REVIEW OF DECISION OF THE CONSTRUCTION INDUSTRY LSL PAYMENTS BOARD GIVEN ON 20 APRIL 2015

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2015 WAIRC 00984

DELIVERED : TUESDAY, 3 NOVEMBER 2015

FILE NO. : APPL 120 OF 2015

Applicant

AND

The Construction Industry Long Service Leave Payments Board

Respondent

Catchwords : Industrial Law (WA) - Review of decision of The Construction Industry Long Service Leave Payments Board - Whether employer required to make contributions on behalf of employee in receipt of workers' compensation payments - Interpretation of s 34(1) "ordinary pay" - Reference to "ordinary pay" is not to be taken to be payments actually made to an employee, but those which are "payable" - Employees' period on workers' compensation does not absolve the employer from making contributions to the Board - Application for review dismissed

Legislation : Construction Industry Portable Paid Long Service Leave Act 1985 (WA)

Fair Work Act 2009 (Cth)

Workers Compensation and Injury Management Act 1981 (WA)

Interpretation Act 1984 (WA)

Result : Application dismissed

Representation:

Counsel:

Applicant : Mr A Vucak and with him Ms R Defreitas of counsel

Respondent : Mr S Kemp of counsel and with him Ms J Alilovic of counsel

Solicitors:

Applicant : Jarman McKenna

Respondent : Jackson McDonald

Case(s) referred to in reasons:

Kirfield Engineering Pty Ltd v Construction Industry Portable Paid Long Service Leave Payments Board (1993) 73 WAIG 2670

Taylor v Owens – Strata Plan No 11564 (2014) 88 ALJR 473

Construction Industry Long Service Leave Payments Board v Precision Corp Pty Limited (unreported 20 September 1991 Library No. 920130)

Case(s) also cited:

Department of Education v Kenworthy (1990) 3 WAR 1

Department of Education and Training v Kenneth Adrian Ducker C27-2007

Glenn v Compass Group (Australia) Pty Ltd [2014] WADC 86

NSW Nurses and Midwives’ Association v Anglican Care [2014] FCCA 2580

Anglican Care v NSW Nurses and Midwives’ Association [2015] FCAFC 81

Reasons for Decision

1         Mr Thomson was an employee of RCR Resources and his employment was covered by the RCR Resources Pty Ltd Solomon Ore Processing Facilities Project Greenfields Agreement 2011 (Cth). It was common ground in these proceedings, that RCR Resources and Mr Thomson were registered as an employer and an employee under the Construction Industry Portable Paid Long Service Leave Act 1985 (WA) administered by the Board.

2         Mr Thomson suffered a workplace injury in February 2013. As a result of the workplace injury, Mr Thomson was in receipt of workers’ compensation payments under the Workers Compensation and Injury Management Act 1981 (WA). Mr Thomson underwent a rehabilitation program which involved him performing office based duties for a period of time.

3         During the time Mr Thomson was receiving workers’ compensation payments, RCR Resources did not include Mr Thomson on its quarterly returns required to be submitted to the Board under the LSL Act, nor did it make any contributions in respect of Mr Thomson, under s 34 of the LSL Act. Mr Thomson remained an employee of RCR Resources throughout this period of time.

4         In late April 2015 the Board informed RCR Resources that it was required to make contributions under s 34 in relation to Mr Thomson, whilst he was off work on workers’ compensation. RCR Resources now seeks a review of the Board’s assessment, under s 50 of the LSL Act. The question arising in the application for review is the assessment of “ordinary pay” under s 34. Specifically, whether a person in Mr Thomson’s position, whilst in receipt of workers’ compensation payments under the WC Act, should have contributions made on his behalf to the Board, in respect of such a period. RCR Resources said that it should not have to make such contributions. The Board disagreed and said that the reference to “ordinary pay” in s 34(1) is a measure by which such contributions are to be calculated. It does not refer to an employee’s actual payments received over any particular period of time. The contentions put by both RCR Resources and the Board in relation to their respective positions on the review are as follows.

Contentions of the parties

5         For RCR Resources it was contended that having regard to the terms of s 34 of the LSL Act, when read with s 21 and the meaning of “ordinary pay” in s 3, it is clear that Mr Thomson, suffering a compensable injury and in receipt of worker’ compensation, was not entitled to receive “ordinary pay” over the relevant period.  The relevant period for these purposes was from 27 March 2013 to 7 August 2013. During this period, Mr Thomson was absent from the site, not performing his normal duties as a rigger, and was engaged in office duties in RCR Resources’ Perth office, as a part of a return to work program.

6         Because of this, as RCR Resources’ submissions went, Mr Thomson, over this period, was not in receipt of wages as he was being paid workers’ compensation payments.  He was not performing his pre-accident duties as a rigger and he was not engaged in duties on site in the construction industry, to which the Agreement had application. Given that Mr Thomson was in receipt of workers’ compensation payments from 1 April 2013 to 7 August 2013, the Board should not have assessed contributions payable on his behalf. This is because, as RCR Resources submitted, workers’ compensation payments are a statutory entitlement under the WC Act, and are not wages or ordinary pay.

7         Furthermore, RCR Resources referred to s 130 of the Fair Work Act 2009 (Cth).  It was submitted that when read with s 113 of the FW Act, and cl 31 of the Agreement, it is clear that there is no term in the Agreement requiring the employer to make contributions for long service leave whilst an employee is in receipt of workers’ compensation payments.

8         For the Board, a number of submissions were made. First and foremost, the Board contended that the relevant provisions of the LSL Act, for present purposes at least, establish a statutory scheme for employers in the construction industry to make contributions to the Board, for employees engaged in the industry. The Board is empowered, from the fund which it administers, to make payments to employees in the construction industry in respect of long service leave, once employees meet the required qualifying periods of service.

9         In accordance with the key provision for the purposes of these proceedings, that being s 34, the Board contended that the statutory scheme contemplates two broad obligations. The first obligation is on employers to make contributions to the fund administered by the Board. The second obligation, relates to payments made by the Board to employees, who meet the qualification requirement for long service leave. The submission of the Board was that those obligations are independent of each other.

10      Specifically as to s 34(1), the Board submitted that the first part of the subsection obliges an employer, in respect of persons employed by the employer under a current contract of employment, to make contributions. This only requires the existence of a contract of employment, and is not dependent on the actual performance of work under it. The second part of s 34(1), which is the controversial part for present purposes, deals with the manner by which contributions are calculated for employees of employers in the construction industry. The reference to “ordinary pay”, as defined in s 3, gives it a special meaning, and that is a meaning based on what an employee is entitled to be paid, not what they are actually paid. 

11      In relation to these submissions, the Board referred to a decision of the Commission in Court Session in Kirfield Engineering Pty Ltd v Construction Industry Portable Paid Long Service Leave Payments Board (1993) 73 WAIG 2670.  In this case, which dealt with a similar issue, although under a somewhat different former definition of “ordinary pay” in the legislation, the conclusion was reached that a period of service on workers’ compensation does not mean an employer is absolved from the obligation to make contributions on an employee’s behalf, under s 34(1).

12      As to RCR Resources’ reference to s 21 of the LSL Act, the Board submitted that this section of the Act, and in particular its reference to “days of service”, is only for the specific purposes of calculating an entitlement of an employee to long service leave benefits under the legislation. It is not relevant for the purposes of assessing an employer’s obligation to make contributions. Finally, the Board submitted that s 130(1) of the FW Act is not relevant to the issue to be determined in these proceedings. In all the circumstances the Board submitted that its assessment of RCR Resources’ obligations to pay contributions in respect of Mr Thomson, whilst he was on workers’ compensation, was correct.

Consideration

13      The application for review turns largely on the proper construction of the relevant provisions of the LSL Act, in particular s 34(1). The interpretation of legislation is a text based activity and it is to the text of the statute or other instrument, that primary regard must be given.  An interpretation consistent with the purpose and object of the legislation should be preferred to one that is not: s 18 Interpretation Act 1984 (WA). Recently, in Taylor v Owens – Strata Plan No 11564 (2014) 88 ALJR 473, Gageler and Keane JJ said at par 65:

[65]  Statutory construction involves attribution of legal meaning to statutory text, read in context.  “Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning … But not always.”112  Context sometimes favours an ungrammatical legal meaning.  Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words.  Implicit words are sometimes words of limitation.  They are sometimes words of extension.  But they are always words of explanation.113  the constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention.  Construction is not speculation, and it is not repair.

14      By its long title, the LSL Act is “an Act to make provision for paid long service leave to employees engaged in the construction industry and for incidental and other purposes.”

15      By Part II the Board is established as a body corporate. The Board amongst other things is to maintain a register of employers and employees under the legislation and to administer the scheme of payment to employees for long service leave established under the LSL Act. For that purpose amongst its functions in s 15, the Board is to have a fund, which is comprised of contributions made to it under s 34 and proceeds from investments and other monies which the Board may borrow or raise. From the funds, the Board is to make payments to employees in accordance with the terms of the legislation.

16      Part III deals with entitlements to long service leave and pay. In particular, s 21 sets out the long service leave benefits which apply to an employee in relation to service in the construction industry. By s 21(2) there is set out a method of calculating such entitlements, which is based on a prescribed number of days of service with an employer or employers. Notably, given the nature of the construction industry, service is not required to be continuous with one and the same employer, and even with the same employer there can be more than one period of service. This Part also makes provision for lump sum payments, the taking of leave and additionally, pro rata leave after a minimum period of service.  There are powers enabling the Board to remove an employee from the register of employees where they have not been engaged in the construction industry for a prescribed period of time. On this event, any entitlement to long service leave is extinguished, and there is no apparent mechanism within the legislation for an employer to recover any contributions so made.

17      By Part IV, provision is made for the registration of both employers and employees who are engaged in the construction industry as defined in s 3. Under this Part also, a registered employer is required to furnish a return to the Board for each prescribed period with the appropriate amount required to be paid to the Board in respect of persons employed by it.

18      The key provision for present purposes is s 34(1) which is in the following terms:

34. Contribution by employer and assessment by Board

(1) On and from the appointed day an employer shall pay to the Board in respect of a person employed by him as an employee and in respect of each week or part of a week during which that person is so employed such amounts by way of contributions as are calculated by reference to the ordinary pay payable to that employee as is prescribed.

19      Furthermore, the definition of “ordinary pay” in s 3 is also relevant and it provides:

ordinary pay, of a person, means the rate of pay (disregarding any leave loading) to which the person is entitled for leave (other than long service leave) to which the person is entitled;

…

(3a) For the purposes of the definition of ordinary pay in subsection (1), if the person is not entitled to paid leave (other than long service leave), the ordinary pay of the person is the rate of pay to which the person is entitled for ordinary hours of work.

20      From the terms of the LSL Act as a whole, it is apparent that the overall scheme is to establish a fund from contributions made by employers in the construction industry. The Board administers the scheme payments for long service leave from the fund for the benefit of employees engaged in the construction industry, irrespective of by whom they may be employed at the time that the long service leave accrues. It seems from this scheme that contributions made by employers in accordance with the LSL Act, is the principal means by which the scheme is funded. Such contributions are not made for the purposes of paying for an employer’s own employees’ long service leave entitlements, but they may do.

21      In Construction Industry Long Service Leave Payments Board v Precision Corp Pty Limited (unreported 20 September 1991 Library No. 920130) Owen J said at pp 3-4:

The Scheme of the Act

The Act embodies the concept of providing long service leave based on service to an industry rather than service to a single employer. Instead of being eligible for long service leave after fifteen years of service to one employer, employees in the construction industry become eligible after fifteen years service in the industry.

The legislation provides for a portable long service leave scheme for employees who may move from one employer to another or others but who remain within the construction industry.

To be eligible for benefits under the scheme, employees must be registered (s 21).  All employers in the construction industry must be registered (s 30).  To meet the costs of the scheme each employer pays a contribution to the plaintiff based on a percentage of their employees' ordinary pay (as defined in s 3) except in the case of apprentices, for whom no contribution is made (ss 31 and 34(1)).  The scheme enables registered employees to carry their long service leave entitlements from employer to employer as the responsibility for payment for long service leave rests with the plaintiff rather than the individual employer.

22      From s 34(1) set out above, it provides for a contribution by an employer to the Board, “in respect of a person employed by him as an employee”. The contributions seemingly are required to be made during the course of employment. Such contributions are to be made, and are to be calculated “by reference to the ordinary pay payable to that employee”.  It was common ground that there is a percentage rate of contribution prescribed by the relevant regulations. That is not necessary to consider for the purposes of this review.  The reference to “ordinary pay” under s 34(1), refers to that which is “payable”, and not that which is “actually paid”, on the ordinary and natural meaning of the words used in the subsection.

23      In s 3, set out above, “ordinary pay” makes reference to a rate of payment “to which a person is entitled” for leave. Whilst the definition is not elegantly drafted, again, there is no reference to any actual payment of wages, salary or other benefits. Furthermore, by s 3(a) if the person has no entitlement to leave, then the relevant “ordinary pay” for such a person is the rate the person is “entitled to for ordinary hours of work”. Again no reference is made to actual payments made for the purposes of determining ordinary pay. Thus in both cases, in ss 3 and 34(1) when read together, which they must be, the reference to “ordinary pay” is not taken to be payments actually made to an employee, but those which are “payable”.

24      Section 21 of the LSL Act, to which RCR Resources made extensive reference, deals with the entitlements of employees to long service leave and how those entitlements are to be calculated. So much is clear by the heading to Part III.  Section 21(1) prescribes the entitlement to an employee based on “service in the construction industry (as defined in s 3)”. By s 21(2), how service is to be calculated is then set out. Consistent with the mobility of labour in the construction industry, service does not need to be continuous with the same employer. Service will however exclude breaks in service with the one and the same employer.

25      In my opinion, having regard to the scheme of the LSL Act, I consider that the issue of the calculation of entitlements to long service leave under Part III and the calculation of contributions employers are required to make to the Board, as being separate and distinct from one another. The contributions by an employer are to be made in respect of persons who are employed in each week or part of a week. That is the trigger for the making of a contribution to the Board. The rate of contribution, which is the second part of s 34(1) is to be determined in the manner prescribed. The words “are calculated by reference to”, when read in their ordinary and natural sense, are consistent with requiring an employer to work out how such contributions are to be determined. The use of the words “ordinary pay payable” require, consistent with the meaning of “ordinary pay” in s 3, an employer to work out what a person would be paid if they were to go on for example, annual leave or sick leave. It enables an employer to make an objective assessment as to how that calculation should be performed.

26      In the case of Mr Thomson, while on workers’ compensation, he remained an employee of RCR Resources. His rate of pay for the purposes of the determination of his “ordinary pay payable”, on which the company would be required to make contributions, would be presumably that set out in the Agreement, otherwise payable to him whilst on leave. I do not consider that Mr Thomson’s period on workers’ compensation, absolved RCR Resources from making contributions to the Board. To the extent that the same view was reached in Kirfield, albeit under the previous definition of “ordinary pay” in s 3, which referred to the relevant prescribed award and prescribed classification, then the same result applies in this case. In both the former and current definition of “ordinary pay”, a method of calculation was and is provided, based on an objective assessment of what payments would be payable in respect of an employee and not payments actually made to an employee.

27      In my view, the reference to “service”, and the provisions in relation to entitlements of employees in s 21 of the LSL Act, referred to by RCR Resources, are separate and distinguishable from the obligation to make contributions in s 34(1) contained in Part IV of the legislation. The construction of the legislation which I prefer is consistent with the overall legislative scheme to provide a common fund for contributions from all employers engaged in the construction industry in respect of those persons they employ, administered by the Board, and from which fund entitlements are paid to employees as and when they fall due under the legislation.

28      The final issue raised, concerns s 130 of the FW Act.  It provides as follows:

130  Restriction on taking or accruing leave or absence while receiving workers’ compensation

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

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

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

29      Section 130 falls within Part 2-2 of the FW Act that deals with National Employment Standards, including leave. The section only applies to leave which accrues “under this Part”. In this case, the entitlement to long service leave is taken or accrues under the LSL Act and not the FW Act. Whilst the Agreement refers to long service leave in cl 30.0, it is plainly a reference, as a statement, to the contributions payable by RCR Resources on behalf of employees as required by the LSL Act. Also, there is no applicable award or agreement based long service leave terms, to which s 113 of the FW Act, could have application in this particular case. In my opinion, the terms of s 130 of the FW Act, and the cases referred to in argument, do not assist in relation to the issue of contributions required for or the entitlements of employees to, long service leave for employees engaged in the construction industry under the LSL Act.

Conclusion

30      Therefore for the foregoing reasons, I consider that the Board was correct in its assessment. The application for review must be dismissed.