100319861

OVER PAYMENT OF ANNUAL LEAVE

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES THE CIVIL SERVICE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED

APPLICANT

 -v-

 DIRECTOR GENERAL, DEPARTMENT OF JUSTICE

RESPONDENT

CORAM COMMISSIONER P E SCOTT

 PUBLIC SERVICE ARBITRATOR

DATE WEDNESDAY, 5 NOVEMBER 2003

FILE NO PSACR 35 OF 2003

CITATION NO. 2003 WAIRC 09922

_______________________________________________________________________________

Result Application granted in part

Representation

Applicant Mr J Ross

Respondent Mr D Matthews (of counsel) and with him Ms V Jabr

_______________________________________________________________________________

Reasons for Decision

1         The matter referred for hearing and determination is set out as follows:

“1. The Civil Service Association of Western Australia Incorporated (“the Applicant”) says that:

(a) in January 2003 the Department of Justice (“the Respondent”) advised Mr Simmons that an audit of his annual leave entitlement had discovered an alleged overpayment in 1998/99 of 21 days annual leave;

(b) the error was due to the Respondent’s failure to properly maintain annual leave records during Mr Simmons’s secondment to the Department of Fisheries in 1998 and 1999;

(c) the Respondent has acted harshly and unfairly to recover the alleged overpayment;

(d) the Respondent does not have the ability to deduct the overpayment from current leave entitlements without a signed authorisation from Mr Simmons; and

(e) applications for leave signed in 1998 and 1999 cannot be used to debit Mr Simmons’s leave entitlement for the 2003 calendar year.

2. The Applicant seeks:

(a) a Declaration that the Respondent has breached Sections 8 and 9 of the Public Sector Management Act 1994 in its handling of this matter;

(b) a Declaration that the Respondent has breached Section 49D(2) of the Industrial Relations Act 1979 in failing to keep accurate records of Mr Simmons's leave entitlements;

(c) a Declaration that the Respondent has caused Mr Simmons to incur a debt without his knowledge or authorisation;

(d) a Declaration that the Respondent is responsible for the overpayment of leave;

(e) a Declaration that the Respondent cannot relinquish all responsibility and liability for the overpayment at the financial detriment of Mr Simmons; and

(f) an Order preventing the Respondent from recovering the overpayment or altering his leave balance to recover the overpayment from Mr Simmons.

3. The Respondent:

(a) refutes the claims of the Applicant opposes the Order and Declarations as sought; and

(b) says that the Respondent has a statutory obligation to seek recovery of all overpayments and as such will pursue all avenues available to it in doing so.”

2         Notwithstanding the complexity added to this matter by reference to allegations of breaches to the Public Sector Management Act 1994 and the Industrial Relations Act 1979, this matter is quite simple.  The applicant alleges that the respondent has treated Mr Simmons unfairly in that he has taken annual leave beyond his entitlement due to the respondent’s failure to keep accurate records and he seeks an order which would have the effect of removing the deficit in his annual leave brought about by that failure. 

3         The facts too are simple.  Mr Simmons has been an employee of the respondent for some 16 years.  On 9 March 1998 he commenced a secondment at the Department of Fisheries.  At around that time, Tiffany Maddox, a Personnel Officer with the Ministry of Justice wrote to the Human Resources Branch of the Department of Fisheries (Exhibit R11).  This letter indicates that attached to the letter was Mr Simmons’ personal file and notes that he was on a 9 month secondment with the Department of Fisheries.  The letter also set out the details of Mr Simmons’s salary level, sick leave, long service leave and importantly, his annual leave credits.  These annual leave credits were recorded as being in credit of 41.1 hours (approximately 5 days) as at 31 December 1997 and that he had accrued 30.4 hours (4 days) up to 19 March 1998.  The letter bears a stamp “CLOCKWORK PROCESSED”.  I take this stamp to mean that these details were included in the personnel records system of the Department of Fisheries, called Clockwork, if not in the respondent’s system.

4         During the period of his secondment, Mr Simmons submitted annual leave forms to cover the following periods, two weeks from 19 October 1998 to 30 October 1998, nine days from 17 December 1998 to 1 January 1999 and two days from 4 – 5 March 1999 (Exhibit R2).  His annual leave forms for those periods contain endorsements approving the leave and stamps indicating “CLOCKWORK PROCESSED”.  According to the evidence the leave forms appear to have been placed on Mr Simmons’s personal file when it was held with the Department of Fisheries.  There is no indication that they were forwarded separately or specifically to the respondent.  Mr Simmons completed his secondment and returned to the respondent on 6 April 1999.  Joanne Jemerson, Personnel Officer for the Department of Fisheries, wrote to Personnel Services, Ministry of Justice on 17 March 1999 (Exhibit R9).  Her letter indicates that she was enclosing Mr Simmons’s personal file and noting that “the following entitlements are provided for you (sic) information”.  The annual leave accrued to 31 December 1998 was recorded as being 26.1 hours or 3.43 days and the annual leave accrued to 31 March 1999 was recorded as 38 hours or 5 days.  There is no mention of Mr Simmons having taken any leave during the period.

5         There is no indication in this letter that the respondent had then updated its records in any way.  The evidence suggests that when the file was returned to the Department of Justice, no checks were made by the Department of Justice of Mr Simmons’s annual leave accruals and his records held in the respondent’s own records system were not adjusted to take account of the annual leave taken by Mr Simmons while on secondment.

6         Mr Simmons had given evidence that in 1998 he had no access to the respondent’s records system to check his annual leave entitlements.  He would apply for annual leave and if approved he would take it.  He relied upon his employer’s human resources services for advice regarding his annual leave balance.  He says that he usually takes annual leave in smaller rather than larger blocks.  He does not keep his own records, relying upon advice from human resources.

7         Mr Simmons says that he was expecting the birth of his first child in March this year and had planned his financial affairs in preparation for the birth to make sure that he was clear of debt as his wife would be on maternity leave and their income would be reduced in those circumstances.

8         Mr Simmons was advised by letter dated 17 January 2003 that he had been overpaid his annual leave (Exhibit R3).  This letter was from the Personnel Services – Leave Audit Team of the respondent.  It advised that as part of a general review of the Concept system an audit of leave had been conducted on 22 July 2002.  This audit had identified a number of discrepancies which included that all three periods of leave referred to earlier which were taken by Mr Simmons in 1998 and 1999 were not recorded in the respondent’s annual leave records and that the leave applications made to the Department of Fisheries had never been debited from the Department of Justice’s records system.  He was therefore advised that his leave entitlement would have to be adjusted by 21 days. 

9         Mr Simmons says that he was surprised and upset to discover that he had been placed in a situation where he had been overpaid for annual leave and that he had now a deficit in his annual leave entitlement.  Mr Simmons says that he believed that the respondent’s correspondence to him throughout the subsequent period in dealing with this matter has been threatening.

10      In the letter of 17 January 2003, the respondent advised Mr Simmons that there were three options available to him in dealing with the deficit:

1. To create an overpayment for the 21 day’s annual leave which is to be repaid back to the Department; or

2. Process 1 day’s annual leave from Mr Simmons’s 2003 entitlements and 20 days of his long service leave entitlements; or

3. Create an over payment for one day to be repaid back to the Department and 20 days deducted from his long service leave entitlements.

11      The respondent proceeded to debit the 21 days against Mr Simmons’s annual leave entitlements when the matter was not resolved.  As Mr Simmons had no annual leave entitlements available to him, and as he is unable to take long service leave in small amounts, an application was made for an interim order to be issued to reinstate some of that leave until the matter was heard and determined.  The order was issued on 7 August 2003 pending the hearing and determination of this matter and required the respondent to reinstate an amount of 7 days annual leave to Mr Simmons from the date that it was deducted from his records. 

12      As I noted earlier, this matter is quite simple.  The respondent had been informed of Mr Simmons’s leave entitlements by correspondence from the Department of Fisheries when he returned from the secondment.  However, the respondent did not check this letter and adjust its records accordingly.  Through its administrative processes the respondent did not keep an accurate record of Mr Simmons’s leave taken or owed to him.  He continued to seek approval to take leave and had it approved over a period such that by the beginning of 2003, he had exceeded his annual leave entitlement by 3 weeks without being aware of it.  He was not alerted to this by the respondent until after the audit because the respondent’s records were incorrect.

13      On one hand then the respondent’s records management system, together with a lack of the respondent checking Mr Simmons’s records and updating them upon his return from secondment, has meant that Mr Simmons’s records were erroneous such as to place him in a position where, through no fault of his own, Mr Simmons had been taking leave to which he had no entitlement at the time.

14      Mr Simmons had clearly planned his financial affairs and leave arrangements to take account of changes in his family circumstances.  He is disadvantaged by the fact that the respondent’s records have been kept in such a manner that for some years a period of more than 4 weeks leave had not been recorded as having being taken.  That disadvantage is that he would be unable to take annual leave.  There would be no specific financial disadvantage to him unless he were to need to take leave and annual leave would be the only way to accommodate that need.  He would then have to take leave without pay or draw on other leave.  That other leave may not meet the same purpose.  He might also be financially disadvantaged if his employment were to terminate, and he would have a debt to repay.  Conversely, Mr Simmons has had the benefit of the leave which he has taken.  In the respondent’s case, it has an obligation to seek to recover overpayments and to manage its finances responsibly.

15      Whether or not there has been a breach by the respondent of its obligations pursuant to the Public Sector Management Act 1994 and the Industrial Relations Act 1979, the role of the Public Service Arbitrator is to resolve disputes according to equity, good conscience and the substantial merits of the case, not merely according to breaches of law or otherwise.  In these circumstances, Mr Simmons had been disadvantaged overall but also has had the benefit of having taken the leave.

16      In these particular circumstances, which are limited to Mr Simmons, I am satisfied that the fair outcome would be for the respondent to bear some of that responsibility and for Mr Simmons to take account of the fact that he has received the benefit of the leave.  An appropriate arrangement would be for the respondent and Mr Simmons to share the burden of the difficulty which has arisen.  Accordingly, Mr Simmons ought be credited with half of the leave that the respondent has deducted because it has failed to record leave taken by him.  Therefore, I intend to order that Mr Simmons be credited with 10.5 days annual leave to his benefit.

17      Where the applicant seeks an order that the Commission, in effect, restrain the respondent from recovering the over payment or altering Mr Simmons’s leave balance to recover the overpayment, it is not my intention to make such an order.  I am of the view that such an order would be unnecessary if an order as referred to above is issued.  That will have the effect of requiring the respondent to alter Mr Simmons’s leave balance to provide him with 10.5 days annual leave entitlement.  Such order shall be in substitution for, not in addition to, the leave already provided by the interim order, which ceases to have effect with the issuing of the order to finalise this matter.