WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2019 WAIRC 00650

DELIVERED : Wednesday, 21 August 2019

FILE NO. : M 128 OF 2018

CLAIMANT

AND

Vesco Foods Pty Ltd, trading as Vesco Foods

RESPONDENT

CatchWords : INDUSTRIAL LAW – Construction of term of an enterprise agreement – Meaning of ‘agreed hours’ – Payment of overtime

Legislation : Fair Work Act 2009 (Cth)

Industrial Relations Act 1979 (WA)

Instruments : Vesco Foods Pty Ltd (Production Employees, Western Australia) Enterprise Agreement 2017

Food, Beverage and Tobacco Manufacturing Award 2010

Case(s) referred

to in reasons: : Border Express Pty Ltd [2013] FWA 7627

Hospira Australia Pty Ltd [2013] FWCA 3663

Dairy Technical Services Ltd re DTS Food Laboratories Collective Agreement 2012 – 2015 [2012] FWAA 10728

O’Brien Glass Industries Ltd re O’Brien Tasmania Glaziers Enterprise Bargaining Agreement 2012-2014 [2012] FWAA 9371

Barlina Pty Ltd [2014] FWC 887

United Voice v Wilson Security Pty Ltd [2019] FCAFC 66

Mildren and Anor v Gabbusch [2014] SAIRC 15

Miller v Minister of Pensions [1947] 2 All ER 372

Briginshaw v Briginshaw [1938] HCA 34

Fedec -v- The Minister for Corrective Services [2017] WAIRC 00828

City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union [2006] FCA 813

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Excelior Pty Ltd [2013] FCA 638

ALDI Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53

Armacell Australia Pty Ltd and others [2010] FWAFB 9985

Result : Claim proven in part

Representation:

Claimant : Mr C. Young (industrial officer)

Respondent : Mr J. Raftos (of counsel) as instructed by Minter Ellison

REASONS FOR DECISION

1         Deng Atack Ken Agany (Mr Agany) is employed by Vesco Foods Pty Ltd, trading as Vesco Foods (Vesco) as a permanent part-time food process worker pursuant to an updated employment contract dated 8 August 2016 (Employment Contract).

2         Mr Agany, The Australian Workers' Union (the Claimant) and Vesco are all covered by the Vesco Foods Pty Ltd (Production Employees, Western Australia) Enterprise Agreement 2017 (the Agreement) pursuant to s 53 of the Fair Work Act 2009 (Cth) (FWA).

3         The Agreement, approved by the Fair Work Commission (FWC) on 18 August 2017 with the operative date being 25 August 2017, was approved and subject to undertakings given by Vesco.

4         Pursuant to cl 4.3 of the Agreement, the Agreement operates to the exclusion of any modern award or other industrial agreement, including the Food, Beverage and Tobacco Manufacturing Award 2010 (the Award). The Award is relevant for the purposes of interpreting the Agreement to the extent required by the undertakings given by Vesco and because the Award was the relevant award for the ‘better off overall test’ under s 193 of the FWA.

5         The Claimant claims Vesco has contravened s 50 of the FWA by:

(a)     failing to pay Mr Agany overtime for hours worked in excess of 20 hours per week at the rate required under the Agreement (by reference to the undertakings); and

(b)     failing to establish a reconciliation system to determine any shortfall on payment as required by undertakings in the Agreement.

6         The Claimant further claims Vesco has contravened s 323 of the FWA by failing to pay Mr Agany any amount in full that he was entitled under the Agreement.

7         The Claimant seeks an amount to be paid to Mr Agany of $5,193.42.

8         Vesco denies the Claimant’s claim and relevant to the alleged failure to pay overtime says that Mr Agany’s agreed hours were 38 hours per week as determined by a weekly roster where Mr Agany accepted the working hours published in the roster. Further, the reference to 20 hours per week is reference to a guaranteed minimum of hours of work per week.

9         The parties, having conferred, identified certain questions for determination (see below) and lodged an amended statement of agreed facts1 with a sample week from 28 August 2017 to 3 September 2017 to assist the court in answering the questions (Example Week).

10      Schedule I contains the amended statement of agreed facts (Agreed Facts).

11      Schedule II outlines the jurisdiction and practice and procedure relevant to the Industrial Magistrates Court (IMC).

12      Schedule III outlines the principles relevant to construction of an industrial instrument.

13      Schedule IV contains various tables of calculations referred to in these reasons for decision.

Questions And Issues For Determination

14      The parties identified the following questions for determination:

(a)     Are Mr Agany’s ‘agreed hours’ for the purposes of the undertaking in the Agreement 20 hours per week?

(b)     If the answer to (a) is ‘yes’, what is the amount owing to Mr Agany in respect of overtime hours for the Example Week?

15      To answer those questions the following issues require determination:

(a)     What were Mr Agany’s ‘agreed hours’ under his Employment Contract and the Agreement?

(b)     What does ‘minimum of 20 hours per week’ mean in cl 9.2 in the Agreement and in the Employment Contract?

(c)     When do overtime rates apply?

(d)     What, if anything, is owed to Mr Agany?

16      The remaining issue is whether Vesco undertook weekly reconciliation required by the undertakings to the Agreement.

Claimant’s Contentions

17      The Claimant contends that:

(a)     Mr Agany’s agreed hours of work are 20 hours per week and consequently he is entitled to be paid overtime for each hour worked over 20 hours per week in accordance with overtime rates in the Agreement;

(b)     the Employment Contract and the Agreement guarantees Mr Agany 20 hours per week of work as a minimum and the Claimant claims this is the agreed hours of work;

(c)     a fair and objective interpretation of the Employment Contract and Agreement does not favour a reading of agreed hours as ‘20 hours per week and any additional hours’ as determined by Vesco;

(d)     the purpose of the undertaking in the Agreement as it related to overtime for part-time employees was to ensure that part-time employees did not suffer a financial detriment in comparison to that which they might be paid under the Award; and

(e)     their proposed methodology for calculating overtime means Mr Agany is owed $242.72 for the Example Week.

Respondent’s Contentions

18      Vesco contends that:

(a)     the Employment Contract and the Agreement set a minimum number of guaranteed working hours per week (20 hours), but these are not Mr Agany’s agreed hours;

(b)     Mr Agany’s agreed hours are between 20 and 38 hours as allocated and published in a roster and accepted by him;

(c)     the Agreement wholly excludes the Award and conceptually ‘agreed hours’ is significantly different under the Agreement given no equivalent undertaking to that contained in cl 12.3 of the Award applies; and

(d)     alternatively, if the issue of ‘agreed hours’ is determined in accordance with the Claimant’s contention, the amount owed is less than that alleged by the Claimant using a different methodology.

The Agreement Undertakings

19      The undertakings in the Agreement cover a number of areas. Relevant to the claim are the following undertakings:

Base rates of pay

Notwithstanding the base rates of pay in Schedule 1 of the Agreement, employees will receive at least the base rate of pay in the Award or the rate set out in the Agreement relevant to their classification, whichever is the higher rate.

Overtime

Employees who are required to work overtime will receive at least the amount that they would receive under the Award for working the same hours, calculated on a weekly basis.

Overtime – part-time employees

Part-time employees are entitled to overtime rates (to be paid in accordance with the overtime undertaking above) for hours worked in excess of their agreed hours [my emphasis], calculated on a weekly basis.

Reconciliation

Vesco will establish a system to ensure that any shortfalls in payments to employees arising from the Overtime, Overtime – part-time employees, and Allowances undertakings are reconciled and paid to employees at the following frequency (remainder omitted)

20      Vesco, having given the undertakings, satisfied the FWC that the undertakings would not cause financial detriment to any of Vesco’s employees covered by the Agreement.2

21      In accordance with the undertaking relevant to the base rate of pay, and s 206 of the FWA, from 18 August 2017 Mr Agany was paid an hourly rate of $20.20 following a Fair Work Commission determination varying the minimum wage for a level 4 employee under the Award to $20.21.3

22      The Agreement outlines the payment of overtime and penalty rates in cl 17, relevantly, as follows:

17.1 If an employee works more than 38 hours in one weekly pay period, inclusive of paid leave entitlements (leave omitted), then the additional hours will be paid as follows:

(a) 38.01 to 45.0 hours – base rate of pay plus 50% penalty

(b) 45.01 hours to 55 hours – base rate of pay plus 65% penalty

(c) 55.01 hours and above – base rate of pay plus 81% penalty

17.3 If the employer requires an employee to work on a Saturday, the employee shall be paid time and a half the employee’s base rate of pay for all hours worked, and the total hours are included in the minimum rostered hours for the week.

17.7 All hours worked after 6.00pm and before 10.00pm Monday to Friday will be paid at an additional 15% of the employee’s base rate.  This 15% will be known as Shift Allowance 1 and will not be payable when either penalty rates or overtime rates are applied to these hours worked.

17.10 It is a term of the Agreement that employees will make themselves available to work reasonable overtime in order to meet the operational requirements of the employer.  Where practical, employees will be notified of the requirement for overtime within the first 3 hours of the shift.

23      Clause 12 of the Agreement refers to hours of work.  In summary, the ordinary hours of work are on shift from Monday to Saturday based on a production roster arrangement where the maximum daily shift length is 12 hours.4

24      Vesco is to provide a minimum of 7.6 hours for ‘Ordinary Time Shift’ for full-time employees and six hours for ‘Ordinary Time Shift’ for part-time employees.5 A part-time employee may agree to work additional hours to their ‘Ordinary Time Shift’ up to the levels set out in cl 9.2. ‘Ordinary Time Shift’ is a shift that commences with the employee earning ordinary time pay rate (that is, not overtime penalty pay rate).6

25      Under the Agreement, a permanent part-time is a person who works less than 38 hours per week. Part time employees may be required to work reasonable additional hours in excess of 38 hours per week. Part time workers are required to work a minimum of 20 hours per week as determined by a roster system.7

26      Thus when the terms of the Agreement and the undertakings are read together, the net effect is that employees cannot be paid less than the relevant Award rates of pay both in respect of base rate of pay and overtime for hours worked under the Agreement. For full-time employees the situation is relatively straight forward because overtime is paid for hours worked in excess of 38 hours per week.

27      However, the situation is more nuanced for part-time employees because, in accordance with the overtime undertaking relevant to part-time employees, it depends on what ‘their agreed hours’, in fact, are where they are paid overtime for hours worked in excess of those hours.

What Were Mr Agany’s Agreed Hours Of Work?

28      According to the Employment Contract, Mr Agany was contracted to work a ‘minimum of 20 hours per week, and reasonable additional hours as determined by roster’.8 He was paid weekly.

29      The weekly rosters started on Mondays and were made available to the employees, including Mr Agany, on Wednesday the previous week by text message and published on the Vesco Work Planner.

30      Employees in the same section as Mr Agany are rostered on a 10 hour shift although it appears that from time to time the length of the shift may be longer or shorter for various reasons.9

31      Clause 12.3 of the Award requires that prior to commencing part-time employment, the employee and the employer must agree in writing: (a) on the hours to be worked by the employee, the days on which they will be worked and the commencing and finishing times for work; and (b) on the classification of work performed. Pursuant to cl 12.4 of the Award these terms may be varied by consent in writing.

32      Pursuant to cl 12.8 of the Award an employee who is required by the employer to work in excess of the hours agreed under clauses 12.3 and 12.4 must be paid overtime in accordance with cl 33 of the Award.

33      A fair reading of clauses 12.3, 12.4, 12.8 and 33 of the Award indicates that the hours worked by part-time employees is required to be certain but can be varied by consent in writing.  Thereafter, if the part-time employee works in excess of these specified hours they are entitled to the payment of overtime in accordance with cl 33 of the Award.

34      Clause 4.3 of the Agreement excludes the operation of the Award, subject to the terms of the relevant undertakings, which appear to be relevant only for the purposes of ensuring that comparatively employees are not paid less than that they may receive under the Award.

35      To the extent that there is a provision of the Agreement similar to cl 12.3 of the Award this is contained in cl 11 where an employee, on commencing employment or on transfer or promotion, is to be provided with a written contract of employment outlining the employee’s:

(a)     classification and duties;

(b)     ordinary hours of employment and roster arrangements;

(c)     rate of pay; and

(d)     date of appointment or transfer or promotion.

36      The Employment Contract outlines Mr Agany’s:

(a)     classification (level 4) and his position (food process worker);

(b)     the hourly rate of pay ($19.65);

(c)     the date of variation to his classification (8 August 2016); and

(d)     in terms of the ordinary hours of employment and roster arrangements ‘[a]s a part-time employee, you will be engaged on a permanent basis for a minimum of 20 hours per week, and reasonable additional hours as determined by roster’.

37      Vesco referred to several FWC and Fair Work Australia decisions relevant to the provision of undertakings and how undertakings apply to enterprise agreements.

38      In Border Express Pty Ltd [2013] FWA 7627, the proposed enterprise agreement relevant to part-time employees contained a clause similar to cl 9.2 of the Agreement (save for the inclusions of cl 10.4.3 in the proposed enterprise agreement). Notably, the proposed enterprise agreement in Border Express provided at cl 2.2 that the agreement be read in conjunction with the relevant award subject to any inconsistencies in favour of the agreement.

39      The relevant award contained a clause requiring parties to the award to fix hours for part-time employees in writing prior to commencing employment (cl 12.4).

40      The FWC identified an inconsistency between the proposed enterprise agreement and the relevant award as it related to the payment of overtime to part-time employees working in excess of 38 hours (under the proposed enterprise agreement) and working in excess of agreed hours (under the relevant award).

41      The FWC found that part-time employees were not better off all round under the relevant enterprise agreement (in comparison to the relevant award) as it related to the payment of overtime and required an undertaking by Border Express Pty Ltd to the effect that hours worked outside of those agreed by the employer and employee would be paid at overtime rates provided by the relevant award. It can only be assumed that such undertaking was given as the approval of the proposed enterprise agreement was dependent upon it.

42      In Hospira Australia Pty Ltd [2013] FWCA 3663, the FWC identified that part-time employees under the proposed enterprise agreement were significantly worse off than under the relevant award in a manner similar to that identified in Border Express. Again, the proposed enterprise agreement provided that the agreement be read in conjunction with the relevant award subject to any inconsistencies in favour of the agreement.

43      Hospira Australia Pty Ltd provided an undertaking to the FWC in similar terms to that contained in Border Express, the effect of which was that part-time employees would be paid overtime for hours worked over the employees’ agreed hours (not over 36 or 38 hours), similar to that provided for in cl 13 of the relevant award.

44      In Dairy Technical Services Ltd re DTS Food Laboratories Collective Agreement 2012 – 2015 [2012] FWAA 10728, like Border Express and Hospira, Fair Work Australia required Dairy Technical Services Ltd to provide an undertaking agreeing to pay part-time employees overtime for hours worked in excess of the employees’ ordinary agreed hours (subject to any variation by consent of those agreed hours). Notably, the agreement and the relevant award both contained a provision requiring the part-time employee and the employer to fix the hours of work prior to commencing employment.

45      In O’Brien Glass Industries Ltd re O’Brien Tasmania Glaziers Enterprise Bargaining Agreement 2012-2014 [2012] FWAA 9371 in response to concerns raised by Fair Work Australia, O’Brien Glass Industries Ltd provided an undertaking to fix the hours of work of part-time employees prior to the commencement of employment and overtime rates would be paid in excess of the written agreed hours. Interestingly, Commissioner Ryan stated:

The very essence of the Award protections for part time employees are that the Award provides absolute certainty to a part time employee as to the hours they will work and the days on which they will work those hours. The agreed hours cannot be unilaterally varied by the employer but can only be varied by agreement in writing with the employee[8].

46      Finally, in Barlina Pty Ltd [2014] FWC 887, Barlina Pty Ltd provided a similar undertaking to the preceding cases referred to above in respect of fixing the hours worked by part-time employees and the payment of overtime for hours worked in excess of those agreed hours, similar to the relevant award.

47      Pursuant to s 185 of the FWA, an application was made in respect of the Agreement. The application was purported to have been assessed by reference to sections 186, 187, 188 and 190 of the FWA where it was found that the relevant requirements set out by those sections had been met.10

48      The effect of the undertaking is that once approved, the undertaking is taken to be a term of the agreement as the agreement applies to the employer.11

49      An enterprise agreement comes into operation in the sense of creating rights and obligations between an employer and employees in relation to the work performed under it only after it has been approved by the FWC. After that time the agreement applies to the employers and employees who are covered by it.12

50      In terms of the assessment of ‘better off overall test’, it may be that if the same assessment was applied by a differently constituted forum a different conclusion may ensue as to undertakings given.13

51      Therefore, it is not to the point whether cl 11 of the Agreement accords with cl 12.3 of the Award, where the Agreement has been approved and cl 11 is not subject to any other undertaking. Clause 11 of the Agreement lacks the specificity of the information contained within cl 12.3 of the Award.  The Employment Contract accords with cl 11 of the Agreement and it is not for the IMC to reassess what might have been where the Claimant may wish it had struck a different bargain or taken different action concerning the approval of the Agreement.

52      The IMC can only have regard to the terms contained in the Agreement (including the undertakings) and the Employment Contract.

What does ‘minimum of 20 hours per week’ mean?

53      The Claimant contends that a ‘minimum of 20 hours per week’ must mean Mr Agany’s agreed hours are 20 hours per week because any other interpretation is too uncertain and at the behest of Vesco who determine the weekly roster.

54      Vesco contends that Mr Agany’s agreed hours are between 20 and 38 hours per week depending upon his weekly roster and that reference to a ‘minimum’ number of hours merely guarantees that Mr Agany will work at least 20 hours per week and any other reasonable hours on the roster.

55      The Employment Contract provides that Mr Agany is engaged on a permanent part-time basis for a minimum of 20 hours per week, and additional hours as determined by roster. The weekly roster is then sent via text message the Wednesday prior to the commencement of the working week, Monday to Sunday.

56      Clause 9.2 of the Agreement provides that a part-time employee is a person who works less than 38 hours per week, but they are required to work a minimum of 20 hours per week as determined by a roster system.

57      Clause 12.5 of the Agreement provides that Vesco is to provide a minimum six hours for an ‘Ordinary Time Shift’ for part-time employees (exceptions apply) although the employee may agree to work additional hours to their ‘Ordinary Time Shift’ up to the levels in clause 9.2 (that is, up to 38 hours per week).

58      ‘Ordinary Time Shift’ means a shift that commences with the employee earning ordinary time pay rate (i.e. not overtime penalty rate).14

59      The application of cl 17 of the Agreement – ‘Overtime and Penalty Rates’ – applies to all employees (see the definition in cl 2) and, in relation to overtime, applies after an employee who works more than 38 hours in one weekly pay period.

60      Having regard to the ordinary meaning of the word ‘minimum’ in the context of its use in the Employment Contract and Agreement, ‘minimum’ describes an amount which is the smallest that is possible, allowed, or required.15

61      That is, the least possible number of hours to be worked by Mr Agany as a permanent part-time employee is 20 hours per week with reasonable additional hours determined by a roster. The minimum number of hours Mr Agany could expect to work in any week is 20 hours, but the employment reality is that he will not know of any additional hours until the roster is published on the Wednesday before the week commencing Monday.

62      Therefore, having regard to the terms of the Agreement and the Employment Contract and the industrial reality, Mr Agany’s ‘agreed hours’ of work vary weekly and his hours of work are not known until Wednesday for the forthcoming week.

63      I do not accept that Mr Agany’s ‘agreed hours’ are 20 hours per week where his hours of work are prefaced by the word ‘minimum’ and subject to a roster where he is expected to work reasonable additional hours over the minimum of 20 hours per week.

64      In the context of the claim, the IMC is not required to determine whether Mr Agany’s hours of work in addition to 20 hours per week were reasonable or in contravention of the FWA, although this may or may not be the case.

65      The situation may have been different had the Agreement (including any undertakings) contained a clause like cl 12.3 of the Award (as required in the cases discussed above) where the weekly hours for a permanent part-time employee were required to be fixed.

66      The undertaking in the Agreement relevant to overtime for part-time employees does not assist the Claimant because it is predicated on part-time employees being paid overtime in excess of their ‘agreed hours’ and not their ‘minimum’ hours, calculated on a weekly basis. In Mr Agany’s case, his agreed hours vary week to week.

67      Further, when read with the undertaking, relevant to overtime, it is not the case that the terms of the Award relevant to hours of work apply but that where an employee works overtime they will receive no less under the Agreement for working the same overtime hours. However, the Agreement still determines when overtime hours applies, and, therefore, when overtime pay applies.

68      Therefore, at its highest Mr Agany’s agreed hours were those published each Wednesday which varied on a weekly basis.

When Do Overtime Rates Apply?

69      Having regard to the reasons above where I do not accept that Mr Agany’s ‘agreed hours’ are 20 hours per week, there are two alternatives applicable to Mr Agany concerning when overtime rates apply:

• overtime rates do not apply until a part-time employee works in excess of 38 hours per week; or
• overtime rates apply to the hours worked after the minimum 20 hours but which are less than 38 hours per week as determined by Wednesday’s published roster. 

70      That is, if Mr Agany’s published roster requires him to work 28 hours the following week (to which he agrees) but, in fact, he works 32 hours (also by agreement), is he entitled to no overtime rates (because the total hours are less than 38 hours per week), or is he entitled to four hours of work paid at the overtime rates (because he has, in fact, worked additional time to that in the published roster)?

71      For the following reasons, I consider that the second alternative for the payment of overtime rates to part-time employees applies:

• part-time employees are employees who work less than 38 hours per week;
• nothing in the undertaking relevant to overtime for part-time employees (which forms part of the Agreement) limits the payment of overtime to hours worked in excess of 38 hours. The undertaking countenances the payment of overtime for hours worked in excess of agreed hours, where the overtime payment is calculated on a weekly basis;
• part-time employees are subject to a weekly published roster which supports an intent of weekly agreed hours subject to the minimum number of hours required to be worked;
• more generally, employees who are required to work overtime are to receive at least the amount they would receive for working the same hours under the Award, although for part-time employees this must be seen in the context of what their agreed hours are where there is no undertaking like that contained in cl 12.3 of the Award; and
• notwithstanding cl 17.1 of the Agreement provides that employees (as defined) are paid overtime on a graduated basis when they work more than 38 hours in one week, this needs to be read with the undertakings.

72      Therefore, when all clauses of the Agreement including the undertakings, are read together, the following applies:

• full-time employees are eligible for overtime pay when they work 38 hours per week; and
• part-time employees are eligible for overtime pay when they work more than their published weekly agreed hours. If the published weekly agreed hours are 38 hours per week or more than 38 hours per week, overtime pay applies after the part-time employee has worked more than 38 hours per week. If the published weekly agreed hours are less than 38 hours per week, overtime pay applies to the hours worked in excess of the published agreed hours regardless of whether those agreed hours are less than 38 hours per week.

73      For example, if the part-time employees published weekly agreed hours are 28 hours (for the forthcoming week) and the part-time employee is required to work 36 hours in that week, they are eligible for overtime pay for the eight hours worked after the published agreed 28 hours. If the part-time employee’s published weekly agreed hours are 50 hours, they are eligible for overtime pay for the 12 hours worked after 38 hours.

What Should Mr Agany Be Paid For The Hours Worked In The Example Week?

74      Mr Agany worked 56 hours in the Example Week over six days, including Saturday.16

75      According to paragraph 25 of the Agreed Facts the roster for the Example Week was provided on the Wednesday prior to commencement on Monday, 28 August 2017.

76      Further, Mr Agany was rostered on a 10 hour shift on each of the rostered days and was paid for 9.5 hours of work (minus the unpaid meal break). However, it is apparent that he worked less hours on some days and more on others.

77      A number of assumptions need to be made:

(a)     the roster was published to Mr Agany in the manner stated by Vesco;

(b)     the published roster had the specified start times on it; and

(c)     the hours worked were all paid hours.

78      Therefore, the published weekly agreed hours for the week commencing 28 August 2017 was 60 hours, of which Mr Agany worked 56 hours that week.  That is, having regard to the reasons above, Mr Agany worked 18 hours overtime in the Example Week.

79      The parties detailed three different methods of calculating Mr Agany’s total pay for the Example Week:

• Vesco’s actual payment methodology;17
• Claimant’s suggested methodology;18 and
• Vesco’s alternative suggested methodology.19

Vesco’s actual payment methodology

80      Vesco’s actual payment methodology applies the terms of the Agreement to an entitlement of overtime for hours worked over 38 hours per week.

The Claimant’s suggested methodology

81      The Claimant’s suggested methodology is predicated on six hours of ordinary pay (or base rate of pay) each day starting Monday until 20 hours is exhausted whereupon the remaining hours for the day over six hours (if any) and the week is paid at the overtime rates provided in cl 12.3 of the Award.20

Vesco’s alternative suggested methodology

82      Noting the alternative suggested methodology is not Vesco’s principle argument to the claim, its alternative suggested methodology is by averaging ordinary hours over six days using 20 hours as the ordinary hours (3.34 hours per day) and thereafter similarly applying the overtime rates provided in cl 12.3 of the Award to the remaining hours each day.21

The court’s methodology

83      I do not accept the methodologies put forward by the parties.

84      The Claimant’s methodology uses cl 12.5 of the Agreement to establish that because Vesco must provide a minimum of six hours per day of ordinary time to a part-time employee, this is the number of hours per day the part-time employee should receive at base rate of pay and anything over that is paid at the overtime rate.

85      Thus, once the Claimant’s preferred position of 20 hours is exhausted (part way through Thursday), the part-time employee is eligible to be paid at overtime rates on a daily and weekly basis.

86      Vesco’s methodology uses a similar rationale but instead seeks to spread the hours paid at ordinary time (3.34 hours) over the whole working week from Monday to Saturday. 

87      The net effect between the Claimant’s and Vesco’s methodology is a marginal increase in wages in favour of the Claimant, but where Vesco limits its exposure to overtime pay at 200%.

88      In my view, the underpinning assumptions to the calculations made by both parties do not accord with the terms of the Agreement and Employment Contract, and it is to those documents that regard ought to be had when calculating Mr Agany’s pay for the Example Week, including overtime pay.

89      However, before turning to the terms of the Agreement and Employment Contract, it is useful to consider what overtime means (both generally and under the Agreement).

90      In United Voice v Wilson Security Pty Ltd [2019] FCAFC 66, the Full Court of the Federal Court discussed the meaning of overtime by reference to a number of other cases and at [30] and [33] state:

Properly considered, ‘overtime’ means no more than it states and has been long understood on the authorities referred to above – over, or more, than ordinary hours, in relation to the period of time for which ordinary hours apply. The chronological limitation Mr Davis seeks to impose is the product of historic usage and application, rather than inherent meaning. Even that usage and application does not necessarily support the appellants’ argument. It is an amount of time that is over the ordinary hours, not necessarily after the ordinary hours, even if it is more commonly, or even invariably, takes place after those ordinary hours will be, or have been, worked.

Once the broader meaning of overtime is appreciated, which is consistent with the prior curial understanding in Re Steel Works Employees, Re Confectioners and Mills, and no inconsistent with Australian Communication Exchange, all of which focus on the notion of overtime being additional working hours, that meaning does not influence the operation of the Award in the manner contended by the appellants. Nor do the findings of industrial tribunals or dictionary definitions assist, reflecting as they do common historic applications of the concept of overtime in one particular way, rather than reflecting any limitation to be given to its true meaning. Just because the extra or additional hours might often take place after ordinary hours have been, or will be, worked, that does not preclude them taking place before they have been, or will be, worked, or in between the time in which ordinary hours will be worked.

91      As discussed, the real question in United Voice was whether the relevant award imposed any restriction upon the employer rostering overtime to be worked prior to the point in time at which the monthly ordinary hours would be performed, such that overtime could only be rostered to take place after ordinary hours have been, or will be, worked. Ultimately the answer in United Voice was ‘no’ and the employer was able to roster employees within a four week period so as to minimise the amount of overtime/penalty rate paid to the employees.

92      Clause 12 of the Agreement contains the hours of work for all employees and includes that ordinary hours are worked on shifts commencing Monday to Saturday, based on a production roster arrangement.  The maximum shift length is 12 hours.

93      Thereafter, Vesco is to provide a minimum six hours for an ordinary shift to the part-time employee, unless in exceptional circumstances. A part-time employee may agree to work additional hours to their ordinary time shift referred in cl 9.2, that is, up to 38 hours per week. From 38 hours, subject to my reasons where the agreed hours are less than 38 hours, the part-time employee is eligible for overtime rates.

94      The Agreement and Employment Contract do not provide for how the rostering of ordinary hours is applied.

95      Therefore, a part-time employee who is engaged for say 24 hours per week could potentially work two 12-hour shifts or four six-hour shifts at Vesco’s discretion (under the current Agreement) in accordance with the roster. In both examples, the part-time employee works a minimum of 20 hours per week and the hours comply with cl 12 of the Agreement.  Notably, in relation to the two 12-hour shifts, the part-time employee may receive more shift allowance under cl 17.7 and cl 17.8 of the Agreement.

96      In the absence of any other information and where the Agreement provides for a weekly cycle of 38 hours per week starting on Monday, the notional application of six hours or 3.34 hours per day as ordinary hours is not otherwise supported.

97      Therefore, in my view, it is appropriate to apply a lineal methodology consistent with the ordinary hours worked weekly under the Agreement commencing on Monday. In the Example Week, this commences on Monday at 1.30 pm and finishes on Friday at 3.00 pm (that is, 0.5 hours into Friday’s shift).

98      From Monday to Thursday there are no shifts which exceed 12 hours, although there is entitlement to shift allowances pursuant to cl 17.7 and cl 17.8 of the Agreement (where no overtime applies to these shifts).

99      Thereafter, 10 hours of the 10.5 hours worked on Friday and 8 hours of the hours worked on Saturday are hours worked in excess of 38 hours per week and eligible to be paid at overtime rates.  In my view, the 8 hours worked on Saturday are payable at the overtime rate set under cl 33.1(a) of the Award rather than cl 31.4 of the Award, where the words in cl 33.1(a) state “for all work done outside ordinary hours on any day or shift” [my emphasis], which can only have been intended to override the rates otherwise paid for working on a Saturday.  To hold otherwise would mean that someone working in excess of 38 hours per week on a Saturday would be in no better position to someone working ordinary hours on a Saturday, even though they worked more than ordinarily required.

100   Schedule IV of the reasons contains the court’s methodology and calculation22 and compares it to the Agreement using the same methodology.23

101   Applying this methodology, the amount to be paid to Mr Agany is $1,559.17 based on the application of cl 33.1 of the Award (inclusive of any relevant shift allowance under cl 17.6 and cl 17.7 of the Agreement).24

102   In comparison, applying the same methodology by using the overtime rates in cl 17.1 of the Agreement the amount paid to Mr Agany would be $1,412.14.25

103   The amount actually paid to Mr Agany by Vesco was $1,444.81, although Vesco say that a small amount of this was erroneously paid but they do not seek to recover any overpayment.

104   The difference between what should have been paid and what was paid for the Example Week is $114.36.

Reconciliation

105   Vesco agreed that it did not complete a weekly reconciliation as required by the reconciliation undertaking in the Agreement. It has now done so for Mr Agany.

106   Vesco contends that it was unnecessary to undertake a reconciliation because there was no underpayment if the IMC was to accept its position on what is meant by ‘agreed hours’ and the associated calculation.

107   While in part, the IMC agrees with Vesco’s interpretation of ‘minimum agreed hours’ under the Agreement, the computation of Mr Agany’s pay was not accepted, which resulted in an underpayment to Mr Agany.

108   It was incumbent on Vesco to carry out the reconciliation with the Award in order to ensure that any shortfall, if there was one, was identified and paid to the affected employee. In this case, the parties had divergent views on how any reconciliation was to be calculated.

Outcome

109   The answers to the questions posed by the parties:

(a)     Mr Agany’s ‘agreed hours’ for the purposes of the Agreement are not 20 hours per week, but are variable agreed hours published in the weekly roster; and

(b)     notwithstanding this, the amount owed to Mr Agany for the Example Week is $114.36.

110   Therefore, Vesco has failed to pay Mr Agany the full amount of wages he is entitled to for the Example Week in contravention of s 323 of the FWA.

111   Further, Vesco has failed to pay overtime rates for hours worked (albeit not for the reason claimed by the Claimant) and failed to complete a reconciliation as required by the undertakings both in breach of the Agreement and in contravention of s 50 of the FWA.

112   I will hear further from the parties in respect of the orders sought.

D SCADDAN

INDUSTRIAL MAGISTRATE

1 Schedule I - Agreed Facts.

2 Annexure B to the Agreed Facts.

3 Agreed Facts [17] to [20]. I note there is a $0.01 difference between the hourly rate paid by Vesco and the Award rate but neither party raised this as an issue.

4 Clauses 12.1 and 12.2 of the Agreement.

5 Clauses 12.4 and 12.5 of the Agreement.

6 Clause 2 of the Agreement.

7 Clause 9.2 of the Agreement.

8 Annexure C to the Agreed Facts.

9 Annexure D and [25] of the Agreed Facts.

10 Annexure B to the Agreed Facts.

11 Section 191(1) of the FWA.

12 ALDI Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53 [34].

13 Armacell Australia Pty Ltd and others [2010] FWAFB 9985 [41].

14 Clause 2 of the Agreement.

15 Collins English Dictionary.

16 Amended Statement of Agreed Facts at [22].

17 Schedule IV – table 1.

18 Schedule IV – table 2.

19 Schedule IV – table 3.

20 Claimant’s Statement of Claim (first page of the attachments) – replicated in Schedule IV.

21 Replicated in Schedule IV – table 3.

22 Schedule IV – table 5.

23 Schedule IV – table 4.

24 Schedule IV – table 5.

25 Schedule IV – table 4.

Schedule I: Statement of Amended Agreed Facts

Schedule II: Jurisdiction, Practice And Procedure Of The Industrial Magistrates Court (WA) Under The Fair Work Act 2009 (Cth): Alleging Contravention Of Enterprise Agreement

Jurisdiction

[1]               An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the FWA.

[2]               The Industrial Magistrates Court (WA) (IMC), being a court constituted by an industrial magistrate, is ‘an eligible State or Territory court’: FWA, s 12 (see definitions of ‘eligible State or Territory court’ and ‘Magistrates Court’); Industrial Relations Act 1979 (WA), sections 81 and 81B.

[3]               The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: FWA, s 544.

[4]               The civil penalty provisions identified in s 539 of the FWA include the terms of an enterprise agreement where the agreement applies to give an entitlement to a person and to impose an obligation upon a respondent employer: FWA, s 51(2). The agreement applies if it covers the employee or the employee organisation and the employer, the agreement is in operation and no other provision of the FWA provides that the agreement does not apply: FWA, s 52(1) (when read with s 53 of the FWA).

[5]               An obligation upon an ‘employer’ covered by an agreement is an obligation upon a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FWA, s 42, s 53, s 14 and s 12. An entitlement of an employee covered by an agreement is an entitlement of an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: FWA, s 42, s 53 and s 13.

Contravention

[6]               Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for an employer to pay to an employee an amount that the employer was required to pay under the modern award: FWA, s 545(3)(a).

[7]               The civil penalty provisions identified in s 539 of the FWA include:

• Contravening a term of an enterprise agreement: FWA, s 539 and s 50.
• Other terms and conditions of employment as set out in Part 2 - 9 of the FWA, s 539 and s 323. Those terms and conditions include obligations of employers to employees with respect to the method and frequency of amounts payable in relation to the performance of work including payments of incentive-based payments and bonuses: FWA, s 323(1).
• An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FWA, s 14 and s 12. The obligation is to an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed by a national system employer’: FWA, s 13.

[8]               Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the court may make orders for:

• An employer to pay to an employee an amount that the employer was required to pay under the FWA: FWA, s 545(3).
• A person to pay a pecuniary penalty: FWA, s 546.

In contrast to the powers of the Federal Court and the Federal Circuit Court, an eligible state or territory court has no power to order payment by an entity other than the employer of amounts that the employer was required to pay under the FWA. For example, the IMC has no power to order that the director of an employer company make payments of amounts payable under the FWA: Mildren and Anor v Gabbusch [2014] SAIRC 15.

Burden And Standard Of Proof

[9]               In an application under the FWA, the party making an allegation to enforce a legal right or to relieve the party of a legal obligation carries the burden of proving the allegation. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:

It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say 'we think it more probable than not' the burden is discharged, but if the probabilities are equal it is not.

[10]           In the context of an allegation of the breach of a civil penalty provision of the FWA it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences [362].

[11]           Where in this decision I state that 'I am satisfied' of a fact or matter I am saying that 'I am satisfied on the balance of probabilities' of that fact or matter. Where I state that 'I am not satisfied' of a fact or matter I am saying that 'I am not satisfied on the balance of probabilities' of that fact or matter.

Schedule III – Relevant Principles Of Construction

[1]               This case involves construing industrial agreements and statutes. Similar principles apply to both.  The relevant principles to be applied when interpreting an industrial instrument are set out by the Full Bench of the Western Australian Industrial Relations Commission in Fedec -v- The Minister for Corrective Services [2017] WAIRC 00828 [21] - [23]. In summary (omitting citations), the Full Bench stated:

(a)     ‘The general principles that apply to the construction of contracts and other instruments also apply to the construction of an industrial agreement.’

(b)     ‘The primary duty of the court in construing an instrument is to endeavour to discover the intention of the parties as embodied in the words they have used in the instrument. It is the objectively ascertained intention of the parties, as it is expressed in the instrument, that matters; not the parties' subjective intentions. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean;’

(c)     ‘The objectively ascertained purpose and objective of the transaction that is the subject of a commercial instrument may be taken into account in construing that instrument. This may invite attention to the genesis of the transaction, its background and context. The apparent purpose or object of the relevant transaction can be inferred from the express and implied terms of the instrument, and from any admissible evidence of surrounding circumstances’;

(d)     ‘An instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience. However, it must be borne in mind that business common sense may be a topic on which minds may differ’;

(e)     ‘An instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed so as to have some operation’; and

(f)      ‘Industrial agreements are usually not drafted with careful attention to form by persons who are experienced in drafting documents that have legal effect.’

To the above list I would add:

(g)     Ascertaining the intention of the parties begins with a consideration of the ordinary meaning of the words of the instrument. Ascertaining the ordinary meaning of the words requires attention to the context and purpose of the clause being construed. City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union [2006] FCA 813 [53] - [57] (French J).

(h)     Context may appear from the text of the instrument taken as a whole, its arrangement and the place of the provision under construction. The context includes the history of the instrument and the legal background against which the instrument was made and in which it was to operate. City of Wanneroo [53] - [57] (French J); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Excelior Pty Ltd [2013] FCA 638 [28] - [30] (Katzmann J).

Schedule IV – Tables Of Calculations

Table 1: Vesco’s actual payment to Mr Agany

Table 2: Claimant’s Proposed Methodology for Calculation of Overtime

Table 3: Vesco’s proposed alternative methodology for calculation of overtime

Table 4: IMC’s calculation of overtime in accordance with the Agreement (only)

SA1 = Shift Allowance 1 pursuant to cl 17.7 of the Agreement

SA2 = Shift Allowance 2 pursuant to cl 17.8 of the Agreement

OT1, OT2, OT3 = Overtime pursuant to cl 17.1(a),(b) and (c) of the Agreement

Table 5: IMC’s calculation of overtime in accordance with the Agreement (consistent with the undertakings and the Award)

SA1 = Shift Allowance 1 pursuant to cl 17.7 of the Agreement

SA2 = Shift Allowance 2 pursuant to cl 17.8 of the Agreement

OT1, OT2 = Overtime pursuant to cl 33.1(a) of the Award