WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2011 WAIRC 00263

DELIVERED : Monday, 4 April 2011

FILE NO. : FBA 13 OF 2010, FBA 14 OF 2010

Appellant

AND

John Martin Wall;

Trevor James Ward

Respondents

ON APPEAL FROM:

Jurisdiction : Industrial Magistrate's Court

Coram : Industrial Magistrate G Cicchini

Citation : [2009] WAIRC 01357; (2009) 90 WAIG 42

File Nos : M 32 of 2008 and M 33 of 2008

CatchWords : Industrial law (WA) - Appeal against decision of Industrial Magistrate's Court - Application pursuant to s 83 of the Industrial Relations Act 1979 (WA) for enforcement of the Public Service Award 1992 and the Public Service General Agreements 2002, 2004, 2006 and 2008 - Claim for 2.5 hours overtime for each week worked from 2002 until 2008 - Except for the 'core' condition of 37.5 hours per week the provisions of the Department of Agriculture Agency Specific Agreements 2003, 2005 and 2007 ousted the provisions of the General Agreements in respect of hours of work - Industrial Relations Act 1979 (WA), s 29(1)(b)(ii), s 41, s 41(8), s 41(9), pt IIA div 2, s 80E, s 83, s 83A(2), s 84, s 114, s 114(1), s 114(2);  Workplace Agreements Act 1993 (WA) s 3, pt 1A, s 4B, s 4C, s 4H, s 4H(2), s 4H(3), s 4H(5), s 4H(6), s 4H(6)(a), s 4H(7), s 4H(8), pt 2 div 4;  Public Sector Management Act 1994 (WA) pt 3;  Labour Relations Reform Act 2002 (WA) s 31, s 98, s 99, s 100 of pt 3 div 3.

Result : Appeals allowed

Representation:

Appellant : Mr D J Matthews (of counsel)

Respondent : Mr R L Hooker (of counsel)

Case(s) referred to in reasons:

Amcor Ltd v CFMEU [2005] HCA 10; (2005) 222 CLR 241; (2005) 79 ALJR 703; (2005) 138 IR 286; (2005) 214 ALR 56

Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

BHP Billiton Iron Ore Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers (Western Australian Branch) [2006] WASCA 124

City of Wanneroo v Holmes (1989) 30 IR 362

Chief Executive Officer, Department of Agriculture and Food v Ward and Wall [No 1] (2008) 88 WAIG 156

Kucks v CSR Ltd (1996) 66 IR 182

Liquor, Hospitality and Miscellaneous Union, WA Branch v Minister for Health [2011] WAIRC 00192; (2011) 91 WAIG 291

Palermo v Rosenthal [2011] WAIRC 00069; (2011) 91 WAIG 129

Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355

Public Service Commissioner v Dixon (1995) 75 WAIG 1822

Re M [1921] 2 K.B.

Victoria v Sutton (1998) 195 CLR 291

Case(s) also cited:

Wall and Ward v Chief Executive Officer, Department of Agriculture and Food (2007) 87 WAIG 2853; (2007) 87 WAIG 2872

Reasons for Decision

SMITH AP AND BEECH CC:

The Appeal

1          These are appeals instituted under s 84 of the Industrial Relations Act 1979 (WA) (the Act).  The appeals are against decisions of the Industrial Magistrate's Court given on 30 June 2010 in matters M 32 of 2008 and M 33 of 2008.  The matters were applications made under s 83 of the Act for the enforcement of the Public Service Award 1992 (the Award) and the Public Service General Agreement 2006 (the 2006 General Agreement) and related instruments.  In each matter the respondents allege the appellant had failed to comply with the Award and the 2006 General Agreement by failing to pay salary for 2.5 hours of work worked each week from 1 January 2003 until 20 August 2009 pursuant to cl 11(3)(d), cl 20(1) and cl 22(3) of the Award and cl 11, cl 13.15 and Schedule 1 of the General Agreements and related provisions.  Each respondent contended that they should have been paid for time worked as at overtime rates.  Both applications were heard together and were opposed by the appellant. 

2          The dispute between the parties is long standing and significant as there are approximately 80 other public sector employees in a similar position.  The issues in dispute between the parties first came before Smith SC in 2007 in her capacity as Senior Commissioner in applications made to the Public Service Arbitrator under s 80E of the Act and applications made to the Commission under s 29(1)(b)(ii) of the Act.  In the applications before the Commission made in 2007, the respondents' position was that since 31 December 2002 they had been and continued to be entitled to be paid for the average of 40 hours per week worked, in accordance with workplace agreements made under the Workplace Agreements Act 1993 (WA), at the ordinary rate of pay under the Award and relevant industrial agreements.  The respondents were successful at first instance but the orders made by the Commission in those matters were quashed by the Full Bench in Chief Executive Officer, Department of Agriculture and Food v Ward and Wall (2008) 88 WAIG 156 (Ward and Wall No 1).  The respondents initially sought to appeal the decision of the Full Bench to the Industrial Appeal Court but later discontinued the appeals. 

3          Both respondents have been employed by the appellant for a considerable length of time.  John Martin Wall is employed as a Level 2 Administration officer and has worked for the appellant at Merredin for 11 years.  Mr Trevor James Ward is a Level 3 Financial officer.  He has worked for the appellant in Perth since 2000.  Both are public service officers appointed and subject to pt 3 of the Public Sector Management Act 1994 (WA) (the PSMA).  They are also government officers for the purposes of div 2 of pt IIA of the Act.  Until 31 December 2002 both the respondents' employment was governed by workplace agreements made pursuant to the Workplace Agreements Act. 

4          The respondents' employment was also governed by the Award and a number of industrial agreements including the 2006 General Agreement.  On 1 January 2003 the Labour Relations Reform Act 2002 (WA) amended the Workplace Agreements Act so as to cease the legal operation of the workplace agreements and made certain transitional arrangements.  One of the purposes of the Labour Relations Reform Act was to appeal the Workplace Agreements Act and phase out workplace agreements and dismantle the system of their registration.  Among other legislative amendments the Labour Relations Reform Act amended the Workplace Agreements Act by enacting transitional arrangements for existing workplace agreements.  Pursuant to the amendments the terms of the respondents' workplace agreements became statutory contracts of employment. 

5          The ongoing dispute between the parties arises because the provisions of the Award and the General Agreements provided the payment for an average of 37.5 hours per week at an ordinary rate of pay.  Under the provisions of each workplace agreement which became a statutory contract of employment the respondents had an arrangement to work an average of 40 hours per week.  Since the expiration of the workplace agreements and the creation of the statutory contracts of employment by operation of the amendments to the Workplace Agreements Act by the Labour Relations Reform Act the respondents have continued to work an average of 40 hours per week and have not been paid for all of the average of 40 hours per week worked.  However, from 7 March 2008 in the case of Mr Wall and 4 April 2008 in the case of Mr Ward the respondents have received a commuted overtime payment for the 2.5 hours of work each week.

6          From 1 January 2003 onwards the respondents' employment was governed by the statutory contract of employment, the Award and other industrial instruments.  The industrial instruments which have at different times governed their employment have been apart from the Award, the Public Service General Agreement 2002 (the 2002 General Agreement), the Public Service General Agreement 2004 (the 2004 General Agreement), the 2006 General Agreement, the Department of Agriculture Agency Specific Agreement 2003 (the 2003 Agency Specific Agreement), the Department of Agriculture Agency Specific Agreement 2005 (the 2005 Agency Specific Agreement), the Department of Agriculture and Food Agency Specific Agreement 2007 (the 2007 Agency Specific Agreement) and the Agriculture System of Hours Arrangements 2004 (the 2004 System of Hours Arrangement). 

7          At the time of the hearing of the applications before the Industrial Magistrate's Court the respondents' employment was governed by the Award, the Public Service General Agreement 2008 (the 2008 General Agreement), the 2007 Agency Specific Agreement and the Agriculture System of Hours Arrangements 2007 (the 2007 System of Hours Arrangement). 

8          At the hearing in the Industrial Magistrate's Court the appellant disputed the respondents' claims and said that the respondents were only entitled to payment of 37.5 hours per week at the ordinary rate of pay under the applicable industrial instruments.  The appellant argued that the applicable industrial instruments prevailed over the statutory contracts of employment because of the transitional provisions of the Workplace Agreements Act enacted by the Labour Relations Reform Act.  In particular, they argued the effect of the amendments were that any contract of work for more than an average of 37.5 hours per week as ordinary time was unlawful and invalid and could not be enforced.  The appellant also contended that the claims for overtime were untenable because the respondents had never considered any part of their working week to be overtime and in any event they were not directed to work overtime, as a direction to work overtime is a precondition for a payment of overtime. 

9          The appellant at first instance, also argued that some of the parts of the claim fell outside the six year limitation period in s 83A(2) of the Act.  There was also a dispute about the quantum claimed by the respondents.  However, no issue in relation to quantum or the limitation period is raised in these appeals.

Legislation

10       Pursuant to s 100 of pt 3 div 3 of the Labour Relations Reform Act the provisions of s 4H and pt 2 div 4 of the Workplace Agreements Act are to be regarded as continuing to have effect after the expiry of the Workplace Agreements Act, as if the Workplace Agreements Act had not expired. 

11       Pursuant to s 4B of the Workplace Agreements Act, new workplace agreements cannot be made on or after the designated day.  The designated day is defined in s 3 of the Workplace Agreements Act as the day on which s 31 of the Labour Relations Reform Act came into operation.  This day was 15 September 2002 (Government Gazette, No 160, 6 September 2002 (4487)). 

12       Under s 4C of the Workplace Agreements Act, the respondents' workplace agreements ceased to have effect at the end of six months beginning with the designated day. 

13       The provision which preserved the respondents' workplace agreements as statutory contracts of employment is s 4H of the Workplace Agreements Act which provides as follows:

(1) This section applies where —

(a) a workplace agreement or an arrangement under repealed section 19(4)(b) ceases to have effect as provided by section 4C, 4D, 4E or 4F; or

(b) an employee ceases to be a party to a collective workplace agreement as provided by section 4G.

(2) The employment of an employee becomes subject to a contract of employment under this section.

(3) If —

(a) the workplace agreement that ceased to have effect was an individual workplace agreement; or

(b) the arrangement under repealed section 19(4)(b) that ceased to have effect followed on the expiry of an individual workplace agreement,

the contract of employment is one containing —

(c) the same provisions as those of the workplace agreement or arrangement that has ceased to have effect, other than the provisions implied by section 18; and

(d) if the employee had an existing contract of employment relating to the workplace agreement or arrangement, the provisions of that contract.

(4) If —

(a) the workplace agreement that ceased to have effect was a collective workplace agreement; or

(b) the arrangement under repealed section 19(4)(b) that ceased to have effect followed on the expiry of a collective workplace agreement,

the contract of employment is an individual contract —

(c) applying to the employee such of the provisions of the collective workplace agreement or arrangement that has ceased to have effect, other than the provisions implied by section 18, as were applicable to the employee; and

(d) containing, in addition, the provisions of the existing contract of employment that the employee had relating to the workplace agreement or arrangement.

(5) A contract of employment referred to in subsection (3) or (4) has effect, and may be varied or terminated, as if it were a contract entered into between the employer and the employee.

(6) Despite subsection (2) the employer and the employee are bound by —

(a) any award that extends to them; or

(b) any employer-employee agreement under Part VID of the Industrial Relations Act 1979 to which they are parties.

(7) Where subsection (6)(a) applies, the award ordinary rate of pay (howsoever described in the award) shall, for the purposes of the award only, be the rate of pay as prescribed in the award and not that prescribed in the contract of employment.

(8) Where subsection (6)(a) applies, nothing in this section or in any other enactment or law requires an employer to pay an employee more than the greater of —

(a) the employee's entitlement arising under the contract of employment; or

(b) the employee's entitlement arising under the relevant award,

whichever is the greater when assessed on a yearly basis.

(9) This section does not apply to —

(a) a workplace agreement that was registered under repealed section 40I; or

(b) an arrangement under repealed section 19(4)(b) that followed on the expiry of such a workplace agreement.

14       An 'award' is defined in s 3 of the Workplace Agreements Act to mean an award under the Act and includes any industrial agreement or order under the Act. 

The Material Provisions of the Award, General Agreements, Agency Specific Agreements and System of Hours Arrangements

(a) The Award

15       Clause 20(1) of the Award prescribes the hours of duty to be observed by officers to be 7 hours 30 minutes per day to be worked between 7:00am and 6:00pm, Monday to Friday.  Clause 22 of the Award contains an overtime clause.  Under cl 22(1)(a), overtime is defined to mean all work performed only at the direction of the employer or a duly authorised officer outside the prescribed hours of duty.  The prescribed hours of duty are defined in cl 22(1)(c), to mean an officer's normal working hours as prescribed by the employer in accordance with cl 20 Hours, of the Award.  Clause 22(3)(a) provides the entitlement to payment for overtime as follows:

(a) An officer who works overtime for a greater period than 30 minutes, shall be entitled to payment in accordance with paragraph (d) of this subclause, or time off in lieu of payment in accordance with paragraph (b) of this subclause, or any combination of payment or time off in lieu.

16       The rate of which overtime is paid as is prescribed by cl 22(3)(d).  Of particular relevance to this matter is that payment for overtime on weekdays is prescribed for the first three hours worked outside the prescribed hours duty on any one weekday at the rate of time and one half, and after the first three hours on any one weekday, at the rate of double time. 

(b) The 2006 General Agreement and the 2005 Agency Specific Agreement

17       To understand the appellant's and respondents' arguments it is necessary to have regard to the relevant industrial instruments.  For the purposes of setting out their arguments, we will refer only to the relevant clauses of the 2006 General Agreement and the 2005 Agency Specific Agreement that applied when the 2006 General Agreement was in force in this part of our reasons.  However, when analysing the relevant industrial instruments in our opinion it becomes necessary to consider all of the General Agreements and Agency Specific Agreements that were operative between 2003 and 2008. 

18       Clause 8.1 of the 2006 General Agreement provides that the 'core' conditions of employment for employees covered by the General Agreement shall be the terms and conditions of the General Agreement with the exception of cl 13 – Hours, provided an average of no more than 37.5 hours per week as work worked as ordinary hours and a number of clauses of the Award.  It is notable that neither cl 20 nor cl 22 of the Award are prescribed as 'core' conditions.  Pursuant to cl 4.1(b) of the 2006 General Agreement, the parties agreed that the purpose of the General Agreement was in conjunction with the Award to provide a core set of employment conditions for employees bound by the General Agreement and under cl 4.1(c) to allow the parties to negotiate Agency Specific Agreements in accordance with cl 9 of the 2006 General Agreement.  As to the relationship between the 2006 General Agreement and the Award and Agency Specific Agreements cl 5.4 of the 2006 General Agreement provided as follows:

5.4 This General Agreement shall be read in conjunction with the Award.  Where the provisions of the Award and this General Agreement are inconsistent, the provisions of this General Agreement shall prevail.

19       Pursuant to cl 9 of the 2006 General Agreement, the role of the Agency Specific Agreements is set out.  Clause 9.1 and cl 9.2 of the 2006 General Agreement provided as follows:

9.1 The primary industrial instruments for regulating pay and conditions for employees shall be the Award and this General Agreement.  An Agency Specific Agreement shall be read in conjunction with the Award and this General Agreement and except where this General Agreement identifies conditions as core, the ASA will prevail over this General Agreement and the Award to the extent of any inconsistencies.

9.2 Core conditions of employment referred to in clause 8 – Core Conditions of this General Agreement cannot be the subject of an Agency Specific Agreement.

20       At the time the 2006 General Agreement came into force, the 2005 Agency Specific Agreement had been in force.  Pursuant to cl 5.5 of the 2006 General Agreement, the 2005 Agency Specific Agreement was continued on in force. 

21       Clause 20 of the Award is not listed as a 'core' condition in cl 8 of the 2006 General Agreement.  Relevantly cl 13 of the 2006 General Agreement was also not a 'core' condition.  Clause 13.1 of the 2006 General Agreement provided the provisions of this clause replaced the provisions of cl 20 – Hours of the Award.  Pursuant to cl 13.2 of the 2006 General Agreement the prescribed hours of duty were 150 hours per four week settlement period, to be worked between 7:00am and 6:00pm Monday to Friday as determined by the employer, with a lunch interval of not less than 30 minutes.  In addition, pursuant to cl 13.5(a) of the 2006 General Agreement, the employer could vary the prescribed hours of duty observed in the agency or any branch or section thereof, consistent with a 150 hour four week settlement period, so as to make provision for:

(i) the attendance of employees for duty on a Saturday, Sunday or Public Holiday;

(ii) the performance of shift work including work on Saturdays, Sundays or Public Holidays; and

(iii) the nature of the duties of an employee or class of employees in fulfilling the responsibilities of their office;

provided that where the hours of duty are so varied an employee shall not be required to work more than five (5) hours continuously without a break.

22       With respect to overtime, the 2006 General Agreement provided in cl 13.5(d) that an employee required to work overtime on any day was required to be paid the appropriate rates set out in cl 22 – Overtime Allowance of the Award for all time so worked. 

23       Clause 13.6(e) of the 2006 General Agreement also provided for flexible working arrangements to be made agency specific agreements, provided that an average of no more than 37.5 hours per week is worked as ordinary hours.

24       Clause 13.15(a) and (d) of the 2006 General Agreement relevantly provided:

(a) Where employees are directed by the employer to work more than 7.5 hours in any one (1) day, overtime applies.  The parties acknowledge that the flexible working arrangement provides for the working of hours in excess of 7.5 hours per day as normal hours if the employer and employee agree.

…

(d) Where an employee is required to work overtime at the beginning of a day with less than one (1) day's notice, that employee shall be paid overtime for any time worked prior to the commencing time for prescribed hours of duty determined by the employer under subclause 13.2 of this clause.

25       The 2005 Agency Specific Agreement provided in cl 5.5 that except where the General Agreement identified conditions as 'core', the agency specific agreement prevailed over the General Agreement and the Award to the extent of any inconsistencies.

26       Pursuant to cl 10.1 of the 2005 of Agency Specific Agreement, the prescribed hours for employees within the agency were required to be worked between the span of hours of 6:30am to 6:30pm, Monday to Friday.  Under cl 10.2 of the 2005 Agency Specific Agreement the average daily hours were seven hours and 30 minutes, the settlement period was 13 weeks, the hours of duty in each settlement period were 487.5 hours, the maximum credit hours were 75 hours and maximum daily hours were 12 hours.

27       Under cl 10.3 the 2005 Agency Specific Agreement, payment of overtime was authorised in the following circumstances:

(a) The agreed system of hours is developed documented and made available to affected employees, supervisors/managers and the Union no later than 10 working days prior to the commencement of the system of hours and after receiving endorsement from the Director General or nominee.

(b) The employees and their supervisor or manager in a work group  reach agreement by simple majority in a secret ballot on the system of hours to be worked being:

(i) The agreed Agriculture System of Hours

OR

(ii) The Award provisions as per Clause 9 of this Agreement.

(c) Where practical, there will be no core hours of duty or prescribed hours for employees who are subject to an agreed system of hours as per sub clause 10.3 (b) (i).

28       Overtime could also be paid in certain circumstances where an employee had a credit of greater than 75 credit hours.  Clause 10.9 provided:

(a) Where duly authorised or directed by the Director General or a delegated officer, an employee working within the provisions of Clause 10 has greater than 75 credit hours the overtime provisions of the Parent Award will apply, subject to the following:

(i) Where such excess hours cannot be cleared within the agreed settlement period due to work activities, project and programme demands the employee will receive payment in accordance with the overtime provisions of the Award.

OR

(ii) Where such excess hours are less than twenty five hours at the end of the settlement period, then by mutual agreement between an Employee and the delegated officer, Time in Lieu (TIL) at Award overtime rate can be taken. Agreed TIL under this clause must be cleared within 60 days, or, with the written agreement of the employee, taken with a period of leave. If TIL cannot been cleared as agreed, the excess hours will be paid out at Award overtime rates.

(c) The System of Hours Arrangements

29       It is common ground both the respondents agreed to enter into the System of Hours Arrangements, effective from 2 January 2004.  The agreed System of Hours Arrangements were agreements to work flexible working arrangements in accordance with cl 10 of the Agency Specific Agreements.  The System of Hours Arrangements entered into by the respondents and others employed by the appellant were all essentially the same.  The 2004 System of Hours Arrangement provided the following provisions that were relevant to overtime:

5. All officers are entitled to take time off for accrued 'flexitime', on a one hour for one hour basis:

• Accrued 'flexitime' is hours worked, between Monday to Friday, in excess of 7.5 'average daily hours' but within the 6.30 a.m.-6.30 p.m. 'standard flexitime period'.
• A maximum of 75 credit hours of 'flexitime' only may be carried forward between each 13 week 'settlement period'.
• A maximum of 37,5 debit hours of 'flexitime' only may be carried forward between each 13 week 'settlement period'.
• Accrued 'flexitime', in excess of 75 hours at the end of a 'settlement period', is automatically lost, if not duly authorised as 'Additional Hours'.

6. Any approved or directed time worked by officers at Levels 1 to 5 outside the 12 hour 'standard flexitime period', or on weekends and public holidays, may be paid as 'overtime' or, if the officer chooses; taken as time in lieu (T.I.L.) at the overtime rate.  If such T.I.L. is not cleared within 2 months of accrual then it will be paid out by the incurring project.

7. Overtime penalty rates will only apply for time in excess of 30 minutes worked outside the 12 hour 'standard flexitime period' between Monday to Friday, or on weekends and public holidays.

The Industrial Magistrate's Reasons for Decision

30       The Industrial Magistrate found at page 7 of his reasons for decision that it was undisputed that each of the respondents during the period of the claim, except when on leave for various reasons, worked 40 hours each week and that from 1 April 2006 they had only been paid for 37.5 hours of the 40 hours worked.  The Industrial Magistrate pointed out that the appellant's suggestion that it was open to the respondents to terminate the statutory contracts of employment and if they did so they would work and be paid for 37.5 hours per week, was a harsh criticism of the respondents; particularly given that the statutory contracts preserved their contractual entitlement to work 40 hours per week.  He also held that it was unfair to blame the respondents for the protracted dispute. 

31       The Industrial Magistrate found the appellant's submission that 2.5 hours worked each week did not count for anything was to ignore industrial reality. 

32       In respect of the claim for overtime, the Industrial Magistrate importantly observed that the 2.5 hours per week over and above the 37.5 hours per week worked may be paid at overtime rates, if the respondents were able to demonstrate they were entitled to be paid overtime by the industrial instruments that regulated their employment. 

33       The Industrial Magistrate summarised in his reasons the appellant's submissions as follows:

(a) The General Agreements prescribed that no more than 37.5 hours per week may be worked as 'ordinary' hours and the hours of work of the respondents were regulated by the Agency Specific Agreements which had been in place since 1 January 2003 and the System of Hours Arrangements made under the Agency Specific Agreements which had been in place since 2 January 2004. 

(b) The 2003 Agency Specific Agreement had application from 1 January 2003 and pursuant to cl 10.10 thereof, which related to overtime, did not apply.  Further, no evidence was brought to support coverage of the respondents within cl 10.9 of that agreement that related to additional hours worked in excess of 75 hours.

(c) The System of Hours Arrangements which applied to the respondents from 2 January 2004 provided that penalty rates would only apply for time in excess of 30 minutes worked outside the 12 hours standard flexi time period between Monday to Friday, weekdays and public holidays.  The respondents had been enjoying the benefits of the System of Hours Arrangements, that is, accumulating and clearing credit hours, and it had not been shown that any part of the respondents' claims were covered by the System of Hours Arrangements which entitled them to payment of overtime. 

(d) The General Agreements provide that the Agency Specific Agreements prevail over General Agreements and the Award to the extent of any inconsistency, except when the General Agreements identified a condition as a 'core' condition.  The overtime conditions were not identified as a 'core' condition and the Agency Specific Agreements and System of Hours Arrangements provided that penalty rates would only apply for time in excess of 30 minutes worked each day outside of the 12 hours standard flexi time period. 

(e) The respondents are not entitled to be paid for 2.5 hours worked in excess of 'ordinary' time.  The issue to be determined was whether, on a proper construction of the applicable industrial instruments, the extra 2.5 hours worked each week was payable at overtime rates which required the construction of the applicable instruments. 

34       When construing the industrial instruments, the Industrial Magistrate had regard to the contemporary approach to construction that stems from Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 which established that in construing a document, the purpose, general policy and context have to be taken into account rather than just the literal meaning of a provision so as to create consistency and fairness.  He also had regard to the principle that interpretation of the relevant industrial instruments begins with the consideration of the words used and their natural meaning but they cannot be interpreted in a vacuum divorced from industrial realities: City of Wanneroo v Holmes (1989) 30 IR 362, 378 (French J) and BHP Billiton Iron Ore Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers (Western Australian Branch) [2006] WASCA 124 [19] – [23] (Pullin J).

35       The Industrial Magistrate found that a consideration of the applicable industrial instruments must start with the Award from which all other instruments flow and that cl 11(3)(d) of the Award provides that the hourly rate shall only be applied to an average of no more that 37.5 hours per week worked as ordinary hours whether under the Award or a statutory contract of employment.  He then found it follows that the issue to be determined is whether the 2.5 extra hours worked was done so as overtime.  The Industrial Magistrate had regard to cl 22 of the Award which contains the overtime provisions.  Under cl 22(1)(a) of the Award, overtime is defined to mean 'all work performed only at the direction of the employer or a duly authorised officer outside the prescribed hours of duty' and cl 22(3)(a) of the Award provides:

An officer who works overtime for a greater period than 30 minutes, shall be entitled to payment in accordance with paragraph (d) of this subclause, or time off in lieu of payment in accordance with paragraph (b) of this subclause, or any combination of payment or time off in lieu.

36       The Industrial Magistrate had regard to cl 22(2)(a) of the Award and then observed that there had been no suggestion that the respondents had been offered time in lieu or a combination of time in lieu and overtime for the extra 2.5 hours of work worked each week.  Importantly, the Industrial Magistrate held that reference to the 30 minute period in the Award was not expressed to apply to any particular period of a day or a week.  The Industrial Magistrate found force in the respondent's argument that cl 23(2)(a) of the Award was designed to preclude claims for overtime for short ad hoc periods arising from time to time, the duration of which is no more than 30 minutes and it is not designed to restrict access to the entitlement where, as an ongoing arrangement or sustained course of conduct, an employee regularly works in excess of 37.5 hours per week.

37       The Industrial Magistrate then turned to the 2004, 2006 and 2008 General Agreements provisions with respect to 'hours' which in each instance replace the Award provisions relating to 'hours'.  He found that the relevant clauses with respect to overtime in each of these agreements provided, inter alia, that where an employee is directed by the employer to work more than 7.5 hours in any one day, overtime applies.  He then held, that whilst a direction to work overtime is a precondition to the payment of overtime, that a specific direction to work overtime was not necessary and that a direction or requirement to work overtime could be satisfied by implication: Public Service Commissioner v Dixon (1995) 75 WAIG 1822.  The Industrial Magistrate found that the express terms of the respondents' contract of employment required the respondents to work 40 hours per week, which they did and the appellant knew that the respondents could not be paid for more than 37.5 hours work worked per week at the ordinary rate, yet the respondent was conscious of and acquiesced to that ongoing arrangement, by creating pro forma time sheets to reflect a 40 hour per week regime.  He also found that there was an expectation by the appellant that the respondents would work 40 hours each week.  In light of those findings of fact the Industrial Magistrate found that the appellant implicitly directed and/or required the respondents to work an extra 2.5 hours per week in overtime.

38       The Industrial Magistrate then had regard to the concessions given by the respondents when they gave evidence that they were not given a specific direction to work overtime.  He found that that was not fatal to their claims and the reality of their situation was that they were contractually obligated to work 40 hours per week but only 37.5 hours of those hours could be paid at ordinary time.  The Industrial Magistrate then found that it followed that the remaining 2.5 hours were required to be worked as overtime because the alternate position would be that they would have provided their employer with 2.5 hours labour for no reward. 

39       The Industrial Magistrate also found that the appellant acquiesced to the ongoing performance of 40 hours work each week and it was patently unfair that the appellant should claim that the respondents should not be renumerated for any more than 37.5 hours worked as it offended the principle that employees should be paid for hours worked.  He found this was particularly so in this instance also the respondents did not go off on a folly of their own.  The extra 2.5 hours each week was worked by the respondents by agreement and in the full knowledge of the appellant.  In those circumstances, the Industrial Magistrate found the appellant was estopped from denying the respondents were required, and by implication directed, to work an excess of 2.5 hours per week over and above the 37.5 hours ordinary time. 

40       As to the appellant's arguments that the Agency Specific Agreements prevailed over the Award and General Agreements, the Industrial Magistrate found that Agency Specific Agreement provisions were discreet and applied to particular situations which did not apply to the respondents.  He observed that the General Agreements provide, that except where the General Agreement identified conditions as 'core', the Agency Specific Agreements prevailed over the provisions of the General Agreements and the Award.  He also found that the overtime provisions in each of the General Agreements was not expressed to be a 'core' condition and that the Agency Specific Agreements would assume ascendancy over both the General Agreements and the Award to the extent of any inconsistency.  He had regard to cl 5 of the Agency Specific Agreements which he said made it clear that the Agency Specific Agreements did not replace the General Agreement to which it related and that the provisions of the Agency Specific Agreements should be read together with the Award and the General Agreement.  He then found that cl 10 of each the Agency Specific Agreements dealt with the System of Hours Arrangements and provided for flexible working hours, permitting the storage of extra hours worked to be credited within certain limits and thereafter debited.  He found that the express reference to overtime, other than in circumstances where flexible working arrangements had been exhausted, related only to the circumstances when not less than 24 hours' notice had been given to work outside those outlined in cl 10 and further, in circumstances where a declared emergency exists.  In those circumstances he found that there was no conflict between the Agency Specific Agreements overtime provisions and those contained in the Award and the provisions of the General Agreements and that the Award and General Agreement provisions were not excluded. 

41       The Industrial Magistrate observed that the appellant's contention that cl 6 and cl 7 of the System of Hours Arrangement provided that overtime penalty rates apply only for time worked in excess of 30 minutes outside the 12 hours standard flexi time period between Monday to Friday, weekends and public holidays, seemed at first instance to have force.  But then he had regard to the fact that cl 10 of the Agency Specific Agreements provided, inter alia, that work groups or work sites may develop their own System of Hours Arrangements.  He also found that the respondents in each instance were part of work sites that developed their own System of Hours Arrangements which addressed the issue of payment of overtime.  The Industrial Magistrate said however said that the question which arose was, whether the Agency Specific Agreements provided the requisite legal source to exclude that provided by the General Agreements and the Award.  The Industrial Magistrate found the answer to that question was no, that there were inherent limitations in what the System of Hours Arrangements could provide and insofar as the System of Hours Arrangements purported to exclude the overtime entitlements provided by the General Agreements and the Award, the System of Hours Arrangements could not operate to that effect.  He also found that the System of Hours Arrangements were extraneous to and not contemplative of the ongoing arrangement to work an extra 2.5 hours each week. The Industrial Magistrate had regard to cl 3 of the System of Hours Arrangements which reflected that employees work a daily average of 7.5 hours whereas the respondents by virtue of their statutory contracts of employment are expected to work an average of 8 hours per day.  He found that the creation of the System of Hours Arrangements was predicated on a false premise that all employees covered by the agreements work an average of 37.5 hours per week and found it follows that the specific overtime provisions therein could only relate to employees who work an average of 37.5 hours per week and could not have the effect of excluding the respondents' entitlement to overtime for 2.5 hours worked each week.

42       The Industrial Magistrate concluded that although it was true to say that the respondents could not be paid at 'ordinary' rates for 40 hours it did not follow that the appellant should receive the benefit of the their efforts over 2.5 hours per week for free and given that there were no other alternative arrangements made and that the respondents were by implication, required and directed to work overtime they should have been paid for their 2.5 hours work each week at the overtime rate.  The Industrial Magistrate also found that if the appellant's argument were to be accepted it would result in the respondents being be worse off than they had been under their respective workplace agreements because their paid hours would have been reduced.  In those circumstances he found their terms and conditions would not have been preserved but rather would have been unilaterally altered and that this would be contrary to a representations made by the Department of Consumer and Employment Protection on 22 November 2002 as follows (exhibit 3):

Hours of work will not change as a result of the ceasing of workplace agreements.  If the hours of work in statutory contracts of employment are greater than the ordinary hours provided for in awards/EBAs, the additional time worked will be treated as overtime in accordance with the provisions of awards/EBAs.  This does not necessarily mean the additional time worked will be paid as overtime.  Some awards require minimum additional time to work before overtime is paid.

The Ground of Appeal

43       The sole ground of appeal in each appeal is that the learned Magistrate erred in making an order that the appellant had failed to comply with the Award and the relevant agreements made thereunder.  In the notice of appeal, the appellant particularises 18 particulars of alleged error, not all of which are material to the decisions made by the Industrial Magistrate that the appellant failed to pay each respondent for 2.5 hours worked each week during the periods in dispute at overtime rates pursuant to the provisions of the Award and the relevant General Agreements.

The Appellant's Submissions

44       The appellant points out that the Labour Relations Reform Act was intended to bring an end the regime of individual industrial regulation created by the Workplace Agreements Act and return employees in Western Australia to a regime of collective industrial regulation.  They say insofar as this involved 'transitioning' employees from workplace agreements to collective types of industrial regulation, the Labour Relations Reform Act operated so that collective types of industrial regulation would apply, and, overtime be more beneficial than workplace agreements and overtake them. 

45       The appellant also points out that whilst the respondents rely on the workplace agreements to say that they have contractual entitlement to work 40 hours per week, they do not rely on the workplace agreements in relation to their remuneration.  Under the workplace agreement John Wall signed on 14 February 2001 he agreed to work an average of 40 hours per week as 'ordinary' hours and receive an annual salary of $28,942.  Under the workplace agreement Trevor Ward signed on 13 February 2001 he agreed to work an average of 40 hours per week as 'ordinary' hours and receive an annual salary of $42,905.  Inherent in the appellant's submissions is a contention that each of the respondents agreed to work an average of 40 hours per week as 'ordinary' hours whereas the Award, General Agreements and the Agency Specific Agreements only allow employees to work 37.5 hours per week as 'ordinary' hours.  The appellant says this is the effect of the reasons of the Full Bench in Ward and Wall No 1 in which Ritter AP observed that although the statutory contract contained a term that ordinary hours were an average of 40 hours per week, the respondents could not enforce this as it would be contrary to the Award [147].  The appellant says it follows that the term of the workplace agreements to work an average of 40 hours per week is invalid and unenforceable by operation of s 114 of the Act which prohibits employers and employees from contracting out of the provisions of an award or industrial agreement.  The appellant also says that none of the provisions of the workplace agreements that became statutory contracts of employment have any practical effect as the inescapable conclusion when you look at a base salary for working an average of 40 hours a week to those hours are ordinary hours.

46       The appellant points out that the respondents say that the Award and the General Agreements must be looked at to determine their remuneration.  In other words they seek to 'mix and match' the terms and conditions between individual instruments and the collective instruments, in the way that the appellant says is impermissible.  The learned Industrial Magistrate's decision enshrines this impermissible approach and runs contrary to the intended purpose of the Labour Relations Reform Act, that collective forms of industrial regulation overtake individual ones. 

47       The appellant says it has attempted to apply the law while, in the interest of industrial harmony, allowing the respondents to 'reserve their rights' in relation to a position the appellant says is without merit (that is, that the respondents are entitled to work 40 hours per week).  Further, the appellant has made administrative payments in excess of what is required in the interest of preserving industrial harmony. 

48       The appellant also says it has informed the respondents, (and the Full Bench has in Wall and Ward No 1 determined this to be the correct approach), that they may only be paid for 37.5 hours per week at the ordinary rate of pay because this is what is provided for in the Award and the General Agreements. 

49       The appellant contends that if the respondents have a contractual entitlement to work 40 hours per week in strictly contractual terms, as the workplace agreements are relied upon to found this entitlement, then the appellant would be entitled to say that under the statutory contracts of employment it need pay Mr Wall no more than $28,942 per annum and Mr Ward no more than $42,905 per annum.  The appellant has, however not done this.  It has, as a minimum, applied the Award and General Agreements to pay rates to 37.5 hours of ordinary work performed by the respondents each week.  At times it has paid more than this.  Since 7 March 2008 in Mr Wall's case, and since 4 April 2008 in Mr Ward's case, it has paid the respondents for 37.5 hours at the ordinary rate plus 8% 'commuted overtime allowance'.  While the respondents have steadfastly relied upon workplace agreements to work 40 hours per week, the appellant has, in accordance with a proper interpretation of the law, not relied upon the terms of the workplace agreements in relation to salary and has paid what has been required by the relevant collective forms of industrial regulation, and indeed, more than this. 

50       Despite this, the appellant continues to be criticised on the basis of a view that it is trying to have the respondents work 2.5 hours per week more than 37.5 hours per week without remuneration.  The appellant says this is an unfair criticism.  The appellant has allowed the respondents to act in accordance with what they steadfastly maintained to be their contractual entitlement under the workplace agreements, so as to preserve their claim and industrial harmony, until the matter is finally determined. 

51       The appellant contends that it does not seek to have the respondents work 2.5 hours per week without remuneration and it is not 'taking advantage' of the respondents.  The appellant simply says that if the respondents insist on working 40 hours per week they can only be remunerated for the time in excess of 37.5 hours per week if the collective instruments regulating their employment provide for it.  They say there is no unfairness in this.  The respondents have knowingly run a risk that the extra 2.5 hours per week they work is not covered by an industrial instrument regulating their employment. 

52       Importantly, the appellant contends that the Industrial Magistrate converted an unlawful contractual entitlement under a workplace agreement signed under the legislative regime operative in 2001, that the respondents work an average of 40 hours per week as 'ordinary' hours into a current and permanent requirement by the appellant and the respondents work 2.5 hours overtime per week.  The appellant says this finding was plainly in error. 

53       The appellant also says that the Industrial Magistrate erred in finding that the respondents had been directed to work overtime and erred in finding that the overtime provisions of the Agency Specific Agreements and the System of Hours Arrangements did not apply to the respondents. 

54       The Industrial Magistrate found that the respondents were 'required and by implication directed' to work 2.5 hours per week over and above 37.5 hours per week ordinary time because 'they were contractually obligated to work 40 hours per week'.  The appellant says the respondents worked 40 hours a week because they insisted on doing so.  The contractual obligation was held to arise out of the respondents' workplace agreements.  His Honour was in error in relying on the workplace agreements to find a direction to work overtime.  The contractual obligation, when it had force, was not to work 40 hours per week but to work an average of 40 hours per week as ordinary hours.  That is, the contractual obligation was never what the Industrial Magistrate found it to be.  In any event, upon the commencement of the Labour Relations Reform Act, this obligation was unlawful and unenforceable.  His Honour was in error in finding that 'a direction to work overtime resulted by implication in these circumstances by virtue of their contracts of employment'.  His Honour relied upon an unlawful and invalid term of the workplace agreement and was in error to do so. 

55       The appellant also says that the learned Industrial Magistrate was in error in that he gave no weight to the evidence of the respondents that they had never been directed to work overtime and never thought they were working overtime.  It is clear from the evidence, and not in dispute, that the respondents worked an average of 40 hours per week not because there was an operational need for this to occur but the respondents considered that they had a contractual entitlement to do so, and, in the interest of industrial harmony, the appellant allowed the respondents, and others, to preserve their position awaiting the outcome of investigation.  In this context they say the Industrial Magistrate's finding that the appellant's approach was patently unfair and offends the principle that employees should be paid for hours worked is in error.  The appellant disputes that it has treated the respondents unfairly.  He also disputes that fairness is relevant in any event and says that respondents can only be paid in accordance with industrial instruments regulating their employment.  In particular they say those industrial instruments do not provide that 'employees should be paid for hours worked' and that there are a range of circumstances in which a person subject to the industrial instrument is not paid for hours worked.  Even if the Full Bench takes a different view on the matter of fairness this could not affect the outcome of the appeals.  The question remains whether the collective instruments applying to the respondents provide for the payment of overtime.  Matters of fairness are irrelevant.  Nor is this an estoppel case, or a case where there is ambiguity in the proper interpretation of the industrial instruments.

56       Even if there was a direction to work overtime, overt, or implied the appellant contends that such a finding does not assist the respondents' case that they were not entitled to be paid overtime pursuant to the relevant provisions of the Agency Specific Agreements and the System of Hours Arrangements.  In relation to the Industrial Magistrate's finding that the System of Hours Arrangements did not apply to the respondents, the appellant points out that this was important as the System of Hours Arrangements provided that overtime penalty rates only applied for the time worked in excess of 30 minutes outside the 12 standard flexitime period between 6:30am to 6:30pm on each weekday and public holidays.  Inherent in this submission is a submission that if the System of Hours Arrangements applied then the respondents would not be entitled to be paid for the 2.5 hours worked each week as overtime in the absence of any evidence that the respondents worked outside those hours. 

57       The appellant also says that the Industrial Magistrate's finding that the System of Hours Arrangements did not apply to the respondents because the agreements were 'predicated on a false premise that all employees covered by the agreements work an average of 37.5 hours per week' was not raised with the appellant during the course of proceedings but that in any event the Industrial Magistrate's finding is in error for the following reasons:

(a) The respondents gave evidence that the System of Hours Arrangements applied to them;

(b) There was no evidence that the System of Hours Arrangements were predicated on all employees covered by them working 37.5 hours per week.  In fact, the System of Hours Arrangements were entered into when it was well known that the respondents, and many others, asserted they had a contractual entitlement to work 40 hours per week and were working 40 hours per week.  In any event, insofar as the Agency Specific Agreements and System of Hours Arrangements referred to the 'average daily hours' being 37.5 hours, this was clearly a reference to 'ordinary' hours and all employees, including respondents, could only work an average of 37.5 hours a day (or an average of 37.5 hours per week) as 'ordinary' hours;

(c) There was no reason in logic why the overtime provisions in the Agency Specific Agreements and the System of Hours Arrangements, that overtime was payable only when a person works outside the agreed span of hours, should apply to persons working 37.5 hours per week but not to those working 40 hours per week. 

58       The appellant also says that the Industrial Magistrate erred in finding that there was no conflict between the Agency Specific Agreements and the Award and the General Agreements because the 'express reference to overtime (in cl 10), other than in circumstances where flexible working arrangements have been exhausted, related only to circumstances when not less than 24 hours notice is given to work outside those outlined in cl 10.10(a) and further, in circumstances where a declared emergency exists (cl 10.10(c)).'  The appellant says that this analysis seems to ignore the disjunctive effect of cl 10.10(b) of the 2003 and 2005 Agency Specific Agreements and cl 10.11(b) of the 2007 Agency Specific Agreement which are in identical terms as follows:

'When an employee is directed by the Director General or a delegated officer to work outside the agreed span of hours, overtime is payable in accordance with the overtime provisions of the Award.'

59       Pursuant to cl 5.4 and cl 5.5 of the 2005 and 2007 Agency Specific Agreements, the Agency Specific Agreements are to be read in conjunction with the Award and the General Agreement and except where the General Agreement identifies conditions as 'core', the Agency Specific Agreement prevailed over the relevant General Agreement and the Award to the extent of any inconsistencies.

60       The appellant says cl 10.10(b) and cl 10.11(b) of the Agency Specific Agreements were directly inconsistent with the provisions of the General Agreements and the Award which make different provisions in relation to overtime. 

61       The appellant also says that cl 13.15(a) and cl 13.16(e) of the General Agreements sanctioned what is done under the Agency Specific Agreements.

62       The appellant also contends that even if the Industrial Magistrate was correct in finding that that Agency Specific Agreements and the System of Hours Arrangements did not apply to the respondents it does not automatically follow that the respondents were entitled to 2.5 hours of overtime per week.  The appellant makes this submission because they take issue with the Industrial Magistrate's finding that for each week 2.5 hours of overtime was payable as the Industrial Magistrate made a wrong finding that overtime was to be calculated under the provisions of the Award and the General Agreements on a weekly basis.  The appellant says this is wrong at law and if the provisions of the General Agreements and Award do apply, the issue needs to be revisited to determine if the respondents are entitled to overtime payments under them.  The appellant says that it is clear that a reference to a 'greater period than 30 minutes' in cl 22(3)(a) of the Award is a reference to a greater period than 30 minutes on any given day.  They say that this is a matter of industrial notoriety which is made clear by cl 22(d)(i) of the Award in which the formula for payment of overtime is set out on a daily basis.  The appellant also says that the clauses and the General Agreements are not of assistance, as they do not provide that at all time in excess of 7.5 hours worked on any given day is payable of overtime but only that 'overtime' applies to that time.  Consequently they say to identify the circumstances in which overtime is payable, it is necessary to have regard to the provisions of the Award.  In other words, while time worked over 7.5 hours in any given day, is, according to the General Agreements, overtime, the Award provides when such overtime is payable.  Consequently the appellant says the true position is that even if the Award and General Agreements applied and the Agency Specific Agreements and System of Hours Arrangements did not apply that the respondents would only be entitled to overtime if they worked overtime for a greater period than 30 minutes on any given day. 

The Respondents' Submissions

63       The material points made by the respondents in support of the argument is that the Agency Specific Agreements and the System of Hours Arrangements have no application to the facts of these matters are that:

(a) It is a 'core' condition that hours worked beyond 37.5 hours each week are overtime; and

(b) The Agency Specific Agreements only override the provisions of the General Agreements and the Award where the conditions in the Agency Specific Agreements are not 'core' conditions. 

64       The respondents' counsel relevantly submits that contrary to the appellant's submission, the ongoing contractual obligation in the statutory contracts of employment are that each of the respondents work an average of 40 hours per week but this is not an obligation to work an average of 40 hours per week as 'ordinary' hours. 

65       For present purposes, the respondents say the decision of the Full Bench in Ward and Wall No 1 made the following findings:

(a) The terms of the respondents' workplace agreements continued as contracts of employment but, despite that, the parties are bound by the Award (that is, the totality of industrial instruments which, together, deriving their force and effect from the Act: Ritter AP, Beech CC and Wood C [111]);

(b) If there a material conflict between the statutory contracts of employment and the industrial instruments, the latter take primacy over the former in setting a safety net of minimum conditions and entitlements of employment: [131] Ritter AP, Beech CC and Wood C;

(c) It being common ground that the present respondents have at material times worked an average of 40 hours per week, it was trite to say that they must be paid for all hours worked.  The question was how those hours worked are to be treated in the totality of applicable industrial instruments: [193], [188] Wood C, Beech CC.  Put to similar effect by Ritter AP [148], if the respondents have not been paid for 40 hours worked it would be contrary to the applicable industrial instruments and to general principle.

66       The finding made by Ritter AP at [147] that the respondents worked an average of 40 hours a week as 'ordinary' hours was not the ratio of the disposition of the appeal and in any event is not binding on this Full Bench.  Further the respondents say when what is said by Ritter AP is considered in context, it is clear that he was referring to 'ordinary' hours in the context of normal hours.

67       The respondents say that their true position is that the 2.5 hours per week in dispute should be paid at overtime rates and not as ordinary time as only 37.5 hours can be paid at ordinary time.

68       They say that the learned Industrial Magistrate correctly identified the pivotal issue for determination as being whether the appellant was obliged, over the relevant period, to pay the respondents in addition to their fortnightly remuneration an amount for the 2.5 hours they worked each week. 

69       The respondents say that the learned Industrial Magistrate correctly:

(a) recognised, consistent with the observations of Wood C and Beech CC in Ward and Wall No 1, that employees are entitled to be paid for all hours worked pursuant to their respective contracts of employment;

(b) properly took into account contemporary approach to construction of industrial instruments;

(c) considered, as part of the industrial context and so as to derive the conclusion as to consistency and fairness, the totality of the industrial instruments that fall on the task of construction before the court;

(d) reached conclusions fairly open to him on the evidence before the court, against the background and industrial contents of what had occurred at material times that:

(i) the appellant implicitly directed and – or required the respondents to work an extra 2.5 hours per week in overtime, in satisfaction of the provisions of cl 22.1(a) of the Award and cl 15.16(a) of the 2008 General Agreement;

(ii) the appellant was estopped from denying that the respondents were required, and by implication directed, to work in excess of 2.5 hours per week over and above the 37.5 hours ordinary time.

(e) concluded that there was nothing in the appellant's Agency Specific Agreements or the System of Hours Arrangements which prevailed over the Award and the General Agreements.

70       Fundamental to the respondents' argument is the construction of cl 8.1 of the General Agreements which the respondents say precludes any treatment of the question of overtime or the variation of prescribed hours that undermined a 'core' condition of employment that no more than 37.5 hours per week can be worked as ordinary hours in an Agency Specific Agreement.  They also say there is nothing in the Agency Specific Agreements or the System of Hours Arrangements that are capable of affecting that 'core' condition of employment.

71       The respondents say there are four critical errors which underpin the assertion that the Industrial Magistrate reached an erroneous conclusion at first instance.  The first critical error of the appellant is that matters to fairness were irrelevant.  The respondents point to the decisions which set out principles of contemporary construction in Project Blue Sky, Amcor Ltd v CFMEU [2005] HCA 10; (2005) 222 CLR 241; (2005) 79 ALJR 703; (2005) 138 IR 286; (2005) 214 ALR 56 and Kucks v CSR Ltd (1996) 66 IR 182 in which observations were made that industrial instruments must be construed against the background of an industrial relations environment rather than with legal niceties or jargon and establish the principle that meanings which avoid inconvenience or injustice may reasonably be strained for.  The respondents, however, do not contend any ambiguity arises in the proper interpretation of the industrial instruments but says context is relevant.

72       The respondents say the second error in the appellant's contentions is that the statutory contracts of employment contain an 'unlawful contractual entitlement' that the respondents work an average of 40 hours per week.  The respondents say that such an argument that cannot be sustained when regard is had to s 4H of the Workplace Agreements Act or the principles of common law that concern illegality and unforceability in the law of contractual obligations. 

73       The third error is that the appellant is unable to rely on s 114 of the Act, as the respondents seek to be paid by the employer in accordance with the Award and the General Agreements.  Consequently they say that the Industrial Magistrate corrected concluded that the specific overtime provisions in the Agency Specific Agreements can only relate to employees who work an average of 37.5 hours per week and cannot have the effect of excluding the respondents' entitlement overtime for 2.5 hours worked each week as the Agency Specific Agreements were incapable of derogating from the 'core' condition that work of more than an average of 37.5 hours per week was not worked as 'ordinary' hours.  In any event, the respondents say that cl 10 of the Agency Specific Agreements only purported to regulate the provisions of the Award and not the provisions of the General Agreements.  Even then the Agency Specific Agreements expressed no disentitlement to be paid overtime at time and a half if overtime was worked and claimed.  Consequently the respondents contend no inconsistency rises between cl 16.5(d) and cl 16.16(a) of the 2008 General Agreement (and predecessors or those clauses) and cl 10 of the successive Agency Specific Agreement as the provisions of the Agency Specific Agreements left untouched the entitlements in the General Agreements.  The only possible complication is the second sentence of cl 13.15(a) (the 2006 General Agreement) and cl 16.16(a) (the 2008 General Agreement) that provided for the parties to the agreements to agree to flexible working arrangements in excess of 7.5 hours per day as normal hours if the employer and employee agree.  The respondents say however the implementation of such an agreement in an Agency Specific Agreement to be valid must not impair the 'core' condition, that is, if an employee works beyond 37.5 hours, overtime is to be calculated.

74       The respondents contend the argument that the excess hours worked over 37.5 hours per week by each respondent do not count as ordinary hours or as overtime as the inevitable conclusion must be that no rate is applicable to the excess hours is untenable.  Such a contention ignores the fact that the respondents were and are contractually entitled to work 40 hours a week and be remunerated accordingly.  Further, the submission of the appellant ignores industrial reality and suggests an absurd result.

75       As to the entitlement for payment of overtime, the respondents says the requirement in cl 22(3)(a) of the Award, that provides on any one day an officer must work more than 30 minutes to be entitled to the payment of overtime, may be somewhat ambiguous but a contextual reading of this provision reveals it is designed to preclude an overtime claim for a short and ad hoc period but has no application to an ongoing arrangement sourced in enforceable contractual obligations which the employer has acquiesced in.  Further, there is a strong presumption in cl 13 of the General Agreements that its an entitlement of the employment of a public service officer that if you go beyond 37.5 hours of time you are in overtime calculations rather than 'ordinary' time.  This they say is a 'core' condition and to the extent that the System of Hours Arrangements purported to derogate from or impair that 'core' condition, the provisions of the System of Hours Arrangements that purport to do so are invalid.

76       The respondents also point out in relation to the entitlement to payment for overtime that the General Agreements use the term 'required' in cl 16.5(d) and 'directed' in cl 16.16(a) but the Industrial Magistrate correctly recognised the respondents were 'obligated' to work 40 hours a week.  They say it is the essence of a contract as a primary class of obligation, that there is a voluntary assumption of a legally enforceable duty: Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424, 457.  In particular, a direction or requirement must be found as a matter of fact, drawing legitimate, industrially realistic inferences which take into account the course of proceedings and the employment history.  When regard is had to the statutory contracts of employment, the respondents say, it follows that there was a binding obligation to work overtime, which was clearly an ongoing requirement or direction by the employer to the respondents, to work overtime.

Supplementary Submissions by the Parties

77       On 21 December 2010, the Full Bench wrote to the parties and requested submissions about the following questions:

(a) If a contextual approach is applied to the interpretation of the provisions of the Award and the relevant industrial instruments, should the Full Bench when considering the conditions of employment that may attach to the respondents' statutory contract of employment (that requires them to each work an average of 40 hours each week), have regard to all of the provisions of the Award and the industrial instruments that provide for the conditions of employment in respect of hours. For example, to use the Public Service General Agreement 2006 (the 2006 General Agreement) and the Department of Agriculture Agency Specific Agreement 2005 (the 2005 Agency Specific Agreement) as examples, is it necessary to have regard to the following conditions prescribed in c113 of the 2006 General Agreement:

(i) 13.1;

(ii) 13.5;

(iii) 13.6; and

(iv) 13.10?

(b) When considering these provisions of c113, in light of c18.1, 9.1 and 9.2 of the 2006 General Agreement, should the Full Bench have regard to the following provisions of the 2005 Agency Specific Agreement:

(i) 5.4;

(ii) 5.5; and

(iii) all of 10, in particular 10.8,10.9 and 10.10?

(c) When regard is had to these provisions of the 2006 General Agreement and the 2005 Agency Specific Agreement is it open to find that the disputed 2.5 hours of work that were worked each week are 'additional hours' within the meaning of c11 0.9 of the 2005 Agency Specific Agreement or credit hours to be banked under c113.1 0 of the 2006 General Agreement.

78       Both parties filed written submissions on 21 January 2011.  For different reasons they both made submissions that it was not open for the Full Bench to find that the disputed 2.5 hours of work worked each week were 'additional hours' within the meaning of the Agency Specific Agreements or 'credit hours' to be banked under the General Agreements. 

79       The appellant in its written submissions made the following points:

(a) There was no claim before the Industrial Magistrate that the disputed 2.5 hours of work worked each week were additional hours within the meaning of cl 10.9 of the 2005 Agency Specific Agreement or credit hours to be banked under cl 13.10 of the 2006 General Agreement.  Consequently the appeal cannot be decided on either of these bases, as the context of the proceedings are that they are enforcement proceedings for which penalties may be imposed (although none were imposed in the present matters). 

(b) The Agency Specific Agreements have applied to the respondents since 1 January 2003.  The 2005 and 2007 Agency Specific Agreements provided that the Agency Specific Agreement will prevail over the General Agreement and Award to the extent of any inconsistencies.  The 2003 Agency Specific Agreement provided that where the provisions of the Agency Specific Agreement were inconsistent with the General Agreement the provisions of the General Agreement shall prevail.  Consequently and relevant to this case, from 1 January 2003 to 30 August 2005 (the date of registration of the 2005 Agency Specific Agreement) the 2002 and 2004 General Agreements prevailed over the Agency Specific Agreements where there was an inconsistency, but after this date the Agency Specific Agreements prevailed over the General Agreements where there was an inconsistency. 

(c) The first step is to analyse the 2002 General Agreement against the 2003 Agency Specific Agreement.  As there were no 'flexible working arrangements' provisions in the 2002 General Agreement, the provisions of the 2003 Agency Specific Agreement stand from 1 January 2003, the date it commenced operation. 

(d) From 30 July 2004 (the date of registration of the 2004 General Agreement) to 30 August 2005 (the date of registration of the 2005 Agency Specific Agreement) the provisions of the 2004 General Agreement prevailed over the provisions of the 2003 Agency Specific Agreement to the extent of any inconsistency.  It is therefore necessary to analyse the 2004 General Agreement against the 2003 Agency Specific Agreement. 

(e) Crucially, cl 13.6(e) of the 2004 General Agreement provided that under Agency Specific Agreements 'the employer may approve alternative flexible working arrangements, provided that an average of no more than 37.5 hours per week is worked as ordinary hours'.  The reference to 'alternative' flexible working arrangements in cl 13.6(e) must mean 'alternative to those provided for in the 2004 General Agreement'.  As the 2004 General Agreement specifically allows for alternative flexible working arrangements, it cannot be said that any such alternative flexible working arrangements were inconsistent with the 2004 General Agreement.  Accordingly, the 2003 Agency Specific Agreement continued to operate after 30 July 2004. 

(f) On 30 August 2005, the 2005 Agency Specific Agreement came into operation.  It sat alongside the 2004 General Agreement until 28 July 2006, the date of commencement of the 2006 General Agreement.  The 2005 Agency Specific Agreement was an 'alternative flexible working arrangement' as allowed for, and given force and effect by, cl 13.6(e) of the 2004 General Agreement.  Therefore, there was no inconsistency between the 2005 Agency Specific Agreement and the 2004 General Agreement. 

(g) The 2007 Agency Specific Agreement also operated against the 2006 General Agreement (from 24 July 2006 to 15 May 2007 and from 16 May 2007 to 6 June 2008). 

(h) To answer question (a) posed by the Full Bench, it is only necessary to have regard to cl 13.6(e) of the General Agreements as the Agency Specific Agreements have always had application and effect according to their terms and the provisions of cl 13 of the General Agreements, other than cl 13.6(e), have not applied. 

(i) In relation to question (b) posed by the Full Bench, the Full Bench also need only have regard to cl 13.6(e) of the General Agreements because the authority for the Agency Specific Agreements to provide for alternative flexible working arrangements comes from cl 13.6(e) and thus such alternatives are not inconsistent with the provisions of the General Agreements.  In the alternative, if the Full Bench does not accept this contention, when an analysis is done in relation to inconsistency between the text of cl 13 of the General Agreements and cl 10 of the Agency Specific Agreements, the appellant concedes that there are inconsistencies between the provisions, in particular between cl 10.8 of the Agency Specific Agreements and cl 13.2 General Agreements, cl 10.9 of the Agency Specific Agreements and cl 13.10 of the General Agreements and cl 10.10 of the Agency Specific Agreements and cl 13.15 General Agreements. 

(j) In any event, from 2 January 2004, the respondents were subject to the 'system of hours' arrangements.  In considering cl 13.1, cl 13.5, cl 13.6 and cl 13.10 of the 2006 General Agreement there is no need to have regard to the provisions of the 2005 Agency Specific Agreement, perhaps beyond noting that the provisions of the Agency Specific Agreement had force and effect pursuant to cl 13.6(e) of the General Agreement.  But, it is not necessary to consider the provisions of cl 13, beyond cl 13.6(e), because the respondents' claims are determined by the 2003 Agency Specific Agreement up until 1 January 2004 and by the system of hours arrangements from 2 January 2004. 

(k) In relation to question (c) posed by the Full Bench, the appellant says the answer is 'no' for the following reasons:

(i) this was no part of the respondents' claims, the Industrial Magistrate's decision or the Notice of Appeal and it is not properly before the Full Bench;

(ii) the Agency Specific Agreements did not apply other than for the period 1 January 2003 to 2 January 2004, the latter date being when the system of hours arrangements commenced operation and had application;

(iii) there is no evidential basis for such a finding; and

(iv) in any event, such a finding is not open on the terms of the Agency Specific Agreement when it applied prior to 2 January 2004 (and if it applied after that time).

(l) In relation to question (c) raised by the Full Bench for the period after 2 January 2004, the answer still would be 'no' because the system of hours arrangements applied and not the Agency Specific Agreements.  The 2004 system of hours arrangements provided that a maximum of 75 credit hours of flexitime may be carried forward between each 13 week settlement period and accrued flexitime in excess of 75 hours at the end of a settlement period would be automatically lost if not duly authorised as 'additional hours'.  'Additional hours' were defined by the system of hours arrangements as 'credit hours in excess of 75 hours that have been duly authorised as overtime payment'.  The provision is not only that the working of the hours must be authorised, they must have been 'duly authorised as overtime payment'.  No argument of implication can work here.  It is clear from the wording of the system of hours arrangements that not only did the additional hours have to be worked but they had to be authorised as attracting 'overtime payment'.  In this case there is no evidence:

(i) as to whether credit hours in excess of 75 hours were reached;

(ii) if they were, when they were reached; and

(iii) whether a person with the requisite authority turned his or her mind to whether any such hours should attract 'overtime payment' and duly authorised that they should.

(m) The 2007 system of hours arrangements makes no provision for additional hours. 

(n) For the period before 2 January 2004, the answer again to question (c) is 'no' because the 2003 Agency Specific Agreement either did not, on its terms, provide for the payment of overtime or there is no evidence that the circumstances in which overtime was payable arose.  Even if it were decided that the Agency Specific Agreements applied after 2 January 2004 (rather than the system of hours arrangements) the Agency Specific Agreements would operate after 13 July 2007 because the 2007 system of hours arrangements made no provision for additional hours and referred back to the Agency Specific Agreement. 

(o) The Agency Specific Agreements relevantly provided at cl 10.9 for payment of additional hours 'in accordance with the overtime provisions of the Award' in certain circumstances.  Those circumstances are (and it is assumed that cl 10.9(a)(ii) would not apply):

(i) the Director General or delegated officer has 'duly authorised or directed' the accumulation of more than 75 credit hours; and

(ii) those excess hours cannot be cleared within the agreed settlement period 'due to work activities, project and program demands'.

(p) The appellant did not 'duly authorise or direct' the respondents to accumulate more than 75 credit hours.  The respondents cannot rely on the workplace agreements in this regard.  The term in the workplace agreements required the respondents to work an average of 40 hours per week as ordinary hours was invalid and unenforceable at all material times.  The respondents worked an average of 40 hours per week because they insisted on doing so. 

(q) In any event, there is no evidence that the excess hours, if there were in fact excess hours, could not be cleared within the agreed settlement period due to work activities, project and program demands. 

(r) Even if the respondents did bring themselves within cl 10.9, the phrase 'in accordance with the overtime provisions of the Award' means that cl 22(3)(a) of the Award would apply with the effect that, of the excess credit hours accumulated under the Agency Specific Agreement flexitime regime, any time which contributed to credit hours which was a block of time less than 30 minutes outside the prescribed hours of duty for the employee on any given day, would not be included. 

(s) Even if the General Agreements applied rather than the Agency Specific Agreements there is no reason why cl 13.10(c) would not apply to the hours in relation to which the respondents made a claim (ie they would be lost). 

80       The respondents in their supplementary submissions say as follows:

(a) They acknowledge that in discerning the correct meaning of the provisions that are in dispute, the required contextual approach necessitates consideration of the entirety of the instruments that regulate the respondents' employment concerning their working an excess of 2.5 hours over 37.5 hours per week.

(b) They acknowledge that, at least notionally, there is potential for the successive Agency Specific Agreements to regulate aspects of their employment with the appellant.  The inherent nature of an Agency Specific Agreement is that such agreements can only regulate conditions which are not categorised as core conditions by operation of the General Agreements.

(c) It is a core condition that there must be an average of no more than 37.5 hours per week worked as ordinary hours for cl 13 of the General Agreements.

(d) The General Agreements reflect the intent that an approved regime for alternative flexible working arrangements pursuant to an Agency Specific Agreement is only empowered where no more than 37.5 hours per week is worked as ordinary hours.  Yet the excess 2.5 hours per week worked by the two respondents were at all material times treated by the appellant as ordinary time, not overtime.  There are several indications of this:

(i) The hours of work agreements manifest agreement that each employee is to 'work an average of 40 hours per week' unqualified as overtime or otherwise; 

(ii) The attendance records in Mr Wall's case (commencing at AB 161) record 40 hours per week having been worked as 'normal weekly hours' and 8 hours per day as 'normal hours' or at 40 hours per week as 'standard hours' (commencing AB 310).  In Mr Ward's case the attendance records reflect the latter formulation – 40 hours per week as 'standard hours' (commencing at AB 507);

(iii) When the Agency Specific Agreement was amended in 2007 to enable the potential payment of a commuted overtime allowance, envisaged the conversion into a monetary equivalent of 2.5 hours of accrued ordinary hours per week; and

(iv) The System of Hours Arrangements referred in cl 3 to 'overtime hours' as being 'hours worked outside the standard flexitime period' of 6.30am – 6.30pm Monday to Friday.  In cl 7 they provide that 'overtime penalty rates will only apply for time in excess of 30 minutes worked outside the 12 hour 'standard flexitime period' between Monday and Friday, or on weekends and public holidays'. 

(e) As far as the appellant was concerned, at all material times the respondents worked 40 hours per week as contracted.  Those 40 hours were 'normal' or 'standard' or 'ordinary' hours. Therefore, cl 13 of the General Agreements until 2008 (and in the 2008 General Agreement cl 16) regulated a core condition of employment.  This is not correct.

(f) Each Agency Specific Agreement only prevailed over those other industrial instruments to the extent of any inconsistency to the extent that the General Agreement did not identify an applicable condition as being a core condition: cl 5.4 and cl 5.5.  Accordingly, the agency specific Agriculture System of Hours in cl 10 of the Agency Specific Agreements had no valid or lawful operation to the circumstances of the respondents.  To that extent it was ultra vires its legal source, namely the General Agreements.

(g) The Agency Specific Agreements did not, in any event, purport to regulate the General Agreements.  They only purport to regulate the Award.

(h) It is therefore not open to find that the disputed 2.5 hours of work were 'additional hours' within the meaning of cl 10.9 of the 2005 Agency Specific Agreement.  Furthermore, even if cl 10.9 did not regulate a core condition, it only purported to regulate the Award, not the General Agreements.

(i) As to cl 13.10 of the 2006 General Agreement, read in isolation it enabled (not compelled) the crediting and banking of hours worked in excess of the hours which were prescribed in cl 13.2.  However cl 13.10 must itself be read within its immediate context – namely as part of a scheme commencing with the heading 'Flexible Working Arrangements'.  The heading precedes cl 13.6, which confined the application of the scheme.  Critically, cl 13.6(e) restricted the approval of flexible working arrangements to circumstances:

(i) Where no more than 37.5 hours per week was worked as ordinary hours; and

(ii) In accordance with cl 9 of the General Agreements (which preserves the primacy of core conditions). 

Consequently cl 13.10 is not capable of operation in relation to the respondents' excess hours worked.

(j) Although the text of cl 10.10 of the 2007 Agency Specific Agreement is relevant to the task of construction, the actual payment since March 2008 of a commuted overtime allowance to the respondents does not affect these conclusions.  The payments were made by the appellant to achieve industrial harmony and a commuted overtime allowance is always a matter for negotiation between the union and the employer.

(k) Against these submissions the questions advanced by the Full Bench should be answered as follows:

(i) Regard should be had to all potentially or notionally relevant provisions of the Award and the other industrial instruments in deriving the correct meaning.  In particular, it is necessary to have regard to the conditions identified in cl 13 of the 2006 General Agreement.  However, it is cl 13.5(d) which was the operative (and one sourcing the entitlement to the respondents to payment of overtime as claimed), not any of the other provisions identified within cl 13; 

(ii) Similar regard should be had to those provisions identified in the 2005 Agency Specific Agreement.  However, because there was a relevant core condition that no more than 37.5 hours per week be worked as ordinary hours, the Agency Specific Agreement had no work to do in overriding the operation of the Award.  It did not even purport in its own terms to override the General Agreements; and

(iii) For all of the reasons advanced 'no' it is not open to so find.

The Decision of the Full Bench in Ward and Wall No 1

81       Acting President Ritter in Ward and Wall No 1 held that where there is a conflict between a condition of employment contained in the statutory contract of employment and the applicable award and where the statutory contract provided for inferior conditions of employment, the award will prevail.  At [110] his Honour explained:

Section 4H(6) has the effect that even though the employer and employee have a statutory contract of employment they are also bound by an applicable award or EEA.  As I will set out in more detail below, being 'bound by' an award has legal consequences.  If parties are bound by an award, then a contract of employment which contains terms that are less favourable than the award has no lawful effect.  In my opinion this is so for the statutory contracts of employment.  My conclusion arises from the interaction between s4H(6) and ss4H(2) and (3).  The statutory contracts created by s4H(2) are 'under this section'.  The contract referred to in sub-section (3) is still 'the contract of employment', created by sub-section (2), which in turn is 'under this section'.  'This section' includes s4H(6) which provides for the binding nature of an applicable award.  In my opinion the use of the expression 'bound by' establishes the primacy of an applicable award, given the text and context of s4H.  In referring to 'context' I include the legislative scheme of the Act and the WAA as a whole after the amendments made by the LRAA.

82       At [126] he said:

The effect of s4H(6) of the WAA is that where parties had entered into an industrial agreement this was binding 'despite' subsection (2) and the existence of a statutory contract.  If there was a material conflict between the terms of the contract and the industrial agreement the terms of the latter, as a binding industrial agreement, prevailed.

83       His Honour also found that a statutory contract of employment is not outside the operation of s 114 of the Act and that if there was material conflict between the award and the statutory contract of employment, the award takes primacy over the statutory contract of employment in setting a safety net of minimum conditions and entitlements of employment [131].

84       In relation to s 4H(8) of the Workplace Agreements Act his Honour observed [136]:

Section 4H(8) provides a limitation upon what an employer is required to pay to an employee where they have a statutory contract of employment and an award is also binding.  The employer is not required to pay the employee more than the greater of the employee's entitlement under the contract of employment or arising under the relevant award, whichever is the greater when assessed on a yearly basis.  An effect of ss4H(7) and (8) is that the employee does not have the benefit of the maximum amount of payments which can be obtained by mixing and matching the provisions of the award and terms of the contract of employment.

85       His Honour then found [147] – [148]:

147 On the facts, s4H operated in the following way. The appellant and the respondents were bound by the applicable industrial instruments. It is agreed that these provided for an average of 37½ ordinary hours average per week for full time workers. Employees could not be required to work longer hours at the ordinary rate of pay. If the employer wanted employees to work longer hours there was provision for the payment of overtime. When ascertaining the ordinary rate of pay of the respondents, the rate in the award applied. Although the statutory contract contained a term that ordinary hours were an average of 40 per week, the appellant could not enforce this as it would be contrary to the award. Additionally, the respondents could not insist that they worked an average of 40 hours per week and only be paid the ordinary award rates of pay. They too are bound by the award.

148 In the case of both respondents however, they have been working 40 hours per week on average, with at least the acquiescence of the appellant. If they have not been paid for 40 hours work it would be contrary to the applicable industrial instruments and general principle. If however the respondents wish to take action consequent upon this, then they must seek to enforce the applicable industrial instruments. Such an application would be within the exclusive jurisdiction of the Industrial Magistrate's Court (IMC). (See ss83(1)(e) and 81(3) of the Act).

86       Chief Commissioner Beech made no findings about the construction of the provisions of the Workplace Agreements Act which were enacted by the Labour Relations Reform Act.  He however, agreed with Ritter AP that what was being sought was the enforcement of the provisions of the relevant award or agreement.

87       Commissioner Wood made specific findings about the meaning and effect of s 4H of the Workplace Agreements Act.  He, however, like Beech CC did not adopt the construction put forward by Ritter AP.  Commissioner Wood found that s 4H(2) and s 4H(3) make it plain that the respondents' workplace agreements continue as statutory contracts and contain the same provisions.  He also found that s 4H(6)(a) stipulates that even though the statutory contracts operate, the relevant award also applies to the employment of the respondents.  As to s 4H(7), insofar as it stipulates that where the award applies, in conjunction with the statutory contracts, he held the ordinary rate of pay of the award should be used for calculations under the award.  He found that this meant that rates of pay from the statutory contracts should not be transported into the award for the purposes of the calculation.  He then found that s 4H(8) was the crucial element in relation to the matters in dispute and this provision contemplates for the respondents' a yearly pay comparison.  At [192] Commissioner Wood found that the proper construction of the legislation leads to the conclusion that the respondents must be paid a higher sum following the calculation of the annual pay under the award and under the statutory contract.  In particular, if their pay under the award is higher than under the statutory contract, they should be paid that amount or if their pay under the statutory contract is higher then they should be paid that amount and each calculation is to be made without reference to the other document.  Commissioner Wood also found that the respondents must be paid for all of the hours worked each week and that, hours worked in excess of 37.5 hours per week may attract overtime payments, to be worked out in accordance with the provisions of the Award. 

88       The common findings that can be gleaned from the reasons for decision of the Full Bench in Ward and Wall No 1 are simply that:

(a) The respondents are entitled to be paid for all hours worked pursuant to their respective statutory contracts of employment (Wood C [193] and with whom Beech CC [188] agreed). 

(b) The respondents under each statutory contract of employment work at an average of 40 hours per week and that the Award only allows 37.5 hours per week worked.

89       The issue left open in Ward and Wall No 1 is whether on a proper construction of the provisions of the Award and any applicable industrial instrument the respondents are entitled to be paid overtime pursuant to the provisions of the Award and/or an applicable industrial agreement. 

Principles of Interpretation

90       The determination of these appeals turns upon the construction of the rights and obligations created in the statutory contracts of employment, the Award, the General Agreements, the Agency Specific Agreements and the System of Hours Arrangements.  Construction of these provisions requires the consideration of the text of each industrial instrument as a whole and in context.  In City of Wanneroo v Holmes, French J summarised the well established principles of construction as follows (378) – (379):

The interpretation of an award begins with a consideration of the natural and ordinary meaning of its words: Re Clothing Trades Award (1950) 68 CACR 597 (Aust Indus Ct, Full Ct). The words are to be read as a whole and in context: Australian Timber Workers Union v W Angliss & Co Pty Ltd (1924) 19 CAR 172. Ambiguity if any, may be resolved by a consideration, inter alia, of the history and subject matter of the award: Picard v John Heine & Son Ltd (1924) 35 CLR 1. Resort to such matters as prefatory statements and negotiations is of dubious assistance if admissible at all: Seymour v Stawell Timber Industries Pty Ltd (1985) 13 IR 289 at 290; 9 FCR 241 at 244 (Northrop J) (13 IR at 299; 9 FCR at 254) (Keely J) cf 13 IR at 309; 9 FCR at 265 (Gray J). The logs of claim and arbitrator's reasons for decision may be referred to determine the ambit of the dispute which led to the making of the award so that where there are two possible interpretations, one within the ambit and one without, the former may be preferred. Evidence of the conduct of the parties subsequent to the making of the award however, cannot be relied upon to construe it: Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444, 446, disapproving Merchant Seamen's Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248. That is not to say the words must be interpreted in a vacuum divorced from industry realities.  As Street J said in Geo A Bond & Co Ltd (in Liq) v McKenzie [1929] AR (NSW) 498 at 503:

'it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. - see also Re Crown Employees (Overtime) Award (1969) AR (NSW) 60, 63; Re Hospital Employees Administrative and Clerical (State) Award (1982) 2 IR 123'.

91       His Honour then went on to observe (379):

It is of course no part of the Court's task to assign a meaning in order that the Award may provide what the Court thinks is appropriate - Australian Workers Union -v- Graziers Association (NSW)(1939) 40 CAR 494. Indeed it has been said that a tribunal interpreting an Award must attribute to the words used their true meaning even if satisfied that so construed they would not carry out the intention of the Award making authority - Re Health Administration Corporation; Re: Public Hospital Nurses (State) Award (1985) 12 IR 122; Rogers Meat Co. Pty Ltd -v- Howarth (1960) AR (NSW) 291; Re Government Railways and Tramways (Engineers etc.) Award [1928] AR 53 at 58 (Cantor J.)

92       The observations by French J at (379) are somewhat different to the more recent observations of Kirby J and Callinan J in Amcor who favoured a contextual construction as opposed to a strictly textual approach.  Justice Kirby at [96] and Callinan J at [129] adopted the following passage in the judgment of Madjwick J in Kucks (184):

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.

93       Relevantly, Callinan J also observed in relation to the general purposes of industrial agreements that [131]:

An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties. In this connection it is not without significance that the primary judge adopted a construction which he thought to be not only arguably absurd, but also potentially unjust to the appellant.

94       Clause 55 in Amcor contained rights, obligations and entitlements to severance payments and other entitlements in the event of redundancy.

Analysis

(a) The terms of the statutory contracts of employment

95       The first of the issues raised in the appeal goes to the terms of the contracts of employment of Mr Wall and Mr Ward.  Section 4H of the Workplace Agreements Act provides that their statutory contracts of employment contain the same provisions as those of the Workplace Agreement which has ceased to have effect.  The contracts of employment of Mr Ward and Mr Wall therefore contain the provisions of the workplace agreements which provide (AB 149 and 150):

The employee and manager agree:

1. the employee will work an average of 40 hours per week.

2 (a) the span of hours will be 5am to 7pm, Monday to Friday.

 (b) there can be no more than Nil (maximum 10) Saturdays in a 26-week cycle.  No more than two consecutive six-day weeks may be worked.

96      The balance of the workplace agreements contained the annual salary at the time the contract was signed in 2001. 

(b) Whether the terms of the statutory contracts were invalid and unenforceable

97      The learned Industrial Magistrate held that Mr Wall and Mr Ward were contractually obligated to work 40 hours per week.  The appellant argues that this was in error, in part because the contractual entitlement was to work 40 hours per week as ordinary hours and in any event this provision was invalid and unenforceable as well as contrary to s 114 of the Act.

98       The question then to be addressed is whether the obligation in the statutory contracts of employment was to work an average of 40 hours a week as 'ordinary' hours, and if so, was such an obligation unlawful and unenforceable, as at all material times the Award and the General Agreements prescribed that only 37.5 hours a week can be worked as 'ordinary' time.  Whilst the appellant argues that such a finding at law flows from the observations of Ritter AP in Ward and Wall No 1 at [147], we do not agree that such a finding is established at law.  It was an express term of the workplace agreement, and thus of the contract of employment which it became, that the employee will work an average of 40 hours per week.  The words 'the employee will work an average of 40 hours per week' do not require the payment to be in ordinary hours.  During the life of the workplace agreement, awards or agreements which would have provided for the payment of an overtime rate did not apply to Mr Wall or Mr Ward.  The workplace agreement shows the base salary to be paid for working an average of 40 hours per week within the span of hours prescribed, however, it does not itself prescribe 40 hours per week as ordinary hours. 

99      The appellant submits that the obligation under the workplace agreement was, after the Labour Relations Reform Act invalid and unenforceable.  However, this submission is not to the point.  The relevant point is that as a matter of fact, Mr Wall and Mr Ward have, since the Labour Relations Reform Act, worked an average of 40 hours per week.  Further, the terms of the statutory contract of employment were that they did so by virtue of the agreement between the employee and the manager referred to in the workplace agreement.  The provision in the statutory contract of employment is to work an average of 40 hours per week; it is not to work an average of 40 hours per week as ordinary time.  If we are wrong on that point, it does not alter the fact an average of 40 hours per week has been worked.  When regard is had to all the relevant provisions of the applicable industrial instruments it is clear that employees can work hours in excess of 37.5 hours a week but those excess hours are not characterised as 'ordinary' time under the provisions of the relevant industrial instruments.  Excess hours of work may be paid overtime, credit hours as flexitime and excess hours for which no payment is prescribed such as in some circumstances the first 30 minutes of time worked as overtime does not attract payment.  Further, the observation made by Ritter AP at [147] in Ward and Wall No 1 that the average of 40 hours a week were to be worked as 'ordinary' time was obiter and was not an issue considered by Beech CC or by Wood C.

(c) The Award, the General Agreements and the Agency Specific Agreements

100    The appellant submits that the learned Industrial Magistrate erred in concluding that the Agency Specific Agreements did not provide the requisite legal source to exclude the Award and the General Agreements.  In particular, in Particular 1.3 of his grounds the appellant contends:

The learned Magistrate erred in law in concluding that the Department of Agriculture Agency Specific Agreements did not provide the "requisite legal source" for the Department of Agriculture System of Hours Agreements to exclude the overtime provisions in the Public Service Award 1992 and Public Sector General Agreements when the System of Hours Agreements made specific provision in relation to when overtime is payable to an employee subject to a System of Hours Agreement and Agency Specific Agreements prevail over the Public Service Award and Public Sector General Agreements, except in relation to core conditions, with overtime not being a core condition.

101   As a starting point, we refer to the observation of the learned Industrial Magistrate at AB 98 it is the Award from which all other instruments flow.  It appears to be common ground that in general terms the Award would have applied to the employment of Mr Wall and Mr Ward from 1 January 2003, which is the time their workplace agreements ceased and their statutory contracts of employment commenced.  The answer to the claims of Mr Wall and Mr Ward to be paid for the 40 hours per week worked lies in the application of the overtime provisions of the Award unless those provisions were in conflict with the successive General Agreements (or, in turn, the Agency Specific Agreements which are provided for by those General Agreements). 

102   If the Award applied, cl 16 - Hours (which in 2003 was unchanged from when the award issued) provided in cl 16(1) that the prescribed hours of duty to be observed by officers were 7.5 hours per day Monday to Friday ((1993) 73 WAIG 301 at 307).  The clause provides for variation of hours and for flexitime arrangements; nowhere in the clause itself is there reference to 37.5 hours per week.  Clause 16 also makes a limited provision for payment of overtime by referring to cl 18 – Overtime Allowance.

103    In interpreting the provisions of the Award, regard should be had to the purpose of the making of the Award and the General Agreements as industrial instruments that apply to all public service officers throughout the State of Western Australia.  As 'general' instruments they provide rights and entitlements to employees that address in general, the operational needs of public sector agencies as employers and are intended (to use the words of Callinan J) to create generally fair and just conditions for employers and salaried officers throughout the public sector.  A fundamental difficulty with both the appellant's and respondents' arguments is that they do not put forward an interpretation of the relevant instruments that considers the scheme of the conditions of employment in respect of 'hours' and the context of the conditions as to hours of work in each of the instruments.  In particular, the argument put forward on behalf of the respondents that because it is a 'core' condition that all employees are to work an average of 37.5 hours a week has the effect that the Agency Specific Agreements cannot regulate any conditions that attach to the respondents' statutory obligations to work 40 hours a week, is an argument that must fail, as this 'core' condition is only one part of many conditions that regulate the conditions that attach to the working of hours of work.  Also it too far strains the language of the instruments to say that the General Agreements establish a 'core' condition that all hours in excess of 7.5 hours a day are worked as overtime, as such a contention ignores the scheme and context of flexible working arrangements contained in the General Agreements and the Agency Specific Agreements and the entitlement to overtime as part of that scheme.

104    Having regard to a contextual approach to interpretation and considering the relevant provisions in their context, the provisions of the Award and the General Agreements establish the following relevant conditions:

(a) By operation of s 41(9) of the Act, the provisions of an industrial agreement oust the provisions of an award.  Section 41(9) provides:

To the extent that an industrial agreement is contrary to or inconsistent with an award, the industrial agreement prevails unless the agreement expressly provides otherwise.

However, some provisions of an award have effect if preserved by the terms of an industrial agreement.  Section 41(8) of the Act provides that when an industrial agreement is made and registered in substitution for an industrial agreement, the first agreement is taken to be cancelled, except to the extent the new industrial agreement saves the provisions of the first agreement.  In this matter, each of the General Agreements were made in substitution of the earlier General Agreement and each contain a clause that provides that the General Agreement shall be read in conjunction with the Award and where the provisions of the Award and General Agreement are inconsistent, the provisions of the General Agreement shall prevail (cl 5.4 2002 General Agreement, cl 5.4 2004 General Agreement, cl 5.4 2006 General Agreement).

(b) Each General Agreement provided for the making of an Agency Specific Agreement.  In 2002, Agency Specific Agreements could only be made to meet special circumstances (cl 9.4 2002 General Agreement).  In the 2004 and 2006 General Agreements, Agency Specific Agreements could only be made to replace an existing Agency Specific Agreement or where arrangements were agreed by the parties to be necessary due to the nature of work undertaken or the environment in an agency (cl 9.3 2004 General Agreement, cl 9.3 2006 General Agreement).  It is clear that none of the Agency Specific Agreements raised in this matter were made in substitution for any of the General Agreements, but each successive General Agreement was made in substitution of the former.  Clause 5.2 of each of the Agency Specific Agreements expressly stated that the Agency Specific Agreement did not replace the General Agreement.

(c) Each General Agreement established 'core' conditions to apply across salaried staff of the public sector.  These 'core' conditions were some Award conditions and the majority of conditions of the General Agreements. 

(i) In the 2002 General Agreement the only 'core' condition relevant to this matter was that no more than an average of 37.5 hours a week was to be worked as ordinary hours each week (cl 8.1 2002 General Agreement).  No provision was made for overtime in the 2002 General Agreement.  Consequently, pursuant to cl 5.4 of the 2002 General Agreement, but for the effect of an agency specific agreement, if any, the provisions of the Award applied in respect of the entitlement to overtime.

(ii) The 2004 General Agreement, 2006 General Agreement and 2008 General Agreement created specific provisions about hours of work.  Insofar as cl 13 of the 2004 and 2006 General Agreements and cl 16 of the 2008 General Agreement provided for an average of 37.5 hours to be worked as ordinary hours, no other conditions in respect of hours were prescribed as a 'core' condition.  In particular, cl 13 of the 2004 and 2006 General Agreements and cl 16 of the 2008 General Agreement provided for the following conditions that were not 'core' conditions:

1. An employer could approve alternative flexible working arrangements, in an agency specific agreement, provided no more than 37.5 hours per week are worked as ordinary hours (cl 13.6(e) of the 2004 and 2006 General Agreement and cl 16.7(e) of the 2008 General Agreement).

2. The prescribed hours of duty were 150 hours per four-week settlement period to be worked between 7:00am and 6:00pm Monday to Friday and could be worked with flexible commencement and finishing times (cl 13.2 and cl 13.7(a) of the 2004 and 2006 General Agreement and cl 16.2, cl 16.3 and cl 16.4 of the 2008 General Agreement).

3. Credit hours in excess of 150 hours per four week settlement period up to 52.5 hours in a year could be carried forward.  Any hours in excess of 52.5 hours were lost (cl 13.9 and cl 13.10 of the 2004 and 2006 General Agreement and cl 16.11(c) of the 2008 General Agreement).

4. In the 2004 and 2006 General Agreement a maximum of ten ordinary hours could be worked in each day between 7:00am and 6:00pm (cl 13.12) and under cl 16.13 of the 2008 General Agreement a maximum of ten ordinary hours could be worked in any agreed span of hours.

5. In the 2004 General Agreement, an employer could vary the hours of duty (cl 13.5) consistent with a 150 hour four-week settlement period.  In the 2006 and 2008 General Agreement the employer could vary the prescribed hours of duty, consistent with a 150 hour four-week settlement period (cl 13.5 and cl 16.5 respectively).  In the 2004, 2006 and 2008 General Agreement where an employee was directed to work more than 7.5 hours in any one day, overtime applied.  However a flexible working arrangement could provide for the working of hours in excess of 7.5 hours if the employer and employee agreed (cl 13.15(a) of the 2004 and 2006 General Agreement and cl 16.16(a) of the 2008 General Agreement).  Further, where employees received at least one day's notice to work, the prescribed hours of duty on the day that overtime was performed were 7.5 hours (cl 13.15(b) of the 2004 and 2006 General Agreement and cl 16.16(b) of the 2008 General Agreement).  It is also clear from these provisions that payment for overtime was required to be paid pursuant to cl 22 of the Award.

105    Whilst it is clear from the provisions of each of the General Agreements that it was a 'core' condition that an employee may work no more than an average of 37.5 hours as ordinary hours, it cannot be said that the terms and conditions of payment for hours worked beyond 37.5 hours was a 'core' condition in any of the General Agreements. 

106    The 2002 General Agreement was silent on the issue of preconditions that applied to work that was to be regarded as overtime.  In the absence of an agency specific agreement, the terms of the Award applied.  However cl 9.4 of the 2002 General Agreement contemplated that an agency specific agreement could be made to meet special circumstances which include arrangements agreed by the parties necessary due to the peculiar nature of work undertaken in an agency or to meet agreed equity goals.

107    In 2003, the appellant entered into an agency specific agreement which was registered as an industrial agreement pursuant to s 41 of the Act.  The 2003 Agency Specific Agreement dealt with among other matters a system of hours and the preconditions that were to apply to working flexitime, the payment of excess credit hours and overtime.  Whilst, pursuant to cl 5.4 of the 2003 Agency Specific Agreement, the Agency Specific Agreement was to be read in conjunction with the Award and the General Agreement, pursuant to cl 5.5 and cl 5.6 in the event of an inconsistency, the provisions of the Agency Specific Agreement were to prevail over the Award but the General Agreement was to prevail over the Agency Specific Agreement.  Despite the valiant submissions made on behalf of the respondents, no inconsistency can be said to arise between the provisions of the 2003 Agency Specific Agreement and the 2002 General Agreement in respect of overtime.   The 2002 General Agreement did not deal with the terms and conditions that were to apply to overtime.  Consequently it cannot be said or inferred that the 2002 General Agreement dealt with or covered any condition of employment with respect to overtime.  It is not correct to say that cl 10 of the 2003 Agency Specific Agreement left untouched the entitlements to overtime in the 2002 General Agreement, as there are no provisions that dealt with overtime in the 2002 General Agreement.

108    Clause 10.1 of the 2003 Agency Specific Agreement provided the prescribed hours to be hours worked between the span of 6:30am to 6:30pm Monday to Friday.  Pursuant to cl 10.3(b)(i) of the 2003 Agency Specific Agreement, employees and their supervisor or manager could reach agreement on the system of hours to be worked in an agreed system of hours agreement.

109    The respondents entered into the 2004 System of Hours Arrangement effective from 2 January 2004 to work flexitime.

110    Pursuant to cl 10.2 of the 2003 Agency Specific Agreement, the conditions of the hours of work of employees were as follows:

(a) Average daily hours – 7.5 hours

(b) Settlement period – 13 weeks

(c) Maximum daily hours (see also cl 10.8) – 12 hours

(d) Maximum credit hours – 75 hours.

111    Hours worked beyond the maximum 75 credit hours were regarded as 'additional' credit hours and pursuant to cl 10.9 were paid as overtime in accordance with the overtime provisions of the Award if the following preconditions were satisfied:

(a) Where duly authorised or directed by the Director General or a delegated officer the employee worked (additional hours); and

(b) Where the excess hours could not be cleared within the settlement period due to work activities, project and programme demands.

112    Where the excess hours were less than 25 hours, by mutual agreement between an employee and the delegated officer time in lieu at the Award overtime rate could be taken.  If the excess hours were not cleared within 60 days, or with the written agreement of the employee taken with a period of leave, the excess hours were to be paid at overtime rates.

113    Payment for overtime which was not payment for 'additional credit' hours worked was prescribed by cl 10.10 of the 2003 Agency Specific Agreement.  Clause 10.10(a) provided for payment of overtime when the notice period was less than 24 hours.  This clause was not relevant to the respondents' claims.  Similarly cl 10.10(c) had no application as it dealt with the payment of overtime where a declared emergency arises.  Clause 10.10(b) provided that overtime was payable in accordance with the overtime provisions of the Award, where an employee is directed by the Director General or a delegated officer directed an employee to work outside the agreed span of hours, that is on a Saturday or Sunday, on a public holiday or before 6:30am or after 6:30pm Monday to Friday.  Clause 10.10(b) was plainly intended to be read disjunctively as the entitlement to overtime created in this clause created different and separate preconditions for the payment of overtime to cl 10.10(a) and cl 10.10(c).  Clearly under cl 10.10(a) and cl 10.10(c) overtime was payable for work carried out as overtime within the agreed span of hours as the only preconditions to payment for overtime, in the case of cl 10.10(a) that notice to work overtime must be less than 24 hours and in the case of cl 10.10(c) that a declared emergency has arisen.

114    The nature of hours worked as flexitime is that the working of hours in addition to an average of 37.5 hours is that such work is voluntary; whereas it is inherent in the concept of overtime that hours of work performed as overtime are hours of work which was required by the employer or by necessity to be done.  Consequently the precondition of a direction to work under cl 10.10(a) or the circumstances such as the necessity to perform emergency functions under cl 10.10(c) is a requirement.  The requirement of direction is also implied in cl 10.10(a) as the entitlement to overtime under this clause requires a notice to perform work to be given.

115    Even if the condition in the statutory contracts of employment that the respondents in each case are to work an average of 40 hours a week can be construed as a direction to work overtime, it is common ground that the respondents would not be entitled to payment of overtime for the 2.5 additional hours of work, worked each week pursuant to cl 10.10(b) of the 2003 Agency Specific Agreement as the respondents did not perform that work outside the agreed span of hours.  For this reason it is our view that it is not necessary to decide whether the condition in the statutory contracts of employment can be construed as a direction to work overtime, as there was no evidence before the learned Industrial Magistrate that the respondents worked the 2.5 hours of work each week outside the agreed span of hours. 

116    However, it does not necessarily follow that the respondents would not be entitled to payment or time in lieu for the 2.5 additional hours of work each week, if the work can be said to be duly authorised hours of work and as such hours of work that satisfied the preconditions for payment or time in lieu pursuant to cl 10.9 of the 2003 Agency Specific Agreement.  Given that the 2003 Agency Specific Agreement was made at a time when some employees were to be covered by 2003 Agency Specific Agreement were bound by the terms of the statutory contract of employment to work an average of 40 hours a week, it may be arguable that the respondents were authorised to work an additional 2.5 hours a week.  Whether they would be entitled to payment of overtime or time in lieu at the overtime rate for the working of those hours would depend on whether those hours could be regarded as 'additional credit hours' and whether the other preconditions in cl 10.9(a)(i) or cl 10.9(a)(ii) were met.

117    When the 2004 General Agreement came into effect, the provisions of the 2003 Agency Specific Agreement continued to have force pursuant to cl 5.5 and Schedule 3 of the 2004 General Agreement.  The 2004 General Agreement introduced for the first time an hours clause in cl 13 which included preconditions for the payment of overtime and the working and banking of credit hours.  However cl 13 was not a 'core' condition.  In any event, cl 13.6(e) of the 2004 General Agreement contemplated that individual agencies could approve alternative flexible working arrangements provided that an average of no more than 37.5 hours per week was worked as ordinary hours.  The 37.5 hours proviso continued as a 'core' condition pursuant to cl 8.1 of the 2004 General Agreement.  Pursuant to cl 9.2 of the 2004 General Agreement 'core' conditions could not be the subject of an agency specific agreement and under cl 9.3(a) replacement agency specific agreements could be made.  Whilst there was nothing in the 2004 General Agreement that dealt with any inconsistencies between non core conditions in the 2004 General Agreement and Agency Specific Agreements, cl 5.6 and the definition of General Agreement in the definition clause, importantly, the 2003 Agency Specific Agreement provided that where there was an inconsistency between the provisions of the 2003 Agency Specific Agreement and the provisions of the 2002 General Agreement and its replacements, the provisions of the General Agreement prevailed.

118    Consequently the question arises in this appeal whether an inconsistency arose between the provisions of the 2004 General Agreement and the 2003 Agency Specific Agreement in respect of the preconditions for the payment of overtime and flexible working arrangements.  Plainly the terms of the 2004 General Agreement did not cover the field of hours as cl 13.6(e) expressly contemplated that through an Agency Specific Agreement an employer could approve alternative flexible working arrangements.  Prima facie, without regard to the effect of cl 13.6(e) and cl 13.6(a) of the 2004 General Agreement, when the overtime provisions and the scheme of flexible working arrangements in the 2004 General Agreement and the 2003 Agency Specific Agreement are examined a direct inconsistency appears to arise, as the preconditions for the payment of overtime and the banking of credit hours are different in each agreement.  For example, in respect of overtime cl 13.15(a) and cl 13.15(b) of the 2004 General Agreement provided:

Where employees are directed by the employer to work more than 7.5 hours in any one (1) day, overtime applies.  The parties acknowledge that the flexible working arrangement provides for the working of hours in excess of 7.5 hours per day as normal hours if the employer and employee agree.

For the purpose of Clause 22 – Overtime Allowance of the Award, employees receiving at least one (1) day's prior notice to work overtime, the prescribed hours of duty on the day that overtime is performed shall be 7.5 hours.  

119    A direct inconsistency could be said to arise between the first sentence of cl 13.15(a) of the 2004 General Agreement and cl 10.10(b) of the 2003 Agency Specific Agreement as the precondition for the payment of overtime in cl 13.15(a) was simply that there be a direction to work more than 7.5 hours in any one day whereas under cl 10.10(b) the direction must have been given to work outside the agreed span of hours. 

120    The working of 'normal' hours beyond 7.5 hours a day by agreement pursuant to cl 13.15(a) of the 2004 General Agreement authorised employers and employees to enter into flexitime arrangements whereby hours could have been credited and banked pursuant to cl 13.10.  Whilst the 2003 Agency Specific Agreement and the 2004 System of Hours Arrangement treated all hours worked beyond 37.5 a week as hours to be credited as credit hours unless worked outside the agreed span of hours and thus were overtime, it is apparent from the attendance record/flexible working hours sheets completed by the respondents and tendered into evidence, described the normal weekly hours worked as 40, yet the hours worked beyond 37.5 hours to 40 hours each week were not in fact credited and banked. 

121    Even if the provisions of the 2004 General Agreement applied, in the circumstances where the respondents were bound by their statutory contracts of employment to work an average of 40 hours a week and the appellant through his officers and agents treated this obligation as binding through the attendance record/flexible working sheets as 'normal' weekly hours of 40 hours a week, what is required is that there be a direction to work more than 7.5 hours in any one day:  cl 13.15(a) of the 2004 General Agreement.  Under the General Agreements each day was to 'stand alone' and whilst a direction to work more than 7.5 hours a day could in some circumstances arise as an ongoing direction to work more than 7.5 hours each day for a period of time, the respondents were not required to work particular hours on any one day.  At its highest, the respondents worked an average of 40 hours per week.  That does not mean that they had to work a set number of hours each day in a week, as cl 13.12 of the 2004 General Agreement allowed for a maximum of 10 hours to be worked as ordinary hours each day.

122    Notwithstanding the differences in the arrangements provided for in these agreements, we are not satisfied that an inconsistency between the 2003 Agency Specific Agreement and the 2004 General Agreement arises.  Clause 13.6(a) and cl 13.6(e) made it clear that an employer may specify in an agency specific agreement a different flexible working arrangement than that provided for in cl 13.2 (prescribed hours).  Clause 13.6(a) of the 2004 General Agreement provided that within the parameters of cl 13.2, flexible working arrangements shall apply unless the employer specifies and cl 13.6(e) allows an employer to approve alternative flexible working arrangements in an agency specific agreement providing that an average of no more than 37.5 hours per week is worked as ordinary hours.  When cl 13.6(a) and cl 13.6(e) are read together and when regard is had to the fact that cl 13 is not a 'core' condition it is clear that cl 13 of the 2004 General Agreement contemplates that a separate and different flexible working arrangement could be specified in an Agency Specific Agreement.

123    For these reasons we are of the opinion that whilst the provisions of the 2003 Agency Specific Agreement were in force, the 2.5 hours of work, worked by the respondents could be at law characterised as 'additional hours' within the meaning of cl 10.9 of the 2003 Agency Specific Agreement.  However, such a conclusion cannot be conclusively made to the requisite standard of proof.  In this matter there was insufficient evidence upon which such a conclusion could be drawn and in any event, as the appellant points out, the case before the Industrial Magistrate was not before the Industrial Magistrate on this basis.  A party to proceedings in the general jurisdiction of the Industrial Magistrate's Court is bound by their particulars:  Liquor, Hospitality and Miscellaneous Union, WA Branch v Minister for Health [2011] WAIRC 00192 [80] – [83].  As both applications alleged the appellant failed to comply with the provisions of the Award and the General Agreements it is not open to decide the appeals on this basis.

124    Prior to the 2004 General Agreement ceasing to have force, the 2005 Agency Specific Agreement became operative.  On coming into operation of the 2005 Agency Specific Agreement, except in respect of 'core' conditions, the provisions of the 2004 General Agreement ceased to prevail to the extent of any inconsistency, as cl 5.5 of the 2005 Agency Specific Agreement provided that except where the 2004 General Agreement and its replacement identified conditions as 'core' the 2005 Agency Specific Agreement prevailed over the General Agreements and the Award to the extent of any inconsistencies.

125    Importantly, cl 10 of the 2005 Agency Specific Agreement prescribed the same conditions of the hours of work and preconditions for the payment of overtime for directed hours and payment of overtime for additional hours as the 2003 Agency Specific Agreement.  Consequently whilst the 2005 Agency Specific Agreement and the 2004 General Agreement remained operative, the respondents were not entitled to payment of overtime for the additional hours of work pursuant to cl 10.10(b) of the 2005 Agency Specific Agreement but they may have been entitled to the payment of overtime or time in lieu at the overtime rate if the preconditions in cl 10.9(a)(i) or cl 10.9(a)(ii) were met.

126    When the 2006 General Agreement replaced the 2004 General Agreement the entitlements of the respondents at that point of time to any payment for the 2.5 hours of work beyond 37.5 hours a week remained unchanged, as cl 9.1 of the 2006 General Agreement contained a clear statement which had the effect that the 2005 Agency Specific Agreement was to be read in conjunction with the provisions of the Award and that except where the 2006 General Agreement identified conditions as a 'core' the 2005 Agency Specific Agreement was to prevail.

127    As set out in these reasons at [104] – [105], the 2006 General Agreement did not prescribe any conditions that can be characterised as 'core' which dealt with the working of hours beyond an average of 37.5 hours a week or payment for those hours of work.  Clause 8.1 of the 2006 General Agreement simply prescribed the condition of employment that an average of no more than 37.5 hours a week was to be worked as ordinary hours as a 'core' condition.

128    The 2005 Agency Specific Agreement was replaced by the 2007 Agency Specific Agreement on 16 May 2007.  When the 2007 Agency Specific Agreement came into operation, the 2006 General Agreement was still operative.  Like the 2005 Agency Specific Agreement, pursuant to cl 5.5 of the 2007 Agency Specific Agreement, the 2007 Agency Specific Agreement prevailed over the conditions that were not 'core' in the 2006 Agency Specific Agreement and its replacements and the Award to the extent of any inconsistencies.  Clause 9 of the 2007 Agency Specific Agreement similarly provided that where cl 10 - Agriculture System of Hours does not apply to a work group or work site, then cl 16 - Hours of the relevant Award would apply.   It follows that cl 10 - Agriculture System of Hours of the 2007 Agency Specific Agreement prevailed over the Award and the 2008 General Agreement in relation to the claim for payment of overtime.

129    Clause 10 of the 2007 Agency Specific Agreement contained the same preconditions for the working and payment of overtime for directed hours and for excess additional hours as the 2003 and 2005 Agency Specific Agreement.  However, cl 10 of the 2007 Agency Specific Agreement contained an additional subclause for the payment of a commuted overtime allowance.  Clause 10.10 provided:

This sub-clause is an enabling provision within clause 10, which will allow for two and one half (2.5) hours of accrued ordinary hours per week to be converted into a monetary equivalent.

Governance and application of this sub-clause is subject to the following provisions;

a) Application for effect of this sub-clause has to be duly authorized by the Director-General or delegated officer, and, with the consent of the employee, as per Schedule 1.

b) Where Schedule 1 has been duly approved, the Employer will renumerate the Employee an allowance of 8%, in addition to the appropriate salary contained in the General Agreement.

c) The application period for Commuted Overtime will be for a minimum of 12 months, unless the employee's assigned duties and / or position is subject to project funding, in which case the period will be for the term of the funding.

d) The salary schedule of the General Agreement shall be made available to an employee with an additional and corresponding column of the commuted overtime allowance.

e) Either party may withdraw from the provisions of this sub-clause by giving a notice period of no less than thirteen weeks.

f) Application of this allowance will automatically cease when the employee is promoted, transferred or re-assigned duties to a new project or funding source.  In such circumstances continuation of Commuted Overtime may only occur as prescribed in (a) of this sub-clause.

g) Any variations and/or disputes in relation to this sub-clause or Schedule 1, shall be determined in accordance with the Clause 8- Dispute Settlement Procedure.

130   Shortly before they entered into an agreement contemplated by cl 10.10 of the 2007 Agency Specific Agreement the 2008 General Agreement came into effect.  From 7 March 2008, and from 4 April 2008, Mr Wall and Mr Ward respectively each have been paid a commuted overtime allowance in consideration for them agreeing to work an additional 2.5 hours per week to that specified in the hours clause of the Award or the 2008 General Agreement (AB 148).  It follows in our respectful view that the commuted overtime allowance deals with the additional 2.5 hours worked from those respective dates of commencement. 

131    The 2008 General Agreement commenced on 2 September 2008.  Given our conclusion that the commuted overtime allowance deals with the additional 2.5 hours worked then this General Agreement does not have any relevance to the issues.  If we are wrong in this conclusion, then we observe that the wording in the 2008 General Agreement regarding core conditions of employment (AB 999, 1000) is the same as the wording in the 2006 General Agreement.  It too contains comprehensive provisions as to hours and payment of overtime in cl 16.  Clause 16.1 (AB 1005) provides that the provisions of cl 16 are to replace the provisions of cl 20 – Hours of the Award.  Clause 5.4 of the 2008 General Agreement similarly provides that where the provisions of the Award and the General Agreement are inconsistent, the provisions of the 2008 General Agreement prevail (AB 999).   Therefore, the relevant Award provisions were replaced by the General Agreement's provisions. 

132    Clause 5.5 and Schedule 4 of the 2008 General Agreement continued the 2007 Agency Specific Agreement to have force.  The 2008 General Agreement also contained a clause that dealt with issues of inconsistency between the 2008 General Agreement and the 2007 Agency Specific Agreement.  The effect of cl 9.1 of the 2008 General Agreement was to provide that the 2007 Agency Specific Agreement was to be read in conjunction with the Award, the 2008 General Agreement and except where the 2008 General Agreement identified conditions as 'core' the 2007 Agency Specific Agreement was to prevail over the 2008 General Agreement and the Award to the extent of any inconsistencies.  Like the 2004 and 2006 General Agreement the provisions of the 2008 General Agreement with respect to hours (cl 16) were expressed not to be 'core' with the exception of the condition that an average of no more than 37.5 hours per week were to be worked as ordinary hours.

133    Consequently, prior to the respondents entering into an agreement for the payment of a commuted overtime allowance,  it is our view that the conditions that applied to their statutory contracts of employment in respect of the provision that they work an average of 40 hours per week was as follows:

(a) From the time the 2002 General Agreement and the 2003 Agency Specific Agreement were both operative, the additional 2.5 hours of work each week worked by the respondents could be 'additional hours' and the respondents may be entitled to the benefits prescribed in cl 10.9(a)(i) or cl 10.9(a)(ii) of the 2003 Agency Specific Agreement provided that the preconditions of cl 10.9(a)(i) or cl 10.9(a)(ii) were met;

(b) When the 2004 General Agreement became operative and the 2003 Agency Specific Agreement continued to be operative, the 2003 Agency Specific Agreement in respect of hours of work and overtime continued to have effect and the additional 2.5 hours of work each week worked by the respondents could be 'additional' hours and the respondents may be entitled to the benefits prescribed in cl 10.9(a)(i) or cl 10.9(a)(ii) of the 2003 Agency Specific Agreement provided that the preconditions of cl 10.9(a)(i) or cl 10.9(a)(ii) were met.

(c) From the coming into operation of the 2005 Agency Specific Agreement and until the parties entered into an agreement pursuant to the 2007 Agency Specific Agreement, the additional 2.5 hours of work each week worked by the respondents could be 'additional hours' and the respondents may be entitled to the benefits prescribed in cl 10.9(a)(i) or cl 10.9(a)(ii) of the 2005 Agency Specific Agreement provided that the preconditions of cl 10.9(a)(i) or cl 10.9(a)(ii) were met.

Conclusion whether the Agency Specific Agreements applied

134   The appellant submits that the learned Industrial Magistrate erred in concluding that the Agency Specific Agreements did not provide the 'requisite legal source' for the System of Hours Arrangements to exclude the overtime provisions in the Award  and the General Agreements.  In our respectful view, for the above reasons, the learned Industrial Magistrate did err in that conclusion. 

Proposed Order

135   We consider the appeals are made out and should be upheld.  We have set out the preceding analysis not to show the employees have an entitlement but merely to show the learned Industrial Magistrate erred in the decisions he made.  As the proceedings were for a breach of the Award and the General Agreements we are of the opinion that orders should be made by the Full Bench that the appeals be allowed and that each decision of the learned Industrial Magistrate be quashed. 

KENNER C:

Background

136    The matters arising on these appeals have some history.

137    In short, up until December 2002, the contracts of employment of the respondents were subject to workplace agreements entered into pursuant to the Workplace Agreements Act 1993 ("the WA Act").  From December 2002, on the enactment of the Labour Relations Reform Act 2002 ("the LRR Act"), the respondents' contracts of employment reverted to what are called statutory contracts of employment ("SCOEs"), preserving the pre-existing terms and conditions as contained in the respondents' prior workplace agreements.

138    That part of the respondents' former workplace agreements and subsequent SCOEs which is controversial for the purposes of this appeal, is the provision contained in them that the respondents work an average of 40 hours a week.  This is so because following the enactment of the LRR Act, and the continuation of the respondents' employment under the SCOEs, the relevant terms and conditions of the respondents' employment have been subject to the Public Service Award 1992 ("the Award") and various general and agency specific industrial agreements made under s 41 of the Industrial Relations Act 1979 ("the Act"). 

139    The Award and the various industrial agreements have provided the working of no more than 37.5 hours per week as ordinary hours of work.

140    The parties to these appeals have litigated their dispute in the Commission over several years. 

141    Initially, the respondents commenced proceedings pursuant to ss 29(1)(b)(ii) and 80E and 80F(2) of the Act before both the Commission and the Public Service Arbitrator. The respondents sought denied contractual benefits allegedly arising under their contracts of employment, and in the case of the proceedings before the Arbitrator, declarations as to "the correct and equitable interpretation" of the respondents' contracts of employment and additionally, orders for payment of amounts said to be due accordingly. 

142    The respondents at all material times in those proceedings, maintained that their SCOEs entitled them to payment for work performed at ordinary rates of pay by reason of working an average of 40 ordinary hours per week.  It was on that basis that the proceedings were heard and determined by the Commission.  The orders made by Smith SC were to the effect that the appellant pay to the respondents various sums of money for 40 hours per week at the ordinary rates of pay as specified in the relevant industrial instrument: (2007) 87 WAIG 2853; (2007) 87 WAIG 2872.

143    Those orders were the subject of appeals brought by the present appellant, in Chief Executive Officer, Department of Agriculture and Food v Trevor James Ward and John Martin Wall (2008) 88 WAIG 155.  Both appeals were upheld on jurisdictional grounds and the orders of the Commission at first instance were quashed.  It seems reasonably apparent from the reasons for decision of the Full Bench, when dealing with the history of the matter, that at no time prior to the proceedings before the Commission had the respondents asserted anything other than that their SCOEs required them to work an average of 40 hours per week as their ordinary hours of work.  Consequently, this led to the claims before the Commission and the Arbitrator in those proceedings, to be remunerated for such hours at ordinary rates of pay as prescribed by the relevant industrial instruments.   

144    In my view, for the following reasons, those contentions were entirely consistent with the terms of the respondents' SCOEs, properly construed.

145    Subsequent to those proceedings, the respondents commenced claims in the Industrial Magistrate's Court, alleging that as they had continued to work an average of 40 hours per week under their SCOEs, they were therefore entitled, under the Award and the various industrial agreements having application since that time, to be paid overtime for the additional 2.5 hours worked per week.

146    These claims were upheld by the learned Industrial Magistrate. In his determination, his Honour concluded that the overtime provisions of the relevant industrial instruments had application to the additional time worked by the respondents each week, and thus, a contravention of these industrial instruments had occurred.

147    Following the learned Industrial Magistrate's finding as to liability, the parties conferred and reached agreement as to quantum, which was reflected in final orders of the Court of 30 June 2010.  These orders were to the effect that the appellant had failed to comply with the Award and relevant industrial agreements and by consent, the appellant pay to the first respondent the sum of $12,000 and to the second respondent the sum of $7,500, inclusive of interest:  (2009) 90 WAIG 42.

148    From those orders the present appeals are brought pursuant to s 84 of the Act.

Grounds of Appeal

149    The appeals contain one ground, that being that "The learned Magistrate erred in making an order that the Appellant had failed to comply with the Public Service Award 1992 and the relevant agreements made thereunder." There follows some 18 particulars, which elaborate the bases on which the appellant asserts that the learned Industrial Magistrate erred.

150    The particulars of the grounds of appeal first assert that by reason of s 114 of the Act, to the extent that the respondents' SCOEs purported to create an obligation to work an average of 40 hours per week, such provisions were invalid and unenforceable.  Furthermore, the remaining particulars assert variously, that having regard to the terms of the award, and the various industrial agreements in effect over the course of the respondents' employment from 2003 onwards, applying the appropriate precedence between them, no overtime was payable for any time that the respondents had worked in excess of 37.5 hours per week.

Industrial Instruments

151    As set out in the appellant's Case Outline / Further and Better Particulars of Case Outline at first instance, at par 4 the terms of the regulation of the respondents' contracts of employment were as follows:

"4. In relation to the period to which the claim relates the following may be said:

(a) From 26 September 2002 to 30 December 2002 the Claimant and Respondent were subject to a workplace agreement made under the Workplace Agreements Act 1993;

(b) From 1 January 2003 onwards the Claimant and Respondent were subject to a "statutory contract of employment" pursuant to amendments to the Workplace Agreements Act 1993 made by the Labour Relations Reform Act 2002;

(c) Statutory contracts of employment are subject to any applicable award or industrial agreement;

(d) As at 1 January 2003 the statutory contract of employment was subject to the Public Service Award 1992 and the Public Service General Agreement 2002;

(e) From the first pay period after 26 February 2004 the statutory contract of employment was subject to the Public Service General Agreement 2004 which replaced the Public Service General Agreement 2002;

(f) From the first pay period after 26 February 2006 the statutory contract of employment was subject to the Public Service General Agreement 2006 which replaced the Public Service General Agreement 2004;

(g) From the first pay period after 26 February 2008 the statutory contract of employment was subject to the Public Service General Agreement 2008 which replaced the Public Service General Agreement 2006;

(h) Each of the General Agreements referred to above provided that:

"Where the provisions of the Award and this General Agreement are inconsistent, the provisions of this General Agreement shall prevail. ";"

152    In addition to these instruments, agreements known as agency specific agreements also applied. These agreements, which were also registered industrial agreements under the Act, contained certain conditions of employment that were not described as "core" under either the Award or general agreements.  It was common ground that over the course of the successive years of employment from 1 January 2003, in the main, the terms of the Award, the relevant industrial agreements and the agency specific agreements having application to the parties were either identical or very similar.

153    In general terms, the precedence provisions of these industrial instruments provided that the general agreements prevailed over the Award where any inconsistency arose.  The stated intent was and is that the primary instruments governing the employment are the Award and the general agreements.

154    The "third tier" of instrument, the agency specific agreements, will prevail over the provisions of the Award and general agreements where they are inconsistent.

155    Furthermore, there was and is also a "fourth tier" of regulation, known as the "agriculture system of hours", which appears to be an unregistered agreement made under the auspices of the agency specific agreements, containing specific flexible hours of work provisions.  Where such provisions are supported in the workplace, they are to operate in conjunction with the agency specific agreement.

Consideration

156    Particulars 1.1 and 1.2 of the grounds of appeal go to the validity of the respondents' SCOEs to the extent that they have purported to oblige the respondents to work an average of 40 hours per week from January 2003.

157    The particulars assert that by the operation of the LRR Act, these provisions in the respondents' contracts of employment, as preserved in their SCOEs, were made invalid and unenforceable and contrary to the provisions of s 114 of the Act. The appellant says that the learned Industrial Magistrate was in error in concluding that the respondents' SCOEs "preserved the respondents' contractual entitlement to work 40 hours per week" and that the respondents were obligated to work 40 hours per week. 

158    The appellant contended that after the enactment of the LRR Act, these provisions of the respondents' contracts of employment were invalid and unenforceable. To this extent, the appellant relied on observations made by Ritter AP in Chief Executive Officer, Department of Agriculture and Food v Trevor James Ward and John Martin Wall (2007) 88 WAIG 155 at par 147 to the effect that to the extent that the statutory contract of employment of the respondents contained a term that ordinary hours were an average of 40 per week, this was unenforceable as being contrary to the terms of the Award.

Respondents' Workplace Agreements

159    Examples of the respondents' workplace agreements registered under the WA Act are contained at AB 149 – 152 and AB 502 – 506.  The workplace agreements seem to be in identical terms.  The agreements contain two documents; one entitled "WORKPLACE AGREEMENT (2)" and the other "HOURS OF WORK AGREEMENT".  The first document, the workplace agreement, formal parts omitted is in the following terms:

"The Employee and the Employer AGREE that on signing this Agreement:

1. The Employee and Employer are bound by the Terms and Conditions.

2. The provisions outlined in the document entitled "Terms and Conditions – Agriculture Western Australia Generic Individual Workplace Agreement 2 ", dated June 2000 are fully incorporated into and form part of this Agreement.

3. This Workplace Agreement is only applicable to the employee whilst employed in

(a) MANAGEMENT SERVICES (workgroup/worksite) and working in the

(b) CORPORATE SERVICES (District/Region) and shall have no effect outside the scope of 3(b) and/or Schedule C(l).

(c) The employee's existing substantive classification level will be transferred to the same level under this Agreement.

3. The employee's existing substantive classification level will be transferred to the same level under this Agreement.

4. This Agreement shall have effect from first pay period commencing on or after 1 January 2001, otherwise from the first pay period commencing on or after date of signing.

5. Nothing in this Agreement or the Terms and Conditions affects the employment tenure of the employee.

6. The employee is entitled to a payment of an additional hours allowance as prescribed in Schedule C, for the officer's level and classification as determined pursuant to Clause 6 – Hours of Work."

160    The hours of work agreement, taking Mr Walls initial agreement, formal parts omitted, relevantly provides:

"The employee and Manager agree:

1. The employee will work an average of 40 hours per week.

2. (a) The span of hours will be 5 am to 7 pm, Monday to Friday.

(b) There can be no more than NIL (maximum 10) Saturdays in a 26 week cycle).  No more than 2 consecutive 6 day weeks may be worked.

3. The employee will be paid an annual salary of:

Base salary     [$ 28,942 .... ]

Additional hours allowance   [$ ……….... ]

Other allowances:

Allowance 1    [$ ……….... ]

Allowance 2    [$ ……….... ]

Allowance 3    [$ ……….... ]

Allowance 4    [$ ……….... ]

Total     ____________

     $                        "

161   It is trite to observe that in the interpretation of an agreement, a provision within it will be considered in the context of the agreement as a whole.  The workplace agreement entered into between the appellant and the respondents at the material times contemplated that the respondents be paid a base salary in return for working an average of 40 hours per week.  In my view, some emphasis is to be placed upon the reference to a base salary, as being indicative of a salary paid for "normal" or "ordinary" working hours worked in any one week. 

162   Of significance, cl 6 of the "WORKPLACE AGREEMENT (2)" contemplated that the employee may be entitled to the payment of an "additional hours allowance" as prescribed in Schedule C.  No such additional hours allowance was prescribed for either of the respondents in their workplace agreements. As a matter of commonsense, it would seem that such a provision would be included where it was required that the employee work beyond the "normal" or "ordinary" hours as otherwise provided in the agreement, and for which the base salary is paid.  

163   Furthermore, in materials in evidence before the learned Industrial Magistrate at first instance, by way of "Personal Time Attendance Records", at AB 507 – 569, from 2002 to 2009, the hours of work of the respondents are recorded as "standard hours 40".

164   In relation to this issue, and referring to the decision of the Full Bench, in particular the reasons of Ritter AP in Chief Executive Officer, Department of Agriculture and Food at par 147, counsel for the appellant Mr Matthews made the following submissions at T 5:

"These hours were always worked as ordinary hours under the workplace agreement.  It has been the respondents and others steadfast position for the best part of a decade now that they were worked as ordinary hours, and in fact there was an entitlement to go on working those hours as ordinary hours and be paid at the ordinary rate.  That was what was litigated and decided upon by the Full Bench, and there was never any question at the time when the workplace … putting to one side what is now argued, if we go back to the time when the workplace agreement was in place, there was no argument at that point in time that any of these hours were overtime hours.  They were ordinary working hours, and they received their salary, a set salary, pursuant to the workplace agreement for working those hours.  There was never a question that some other kind of payment, some other characterisation, should bear in relation to the working of those hours.  They were ordinary hours."

165   In my opinion, construing the terms of the workplace agreements as a whole, in the context of all of the circumstances surrounding their operation, that contention must be correct.  It seems contemplated from the ordinary and natural meaning of the language used in the terms of the workplace agreements, that the respondents were to be paid a base salary for working an average of 40 hours per week, to be regarded as their normal or "ordinary" working week.  The absence of any additional hours allowance, when read with the terms of the agreement as a whole, strongly suggests compensation for working additional or "overtime" hours, was absent from these agreements.  Presumably, this was because it was the intention of the parties to the workplace agreements, as reflected in its terms, that the respondents work an average of 40 ordinary hours a week, as a "normal" working week, for the base salary as prescribed. This intention appears to have manifested itself in the conduct of the parties, over many years, at least up until the proceedings at first instance were commenced.

166   Notably, from the proceedings before Smith SC in 2007, there appears to have been no suggestion that the SCOEs, there under consideration, warranted a contrary interpretation.  In my view, nor could they. I think the clear import of the workplace agreements of the respondents, when read as a whole, is that the ordinary working week contemplated would be on average 40 hours, in return for which an agreed base salary was payable.

Principles of Statutory Illegality

167   The entering into or performance of a contract may involve illegality either under statute or the common law.  A contract which is illegal is generally unenforceable.  Statutory illegality may arise expressly or by necessary implication.  At common law, a contract may be illegal as being formed or performed in circumstances where the contract is contrary to public policy.

168   In Cheshire and Fifoot's Law of Contract 8th Australian Edition at par 18.8 the learned authors observe:

"[18.8] Contracts Expressly Prohibited by Legislation.

If making or performing a particular contract is expressly prohibited by legislation, the contract is illegal unless the statute itself indicates that a prohibited contract shall nevertheless be enforceable. In the absence of such an indication, a contract the formation or performance of which is expressly prohibited by legislation is illegal - as where a statute expressly prohibits selling land or goods, contracting without a licence, or some other specified kind of contract.

In deciding whether a contract falls within the ambit of express prohibition, the court is entitled to look at the substance of the transaction.  The court will not enforce a contract which ostensibly conforms to statutory requirements but in fact attempts to evade them.

Legislation which prohibits the formation or performance of contracts must be distinguished from legislation which precludes the enforcement of specified contracts by legal action or provides that they are invalid or void. Such contracts are not necessarily illegal, and the rules which apply to illegal contracts to not apply to them. The question whether such contracts are 'illegal' is, strictly speaking, otiose. Their operation depends on what the statute, properly interpreted, prescribes. "

169   In Victoria v Sutton (1998) 195 CLR 291 Kirby J considered the validity of an order made by the Governor of Victoria which made any disposition of property of the former Builders Labourers' Federation "void", and said at par 95:

"The word "void" is inherently ambiguous.  It sometimes means that the act in question has not, and never has had, any legal effect (void ab initio).  But sometimes it means that the Act becomes void as against the world or against those who cannot enforce or take advantage of it subsequently (void ex post facto).  "Void" is in some contexts treated as synonymous with "voidable" or voidable at the election of the party for whose benefit a legal rule makes the transaction void.  The task of a court, in differentiating between the available meanings of the word, is to ascertain the objective of the lawmaker in the particular circumstances.  It is to discover the meaning to be attributed to the word which is natural to its context.  Many past cases demonstrate that the use of the word "void" presents a problem of statutory construction.  There is no settled meaning."

170   Furthermore, in Chitty on Contracts General Principles at par 16-127 the learned authors refer to contracts unenforceable by statute and comment on the issue of aids to statutory interpretation as follows:

"If, on the true construction of the statute, "the contract be rendered illegal, it can make no difference, in point of law, whether the statute which makes it so has in mind the protection of the revenue or any other object.  The sole question is whether the statute means to prohibit the contract."  If, on the other hand, the object of the statute is the protection of the public from possible injury or fraud, or is the promotion of some object of public policy, the inference is that contracts made in contravention of its provisions are prohibited."

171    For the purposes of dealing with this aspect of the appeals, s 114 of the Act is in the following terms:

114. Prohibition of contracting out

 (1) Subject to this Act, a person shall not be freed or discharged from any liability or penalty or from the obligation of any award, industrial agreement or order of the Commission by reason of any contract made or entered into by him or on his behalf, and every contract, in so far as it purports to annul or vary such award, industrial agreement or order of the Commission, shall, to that extent, be null and void without prejudice to the other provisions of the contract which shall be deemed to be severable from any provisions hereby annulled.

 (2) Each employee shall be entitled to be paid by his employer in accordance with any award, industrial agreement or order of the Commission binding on his employer and applicable to him and to the work performed, notwithstanding any contract or pretended contract to the contrary, and the employee may recover as wages the amount to which he is hereby declared entitled in any court of competent jurisdiction, but every action for the recovery of any such amount shall be commenced within 6 years from the time when the cause of action arose, and the employee is not entitled to recovery of wages under this subsection and otherwise, in respect of the same period.

172    It is also necessary to set out the relevant part of s 31 of the LRR Act, which inserted Part IA into the WA Act, in particular s 4H which is in the following terms:

4H.  Employment conditions if workplace agreement or arrangement terminated or employee ceases to be a party

(1) This section applies where —

(a) a workplace agreement or an arrangement under repealed section 19(4)(b)ceases to have effect as provided by section 4C, 4D, 4E or 4F; or

(b) an employee ceases to be a party to a collective workplace agreement as provided by section 4G.

(2) The employment of an employee becomes subject to a contract of employment under this section.

(3) If —

(a) the workplace agreement that ceased to have effect was an individual workplace agreement; or

(b) the arrangement under repealed section 19(4)(b) that ceased to have effect followed on the expiry of an individual workplace agreement,

the contract of employment is one containing —

(c) the same provisions as those of the workplace agreement or arrangement that has ceased to have effect, other than the provisions implied by section 18; and

(d) if the employee had an existing contract of employment relating to the workplace agreement or arrangement, the provisions of that contract.

(4) If —

(a) the workplace agreement that ceased to have effect was a collective workplace agreement; or

(b) the arrangement under repealed section 19(4)(b) that ceased to have effect followed on the expiry of a collective workplace agreement,

the contract of employment is an individual contract —

(c) applying to the employee such of the provisions of the collective workplace agreement or arrangement that has ceased to have effect, other than the provisions implied by section 18, as were applicable to the employee; and

(d) containing, in addition, the provisions of the existing contract of employment that the employee had relating to the workplace agreement or arrangement.

(5) A contract of employment referred to in subsection (3) or (4) has effect, and may be varied or terminated, as if it were a contract entered into between the employer and the employee.

(6) Despite subsection (2) the employer and the employee are bound by —

(a) any award that extends to them; or

(b) any employer-employee agreement under Part VID of the Industrial Relations Act 1979 to which they are parties.

(7) Where subsection (6)(a) applies, the award ordinary rate of pay (howsoever described in the award) shall, for the purposes of the award only, be the rate of pay as prescribed in the award and not that prescribed in the contract of employment.

(8) Where subsection (6)(a) applies, nothing in this section or in any other enactment or law requires an employer to pay an employee more than the greater of —

(a) the employee's entitlement arising under the contract of employment; or

(b) the employee's entitlement arising under the relevant award,

whichever is the greater when assessed on a yearly basis.

(9) This section does not apply to —

(a) a workplace agreement that was registered under repealed section 40I; or

(b) an arrangement under repealed section 19(4)(b) that followed on the expiry of such a workplace agreement.

Note: For the position when an agreement or arrangement referred to in subsection (9) ceases to have effect, see section 152 of the Workplace Relations Act 1996 of the Commonwealth.

173   Relevant also, for present purposes, is  s 3 of the WA Act, part of which was in the following terms:

""award" means —

1. an award under the Industrial Relations Act 1979, and includes any industrial agreement or order under that Act; and

2. an award under the Coal Industry Tribunal of Western Australia Act 1992, and includes any order under that Act and any agreement that comes within section 12(4) or 17(1) of that Act;"

174   Additionally, whilst the terms of s 31 of the LRR Act contained a provision to the effect that the WA Act would expire at the end of one year commencing on the relevant designated day, by the terms of ss 98-100 of the LRR Act, in particular s 100, the terms of s 4H continued beyond the expiration of the WA Act.

175   There is no doubt that at all material times, the appellant and the respondents were and are bound by the Award, the relevant general agreements and other registered industrial agreements for the purposes of s 4H(6) of the WA Act, and were parties to a SCOE as provided in s 4H(2).

176   Accordingly, by reason of these provisions, in my view, s 114(1) of the Act has application to an SCOE as a contract of employment.

177   The terms of a SCOE in operation under s 4H of the WA Act, may not derogate from an award or industrial agreement, and to the extent that they do so, they are invalid and of no effect. Put another way, any inconsistency between contracts of employment and such an industrial instrument, must be resolved in favour of the latter.

178   To the extent that the respondents' SCOEs from 1 January 2003 to date provide for the working of an average of 40 hours per week as "ordinary hours", such a provision is, in my view, unenforceable and invalid by the operation of s 114(1) of the Act. It constitutes a derogation from the provisions of the Award and relevant industrial agreements that provide for the working of a maximum of 37.5 hours per week as ordinary hours.

179   The relevant "person" for the purposes of s 114(1) of the Act, means both the employer and the employee bound by and subject to the relevant award or industrial agreement, as the case may be.

180   The effect of s 114(1) of the Act on the terms of a contract of employment that is at variance to and purports to vary or annul the terms of an award or industrial agreement, is to make the relevant provision of the contract concerned "null and void". Consistent with the above analysis, the language of s 114(1) is clear and unambiguous and a strong statement of Parliamentary intention, as an expression of public policy.  Furthermore, the existence of the penalty provisions in s 83 of the Act, where a contravention or failure to comply with an industrial instrument is established, lends support to invalidity as the intended effect: Re M [1921] 2 K.B.

181   It is reasonably apparent that the terms of s 114(1) of the Act when read with the terms of the Act as a whole, express a Parliamentary intention, as a matter of public policy, that obligations contained in awards and industrial agreements made by the Commission under the Act, are to be observed and mechanisms for enforcement of the same are prescribed.  It is not open for a person, by purported contract, to avoid or to alter the rights and obligations so prescribed in an award or industrial agreement.

182   Moreover, in my view, the language of s 4H of the WA Act confirms that this was the intention of the Parliament.  By s 4H(5), it is provided that "a contract of employment referred to in subsection (3) or (4) has effect, and may be varied or terminated, as if it were a contract entered into between the employer and the employee." Thus, a SCOE, once created by the operation of s 4H(2), is effectively deemed to be a contract "entered into by the employer and employee", as expressly referred to in s 114(1) of the Act.

183   The effect of s 114(1) of the Act in this case, was that once the SCOEs of the respondents came into effect from 1 January 2003, the purported "obligation" on the respondents to work an average of 40 hours per week as ordinary hours, had to be read down to be consistent with the Award and relevant industrial agreements. This necessarily meant that the respondents' obligations were to work no more than 37.5 hours per week as ordinary hours.  Additionally, the appellant as the employer was obliged to offer to full time employees, who were ready, willing and able to perform work in accordance with their contracts of employment, 37.5 ordinary hours per week and no more. 

184   There could not be, by the operation of s 114(1) of the Act, any obligation to afford an employee more than 37.5 ordinary hours of work each week, as to do so would be to purport to annul or vary the terms of the relevant industrial instrument and that provision would therefore become null and void.  

185   When read in this way, the respondents have proceeded upon a misconception as to the obligation imposed on them by their SCOEs, after the commencement of the LRR Act.  From that time, the obligation on the respondents as contained in the Award and relevant industrial agreements, was to work no more than 37.5 hours per week as ordinary or normal hours and the terms of their SCOEs, to the extent that they purported to "annul or vary any such award, industrial agreement", were null and void.  Plainly, the remainder of the terms of the respondents SCOEs were and are, severable and not affected by invalidity as expressly prescribed by s 114(1) of the Act.

186   There is nothing in s 114(2) of the Act, requiring each employee to receive the benefit of any award or industrial agreement or order of the Commission, which is inconsistent with this conclusion.

187   Therefore, in my view, the learned Industrial Magistrate was, with respect, in error in concluding that the respondents' contracts of employment obliged them to work 40 hours per week.

188   It follows from this analysis, if correct, that the absence of an enforceable obligation to work more than 37.5 hours per week, by the operation of s 114(1) of the Act, meant there was no foundation for a conclusion that hours worked in excess of 37.5 hours per week, as prescribed by the Award and the industrial agreements, were liable to be compensated, either as ordinary time or overtime. This is so because of the invalidity of that part of the respondents' contracts of employment prescribing ordinary hours in excess of 37.5 per week from 1 January 2003.

Direction to Work Overtime and Application of Agency Specific Agreements

189   A consequence of my conclusions in relation to particulars 1.1 and 1.2 is that particular 1.8, to the extent that it alleges the learned Industrial Magistrate erred in construing the respondents' SCOE's requiring them to work an average of 40 hours per week as a direction to work for the purposes of the relevant provisions of the Award and industrial agreements, must also be upheld. That is, the provision relied on by the respondents, and upheld by the court, as constituting a "standing direction" to work overtime for 2.5 hours each week, was null and void.

190   If so, then it must necessarily follow that there was not and never could have been, any such lawful direction to work overtime as required by the relevant industrial instruments.

191   In the alternative, if the terms of the SCOE as to working an average of forty hours per week were not null and void by reason of s 114(1) of the Act, I do not consider that it, without more, could constitute a "direction" to work overtime as contemplated by the Award or industrial agreements. 

192   The learned Industrial Magistrate concluded correctly that the 2004, 2006 and 2008 general agreements replaced the terms of the Award in relation to hours of work. The relevant provisions of the general agreements provide that where an employee is "required" or "directed" to work overtime on any day, then the overtime provisions of the Award have application.  This is subject to working of "flexible working arrangements", where particular provisions have application. 

193   In relation to such a direction, the learned Industrial Magistrate concluded that the terms of the respondents' SCOE's as to working 40 hours per week, created by implication, an ongoing contractual direction by the appellant to work overtime.  It was also held that the appellant acquiesced in this arrangement.  Reference was also made to contentions by the respondent at first instance that a decision of the Full Bench in Public Service Commissioner v Dixon (1995) 75 WAIG 1822, was said to support such a conclusion.

194   As found by the court, there was no actual direction to either respondent that they were required to work overtime: AB 120, 122; AB 130-131.

195   The effect of the finding is that the "direction" to work overtime could continue indefinitely, at the election of the respondents, as long as they remained employed by the appellant.  On the basis as found by the court, the only way the implied direction could be countermanded would be either by an agreed variation to the SCOE's, or their termination by the appellant.  In my view, for the following reasons, such a situation is with respect, at odds with what the general agreements contemplate by a direction or requirement to work overtime.

196   The case before the Full Bench in Dixon is distinguishable from the present matter.  In that case the relevant award did not require a direction to work overtime, rather, all time worked outside of the prescribed hours of duty was deemed overtime.  The complainant was one of a number of community corrections officers who, as it was found at first instance, were required to be in attendance at the workplace for operational reasons, and worked through their nominated meal break.  Because they did so for such operational reasons, and as a consequence worked in excess of the prescribed hours, overtime applied. 

197   Furthermore, unlike in Dixon, the relevant provisions of the general agreements in this case did and do not deem work performed outside of prescribed hours of duty as overtime.  In this case, a positive affirmation by the use of the word "direction" in the overtime clause is required.  On its ordinary and natural meaning, a "direction" to do something involves "an instruction how to proceed; an order…": Shorter Oxford Dictionary.  There is nothing in this approach that leads to any repugnancy or absurdity in the interpretation of the overtime clauses when read with the agreements as a whole.  Given that overtime provisions of an award require an employer to provide additional compensation to an employee, a requirement for an authorisation in positive and clear terms is not surprising and is consistent with general industrial principle.

198   Even if the same outcome as in Dixon could be said to apply in this matter, there was certainly no operational need for the respondents to work overtime on the evidence at first instance.  Indeed, the evidence was to the contrary, that is there was no such requirement. 

199   I next deal with the complaints of the appellant in relation to the interpretation of the agency specific agreements and the agriculture system of hours.  It is said by the appellant that the learned Industrial Magistrate was in error in concluding that the terms of these agreements dealing with overtime did not apply. 

200   Taking the 2005 Agency Specific Agreement as an example, by its terms, as noted above, except in the case of "core" conditions, it prevailed over the Award and general agreements to the extent of inconsistency.  By cl 9, the parties could agree to implement agreed variations to the Award in relation to flexible work arrangements, called the "Agriculture System of Hours".  Where a particular work group is not subject to such an arrangement, then the provisions of the Award in relation to hours of work apply.

201   In accordance with cl 10.3 of the 2005 Agency Specific Agreement, the adoption of the Agriculture System of Hours was to be by a secret ballot carried by a simple majority. The evidence at first instance was that the respondents were located in Merredin and South Perth, districts to which the Agriculture System of Hours agreements had application by acceptance of majority votes in those locations. It applied to all officers in the locations and the respondents took advantage of the system: AB 118-119; AB 131.  Prima facie therefore, these provisions had application to the respondents. It seems to be the case that the relevant provisions of both the agency specific agreements and the Agriculture Systems of Hours operate as a scheme in relation to flexible working arrangements.

202   Under this arrangement, employees work within a span of hours between 6.30am and 6.30pm Monday to Friday.  Average daily hours are 7.5 with a maximum of 12 hours on any day.  A system of "credits and debits" operates over an agreed settlement period of thirteen weeks.   Importantly for present purposes, overtime applies under this scheme only where an employee works outside of the span of hours above. 

203   As an example, cl 10.10 of the 2005 Agency Specific Agreement, largely in the same terms as the other agency specific agreements was as follows:

"10.10 Overtime

a) Where the notice period is less than 24 hours, then in accordance with the overtime provisions of the parent award, overtime is payable after 7 hours and 30 minutes.

b) Where an employee is directed by the Director General or a delegated officer to work outside the agreed span of hours, overtime is payable in accordance with the overtime provisions of the parent award.

c) Where a declared emergency arises in accordance with the Department's policy on emergency response, the Agriculture System of Hours will be suspended and employees involved in the declared emergency will be paid in accordance with the Award entitlements."

204   As already noted, in the case of inconsistency, except as to core conditions (which do not include overtime provisions), the agency specific agreements prevail over both the Award and the general agreements. 

205   In my view, the terms of cl 10.10 are to be interpreted disjunctively, such that each of cls 10.10(a), (b) and (c) are to be read independent of one another. Given the hierarchy between the various levels of industrial instruments, there seems no reason why cl 10.10(b) should not be given effect as being inconsistent with the terms of both the Award and general agreements in relation to overtime.  That is, it is only in circumstances where the Director General or a delegated officer gives a direction to an employee to work outside of the agreed span of hours being 6.30am to 6.30pm Monday to Friday that overtime would apply.

206   It is also strongly arguable that this means working more than 30 minutes outside the span of hours, as reinforced by the terms of the Agriculture System of Hours concerning overtime penalty rates.  This is because cl 10.10(b) of the 2005 Agency Specific Agreement refers to overtime payable "in accordance with the overtime provisions of the parent award", which means the Award.  By cl 22 - Overtime Allowance of the Award, par (3)(a) provides for overtime to be payable where "An officer works overtime for a greater period than 30 minutes".  I see no reason to give the term of this provision of the Award anything other than its ordinary and natural meaning based on its text.

207   If this be so, then with respect, I consider that the learned Industrial Magistrate was in error in concluding that the agency specific agreements and Agriculture Systems of Hours as to overtime had no application to the respondents.  Even if the hours of work provisions of the SCOE's could be construed as a "direction" to work overtime in the requisite sense, then the respondents did not work outside of the span of hours as specified in the agency specific agreements and the Agriculture System of Hours.

208   Even if it be concluded that in a particular case the terms of the agency specific agreements were not inconsistent with the general agreements and did not prevail, then the respondents were still required to be "directed" to work overtime under the general agreements, which, on the above analysis, they were not.   Importantly, under the terms of the overtime provisions of the general agreements, for example cl 13.15(a) of the 2006 general agreement, overtime stands alone on a daily basis. That is, the clause appears to contemplate a specific direction each day to work overtime beyond 7.5 hours on any day.  This is inconsistent with the notion that there can be an effective "standing" implied direction to work overtime, arising from the terms of the respondents' SCOE's.  Any such implication would be at odds with the express terms of the general agreement.

Conclusion

209   The claims at first instance as set out in the statement of claims alleged that the appellant was in breach of its obligations under the Award and general agreement to pay overtime at the correct rate.  A monetary sum, prejudgment interest and penalties against the appellant were sought.  No claim was before the court below for the enforcement of other benefits arising under the respective industrial instruments. The respondents are bound by their case as particularised: Palermo v Rosenthal (2011) 91 WAIG 129; LHMU v The Minister for Health (2011) 91 WAIG 291. 

210   The appropriate course is that the appeals be allowed and the orders of the learned Industrial Magistrate quashed.