) as to whether the employment of the employee was or was not ended by an employer in order to avoid or to attempt to avoid liability for long service leave; and

(e) with respect to a benefit in lieu of long service leave under an agreement made under section 5.

(2) Jurisdiction granted under subsection (1) is exclusive of any other court except where an appeal lies to that other court.”

43       The respondent argued that if the method of calculation of payment of an employee was part of their entitlement to long service leave then it would not have been necessary to separately provide for the jurisdiction of the Industrial Magistrate contained in s11(1)(c).  This is because a determination as to the ordinary rate of pay of an employee could have been determined as part of the determination set out in s11(1)(b).  I do not accept this contention.  Firstly, this is because in my opinion s8(1) more clearly sets out what the legislature intended to be the constituents of the entitlement to long service leave.  As set out earlier, this is long service leave on ordinary pay.  Secondly, paragraphs (a)-(e) of s11(1) do not describe mutually exclusive questions which may be determined by the Industrial Magistrate’s Court.  For example, the question of whether or not a person is an employee to whom the Long Service Leave Act applies (s11(1)(a)), is also bound up within the question of whether and to what extent an employee is entitled to long service leave (s11(1)(b)).  In the same way, the question of the ordinary rate of pay of an employee is separately mentioned in s11(1)(c) although this question could be integral to a determination of the broader question set out in question s11(1)(b) of Long Service Leave Act.

44       For the reasons set out, in my opinion the Industrial Magistrate erred in deciding that the method of calculation of the payment by the appellant to the respondent was in accordance with s4(2)(b) of the Long Service Leave Act.  Instead, the method of calculation should have been decided to be that contained in clause 4(5) of the LSL General Order.

The Repeal of s8A of the Long Service Leave Act and the LSL General Order

45       Having reached this conclusion it is necessary to consider whether the repeal of s8A of the Long Service Leave Act and the LSL General Order by the Labour Relations Legislation Amendment Act 2006 has any impact upon the appeal.  Section 8A of the Long Service Leave Act was repealed by s57 of the Labour Relations Legislation Amendment Act.  The LSL General Order was repealed by s64 of the Labour Relations Legislation Amendment Act.  Section 65 of the Labour Relations Legislation Amendment Act contained a transitional provision with respect to references to the LSL General Order in industrial instruments.  An industrial instrument is defined in s63 of the Labour Relations Legislation Amendment Act in the following way:-

“63. Meaning of terms used in this Division

…

“industrial instrument” means —

(a) an award under the Coal Industry Tribunal of Western Australia Act 1992;

(b) an order under the Coal Industry Tribunal of Western Australia Act 1992 or an agreement that comes within section 12(4) or 17(1) of that Act;

(c) an award as defined in the Industrial Relations Act 1979 section 7(1);

(d) an industrial agreement as defined in the Industrial Relations Act 1979 section 7(1);

(e) an order of the Commission under the Industrial Relations Act 1979;

(f) an employer‑employee agreement under the Industrial Relations Act 1979 Part VID; or

(g) any other agreement between a person and an employer, as such, that deals with long service leave;”

46       Section 65 of the Labour Relations Legislation Amendment Act in the following terms:-

“65. Transitional provision — references to the LSL General Order

(1) The object of this section is to ensure that where, before commencement, a person’s long service leave rights, entitlements or obligations arose under an industrial instrument by reference to the LSL General Order that person’s long service leave rights, entitlements or obligations arise, after commencement, under the instrument by reference to the Long Service Leave Act 1958.

(2) Unless the contrary intention appears or the context otherwise requires, a reference in an industrial instrument to the LSL General Order, or a provision of that Order, is, after commencement, to be read as a reference to the Long Service Leave Act 1958, or the corresponding provision of that Act, (whichever is relevant) and the instrument is to be construed so as to give effect to the object of this section.

(3) Subsection (2) applies to references that, after commencement, have ongoing effect.

(4) A provision of the Long Service Leave Act 1958 corresponds to a provision of the LSL General Order if the provisions deal with substantially the same matter.

(5) In this section —

 “commencement” means the coming into operation of the Labour Relations Legislation Amendment Act 2006 Part 7 Division 2.”

47       In my opinion the transitional provisions contained in s65 of the Labour Relations Legislation Amendment Act do not effect the entitlement of the respondent.  This is because her entitlement to long service leave did not arise under an industrial instrument, as defined in the Labour Relations Legislation Amendment Act.

48       In my opinion s37 of the Interpretation Act 1984 (WA) has application.  Section 37(1) of the Interpretation Act is in the following terms:-

“37. General savings on repeal

(1) Where a written law repeals an enactment, the repeal does not, unless the contrary intention appears — 

(a) revive anything not in force or existing at the time at which the repeal takes effect;

(b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment;

(c) affect any right, interest, title, power or privilege created, acquired, accrued, established or exercisable or any status or capacity existing prior to the repeal;

(d) affect any duty, obligation, liability, or burden of proof imposed, created, or incurred prior to the repeal;

(e) subject to section 11 of The Criminal Code and section 10 of the Sentencing Act 1995, affect any penalty or forfeiture incurred or liable to be incurred in respect of an offence committed against that enactment;

(f) affect any investigation, legal proceeding or remedy in respect of any such right, interest, title, power, privilege, status, capacity, duty, obligation, liability, burden of proof, penalty or forfeiture,

and any such investigation, legal proceeding or remedy may be instituted, continued, or enforced, and any such penalty or forfeiture may be imposed and enforced as if the repealing written law had not been passed or made.”

49       The Labour Relations Legislation Amendment Act is a written law as defined in s5 of the Interpretation Act.  In my opinion s37(1)(b), (c), (d) and (f) of the Interpretation Act apply in the present appeal.  The result is that the repeal of s8A of the Long Service Leave Act has not affected the right of the respondent or the corresponding obligation of the appellant with respect to the payment by the appellant to the respondent of an amount in lieu of long service leave. 

50       The entitlement to receive and obligation to pay this amount arose on the termination of the respondent’s employment in December 2004.  For the reasons set out above, s8A had an impact upon the calculation of the amount of payment.  In terms of s37(1)(b) of the Interpretation Act, this was a “previous operation” of the now repealed s8A of the Long Service Leave Act which is not affected by the repeal.  The requirement for payment by the appellant to the respondent under the Long Service Leave Act, as at December 2004, was a right existing and obligation incurred prior to the repeal of s8A of the Long Service Leave Act.  As stated in s37(1)(c) and (d) of the Interpretation Act therefore the right and obligation was not effected by the repeal of s8A of the Long Service Leave Act.  Furthermore, s37(1)(f) of the Interpretation Act provides that the repeal of s8A does not effect any legal proceedings in respect of any of the rights and obligations referred to in the earlier subparagraphs of s37(1).  The appeal against the decision of the Industrial Magistrate’s Court satisfies, in my opinion the character of being a legal proceeding in respect of any such right or obligation.  The appeal is not therefore affected by the repeal of s8A of the Long Service Leave Act.

The Orders to be Made

51       It remains to be considered what orders should be made by the Full Bench.  The parties were not in a position to make submissions on this issue at the hearing of the appeal.  Accordingly, at the conclusion of the hearing, orders were made for the filing of submissions on the orders the Full Bench should make in the event that the appeal was upheld.  The respondent filed written submissions on 1 November 2006 and the appellant did so, in reply, on 15 November 2006.

52       The duty of the Full Bench is to now assess the amount which the Industrial Magistrate ought to have ordered the appellant to pay to the respondent in satisfaction of her entitlement to long service leave.  The parties did not agree upon the way in which this amount should be assessed.  The first point of disagreement was as to the proportionate amount of leave which should be used to calculate the entitlement in accordance with s8(3) of the Long Service Leave Act.  This subsection has been set out earlier.  The Industrial Magistrate assessed the amount of leave to be 8.67 weeks.  As set out on pages 9 and 10 of his Honour’s reasons, this figure was arrived at by dividing 10 years by 15 years and multiplying this by 13 weeks.  The Industrial Magistrate therefore took into account the figure of 10 years as being the duration of “continuous employment” for the purpose of the calculation.  Near the commencement of his Honour’s reasons however it was recorded that the respondent commenced working for the appellant on 9 June 1994 and remained so employed until 31 December 2004.  His Honour then said that as at termination the respondent had “completed 10 years of continuous service”.  This was as stated, the figure used by the Industrial Magistrate for the purpose of making the calculation under s8(3) of the Long Service Leave Act. 

53       In her written submissions, the respondent challenges the correctness of the 8.67 weeks multiplier.  Instead, the respondent says that the period of continuous employment was “approximately 10 years and 7 months (127) months”.  Accordingly it is said that the entitlement is to a payment for 9.17 weeks, using the formula set out in s8(3) of the Long Service Leave Act.  The appellant in its written submissions, rejects this approach.  It is submitted that the Industrial Magistrate made a finding the respondent was entitled to 8.67 weeks pro-rata long service leave and that this finding was not raised as an issue in the appeal by either party.  It is submitted the respondent is therefore entitled to 8.67 weeks long service leave.  The appellant’s submissions did not challenge the correctness of the assertion in the respondent’s submissions, or the reasons of the Industrial Magistrate, that the respondent was employed by the appellant from 9 June 1994 to 31 December 2004. 

54       In support of its submission, the appellant states that the issue in the appeal was whether in calculating the respondent’s entitlement to long service leave, clause 4(5) of the LSL General Order applied.  Whilst this is so, the Full Bench, having accepted the appellant’s argument on this issue, is now in the position of determining the amount which the Industrial Magistrate ought to have found the respondent was entitled to, if his Honour had made the calculation in accordance with clause 4(5) of the LSL General Order.  In carrying out this assessment for itself, in my opinion the Full Bench is not bound to take into account the figures used by the Industrial Magistrate.  In particular, in my opinion, the Full Bench should not make the assessment on the basis of the figures used by the Industrial Magistrate if it can be shown that his Honour was in error in using the figures which he did. 

55       On the issue of the multiplier, the Industrial Magistrate seems to have clearly erred in taking into account that the respondent had only 10 years of continuous employment, when the period of her continuous employment was longer than 10 years.  Although having 10 years continuous employment qualified the respondent for the entitlement contained in s8(3) of the Long Service Leave Act, it was the actual period of continuous employment which ought to have been used by the Industrial Magistrate in making the assessment of the entitlement of the respondent under s8(3) of the Long Service Leave Act.  The respondent gave evidence that the period of her employment with the appellant was 9 June 1994 to 31 December 2004.  (T2).  These dates were not disputed in her cross-examination or in the evidence of Mr Hollow, the principal of the appellant who was their only witness.  The Industrial Magistrate correctly found that this was the period of her employment.  Accordingly, the period of the respondent’s continuous employment was not 10 years but 10 years plus the period between 9 June 2004 and 31 December 2004.  This was a period of 6 completed months plus 21 days of June.  As June is a month of 30 days duration, 21 days comprises 0.7 of the month.  Therefore the amount of continuous employment of the respondent was 10 years, plus 6 months, plus 0.7 of the month.  Converted to months, this totals 126.7 months. 

56       The respondent’s leave entitlement, using the formula set out in s8(3) of the Long Service Leave Act is therefore:-

126.7 (months of employment) ÷ by 180 (months in 15 years) x 13 (weeks of long service leave) = 9.15 weeks

57       Accordingly this is the amount of weeks leave which the Industrial Magistrate ought to have used for the purposes of calculating the payment to the respondent. 

58       The next step is to determine the respondent’s “rate of pay for each week over the previous three monthly period”, prior to the termination of employment, as required by clause 4(5) of the LSL General Order.  The parties again did not agree over the way in which this should be determined.  In part this was because of the way in which the respondent was remunerated.  By far the greater proportion of her income was earned by way of commission upon sales of residential property.  The commission was paid upon settlement.  There was therefore a time lag between the respondent doing the work which led to an offer and acceptance being completed and the settlement of the property leading to the payment of the respondent’s commission.  The task for the Full Bench is to consider the evidence and decide what the respondent’s “rate of pay for each week” was over the relevant 3 monthly period.

59       The respondent submits that her “earnings” could be calculated in two alternative ways:-

(a) On a cash accrual basis, that is, on the basis of payments she received or was entitled to receive in or after the period 1 October to 31 December 2004.  The respondent says this is the basis upon which the Industrial Magistrate made the calculation.

(b) On a deals signed basis, looking at the commission payable on deals signed in the period 1 October to 31 December 2004 plus bonuses and other payments that became payable in that period.

60       The appellant’s primary position is that the correct calculation is that of pay actually received within the 3 month period.  The appellant’s secondary position is that the calculation should be based on pay actually received within the 3 month period plus any pay the respondent was entitled to be paid within the 3 month period.  The appellant’s third position, if the Full Bench did not accept their primary or secondary position, is that the calculation should be based on deals signed during the 3 month period. 

61       In considering these alternatives, the primary consideration must be the words used in clause 4(5) of the LSL General Order.  This refers to a “rate of pay for each week over the previous 3 monthly period”.  The way in which the respondent was paid does not make it easy to determine a “rate of pay” in terms of clause 4(5).  In my opinion however the focus of clause 4(5) is upon the work which was done during the 3 month period and the entitlement to pay for that work.  I do not think that the focus is simply upon the amount which the worker was actually paid during the 3 monthly period.  This is because this would, wrongly in my opinion, take out of consideration any amount which the worker was entitled to but was, for one reason or another, not paid for their work during the 3 monthly period.  In my opinion, it is the amount which the worker has earned or become entitled to be paid because of their work within the 3 month period which best fits the expression “rate of pay” in clause 4(5) of the LSL General Order.  In this case, that means the amounts which the respondent became entitled to be paid because of her work during the 3 month period.  That is the commissions and other amounts which were entitled to be paid because of agreements reached or other work done by the respondent during the 3 month period. 

62       This does not involve acceptance of either of the two methods of calculation submitted by the respondent.  With respect to the cash accrual basis, the respondent submitted that this should include payments received or entitled to receive during the 3 month period.  However, payments received during this period may reflect work done by the respondent during the period prior to the commencement of the 3 month period and therefore should not be taken into account.  With respect to the respondent’s suggested deals signed basis, this also took into account payments that became payable in the period 1 October to 31 December 2004 and therefore could include amounts received during that period which related to work done prior to the commencement of the 3 month period.  In my opinion the appellant’s third alternative is the preferred method of calculation, which is that it should be based upon deals signed during the 3 month period as well as any other payments earned by the respondent for work done during that period. 

63       I recognise the submission of the appellant to the effect that it is only when settlement occurs that the payment entitlement of the respondent, as a real estate agent paid by commission, crystallizes.  In the ordinary course of events, however, the payment which is then made reflects work done by the agent leading up to the signing of the offer and acceptance.  (This was referred to as a “deal” at places in the written submissions.  I will therefore also use this word at times below).  The later payment is therefore largely for work done during an earlier period.  The date the deal is signed is therefore in my opinion the appropriate date to take into account as the date the money was earned, relevant to an understanding of a “rate of pay” for the purposes of clause 4(5) of the LSL General Order.  If settlement does not occur, after a deal has been signed, then there is obviously no amount earned for that deal for the purpose of establishing a “rate of pay”.  This does not mean however that it is not the date the deal is signed which is material to determining when the money is earned for the purpose of establishing the rate of pay.

64       The parties agree that the commissions earned by the respondent for “deals signed” on residential properties for 1 October to 31 December 2004 was $43,066.00.  They are also agreed that in this period the respondent earned a letting fee of $187.20 and also that rental management/commission fees of $1,880.26 should be included.  The respondent was, in June 2005, credited with $8,727.85 as a performance bonus for January to December 2004.  The respondent asserts this amount should be taken into account in full, as it was payable in December 2004.  The appellant argues that only a quarter of this amount (being $2,181.96) as representing 3 months of the yearly entitlement should be taken into account.  I agree that this is the preferable approach, as it is more likely to represent the amount earned by the respondent as a performance bonus in the relevant 3 month period.  The total of these four amounts is $47,315.42.

65       The appellant submits that from these amounts should be deducted the respondent’s expenses for the 3 month period.  Some reference to these expenses was made in paragraph [4] above.  As stated by the Industrial Magistrate in his reasons, these expenses included those for advertising, photocopying, printing, sign writing and telephone.  The appellant submits that taking into account the expenses which were deducted from the respondent’s ledger are essential to the calculation of her true earnings.  I accept this submission.  (The appellant does not include for present purposes and in my opinion properly, superannuation paid by the appellant, as an expenses debited against the respondent).  The expenses debited to the respondent for 1 October to 31 December 2004 total $5,196.11.  (Appeal Book pages 29-30).

66       The amount earned in the relevant 3 monthly period is therefore:-

$47,315.42 - $5,196.11 = $42,119.31

67       The weekly rate of pay over this 3 month period is calculated by dividing $42,119.31 by the number of weeks in the period.  The 3 months from 1 October 2004 to 31 December 2004 comprises 92 days.  This equals 13.14 weeks.  The weekly rate of pay is therefore:-

$42,119.31 ÷ 13.14 = $3,205.43

68       The amount which the appellant was obliged to pay the respondent was therefore:-

$3,205.43 (average weekly rate of pay) x 9.15 (proportional entitlement of weeks of leave)

= $29,329.68

69       The parties are agreed that the appellant has already made a payment of $11,325.60 to the respondent, in partial satisfaction of the orders made by the Industrial Magistrate’s Court.  Therefore this must be taken into account in setting the amount the appellant is now ordered to pay.  This amount is therefore:-

$29,329.68 - $11,325.60 = $18,004.08

70       The respondent sought an order that the amount be ordered to be paid within 14 days.  The appellant made no submissions against this time period.  It is the time within which the Industrial Magistrate’s Court ordered payment to be paid.  In my opinion the time period is reasonable.

71       Accordingly, in my opinion, the following orders should be made by the Full Bench and a minute of proposed order should issue in these terms:-

1. The appeal is upheld.

2. The order made by the Industrial Magistrate’s Court is set aside.

3. The appellant shall pay to the respondent $18,004.08 within 14 days of the day of publication of this order.

COMMISSIONER S J KENNER:

72       This is an appeal pursuant to s84 of the Industrial Relations Act 1979 (“the Act”) from a decision of an Industrial Magistrate of 14 June 2006 which determined a dispute between the appellant and the respondent concerning the respondent’s entitlement to long service leave under the Long Service Leave Act 1958 (“the LSL Act”).  There was no controversy on the factual matters before the learned Industrial Magistrate with the issue for determination being how the respondent’s long service leave entitlement was to be calculated.

Background

73       At all material times the respondent was an employed real estate agent engaged by the appellant between June 1994 and December 2004.  As at the date of the termination of the respondent’s employment on 31 December 2004, the respondent had a pro-rata entitlement to long service leave having served at least 10 years continuous employment.  The appellant at first instance argued that the respondent’s entitlement to long service leave should be calculated at the rate as determined by clause 4(5) of the General Order as to long service leave made by the Commission in Court Session as at December 1977 (“the General Order”) which provided that in the case of an employee such as the respondent, the rate of pay for long service leave purposes is to be calculated on the basis of an average rate over a three month period from when it fell due.  The appellant contended that this was so by reason of the operation of s8A of the LSL Act which in effect, sought to place employees under the LSL Act on the same footing as award employees under the Act as far as long service leave entitlements were concerned.   Section 8A of the LSL Act has been repealed since the decision at first instance was handed down.   The effect of that repeal I deal with later in these reasons.

74       On the other hand, the respondent argued at first instance that s8A of the LSL Act had no application to the present circumstances as “entitlement” to long service leave, only refers to the quantum of weeks of leave, and not the payment for it.  Accordingly, the respondent submitted that the calculation of the respondent’s entitlement to long service leave, was governed by ss4(1) and 4(2) of the LSL Act which in the respondent’s case, was to be based on an average weekly rate over a period of 12 months immediately prior to the entitlement arising.  In the instant case, the latter method of calculation conferred a considerably greater monetary benefit on the respondent.

Decision at First Instance

75       The learned Industrial Magistrate considered the contentions of the parties and whilst concluding at AB 18 that the purpose of s8A of the LSL Act was to maintain consistency between award and non award employees insofar as long service leave is concerned, came to the conclusion that “entitlement” was to be read only as referring to the weeks of long service leave and not inclusive of the method of payment.  Accordingly, the learned Industrial Magistrate found favour with the respondent’s submissions at first instance and held that s8A of the LSL Act had no application to the present circumstances.  The respondent’s pro-rata entitlement to long service leave on termination of her employment was to be calculated in accordance with ss4(1) and 4(2) of the LSL Act.

The Appeal

76       Counsel for the appellant says that the learned Industrial Magistrate was in error when he applied ss4(1) and 4(2) of the LSL Act in calculating the respondent’s pro-rata long service leave entitlement.  In essence, Mr Momber contended that the approach adopted by the learned Industrial Magistrate involved an overly narrow interpretation of “entitlement” for the purposes of the LSL Act, and he should have concluded that “entitlement” includes both the actual weeks of long service leave and the payment to be made calculated in accordance with the appropriate formula.  The appropriate formula in this case according to the appellant’s submissions, was that prescribed by clause 4(5) of the General Order.  This would mean that instead of the amount of $37,598.62 being awarded to the respondent, the amount that should have been awarded was some $11,325.60.  Indeed, it was this sum that was paid to the respondent by the appellant and which was the subject of consideration by the Full Bench, in its earlier reasons for decision in relation to the respondent’s application that the order of the court at first instance not be stayed pending the hearing and determination of the appeal: Nekros Pty Ltd v Roanne Baker (2006) 86 WAIG 2957. 

77       Counsel for the respondent contended that the learned Industrial Magistrate was correct in his decision to determine the quantum of the respondent’s entitlement to pro-rata long service leave using the formula set out in ss4(1) and 4(2) of the LSL Act and not clause 4(5) of the General Order.  Mr Kemp submitted that in part in reliance upon Parliamentary materials leading to the enactment of s8A of the LSL Act, that s8A was only aimed at maintaining consistency between award and non award employees with respect to the entitlement in weeks of leave that accrue to employees under the LSL Act.  This, according to counsel, was the construction to be preferred when having regard to the source of the entitlement in s8 of the LSL Act.

Consideration

78       In my opinion, for the following reasons, the appellant’s submissions are to be preferred and accordingly I would uphold the appeal. 

79       I first turn to the relevant provisions of the LSL Act and the General Order. 

The Relevant Provisions

80       The LSL Act was enacted in 1958.  This legislation was enacted to extend long service leave entitlements to employees throughout the State of Western Australia, except those who were entitled to long service leave benefits at least equal to those under the LSL Act, and whose employment was covered by various industrial instruments under the Act.  Part III of the LSL Act is headed “Entitlements To Long Service Leave Or To Payment In Lieu Thereof”.  Sections 8(1) and 8(3), relevant for the purposes this appeal, were at the material time as follows:-

“(1) An employee is entitled in accordance with, and subject to, the provisions of this Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer...

(3) Subject to subsection (5), where an employee has completed at least 10 years of such continuous employment since the commencement thereof, but less than 15 years, and the employment is terminated — 

(a) by his death; or

(b) for any reason other than serious misconduct,

the amount of leave to which the employee is entitled shall be a proportionate amount on the basis of 13 weeks for 15 years of such continuous employment.”

81       The definition of “ordinary pay” at the material time appears in s4(2) as follows:-

“(2) For the purpose of the interpretation of “ordinary pay” in subsection (1) — 

(a) where the employee is employed on piece or bonus work or any other system of payment by results, he shall be paid during any period when he is on long service leave at the ordinary rate of pay which would be applicable to him if he was employed in the industry appropriate to his calling on a time basis and not on piece or bonus work or other system of payment by results;

(b) where no ordinary time rate of pay is fixed under the provisions of paragraph (a) the ordinary time rate of pay shall be deemed to be the average weekly rate earned by him while in employment during the period of 12 months —

(i) ending on the day immediately preceding that on which he commences long service leave or would but for payment in lieu of long service leave have commenced long service leave, if he is then in employment; or

(ii) ending on the day immediately preceding that on which he was last in employment, if he is not then in employment; or

(iii) ending on the day immediately preceding that of his death,

as the case requires; and

(c) where the normal weekly number of hours have varied over the period of employment of an employee the normal weekly number of hours of work shall, subject to paragraph (a), be deemed to be the average weekly number of hours worked by the employee during that period of employment (calculated by reference to such hours as are ascertainable if the hours actually worked over that period are not known); and

(d) the cash value of any board and lodging provided for an employee shall be deemed to be its cash value as fixed by or under the conditions of the employee’s employment, or, if it is not so fixed, shall be computed at the prescribed rate; and

(e) where by agreement between the employer and the employee the commencement of the leave to which the employee is entitled or any portion thereof is postponed to meet the convenience of the employee, the rate of payment for such leave shall be at the ordinary time rate of pay applicable to him at the date of accrual or, if so agreed, at the ordinary time rate of pay applicable at the date he commences such leave.”

82       The General Order was made by the Commission in Court Session in 1964: (1964) 52 WAIG 16.  At the time it was made, there was no provision for the calculation of long service leave benefits for those paid on a piece work basis or the like.

83       Section 8A was inserted into the LSL Act in 1973 and at the material time for present purposes it provided as follows:-

“8A. Variation of qualifications and entitlement to long service leave

Notwithstanding any other provision in this Act in the event of a determination of the Commission in Court Session varying from time to time any of the provisions for qualifications or entitlement to long service leave as contained in volume 52 of the Western Australian Industrial Gazette at pages 16 to 21, both inclusive, for the majority of awards which those provisions have been incorporated in and form part of, the qualifications and entitlement of employees to long service leave shall forthwith thereafter be varied accordingly.”

84       In 1977 the General Order was varied to include a new clause 4(5): (1977) 58 WAIG 1.  At the relevant time clause 4(5) provided as follows:-

“4(5) In the case of workers employed on piece or bonus work or any other system of payment by results the rate of pay shall be calculated by averaging the worker’s rate of pay for each week over the previous three monthly period.”

85       The crux of the appeal turns upon the proper construction of the relevant provisions of the LSL Act and in particular, the meaning of “entitlement” for the purposes of the then now repealed s8A. 

86       From its terms, and from the Parliamentary materials in connection with its enactment, the learned Industrial Magistrate was with respect, correct to conclude as he did, that the apparent intention of s8A was to enable variations to long service leave standards applicable to award covered employees under the Act to be effective for employees under and subject to the LSL Act, without the need for an amendment to the latter.  Such a provision no doubt at the time made logical sense as the Commission in Court Session had jurisdiction to review long service leave entitlements for employees under the General Order, which extended to all employees throughout the State who fell under the Act.

87       In the interpretation of the LSL Act the usual principles apply.  The terms of s8A must be interpreted in accordance with the ordinary and natural meaning of the language used, consistent with the overall purpose of the legislation.  Additionally, in the interpretation of legislation, the first step is always to examine the language of the statute under consideration before considering any secondary material:  Attorney-General v Queensland (2002) 213 CLR 485.

88       The relevant provisions of the LSL Act, set out above, appear in Part III which is also noted, headed “Entitlements To Long Service Leave Or To Payment In Lieu Thereof”.  In the interpretation of a statute, Parts, Divisions and headings are a part of legislation and regard may be had to them in considering the meaning of the text.  This is subject to the general proviso that headings may be disregarded if they conflict with an otherwise clear and unambiguous provision in the statute concerned:  Silk Bros Pty Ltd v State Electricity Commission (Inc) (1943) 67 CLR 1:  Bennett v Minister for Public Works (NSW) (1908) 7 CLR 372:  Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 92 ALR 193.  Significantly, the heading to Part III, in terms of entitlements, refers to both long service leave and payment in lieu of it. 

89       What then is the “entitlement”?  Firstly, one looks at s8(1) of the LSL Act.  This provides, as set out above, that “an employee is entitled …, to long service leave on ordinary pay in respect of continuous employment with one and the same employer,…”  The remaining provisions s8 then sets out the qualifications for that entitlement, which are based on years of continuous employment as defined with a pro-rata entitlement, again subject to a minimum period of continuous service and subject to other conditions.  In my opinion, s8(1) is to be construed as a whole with reference to “long service leave” and “ordinary pay” being seen as a composite provision.  When read in this way, the reference to “ordinary pay” is an integral part of the entitlement to long service leave in the sense that the entitlement is a composite entitlement to both a period of leave and payment for it in respect of long service with one and the same employer. 

90       Counsel for both the appellant and respondent referred the Full Bench to various dictionary meanings of “entitlement”.  For example, the CCH Macquarie Dictionary of Employment and Industrial Relations, upon which the learned Industrial Magistrate relied at AB 20, defines it to mean:-

“entitlement that which a person has a right to, e.g. that which is specifically provided for in industrial awards and contracts of employment as the rights of employees.  The term is used especially for the additional payment received when leaving employment, consisting of a pro rata amount for accrued annual leave, long service leave where applicable, etc.”

91       Furthermore, the New Shorter Oxford Dictionary, 1993, defines the word as:-

“(c) something to which a person is entitled, esp. a state benefit”.

92       In accordance with such meanings, clearly “entitlement” means something which a person has a right to.  Accepting this to be the case, and that “entitlement” in its ordinary and natural meaning connotes a “right”, then by the ordinary and natural meaning of the language in s8(1) of the LSL Act, an employee’s right to long service leave, is to both a period of leave and payment for it in respect of long service with the employer.  It seems to me, with due respect, to be somewhat artificial to separate the act of payment from the taking of leave.  If one was to ask a reasonable bystander what they would understand to be their right in relation to long service leave, I have no doubt that the answer would be a period of paid leave in respect of long service with an employer.  

93       Adopting this construction, in my opinion, the rate of pay as “ordinary pay”, is an integral part of the right or entitlement to the long service leave conferred by the LSL Act.  This right to payment as well as the period of leave, as a matter of interpretation, is supported by the inclusion in Part III of the LSL Act, of an entitlement to payment in lieu of long service leave.  That is, an employee has a right or “entitlement”, after having served at least 10 years continuous service with an employer, on termination of employment, on grounds other than serious misconduct, to payment for the period of long service leave which had been accrued to that time.  Whilst the language of s8(3) does not actually refer to payment in lieu thereof, but rather “the amount of leave”, it is plain to sensibly interpret that provision to mean payment of a money sum in respect of the leave that otherwise could be taken for that period of service.

94       Furthermore, on its ordinary language, s8A refers to “any of the provisions for qualifications or entitlement to long service leave …”.  If, as contended by the respondent, “entitlement” only refers to weeks of leave, then Parliament could clearly have said this if that was the extent of the limitation.  The use of the word “any” when read with the meaning of “entitlement” that should be preferred in my opinion, clearly comprehends the method of calculating the payment for the period of long service leave to be taken.

95       Therefore in my view, the construction of “entitlement” to be preferred for the purposes of the LSL Act and for that matter the General Order, is that an “entitlement” to long service leave includes both the period of leave itself and the payment for that leave at ordinary rates of pay.  Given that at the material time of the termination of the respondent’s employment, both s8A and clause 4(5) of the General Order were in force, then the monetary payment to long service leave, or the rate of “ordinary pay” is the rate of pay calculated in accordance with the General Order, which in this case is by averaging the respondent’s rate of pay for each week over the three month period prior to the termination of her employment.  This interpretation involves no absurdity or repugnancy with the statute as a whole. 

96       In my opinion, this interpretation of the relevant provisions of the LSL Act is entirely consistent with the general apparent purpose of s8A to achieve uniformity and consistency between the LSL Act and the General Order as to the qualifications for and entitlements to the taking of long service leave.  Whilst the learned Industrial Magistrate recognised this, in my opinion, with respect, he erred in not applying that principle consistent with the broader meaning of “entitlement” in this case.

Effect of Repeal

97       Since the matter of the respondent’s entitlement to long service leave was heard by the learned Industrial Magistrate, by the terms of the Labour Relations Legislation Amendment Act 2006 in particular ss57 and 64, s8A of the LSL Act and the General Order have been repealed effective from 4 July 2006.  Thereafter, by the transitional provisions in s65 of that amending legislation, all rights, entitlements or obligations arising under an industrial instrument referable to the former General Order, are taken to arise under the LSL Act from the coming into operation of the amendments.  Given that it seemed common ground that the respondent’s employment was not governed by an industrial instrument, then those transitional provisions have no application in the present case.

98       However, as at the time of the crystallisation of the respondent’s entitlement to payment in lieu of long service leave, which was the termination of her employment in December 2004, s8A was in force and effect and in my opinion conferred a right as at that time, as to the calculation of the payment for the period of long service leave due to the respondent.  As such, the general savings on repeal in s37 of the Interpretation Act 1984, in particular s37(1)(c) would have application.  This provision provides that the repeal of s8A does not, subject to any contrary intention, “affect any right, interest, title, power or privilege created, acquired, accrued, established or exercisable or any status or capacity existing prior to the repeal.”  No contrary intention is apparent.  In any event and furthermore, it must be assumed that in the absence of any clear statement to the contrary, the repeal of s8A does not have retrospective operation to apply to facts or events that have already taken place and which would impact on the rights or interests prescribed by s8A of the LSL Act when it was in operation: Maxwell v Murphy (1957) 96 CLR 261.  On either basis, it is open to the Full Bench to make an order that could have been made at first instance by applying clause 4(5) of the General Order to the respondent’s accrual and payment out of long service leave. 

Orders to be Made

99       The respondent was directed to file and serve further submissions as to the quantification of the respondent’s entitlement to long service leave, in the event the Full Bench upheld the appeal.  The appellant also filed written submissions in reply.

100    The appellant and respondent set out various bases for their contentions as to the appropriate orders that should be made in the event that the Full Bench upheld the appeal.  One difficulty that arises in this matter is determining how the terms of clause 4(5) of the General Order should apply.  As set out above, in the case of a person employed on piece work, by bonus or other system of payment by results, the General Order provides a method of calculation “by averaging the worker’s rate of pay for each week over the previous three monthly period”.  The difficulty which is immediately apparent from the language of this provision is that in the case of a piece worker for example, calculating an average “rate of pay for each week” is nonsensical.  This is because a piece worker is not paid a weekly rate but is paid generally by unit of production. 

101    This difficulty seems to have been foreseen under the terms of the LSL Act as it was, where in s 4(2) set out above, a formula is provided based on an ordinary time equivalent rate of pay if an employee was employed on piece or bonus work or other system of payment by results.  In the further alternative to that, a rate of pay based on “the average weekly rate earned by him while in employment during the period of 12 months…” is prescribed.  No such mechanism was inserted into clause 4(5) of the General Order.

102    In my opinion, to overcome this difficulty, “rate of pay” for the purposes of clause 4(5) should be interpreted in a similar fashion to s4(2) of the LSL Act with the calculation being based on an average of the weekly rate earned by the respondent over the three month period prior to the termination of her employment.  This method of calculation is also more consistent with the method of remuneration of a commission only real estate sales person who “earns” their commission payments by concluding transactions between vendors and purchasers by way of “deals”, as they were described in the written submissions.  Whilst it is often the case that the commission’s so earned are not usually paid until the transaction settles, which can be some time after the conclusion of the “deal”, in my opinion, it is the effort expended by the agent in leading up to and concluding a signed contract of sale which is the basis for the earnings to be received.  Thus the focus should be on earned commissions rather than commission payments actually received.

103    Therefore, on this basis, and accepting that not all “deals” entered into in the three month period 1 October to 31 December 2004 would necessarily settle during that same time period, it is all of the “deals” concluded during that period which should be brought to account for the purposes of the respondent’s entitlement to pro-rata long service leave.  For that reason the appellant’s third option “Alternative C” which is a calculation based on “deals” written in the period 1 October to 31 December 2004 that should be utilised.  In the calculation of the respondent’s earnings expenses should also be brought to account as pointed out in the appellant’s written submissions.

104    I also agree that the calculation of the weeks of entitlement should be 9.15 weeks and not 8.67 weeks as determined by the learned Industrial Magistrate.

105    I agree with the orders as proposed.

COMMISSIONER J L HARRISON:

106    I have had the benefit of reading the reasons for decision of His Honour, the Acting President.  I agree with those reasons and have nothing to add.