2025 WAIRC 00681
APPEAL AGAINST A DECISION OF THE INDUSTRIAL MAGISTRATE IN MATTER NUMBER M 65/2023 GIVEN ON 5 APRIL 2024 AND 14 AUGUST 2024
WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2025 WAIRC 00681

CORAM
: SENIOR COMMISSIONER R COSENTINO
COMMISSIONER C TSANG
COMMISSIONER T KUCERA

HEARD
:
THURSDAY, 12 DECEMBER 2024

DELIVERED : FRIDAY, 8 AUGUST 2025

FILE NO. : FBA 11 OF 2024

BETWEEN
:
COASTAL R.E. PTY LTD ATF COASTAL UNIT TRUST
Appellant

AND

JASON JOWETT
Respondent

FILE NO. : FBA 12 OF 2024

BETWEEN
:
JASON JOWETT
Appellant

AND

COASTAL R.E. PTY LTD ATF COASTAL UNIT TRUST
Respondent

FILE NO. : FBA 18 OF 2024

BETWEEN
:
COASTAL R.E PTY LTD ATF COASTAL UNIT TRUST
Appellant

AND

JASON JOWETT
Respondent

ON APPEAL FROM:

JURISDICTION : INDUSTRIAL MAGISTRATES COURT
CORAM : INDUSTRIAL MAGISTRATE D. SCADDAN
CITATION : [2024] WAIRC 00149; [2024] WAIRC 00766
FILE NO : M 65 OF 2023

CatchWords : Industrial Law WA - Appeal from Industrial Magistrates Court - Entitlement to long service leave - Commission based remuneration employment relationship - Relationship between contract of employment and Long Service Leave Act 1958 - Construction of s 5 of Long Service Leave Act 1958 - Contracting out of entitlement to long service leave - Whether s 5 contracting out limited to accrued or crystalised entitlement only - Legislative history and construction of Long Service Leave Act 1958 - Consideration of set-off principles - Appeal upheld
Legislation : Industrial Relations Act 1979 (WA)
Fair Work Act 2009 (Cth)
Long Service Leave Act 1958 (WA)
Interpretation Act 1984 (WA)
Legislation Act 2021 (WA)
Industrial Relations Legislation Amendment Act 2021 (WA)
Industrial Relations Act 1999 (Qld) (repealed)
Legislation Act 2021 (WA)
Industrial Relations Legislation Amendment and Repeal Act 1995 (WA)
Result : Appeal in FBA 11 of 2024 upheld
Appeal in FBA 12 of 2024 dismissed
Appeal in FBA 18 of 2024 dismissed
REPRESENTATION:
Mr D Howlett (of counsel) on behalf of Coastal R.E. Pty Ltd atf Coastal Unit Trust

Mr S Farrell (as agent) on behalf of Mr Jason Jowett

Case(s) referred to in reasons:
Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203
Conroy’s Smallgoods v Australasian Meat Industry Employees Union [2023] FCAFC 59
Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45; (2012) 213 FCR 549
Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13
Hepples v Federal Commissioner of Taxation [1991] HCA 39
Interlego AG v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348
James Turner Roofing v Peters [2003] WASCA 28; (2003) 132 IR 122
Jowett v Coastal R.E Pty Ltd atf Coastal Unit Trust [2024] WAIRC 00149
Jowett v Coastal R.E Pty Ltd atf Coastal Unit Trust [2024] WAIRC 00766
Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94
Maurice Alexander Management Pty Ltd v Sato [2023] ICQ 14
Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 00390; (2020) 100 WAIG 519
Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149
Nekros Pty Ltd v Baker [2006] WAIRC 05764
Poletti v Ecob (No 2) [1989] FCA 779
Prichard v M 6:8 Legal Pty Ltd [2024] WASCA 4
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355
Public Transport Authority of Western Australia v Yoon [2017] WASCA 25
Qantas Airways Ltd v Transport Workers Union of Australia [2023] HCA 27
R v Sieders [2008] NSWCCA 187
Ray v Radano [1967] AR (NSW) 471
Re The Honourable G D Kierath, Minister for Heritage; Ex Parte City of Fremantle [2000] WASCA 156; (2000) 22 WAR 342
Sea Shepherd Australia Ltd v State of Western Australia [2014] WASC 66
Shire of Mount Magnet v Atlantic Vanadium Pty Ltd [2025] WASC 274
Spall v Minister for Home Affairs [2024] FCA 849
Sydney Seaplanes Pty Ltd v Page [2021] NSWCA 204; (2021) 393 ALR 485
SZTAL v Minister for Immigration and Border Protection [2017] HCA 34
Tabcorp Holdings Ltd v Victoria [2016] HCA 4
UnionsWA Incorporated v Not Applicable [2025] WAIRC 00129
United Construction Pty Ltd v Birighitti [2002] WAIRC 06242
Wardman v Macquarie Bank Limited [2023] FCAFC 13
WorkPac Pty Ltd v Rossato [2020] FCAFC 84; (2020) 278 FCR 179
Worsley Alumina Pty Ltd v The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers Western Australian Branch & Ors (1996) 76 WAIG 4150
Worsley Timber 2000 Pty Ltd (in Liq) v Commissioner of State Revenue [2007] WASC 155
Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2024] WASCA 38
Reasons for Decision
COSENTINO SC:
Contents

Paragraph number
Part 1 - Coastal’s liability for long service leave on termination

Parties’ positions in relation to the Long Service Leave Claim
[10]
The Industrial Magistrate’s reasons for upholding the LSL claim
[18]
Coastal’s ground of appeal
[31]
The Alleged construction error grounds - What is the meaning of ‘entitlement to long service Principles
[33]
Coastal’s Submissions
[37]
Mr Jowett’s Submissions
[51]
Consideration
[52]
Text, structure, and statutory context
[63]
Legislative History
[95]
The subsequent amending Act
[102]
Conclusion in relation to construction of s 5
[111]
Ground 5 - Insufficiency of reasons
[113]
Ground 7 - Was clause cl 8 permitted by s 5 of the LSL Act
[119]
Grounds 8, 12 and 13 - Did cl 8 of the contract provide ‘an adequate benefit in lieu’?
[123]
Part 2 - The ‘set-off’ issue

Parties’ positions at first instance
[134]
The Industrial Magistrate’s Set-Off and Penalty Decision
[138]
Grounds of appeal and parties’ submissions
[145]
Principles: When will over-award commission payments operate to satisfy Statutory obligations?
[148]
Consideration of Ground 1 - Relevance of the parties’ understanding of what the contract meant
[150]
Consideration of Ground 2 - What contractual specificity was required?
[157]
Ground 3 - Was the connection between the purpose of the appropriation and the long service leave entitlement severed?
[166]
Ground 4 - What is the principle established by James Turner Roofing?
[178]
Disposition
[183]
Introduction
1 The appellant, Coastal R. E. Pty Ltd employed the respondent, Jason Jowett, as a real estate agent for just under 10 years, from 2012 to 2020. During the employment, Coastal paid Mr Jowett remuneration in the form of commission only on real estate sales Mr Jowett brokered.
2 After the employment ended, Mr Jowett claimed he was entitled to payment in respect of:
(a) Payment on termination of accrued but untaken annual leave under s 90(2) of the Fair Work Act 2009 (Cth) (FWA); and
(b) Payment on termination of accrued but untaken long service leave under s 8(3) and s 9(2A) of the Long Service Leave Act 1958 (WA) (LSL Act).
3 These claims and other incidental claims were prosecuted by Mr Jowett in the Industrial Magistrates Court (IMC), which has jurisdiction to enforce the FWA and awards made under it, as well as, jurisdiction to enforce the current LSL Act.
4 On 5 April 2024, Industrial Magistrate Scaddan made orders upholding Mr Jowett’s claims for payment in respect of annual leave under the FWA and payment in respect of long service leave. Her Honour’s reasons for decision were published on 5 April 2024: Jowett v Coastal R.E. Pty Ltd atf Coastal Unit Trust [2024] WAIRC 00149 (Primary Decision). Her Honour deferred for further hearing and determination ‘the issue of set-off’. By this her Honour was referring to Coastal’s foreshadowed claim that any liability for annual leave and long service leave could be reduced by the amount of over-award commissions Coastal paid to Mr Jowett.
5 The ‘set-off’ question and penalties were then determined on the papers, her Honour declining to reduce the long service leave payment by reference to over-award commission, issuing reasons on 14 August 2024: Jowett v Coastal R.E. Pty Ltd atf Coastal Unit Trust [2024] WAIRC 00766 (Set-Off and Penalty Decision).
6 In FBA 11 of 2024 Coastal has appealed against the Industrial Magistrate’s findings as to its liability to pay long service leave to Mr Jowett. In FBA 18 of 2024 Coastal appeals her Honour’s finding that there is no ability to ‘set-off’ amounts it paid to Mr Jowett against that liability. In FBA 12 of 2024 Mr Jowett has appealed against the IMC’s method of calculating the long service leave liability, and the amount awarded to him in respect of it.
7 Because the appeals only relate to the LSL claim, which arises under State laws, the appeals lie to the Full Bench of the Western Australian Industrial Relations Commission under s 84 of the Industrial Relations Act 1979 (WA) (IR Act).
8 For the reasons that follow, I would dismiss Coastal’s appeal in FBA 11 of 2024 but uphold its appeal in FBA 18 of 2024. Because I consider the appeal in FBA 18 of 2024 is made out, it is unnecessary for me to deal with Mr Jowett’s cross-appeal. Accordingly, these reasons are in two parts:
(a) Part 1 deals with Coastal’s appeal from the finding that the current LSL Act had been contravened.
(b) Part 2 deals with Coastal’s appeal from the rejection of its ‘set-off’ argument.
9 Throughout these reasons, unless otherwise stated, references to the LSL Act mean the Long Service Leave Act 1958 (WA) as in force as of 19 June 2022, that is, prior to the amendments made by Part 4 of the Industrial Relations Legislation Amendment Act 2021 (WA) which commenced on 1 July 2022. References to ‘current LSL Act’ means the LSL Act as amended by the 2021 amendments.
Part 1 - Coastal’s liability for long service leave on termination
Parties’ positions in relation to the Long Service Leave Claim
10 Mr Jowett’s case at first instance was simply that he was entitled on termination to a proportionate amount of long service leave pursuant to s 8(3) of the current LSL Act, on the basis of having completed a period of continuous employment of 9 years, 11 months and 8 days. He said this equated to 8.61 weeks’ ordinary pay.
11 Mr Jowett claimed his ordinary pay was $10,772.85 per week, on the basis that he had earned $560,188.26 in the 365-day period up to the date of termination. Accordingly, he calculated his claimed entitlement as $91,082.53.
12 Coastal argued that at the time the employment contract was entered into, the LSL Act permitted an agreement between it and Mr Jowett by which Mr Jowett would forego all his entitlements under the LSL Act.
13 Coastal relied on the terms of a written agreement between it and Mr Jowett, which it said was in accordance with the LSL Act. The written agreement, made at the commencement of the employment contained the following term (original emphasis):
…
8. Leave
An additional percentage amount has been included in the commission remuneration, so that you are paid in advance of all leave entitlements as determined by Legislation, as such any form of leave taken will be taken on an unpaid basis.
Should your employment cease with Realmark whether by your own accord or at Realmark’s discretion, no further payment for leave entitlements will be made.
…
14 Coastal submitted that the effect of the written agreement was that Mr Jowett had agreed to forego his long service leave entitlements in exchange for an adequate benefit in lieu, being an additional percentage amount in his commission remuneration. This agreement, Coastal said, met the description in s 5 of the LSL Act, and so Coastal had no liability under the LSL Act.
15 As a consequence of the 2021 amendments, from 20 June 2022, s 5 of the current LSL Act said:
5. Cashing out of accrued long service leave
(1) An employer and an employee may agree that the employee may forgo the employee’s entitlement, or part of the employee’s entitlement, to long service leave under section 8(2)(a) or (b) if —
(a) the employee is given an adequate benefit instead of the entitlement; and
(b) the agreement is in writing, signed by the employer and employee.
(2) For the purposes of subsection (1), a benefit is not adequate unless the employee is paid at least the amount of ordinary pay the employee would have received had the employee taken the long service leave or part of the leave.
(3) Nothing in this section enables the employer and employee to reach the agreement before the employee’s entitlement to long service leave has accrued.
16 From this date, Coastal recognised accrual of long service leave.
17 Mr Jowett argued that Coastal could not rely on s 5 of the LSL Act because:
(a) Where s 5 of the LSL Act speaks of an ‘entitlement’ to long service leave, it is referring to the accrued entitlement to take a period of leave after reaching a qualifying period of service. An entitlement does not arise before the qualifying period of service has been served.
(b) Mr Jowett did not have 10 years’ service when the LSL Act was amended. Accordingly he did not have an entitlement to take LSL at any time under the LSL Act as it stood prior to the 2022 amendments. While he did have the 7 years of continuous service which would have entitled him to payment of a pro-rata amount on termination, he was not terminated prior to 20 June 2022 when the amendments came into effect, so he did not have that entitlement either.
(c) Section 5 of the LSL Act did not permit an agreement to forego a future entitlement.
(d) In any event, the written agreement did not provide an adequate benefit in lieu because the value of the future entitlement to long service leave could not be assessed and the additional percentage attributable to it was indeterminable. Further, the ‘additional percentage’ was allocated to all forms of leave without breaking it down into components for different types of leave.
The Industrial Magistrate’s reasons for upholding the LSL claim
18 Her Honour recited the relevant agreed and uncontested facts at [11]-[38] of the Primary Decision. The facts relevant to the long service leave claim are, in summary:
(a) Mr Jowett was employed according to the terms of a contract of employment dated 2 November 2012.
(b) During the entire employment period Mr Jowett was paid on a commission only basis.
(c) The Real Estate Industry Award 2010 and then the Real Estate Industry Award 2020 (REIA or REIAs) applied. The minimum commission for commission-only employees under the REIAs was 31.5% of the gross commission paid for the sale of a property.
(d) The contract was varied by agreement on 8 July 2021 with effect from 1 July 2021, to increase the percentage of gross commission payable to Mr Jowett from 60% plus superannuation (of 93% total commission) to 70% including superannuation (of 100% total commission) on gross commission up to $900,000 and from 65% plus superannuation to 75% including superannuation on gross commission over $900,000.
(e) To resolve a dispute that had arisen between them, in July 2021 Coastal agreed that it would pay $118,000 to Mr Jowett (less tax and superannuation). This amount was paid in two equal instalments in August 2021 and July 2022.
(f) From time to time Mr Jowett requested Coastal to pay amounts of the commission owing to him to be salary sacrificed to additional superannuation payments. Mr Jowett also requested that Coastal pay to his wife, from the commissions owing to him, invoices she raised for providing administrative assistance to Mr Jowett. Coastal complied with these requests.
(g) The employment was for a period of 9 years, 11 months and 8 days from 13 November 2012 to 20 October 2022.
(h) At the end of the employment Coastal paid Mr Jowett $1,671.72 in lieu of accrued long service leave.
19 The Industrial Magistrate observed that to the extent that there was a factual dispute between the parties, it largely related to the characterisation of payments that were made to Mr Jowett, or his wife, or to superannuation, for the purpose of calculating the quantum of his claims.
20 After summarising the parties’ respective contentions about the question of whether s 5 of the LSL Act applied to Mr Jowett (at [158]-[164]), the Industrial Magistrate proceeded to consider the meaning of s 5. Her Honour referred to the principles of statutory construction at [166]:
In summary, principles of statutory construction include consideration of the text itself as used in the context in which it applies, context includes consideration of the general purpose and policy of a provision and may include consideration of extrinsic materials, extrinsic materials cannot, however, be used for the purpose of rewriting the text, extrinsic materials may be used to determine the meaning conveyed by the text where the provision is ambiguous or obscure or the ordinary meaning leads to absurdity or unreasonableness, and care must be taken in having regard to the purpose or object of the Act concerned and the specific purpose of the particular provision being construed needs to be identified: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355; Kizon v Lee [2013] WASC 221.
21 Her Honour then made some brief observations about the history of the provision, noting it was inserted with effect from 16 January 1996, in circumstances where s 5 previously enabled exemption from the LSL Act in the following terms ([170]-[171] of the Primary Decision):
[170] Section 5 prior to 16 January 1996 countenanced an alternative scheme having prospective application, notwithstanding the arrangement (if approved) would apply when a person commenced employment, or to an existing employee. What an example scheme did or might look like is somewhat of an enigma.
[171] However, unlike the terms of s 5 prior to 16 January 1996, the amended s 5 did not purport to wholly exempt an employer from the LSL Act but enabled an employee and employer to agree to forego the entitlement to long service leave.
22 At [172] of the Primary Decision her Honour noted that there is little commentary on the 1996 amendment, however her Honour referred to Worsley Alumina Pty Ltd v Australian Workers’ Union & Ors (1996) 76 WAIG 4150 (Worsley) as one case which referred to the amendments. Her Honour also referred to Public Transport Authority of Western Australia v Yoon [2017] WASCA 25; 97 WAIG 249 (Yoon) at [42] and Nekros Pty Ltd v Baker [2006] WAIRC 05764; (2006) 86 WAIG 3361 (Nekros), concluding at [178]:
From the limited discussion of s 5 of the LSL Act (pre-June 2022) the following can be distilled:
[178.1] section 5 as amended was designed to give greater flexibility to individuals;
[178.2] this flexibility was mainly directed to ‘cashing out’ of the entitlement to long service leave under s 5; and
[178.3] the option crystalised on the realisation or accrual of the entitlement to long service leave.
23 Her Honour added the proviso that ‘cashing out’ of long service leave may not be the only option in foregoing an entitlement under s 5 of the LSL Act, however, in her view, the cases demonstrated as a theme that the option to forego the entitlement ‘crystalises on the realisation or accrual of the entitlement to long service leave’: Primary Decision [179], [184].
24 As to whether a future, not yet crystalised entitlement to take long service leave could be foregone under s 5, her Honour referred to United Construction Pty Ltd v Birighitti [2002] WAIRC 06242; (2002) 82 WAIG 2409 where the Full Bench of the Commission observed in relation to a claim under the LSL Act prior to the 1996 amendments, that the employee’s entitlement to long service leave [188]:
…could not be a matter the subject of weekly instalment payments. A period of long service leave which he was eligible to take in accordance with the eligibility provisions of the LSL Act was his entitlement, subject to the pro-rata provisions of the Act which were not applicable to this argument, only when he had served the required 15 years.
25 Her Honour found these observations were ‘relevant to the prior provision enabling limited opting out of the LSL Act’: Primary Decision [189].
26 At [190] her Honour stated:
Nothing in the language of the section expressly prohibited an employee and employer making an agreement for the future forgoing of long service leave entitlement. There may have been employees who wanted to bolster their wages in the present rather than wait for 10 years to cash out long serve[sic] leave. In fact, it might even have been advantageous for them and their family to do so. By way of example, paying out a mortgage faster or paying for school fees. 
27 But then at [191] her Honour concluded that the limited contracting-out of long service leave entitlement under s 5 of the LSL Act was not intended to extend to the payment in advance to forego a future long service leave entitlement by way of a wages component. Her Honour’s reasons for this conclusion are set out at [191]:
However, for the following reasons, in my view, the limited contractingout of long service leave entitlements in s 5 of the LSL Act (pre-June 2022) was not intended to extend to the payment in advance to forgo future long service leave entitlements: 
[191.1] the entitlement to long service leave is fundamentally predicated on rewarding employees for continual long service: Yoon at [42];
[191.2] the entitlement to long service leave, being to take leave on ordinary pay, arises when an employee has completed at least 10 years of continual service: s 8(1) and s 8(2)(a) of the LSL Act;
[191.3] a pro rata entitlement to an amount of long service leave arises where an employee has completed at least seven years but less than 10 years of continuous employment where the employment is terminated;
[191.4] the payment for the amount of long service leave is at ordinary pay where the applicable ordinary pay is, subject to limited exceptions, at the time when any period of long service leave commences or is deemed to commence: s 4(1) and s 4(2) of the LSL Act;
[191.5] relevant to commission-only employees, the applicable ordinary pay is the average weekly rate earned in the 12 months immediately preceding the commencement of long service leave: s 4(2) of the LSL Act;
[191.6] this is also consistent with the judicial commentary on the LSL Act and s 5;
[191.7] the calculation of the value or benefit of forgoing future long service leave entitlement or pro rata long service entitlement is uncertain and arguably vague where the comparator is adequacy; and
[191.8] an employee may not become eligible for long service leave entitlement or pro rata long service entitlement if their employment is terminated earlier, where upon the status of any agreement for the payment in advance to forgo future long service entitlement is equally uncertain.
28 Her Honour considered the 2021 amendments to s 5 ‘put beyond doubt the prior position’: [193].
29 It therefore followed that, in her Honour’s view, cl 8 of the contract was inconsistent with the limited contracting out provisions of s 5 and therefore unenforceable: [195].
30 Her Honour went on to provide reasons why, in the event that she was wrong about the construction of s 5, she was not satisfied that the benefit under the contract was adequate for the purpose of meeting the conditions of s 5 of the LSL Act.
Coastal’s Grounds of Appeal
31 Coastal’s Amended Grounds of Appeal list 13 grounds relating to the above reasoning. By the first ground of appeal, Coastal alleges that the Industrial Magistrate erred in the construction of s 5 of the LSL Act. Grounds 2, 3, 5, 6, 9, 10 and 11 are really particulars of why Coastal says the Industrial Magistrate so erred. They all concern her Honour’s approach to the construction of s 5 and her conclusion as to its meaning. It is therefore appropriate to deal with all of these paragraphs of the Amended Grounds of Appeal together.
32 Additionally, the Amended Grounds of Appeal allege:
(a) Error in the form of insufficiency of reasons: Ground 5.
(b) Error of fact in concluding that the commission paid to Mr Jowett over the minimum rate was not solely attributable to leave, or that the percentage attributable to leave was not ascertainable: Ground 8.
(c) Error in concluding that it was necessary to break down the over-minimum commission payments into components: Grounds 12 and 13.
The Alleged construction error grounds - What is the meaning of ‘entitlement to long service leave under this Act’ in s 5 of the LSL Act?
Principles
33 The correctness standard applies to the grounds of appeal which challenge the Industrial Magistrate’s construction of s 5 of the LSL Act. The Full Bench is required to reach its own view as to the proper construction of the section, without according any deference to the views adopted by the Industrial Magistrate. It is unnecessary for the Full Bench to deal with the appellant’s contentions which point to alleged methodological errors by the Industrial Magistrate in arriving at her conclusions as to construction: Prichard v M6:8 Legal Pty Ltd [2024] WASCA 4 at [35].
34 The principles of statutory construction were recently and relevantly summarised by the Court of Appeal in Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2024] WASCA 38 at [200]-[206] (citations omitted):
[200] The focus of statutory construction is upon the text of the provisions having regard to their context and purpose.
[201] The statutory text is the surest guide to Parliament's intention. A decision as to the meaning of the text requires consideration of the context, in its widest sense, including the general purpose and policy of the provision.
[202] The context includes the legislative history and extrinsic materials.
[203] At common law, apart from any reliance upon s 19 of the Interpretation Act 1984 (WA), a court may have regard to reports of law reform bodies to ascertain the mischief which a statutory provision is intended to remedy.
[204] However, legislative history and extrinsic materials cannot displace the meaning of statutory text. Further, the examination of legislative history and extrinsic materials is not an end in itself.
[205] The purpose of legislation must be derived from the statutory text and not from any assumption about the desired or desirable reach or operation of the relevant provisions. The intended reach of a legislative provision is to be discerned from the words of the provision and not by making an a priori assumption about its purpose.
[206] Recently, in ENT19 v Minister for Home Affairs, Gordon, Edelman, Steward and Gleeson JJ made these observations:
The context of the words, consideration of the consequences of adopting a provision's literal meaning, the purpose of the statute and principles of construction may lead a court to adopt a construction that departs from the literal meaning of the words of a provision. One such principle is that legislation must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. As expressed by Gageler J in SAS Trustee Corporation v Miles, 'statutory text must be considered from the outset in context and attribution of meaning to the text in context must be guided so far as possible by statutory purpose on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means'. Where conflict appears to arise in construing an Act, 'the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions', and this 'will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Ultimately, the task in applying the accepted principles of statutory construction is to discern what Parliament is to be taken to have intended.
35 These principles mean that context should be considered at the first stage and in its widest sense: SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [14]. Context may encompass the structure of the Act and surrounding provisions. While context includes the existing state of the law and the history of the legislative scheme, the examination of legislative history and extrinsic materials is not an end in itself. Shire of Mount Magnet v Atlantic Vanadium Pty Ltd [2025] WASC 274 at [9] and [53] –[54]
36 Identifying the purpose of a statutory provision can be difficult. Justice Bell explained the difficulties of identifying statutory purpose and its role in construction in Sydney Seaplanes Pty Ltd v Page [2021] NSWCA 204; (2021) 393 ALR 485 (Sydney Seaplanes) at [36][39] (citations omitted):
[36] It will not, however, always be easy to identify or discern the purpose of any given statute or statutory provision, and care must be taken against ascribing an overly broad purpose based upon a priori assumptions as to the legislation’s intended reach: Palgo Holdings Pty Ltd v Gowans at [28]. Furthermore, a statute may have multiple purposes and, as enacted, may (and often will) give effect to political and policy compromises such that the legislative purpose, whatever may have been intended originally, is obscured…
...
[39] The purpose of a statute or statutory provision, or the “mischief” which a statute is intended to address, may sometimes also be identified in an explanatory memorandum to a parliamentary bill or in the second reading speech although these sources of potential enlightenment, particularly the explanatory memorandum, are frequently of limited utility in this regard, often being little more than summaries or paraphrases of provisions of the bill. Although the occasions when such assistance will in fact be given have been said to be “rare”, they nevertheless sometimes present themselves: Lacey v Attorney-General (Qld).
Coastal’s submissions
37 Coastal’s Outline of Submissions in support of its grounds of appeal are primarily directed at the methodology employed by the Industrial Magistrate in reaching her conclusions as to the proper construction of s 5 of the LSL Act. Coastal says the Industrial Magistrate failed to ‘begin with a consideration of the text itself’ instead impermissibly relying on historical considerations and extrinsic materials to displace the clear meaning of the text.
38 Coastal submits that the meaning of s 5 of the LSL Act is clear and unambiguous.
39 Coastal says the meaning of ‘entitlement’ in s 5 of the LSL Act is akin to a ‘workplace right’ under the FWA as described by the High Court in Qantas Airways Ltd v Transport Workers Union of Australia [2023] HCA 27; (2023) 412 ALR 134 at [34]-[35] (Qantas). The plurality there observed that s 341(1)(a)’s reference to a person having a workplace right if the person ‘is entitled to the benefit of a workplace law or workplace instrument’ is sufficiently broad to encompass a present entitlement to receive a benefit at some future stage of the employment relationship on the occurrence of an expected event or contingency. Similarly, Coastal says reference to an ‘entitlement under this Act’ in s 5 is broad enough to encompass entitlements not yet accrued, crystalised or existing but which are due to come into existence in the future.
40 Coastal made much of the fact that the Industrial Magistrate did not expressly refer to or apply the High Court’s approach. Having submitted that the starting point for the construction exercise is the text itself viewed in context and having regard to its statutory purpose, it is odd that Coastal viewed the High Court’s discussion about workplace rights under the FWA as holding the key to construction of s 5 of the LSL Act. The respective statutory contexts have as much in common as chalk and cheese.
41 The High Court was considering the meaning of s 341, contained in Division 3 of Part 3-1 of the FWA, titled Workplace Rights. The Division contains a number of protections against adverse action, coercion, undue influence and misrepresentations, secured through civil regulatory remedies. Section 341 itself sets out the meaning of ‘workplace right’.
42 In contrast, s 5 appears in Part II of the LSL Act, which deals with the construction and application of the LSL Act. The LSL Act more generally is an act ‘to provide for the granting of long service leave to certain Western Australian employees and for matters incidental thereto’. It grants a leave benefit whereas Division 3 of the FWA contains protections in employment.
43 The only potential relevance of Qantas is that it is illustrative of the general idea that words like ‘right’, ‘entitlement’ and ‘benefit,’ when used in legislation, are capable of being construed narrowly and broadly.
44 Even more tangentially, Coastal relied on Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia [2012] FCA 45; (2012) 213 FCR 549 (Jeld-Wen). That case concerned the FWA’s prohibition on cashing out the entitlement to paid personal/carer’s leave, specifically the provision that said ‘paid personal/carer’s leave must not be cashed out except in accordance with permitted cashing out terms included in a modern award or enterprise agreement under section 101’.
45 Under the terms of individual agreements, Jeld-Wen paid employees a weekly allowance of 1.50 hours at their base rate, while absences on sick leave were unpaid. One argument made by JeldWen was that the statutory prohibition on cashing out was limited to entitlements that had accrued, and the payments it made were made in advance of employees having an accrued entitlement.
46 Justice Gray rejected this argument, noting at [20]:
…The prohibition is equally capable of application to entitlements yet to be accrued as it is to entitlements already accrued. The mere fact that money was paid in advance would not render the payment any less a payment in substitution for the entitlement than if the payment were made after the entitlement had accrued…
47 Jeld-Wen considered the meaning of ‘cashing out’ in the FWA. It did not consider the meaning of ‘entitlement’. Again, it is merely illustrative of the possibility that a not yet accrued leave entitlement can be the subject of a payment in substitution for the entitlement.
48 Coastal also submitted that the Industrial Magistrate should have had regard to the 2021 amendments to s 5 of the LSL Act in finding the construction it contended for. Coastal argued that the 2021 amendments would have been unnecessary if s 5 of the LSL Act was given a narrow construction. It said this was a strong indicator that s 5 of the LSL Act allowed what the parties did in this case to be done.
49 On the other hand, Coastal says the Industrial Magistrate was wrong to have regard to Worsley, because it hadn’t been cited by any of the parties at first instance, Coastal had no opportunity to make submissions about it, and it was decided in a different context such that no useful indicators of legislative intent could be drawn from it. Coastal argued Worsley was outdated, not on point, distinguishable and provided no reasoning for the conclusions stated in the parts referred to by her Honour.
50 Coastal submitted that the cases her Honour placed reliance on provided tenuous support for her Honour’s construction and did not logically or persuasively permit the conclusions at [190] of the Primary Decision as to the scheme of the LSL Act. In Coastal’s view, this led the IMC, to assume a legislative purpose that is not apparent from the text or its context, resulting in the IMC impermissibly re-engineering the text’s meaning.
Mr Jowett’s submissions
51 Mr Jowett submits that the Industrial Magistrate was correct to look to the historical context to determine s 5’s legislative purpose, as the meaning of s 5 is not obvious or plain on its face, there being alternative meanings available. Mr Jowett submits that even if there is some deficiency in the Industrial Magistrate’s methodology, including any reference to cases not cited by the parties, or a failure to expressly refer to cases the parties did rely upon, any such deficiency is inconsequential as the construction her Honour favoured was ultimately correct.
Consideration
52 Section 5 of the LSL Act is headed ‘Limited contracting-out of long service leave’. It says:
An employer and an employee may agree that the employee may forgo his entitlement to long service leave under this Act if —
(a) the employee is given an adequate benefit in lieu of the entitlement; and
(b) the agreement is in writing.
53 The controversy is what s 5 means when it refers to ‘entitlement to long service leave under this Act.’ Does this phrase have a wide meaning, so that such entitlements include the right to count service towards an ultimate long service leave entitlement, or a future contingent entitlement? Or does the phrase have a narrow meaning, restricted to an actual entitlement under s 8 to either take long service leave or be paid on termination for accrued and untaken long service leave?
54 Both constructions are available. To my knowledge, the construction of s 5 of the LSL Act has not previously been judicially considered. However, the question of whether the right to have service counted as accrual towards a leave entitlement before an accrued right to leave or payment materialises can be characterised as an ‘entitlement’ has arisen from time to time in different contexts.
55 For example, s 113 of the National Employment Standards (NES) under the FWA provides that if there are applicable award-derived long service leave terms in relation to an employee, the employee is entitled to long service leave in accordance with those terms. Section 113 also sets out various exceptions to this general position. The meaning of ‘entitled to long service leave’ in this provision was considered in Maughan Thiem Auto Sales Pty Ltd v Cooper [2014] FCAFC 94; (2014) FCR 1 (Maughan) and in Conroy’s Smallgoods v Australasian Meat Industry Employees Union [2023] FCAFC 59; (2023) ALR 316 (Conroy’s Smallgoods).
56 In Conroy’s Smallgoods, Raper J observed that the meaning of ‘would have entitled the employee to long service leave’ is ambiguous given long service leave is an accrual-based entitlement.’ At [269], her Honour referred to Katzmann J’s consideration of s 113(3) in Maughan, where Katzmann J determined that there were two possible interpretations of the phrase ‘would have entitled the employee to long service leave’, the first being that it simply refers to terms that provide for an entitlement to long service leave, and the second being that it refers to ‘an entitlement that would have actually accrued’: Maughan at [42].
57 Katzmann J preferred the first, wide interpretation having regard to the specific legislative context and purpose. While Raper J agreed with and endorsed Katzmann J’s analysis in Maughan, her Honour also cautioned against overstating the applicability of Maughan to the question that was before the Full Court: [271].
58 Another example is found in Maurice Alexander Management Pty Ltd v Sato [2023] ICQ 14. There, a casual employee claimed an entitlement to long service leave under the Industrial Relations Act 1999 (Qld) (repealed) in circumstances where her employment was covered by a series of industrial agreements made under the Workplace Relations Act 1996 (Cth) and the FWA. A 2006 agreement expressly provided for casual loading to be paid ‘in lieu of any entitlement to paid annual leave, paid personal leave, long service leave’. The employer argued that the payment of casual loading under the 2006 agreement meant that service while that agreement applied should not be counted as continuous service under the Industrial Relations Act 1999 (Qld).
59 At first instance, the Queensland Industrial Commission held that there was a distinction between an entitlement to long service leave and the accrual leading to an entitlement to long service leave. Further, the entitlement to long service leave only arose after 10 years’ continuous service was complete. Accordingly, the 2006 agreement did not operate to exclude service under it from the calculation of the entitlement to long service leave.
60 On appeal, Davis P of the Industrial Court of Queensland disagreed with this approach, observing at [36]-[38]:
[36] As the Industrial Commissioner held, on a particular day, long service leave crystallises as a right to take leave with pay. It crystallises though because the employee has a right to have periods of service counted towards the ultimate entitlement to long service leave. The entitlement to long service leave is a right to paid leave when a specified term of service has been achieved.
[37] The casual loading is, in effect, a periodically paid sum which is designed to extinguish various “entitlements”. It does that by compensating the employee with inflated pay rates to extinguish the benefit of the otherwise accruing “entitlements”.
[38] Construed in that context, it is the service which is accruing and which ultimately crystallises into an entitlement to take paid long service leave. On a proper construction of clause 13.1, “the entitlement” to long service leave is the right to count service under the 2006 agreement towards an ultimate long service leave entitlement. I therefore respectfully disagree with the conclusion reached by the Industrial Commissioner, and ground 2 of the appeal is made out.
61 I therefore accept that when s 5 speaks of an ‘entitlement to long service leave under this Act’ and ‘the entitlement’, the words are capable of having a broader meaning than an accrued and crystalised entitlement to long service leave.
62 Whether s 5 is intended to have the broad meaning must be determined by reference to the text itself, having regard to its structure, the surrounding text and the legislative history of the scheme in which it sits.
Text, structure, and statutory context
63 There is little if anything in the text and structure of s 5 of the LSL Act which reveals much as to its purpose or whether the intention is that it have a broad or narrow application.
64 The reference to ‘limited contracting-out’ in the section heading might be thought to give a clue that the section has a narrow application. The section heading is not part of the LSL Act: Interpretation Act 1984 (WA), s 32(2). As the section heading does not form part of the Act, I cannot have regard to it as a textual consideration. It may be ‘extrinsic material’ which can be taken into account under s 19(1) of the Interpretation Act, only if contained in the Bill which passed through parliament: Re The Honourable G D Kierath, Minister for Heritage; Ex Parte City of Fremantle [2000] WASCA 156; (2000) 22 WAR 342 at [62] (Wheeler J); Sea Shepherd Australia Ltd v State of Western Australia [2014] WASC 66 at [115] (Edelman J).
65 There are more signposts of purpose in the wider statutory context. Buss and Murphy JJ comprehensively set out the structure and content of the LSL Act in Yoon from [17]-[36]. I respectfully adopt that articulation of the statutory context, without repeating all of it. However, I would highlight that the LSL Act is divided into five parts. The first part is headed ‘Preliminary provisions’ and comprises the LSL Act’s short title and commencement provisions.
66 Part II, where s 5 is located, is headed ‘Construction and application of this Act’. The structure and content of Part II is discussed further below.
67 Part III is headed ‘Entitlements to long service leave or to payment in lieu thereof’. Section 8 sets out the core provision for long service leave on ordinary pay in respect of periods of continuous service with an employer. Section 9 generally deals with how and when long service leave can be taken. Section 10 permits an agreement to allow leave to be taken in advance of its accrual.
68 The Court in Yoon recognised that the term ‘long service leave’ as used in s 8 and elsewhere in the LSL Act is not defined, but said at [40]:
…[W]hen s 8 is read as a whole, it is apparent that the term encompasses two aspects of entitlement. The first is in the granting and taking of “leave away from the employment whilst maintaining its continuity”: s 6(1)(a)(ii), s 8(1), s 8(2)(a) and (b). The second is a conditional right to payment in lieu of pro-rata long service leave where the employment is terminated before the leave is taken: s 8(2)(c), s 8(3)…
69 Part IV is headed ‘Enforcement of the provisions of the Act.’ It confers jurisdiction on the IMC to hear and determine all questions and disputes in relation to rights and liabilities under the LSL Act.
70 Part VII is headed ‘Miscellaneous provisions’. It has six sections in four divisions. It includes provisions about the keeping of and access to employment records, a prohibition of employment during long service leave, entitles parties to proceedings to legal representation and confers a regulation making power on the Governor.
71 Each of the part and division headings form part of the LSL Act: Interpretation Act, s 32(1). They are indicative of the purpose of the sections that fall within those parts and divisions.
72 Returning to the structure of Part II, it includes s 4 which contains the definitions of terms used in the LSL Act. It also includes s 6 which sets out what constitutes ‘continuous employment’. Consistent with the heading, these two sections tell the reader how to construe the other provisions of the LSL Act.
73 Sections 5 and 7 however are not obviously about construction of the LSL Act. Accordingly, the heading to Part II indicates that these sections are about how the Act applies in the circumstances described in the sections. Section 7 modifies the LSL Act’s application where employment commenced before the operation of the Act: s 7(1). It explains how periods of leave ‘in the nature of long service leave’ or payments in lieu of such leave are to be taken into account in calculating the entitlement to long service leave under the LSL Act: s 7(2). Section 7(3) clarifies that the entitlement to leave under the LSL Act is in substitution for and satisfaction of any long service leave which an employee is otherwise entitled to.
74 The construction that Coastal contends for would mean that s 5 does more than simply modify how the LSL Act otherwise applies. It would, in effect, mean that there ceases to be any application of Part III at all. This construction is at odds with the Part heading and structure. It is clear enough that s 5 is intended to create some degree of flexibility in how an employer and an employee can comply with the substantive obligations and recognise the substantive entitlements contained in s 8. But enabling an agreement by which an employee foregoes the substantive entitlements altogether cannot be described as ‘applying’ the LSL Act. It is circumventing the LSL Act.
75 In contrast, s 4, which immediately precedes s 5 in Part II deals with the construction of the Act. To that end, it contains a definition of ‘employee’ which is expressed as being subject to subsection 4(3):
…
employee means, subject to subsection (3) —
(a) any person employed by an employer to do work for hire or reward including an apprentice;
(b) any person whose usual status is that of an employee;
(c) any person employed as a canvasser whose services are remunerated wholly or partly by commission or percentage reward; or
(d) any person who is the lessee of any tools or other implements of production or of any vehicle used in the delivery of goods or who is the owner, whether wholly or partly, of any vehicle used in the transport of goods or passengers if the person is in all other respects an employee;
76 Section 4(3) then says:
Where a person is, by virtue of —
(a) an award or industrial agreement;
(b) an employer-employee agreement under Part VID of the Industrial Relations Act 1979 or other agreement between the person and his employer; or
(c) an enactment of the State, the Commonwealth or of another State or Territory,
entitled to, or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under this Act, that person is not within the definition of “employee” in subsection (1).
77 The section creates a class of persons who fall outside the s 4(1) categories of ‘employee’: Yoon at [57]. Section 4(3) does not simply limit or modify the application of the LSL Act, but rather excludes its application altogether so that, consistent with the long title, its application is less than universal.
78 If it was the legislature’s intention that employees and employers could avoid the substantive entitlements of the LSL Act by agreement, it could have done so by excluding persons from the definition of ‘employee’ in s 4, where complying agreements are entered into. That would put beyond doubt that the application of the Act in its entirety could be circumvented by an agreement meeting the relevant conditions.
79 The other feature of s 4(3) that is significant is its reference to a person being “entitled to, or eligible to become entitled to, long service leave…’ (emphasis added). Section 4(3) explicitly recognises that long service leave benefits or rights under other instruments can be contingent or future rights. The plurality in Yoon at [59] noted these words in s 4(3):
…form a composite phrase upon which, as a whole, the preceding words operate. The preceding words are “a person” who is “by virtue of [an agreement]…”. Read as a whole, and in this context, it appears to be used as an expansive phrase to comprehend an actual or contingent entitlement under another instrument, irrespective of whether it has accrued, or has not yet accrued. In other words, in its context, the phrase appears to be a comprehensive one used by the legislature to refer to an actual or contingent entitlement which any person has under another instrument to long service leave, irrespective of whether it has been accrued or not…
80 The expansive or composite phrase in s 4(3) is directed to entitlements under other instruments, not entitlements under the LSL Act. All the same, the legislature has used the composite phrase to denote the inclusion of both actual crystalised entitlements and contingent entitlements. The other side of the coin is that where the legislature has not used the same expansive phrase, but refers only to ‘entitled to’, the legislature is referring only to an actual, crystalised entitlement.
81 There are other indications in the statutory context which support the same conclusion that s 5 has a narrow operation. The phrases ‘entitled to long service leave’ and ‘entitlement to long service leave’ are used frequently throughout the LSL Act. A consistent meaning should ordinarily be given to a particular phrase used in a statute or suite of statutory provisions, wherever it appears in the statute or suite of statutory provisions: Tabcorp Holdings Ltd v Victoria [2016] HCA 4; (2016) 328 ALR 375 at [65].
82 Beyond s 5, the phrase ‘entitlement to long service leave’ is used to refer to the two aspects of an accrued entitlement, that is, the entitlement to be absent from work without loss of continuity of service, and to receive pay in respect of the absence.
83 For instance, the phrase ‘the entitlement to long service leave under this Act’ appears in s 4(3) following the words ‘where a person is….entitled to, or eligible to become entitled to’. As previously observed, in Yoon, the Court considered Part III involved one comprehensive entitlement which contains two aspects, the granting and taking of leave, and the conditional right to payment in lieu of pro-rata long service leave on termination: [40]. So where s 4(3) referred to ‘the entitlement to long service leave under this Act’, the phrase was taken to mean the specific entitlement or benefits specified in s 8(2) and s 8(3) of the LSL Act: [60]. This construction formed part of the plurality’s reasoning leading to its conclusion that the comparison required by s 4(3) is to be made prospectively by reference to the terms of the respective instruments, rather than at a point in time and from time to time: [61].
84 The phrase ‘entitlement to long service leave under this Act’ then appears in s 7(1):
…in the calculation of the employee’s entitlement to long service leave under this Act not more than 20 years’ continuous employment before the coming into operation of this Act shall be counted.
(emphasis added).
85 Sections 7(2) and 7(3) state:
(2) Any leave, in the nature of long service leave or, as the case may be, payment in lieu thereof, granted, whether before or after the coming into operation of this Act, under any long service leave scheme and irrespective of this Act to an employee in respect of any period of continuous employment with his employer, shall be taken into account in the calculation of the employee’s entitlement to long service leave under this Act as if it were long service leave taken under this Act, or, as the case may be, payment in lieu of long service leave under this Act and to be satisfaction to the extent thereof of any entitlement of the employee under this Act.
(3) The entitlement to leave under this Act shall be in substitution for and satisfaction of any long service leave to which the employee may be entitled in respect of employment of the employee by the employer.
(emphasis added).
86 The phrase is associated here with the concept of ‘calculation.’ Section 26, discussed below, also refers to ‘the calculation of the entitlement to, and payment for, long service leave under this Act’. The idea that the relevant entitlement could be a future contingent entitlement, is somewhat incongruent with the concept of ‘the calculation’ of an entitlement.
87 Further, the reference in s 7(3) to ‘leave’, obviously referring to long service leave, highlights that it is the ability to be absent from work that is being referred to. It is unlikely that the word ‘leave’ would be used to refer to the scheme under the LSL Act in the broad sense as including progressive accrual towards a future right.
88 Finally, the other provisions of the LSL Act which make up the LSL scheme support the view that s 5 is intended to operate narrowly. Section 11 lists, without limitation, the questions and disputes which the industrial magistrate has jurisdiction to determine. Of the five ‘questions and disputes’ listed, the first and last reflect the matters provided for in Part II, by reference to:
…
(a) as to whether a person is or is not an employee, or an employer, to whom this Act applies;
(b) whether and when and to what extent an employee is or has become entitled to long service leave, or payment in lieu of long service leave;
(c) as to the ordinary rate of pay of an employee;
(d) as to whether the employment of the employee was or was not ended by an employer in order to avoid or to attempt to avoid liability for long service leave; and
(e) with respect to a benefit in lieu of long service leave under an agreement made under section 5.
…
89 Notably, what the section contemplates may be a dispute under s 5 is not whether the LSL Act applies (in contrast to s 11(a)), nor whether the benefit is in lieu of entitlements in a broad sense. The words ‘entitlement to long service leave under this Act’ are not found in s 11(e). Rather it is just long service leave that is contemplated as being the subject of a s 5 agreement. Had the legislature intended s 5 have the broader meaning contended for by Coastal, then it would follow that s 11 would provide for resolution of disputes about benefits in lieu of payment on termination, and long service leave which an employee is eligible to become entitled to. It does not.
90 Section 11(b) also suggests that ‘entitled to’ is referring to the components of a crystalised entitlement to long service leave. It makes no sense to speak of whether and when and to what extent an employee has become entitled to something that remains contingent.
91 Section 26 of the LSL Act says:
26. Keeping of employment records
(1) An employer must ensure that details are recorded of —
(a) each employee’s name and, if the employee is under 21 years of age, the employee’s date of birth;
(b) the date on which the employee commenced employment with the employer;
(c) the gross and net amounts paid to the employee under the contract of employment, and all deductions and the reasons for them;
(d) all leave taken by the employee, whether paid, partly paid or unpaid;
(e) details of any agreement made under section 5 between the employer and the employee;
(f) such other details as are necessary for the calculation of the entitlement to, and payment for, long service leave under this Act; and
(g) other matters prescribed by the regulations.
(2) The employer must ensure that —
(a) the records are kept in accordance with the regulations; and
(b) each entry is retained during the employment of the employee and for not less than 7 years thereafter.
(3) A contravention of subsection (2) is not an offence but that subsection is a civil penalty provision for the purposes of the Industrial Relations Act 1979 section 83E.
(4) Subsection (3) extends to a contravention that occurred within the period of 12 months ending on the coming into operation of the Labour Relations Legislation Amendment Act 2006 Part 7 Division 2 unless the employer was charged with an offence in respect of that contravention.
92 The purpose of the section is to facilitate compliance with the LSL Act and enable its enforcement. There is no exemption from the requirement to keep records of the details listed in s 26 where an agreement is made under s 5 of the LSL Act. Rather, the details of such an agreement must be recorded, along with details such as the date of commencement of employment, the gross and net amounts paid to the employee, leave taken by the employee and such other details as are necessary for the calculation of the entitlement to long service leave under the LSL Act.
93 Had the legislature intended that an agreement under s 5 could be made to contract out of the scheme of long service leave generally, rather than limited to accrued long service leave, there would be no need for records to be kept where a s 5 agreement is entered into.
94 The statutory context supports the narrow construction of s 5 preferred by the Industrial Magistrate.
Legislative history
95 Section 5 was inserted into the LSL Act by the Industrial Relations Legislation Amendment and Repeal Act No 79 of 1995 (WA), s 47.
96 Prior to the commencement of s 5 of the LSL Act, s 5 of the earlier version of the Act allowed an employer to apply to the Board of Reference constituted under the earlier version of the Act to be exempted from the operation of the Act. It was in these terms:
5.
(1) The Board of Reference may exempt an employer from the operation of this Act in respect of his employees if it is satisfied that there is an existing or proposed scheme, conferring benefits in the nature of long service leave which in its opinion are or will be, viewed as a whole, not less favourable to the whole of the employees of that employer than the benefits prescribed by this Act.
(2) In order to ensure that the benefits under a scheme in relation to which an employer is granted an exemption under subsection (1) of this section remain not less favourable to the whole of the employees of that employer than the benefits prescribed by this Act, the Board of Reference may
(a) grant the exemption subject to such conditions as it determines are fit to impose; and
(b) from time to time, add to, vary or revoke any such conditions imposed by it.
(3) An application for an exemption under subsection (1) of this section may be made by an employer.
(emphasis added).
97 As the Industrial Magistrate noted at [168]-[169]:
[168] Section 5 of the LSL Act (pre-20 June 2022) was inserted with effect from 16 January 1996. Prior to this, s 5 of the LSL Act enabled exemption from the LSL Act provided there:
(1) was an alternative existing or proposed scheme which conferred benefits in the nature of long service leave;
(2) the scheme satisfied a body named the Board of Reference; and
(3) the existing or proposed scheme was or would be not less favourable to the whole of the employees than the benefit under the LSL Act.
[169] The amended s 5 of the LSL Act contained three noteworthy features, namely: 
[169.1] It removed the oversight of an alternative scheme or arrangement for long service leave between employers and employees;
[169.2] It gave more freedom to individual employers and employees to agree something other than an entitlement to long service leave provided whatever was agreed was an adequate benefit in lieu of the entitlement and was in writing; and
[169.3] It dispensed with the idea of a whole of workforce scheme conferring a benefit similar to long service leave.
98 Under the earlier version of s 5, when the Board of Reference granted an application made under it, the Act ceased to apply altogether. Further, the Board of Reference could only grant such exemption if there was an alternative scheme which provided employees with benefits in the nature of long service leave. That is, the benefit needed to involve the provision of respite from employment without loss of continuity. The section did not contemplate benefits of a different nature, like extra money.
99 The 1996 amendment abolished the Board of Reference. It would therefore appear that s 5 of the LSL Act was introduced to retain the flexibility which the earlier s 5 enabled, but without the involvement of the Board of Reference.
100 Because the amendments did not retain the requirement that the benefit be ‘in the nature of long service leave’, or the reference to a ‘scheme’, it is also apparent that the amendments were intended to provide greater flexibility as to the nature of the benefits which could be substituted for those under the LSL Act. However, there is nothing which indicates that the purpose or intent of the amendments was to allow an agreement which would circumvent the concept of long service leave entirely. Indeed, the fact that, in contrast to the earlier version, s 5 of the LSL Act, does not expressly provide an exemption from the operation of the Act indicates to the contrary.
101 The legislative history does not require a broad construction of s 5.
The subsequent amending Act
102 The version of s 5 effected by the 2021 amendments is set out above, but it is convenient to repeat it here:
5. Cashing out of accrued long service leave
(1) An employer and an employee may agree that the employee may forgo the employee’s entitlement, or part of the employee’s entitlement, to long service leave under section 8(2)(a) or (b) if —
(a) the employee is given an adequate benefit instead of the entitlement; and
(b) the agreement is in writing, signed by the employer and employee.
(2) For the purposes of subsection (1), a benefit is not adequate unless the employee is paid at least the amount of ordinary pay the employee would have received had the employee taken the long service leave or part of the leave.
(3) Nothing in this section enables the employer and employee to reach the agreement before the employee’s entitlement to long service leave has accrued.
103 The 2021 amendments effected the following changes:
(a) The clause heading is changed from ‘Limited contracting-out’ to ‘Cashing out of accrued’ long service leave.
(b) The word ‘his’ is changed to ‘the employee’s’.
(c) There is added reference to ‘or part of the employee’s entitlement’.
(d) There is added reference to ‘under section 8(2)(a)’.
(e) The words ‘instead of’ are substituted for ‘in lieu of’.
(f) There is an added requirement that the agreement be ‘signed by the employer and the employee’.
(g) Subsections (2) and (3) were added.
104 It is proper to look to any amendments to a statutory provision in order to cast light on the meaning of the original words, prior to amendment: see Pearce D Statutory Interpretation 9th Edn 3.38 (Pearce), where the learned author cites Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70, and Dixon J’s observation at 86 that it would have been a strange result if the court had intended the prior legislation as giving a wider exemption than that conferred by the amendment, so that the express exemption the amendment made would have been unnecessary. Cases applying this approach are listed in the Annexure at 3.38 of Pearce and include Worsley Timber 2000 Pty Ltd (in Liq) v Commissioner of State Revenue [2007] WASC 155 where this approach was briefly referred to.
105 However, care must be taken to ensure that the amending words were not included to remove possible doubt as to the meaning of the original provision: Pearce 3.39 citing Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203, Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 and Hepples v Federal Commissioner of Taxation [1991] HCA 39; (1991) 65 ALJR 650; R v Sieders [2008] NSWCCA 187; (2008) 72 NSWLR 417.
106 In Interlego AG v Croner Trading Pty Ltd [1992] FCA 624; (1992) 39 FCR 348, Gummow J (Black CJ & Lockhart J agreeing) noted at 382:
There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, at least to avoid a result which would render the amendment unnecessary, or futile or deficient: see especially Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70 at 85 - 86; Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234 at 254 - 255; But in doing so caution should be exercised: see D C Pearce and R S Geddes, Statutory Interpretation in Australia (3rd ed, 1988), §3.26. It is, after all, a curious way of revealing parliamentary intention at the time of passing the earlier provision. As was observed by Viscount Haldane LC in Re Samuel [1913] UKLawRpAC 17; [1913] AC 514 at 526:
“It is not a conclusive argument as to the construction of an earlier Act to say that unless it be construed in a particular way a later enactment would be surplusage. The later Act may have been designed, ex abundante cautela, to remove possible doubts.”
See also Commissioner of Taxation (Cth) v Verzyden (1988) 88 ATC 4,205 at 4,210; Downey v Trans Waste Pty Ltd [1991] HCA 11; (1991) 172 CLR 167 at 177.
107 See also Hepples v Federal Commissioner of Taxation [1991] HCA 39; (1991) 173 CLR 492, 539 (McHugh J); Spall v Minister for Home Affairs [2024] FCA 849 at [100].
108 The Explanatory Memorandum to the Industrial Relations Legislation Amendment Bill 2021 (WA) provides at [38] that:
The Bill amends the LSL Act to:
a) clarify the absences that do not break an employee’s continuous employment, and the absences that do and do not count towards the length of an employee’s continuous employment. This includes specific provisions relating to casual and seasonal employees, and apprentices;
b) clarify existing provisions relating to the cashing out of long service leave;
…
109 Given this plain statement of the intent of the 2021 amendments to s 5, no support for Coastal’s construction can be gained from reference to those amendments.
110 The fact that the amendments were intended to clarify what the legislature understood to be the existing meaning of s 5 is fortified by the fact that the amending Act contained no savings or transitional provisions preserving the effect of agreements made prior to the amendments.
Conclusion in relation to construction of s 5
111 The statutory context and legislative history reveals the purpose of s 5 of the LSL Act was to enable agreements to be made between an employer and an employee for the employee to forego an entitlement the employee has under s 8 in exchange for an adequate alternative benefit. Section 5 does not apply in the wider sense contended for by Coastal to aspects of the long service leave scheme short of an accrued entitlement.
112 Accordingly, I would dismiss the grounds of appeal that relate to the Industrial Magistrate’s construction of s 5 being Grounds 1, 2, 3, 4, 6, 9, 10 and 11.
Ground 5 - Insufficiency of reasons
113 Coastal’s fifth ground of appeal alleges:
The Appellant was denied fairness by being denied the ability to know why it lost.
114 Its written submissions just say at [4]:
a. This ground is based on Mount Lawley (see paragraph 26).
115 This ground was not elaborated on in oral argument before the Full Bench.
116 I understand this briefest of submissions to invite attention to Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 at [26] where the Court said (citations omitted):
…[T]he giving of reasons is a normal (albeit not universal) incident of the judicial process. That is because “the duty is a function of due process: Public Service Board of New South Wales v Osmond; Soulemezis v Dudley (Holdings) Pty Ltd and Beale v Government Insurance Office of New South Wales. That is because “the duty is a function of due process, and therefore of justice”: Flannery v Halifax Estate Agencies Ltd. Fairness requires that the parties should know why they have won or lost. A requirement to give reasons is likely to produce a more soundly based, rational judgement: Flannery and see Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2). The requirement also furthers judicial accountability: Soulemezis and Beale.
117 Ironically, Coastal denied the Full Bench the ability to know why it says it was denied the ability to know why it lost. In corresponding brevity, this ground of appeal can be dealt with by noting that reasons for decision were published.
118 The ground is dismissed.
Ground 7 - Was cl 8 permitted by s 5 of the LSL Act?
119 This ground of appeal is directed at the finding at [195] of the Industrial Magistrate’s Primary Decision, where her Honour concluded that cl 8 of the contract is inconsistent with and contrary to the limited contracting-out provisions of s 5 of the LSL Act.
120 Coastal’s written submissions on this ground say at [6.a]:
This case was not about the enforcement of Mr Jowett’s contract and the comment about enforceability is unnecessary and hypothetical. As to the finding that clause 8 of the contract was inconsistent with former s5, the Appellant repeats paragraph 1(c) of the grounds of appeal.
121 The ground was not elaborated upon orally.
122 To the extent that Coastal is critical of a part of the reasons which was ‘unnecessary,’ it follows that any alleged error is inconsequential and can have no bearing on the outcome of the matter at first instance nor on appeal. As for the balance of the submission, it appears to repeat and rely upon the alleged error in construction of s 5. Accordingly, this ground should be dismissed.
Grounds 8, 12 and 13 - Did cl 8 of the contract provide ‘an adequate benefit in lieu’?
123 At [196] and the following paragraphs of the Primary Decision, her Honour considered whether, if she was wrong about the construction and effect of s 5 of the LSL Act, cl 8 satisfied the conditions of s 5. That is, if s 5 of the LSL Act enabled payment in advance in lieu of a future entitlement which had not yet accrued, was the commission paid to Mr Jowett an adequate benefit in lieu of his entitlement to long service leave under the LSL Act? Her Honour concluded that it was not, for the reasons set out in [197]:
For the following reasons, I find cl 8 of the Contract did not satisfy the terms of s 5 of the LSL Act (pre-June 2022 amendments):
[197.1] as already stated, the overaward commission paid to the claimant was a composite additional percentage amount, and it did not distinguish what additional percentage was attributable to annual leave, long service leave, personal leave, compassionate leave or community service leave or what additional percentage was attributable to individual performance;
[197.2] while I accept the overaward commission paid to the claimant was significant, the evidence does not enable an objective assessment of whether the claimant was adequately compensated to forgo future long service leave. The respondent’s evidence, is the total effect of the composite additional percentage for a period of five years, rather than a breakdown of how the percentage was attributed over the claimant’s employment period;
[197.3] the evidence demonstrates at least from July 2021, the claimant was rewarded with an increase in composite additional percentage commission that had no apparent nexus with any leave; and
[197.4] to the extent the parties reduced the claimant’s leave arrangements to writing, I am not satisfied cl 8 complies with the requirement of a written agreement under s 5(b) of the LSL Act (pre-June 2022). The written agreement under s 5 of the LSL Act is to forgo the entitlement to long service leave for an adequate benefit in lieu, whereas the written agreement under cl 8 of the Contract is an additional percentage commission paid in advance for leave to be taken on an unpaid basis. What, in fact, was agreed with respect to long service leave, if anything, was uncertain.
124 Coastal submits that her Honour was wrong to characterise the matter as involving an absence of evidence concerning what the over-minimum commission payments were attributable to, when there was a file note of the meeting between Mr Jowett and two of Coastal’s employees or officers on 8 July 2021 which resulted in the commission payments being varied. Coastal submitted that the file note made it clear that no aspect of the agreement for payment of commission related to performance.
125 The initial written contract, cl 8 of which Coastal relied upon in its defence to the claim, said this about the components of the commission:
7. Working Hours
The hours of work shall be 40 hours per week which may be worked on any day, Monday to Sunday. During these hours you are required to meet the operational requirements of Realmark and to achieve the agreed minimum K.P.I.'s in respect of prospecting, listing presentations, listing stock level and sales plus effective days on market/clearance rates.
You are required to attend the weekly Stock Review Meeting at a nominated Realmark office and any Realmark Agency (group) meetings as determined by Realmark from time to time.
It may occasionally be a requirement of the position to work outside normal working hours as determined by Realmark, in which case the commission remuneration has been set to reflect this.
You are entitled to 1½ rostered days free of duty each week. Such rostered days off may be taken in one of the following ways:
• One consecutive period;
• Two periods; or
• Three periods comprising three half days.
It is your responsibility to ensure that your duties and responsibilities are organised in such a manner as to ensure that you have in fact taken these rostered days off in accordance with the Award and this offer of employment.
8. Leave
An additional percentage amount has been included in the commission remuneration, so that you are paid in advance of all leave entitlements as determined by Legislation, as such any form of leave taken will be taken on an unpaid basis.
Should your employment cease with Realmark whether by your own accord or at Realmark's discretion, no further payment for leave entitlements will be made.
(original emphasis)
126 It also set out various expenses which Mr Jowett was required to himself meet from the commission (cl 1, cl 4, cl 5, Schedule 5), and the expenses Coastal would agree to meet (Schedule 5).
127 The file note which records the variation to the commission terms is reproduced below:

128 It is a long stretch to say that this file note reveals anything about what the increased commission is attributable to. All that can be said is that the parties agreed to increase the commission. To the extent that the Industrial Magistrate considered the file note suggested that an increase in the percentage of commission paid was performance based (see [138.2]), that finding does not appear to be supported by the file note itself.
129 Whether a benefit will be adequate for the purpose of s 5 of the LSL Act involves an evaluative judgment. In my view, s 5 does not require that a specific component of a payment be identified as attributable to long service leave, as opposed to other forms of leave and other benefits. To the extent that the Industrial Magistrate sought to find evidence that the commission paid above the minimum commission rate was solely attributable to leave, or to find a distinct percentage attributable to long service leave distinct form performance, I consider her Honour was in error. Further, if the original commission rate established by the contract was adequate, any later agreed increase which was not clearly attributable to leave was irrelevant.
130 The minimum commission rate payable to Mr Jowett under the REIAs was 31.5% of the employer’s net commission (cl 16.7(f)(i)). ‘Employer’s net commission’ is defined by the REIAs to mean at cl 3.1:
…
employer's net commission for a commission - only employee means the employer's gross commission (as defined) less an amount of no greater than 10%
where ‘employer’s gross commission’ is defined to mean:
employer's gross commission for a commission - only employee means the commission received by the employer from a client for a sales or leasing transaction less GST and conjunctional agent fees
131 Mr Jowett was paid 60% of 93% of Coastal’s gross commission, as defined, allowing for GST. This represents 77% more than the minimum commission rate under the REIAs. As the commission rate exceeded the minimum by such a significant percentage, the Industrial Magistrate could be confident that it adequately compensated for all leave types, by common standards of industrial fairness. For example, it is a longstanding industrial principle that a loading of 20% to 25% for casual employees is adequate compensation for the value of annual leave, leave loading, sick leave, public holidays and termination benefits (see UnionsWA Incorporated v Not Applicable [2025] WAIRC 00129; (2025) 105 WAIG 411 at [13]-[14].
132 In circumstances where the commission Coastal agreed to pay to Mr Jowett was at all times at least double the minimum commission Coastal was required to pay, one could easily reach a view that the over-award commission was an adequate benefit in lieu.
133 Because I consider her Honour’s construction of s 5 of the LSL Act was correct, any error in the first instance reasoning on this point would be immaterial. Nevertheless, I would uphold Coastal’s grounds that allege error in the approach to determining whether the benefit in lieu was adequate.
Part 2 - The ‘set-off’ issue
Parties’ positions at first instance
134 In the proceedings at first instance, Coastal relied upon cl 8 of the contract in support of its argument that the commissions it paid to Mr Jowett should be taken into account in satisfaction of its obligation to pay for accrued long service leave on termination. Its submissions at first instance were bare and under-cooked. They did not refer to any legal principles or any authorities that have considered this difficult area of the law.
135 Coastal simply asserted that:
(a) The commissions paid to Mr Jowett exceeded the minimum commission he was entitled to under the REIAs.
(b) The commission above the minimum was paid on account of or in lieu of leave entitlements.
(c) The commission above the minimum well and truly exceeded the value of his leave entitlements.
(d) Mr Jowett accepted payment of the over-minimum commission and did not ever seek to take paid leave during his employment.
(e) The commission payments were therefore intended to satisfy any leave entitlements.
136 Mr Jowett’s submissions did not refer to the law either. In fact, Mr Jowett’s submissions were confined to the ability to set-off the over-award commission payments against the annual leave liability, and did not address the long service leave aspects at all.
137 However, Mr Jowett submitted cl 8 did not clearly establish what part of the commission over the minimum commission rate related to long service leave, and, accordingly it is not possible to apply that payment as a setoff against Coastal’s liability for long service leave.
The Industrial Magistrate’s Set-Off and Penalty Decision
138 After referring to the relevant legal principles derived from WorkPac Pty Ltd v Rossato [2020] FCAFC 84; (2020) 278 FCR 179 (Rossato), James Turner Roofing v Peters [2003] WASCA 28; (2003) 132 IR 122 (James Turner Roofing) and Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 00390; (2020) 100 WAIG 519, the Industrial Magistrate referred to cl 8 of the employment contract and noted that the parties understood, and implicitly that they intended, that leave would be unpaid on account of the higher than REIAs commission rate: [55]-[56]. Her Honour also concluded that the parties understood that if Mr Jowett’s employment was terminated, there would be no further payment for leave entitlements: [57].
139 The Industrial Magistrate referred to a schedule provided by Coastal which calculated the amount over and above the minimum commission rate Mr Jowett received, demonstrating that such amount would have more than satisfied the requirement to pay leave.
140 However, at [60] of the Set-Off and Penalty Decision, her Honour rejected Coastal’s suggestion that the entirety of the amount over and above the minimum commission was for leave, because that suggestion was:
…inconsistent with the finding of fact by the IMC that the increase in commission amount from 1 July 2021 was not referable to leave but followed on from negotiations between the parties.
(original emphasis)
141 Her Honour noted that at the time the contract was made, the 2010 REIA enabled the payment in advance of annual leave and other leave entitlements under the NES, but this ability was removed from 2 April 2018 when the REIA was amended.
142 Her Honour therefore found that Coastal was entitled to setoff its liability in relation to the annual leave entitlement up until 2 April 2018. Her reasons for so finding were [64]:
For the following reasons, for the period of employment from 13 November 2012 to 2 April 2018, I am satisfied the respondent is entitled to setoff its liability in relation to the Annual Leave Entitlement:
(a) the claimant was employed in accordance with the 2010 Award and the Contract;
(b) the common purpose as it related to the payment of the Claimant’s Commission, as understood by the parties, was contained in cl 2 and cl 8 of the Contract and this common purpose was also reflected in cl 17.5(a) of the 2010 Award (pre2 April 2018), and reduced to writing;
(c) the common purpose was the claimant would be paid as a minimum 29.5% over the minimum award rate, which would then increase as the total sales increased, and that an additional percentage amount [albeit unspecified] had been included for payment in advance of all leave entitlements (and thus leave was taken on an ‘unpaid’ basis);
(d) there was no evidence the Claimant’s Commission went below the minimum income threshold reflected in cl 16.3 of the 2010 Award (pre2 April 2018);
(e) the claimant took the benefit of the additional percentage amount over this period and the parties operated in accordance with their common understanding; and
(f) the appropriation of the money by the respondent is for, if not the same purpose, a very close purpose rather than for a purpose other than satisfaction of an award entitlement.
(original emphasis)
143 However, her Honour considered the effect of the variations to the REIA from 2 April 2018, together with the fact that the contract provided a mechanism to vary it in accordance with the REIA, but the parties did not do so, was that any close connection between the purpose of the appropriation and the desire to satisfy the award entitlement was severed: [66].
144 The long service leave component was dealt with by her Honour at [70] and [71]:
[70] For the following reasons I am not satisfied the respondent is entitled to setoff its liability in relation to the Long Service Leave Entitlement:
(a) as set out in the Reasons, an entitlement to long service leave crystallises upon an employee completing a certain number of years’ continual service;
(b) the 2010 Award and its successors make no reference to the provision of long service leave entitlements;
(c) the Contract refers to ‘all leave entitlements as determined by Legislation’, but does not define or expand on what legislation or what leave, and there was no evidence of what the parties understood this to mean (over and above award conditions) at the time the Contract was signed;
(d) while it might have been desirable, the claimant’s continued employment with the respondent was unknown at the time the Contract was signed;
(f) in the absence of further evidence and specificity in the Contract, it cannot be said with sufficient certainty that a percentage commission paid over the minimum commissiononly percentage under the 2010 Award was intended to meet the future, but unknown, obligation of long service leave entitlements. It is open to speculate that it might have been intended, but I am not satisfied to the requisite standard that it was; and
(g) accordingly, in my view, the purpose of the appropriation by the respondent and any close connection between the purpose of the appropriation and the desire to satisfy any long service leave entitlement was, again, severed.
[71] The outcome of this determination is that the amount of Long Service Leave Entitlement ordered in the Reasons cannot be set-off by the respondent and the respondent is required to pay the whole of the amount ordered.
(original emphasis)
Grounds of appeal and parties’ submissions
145 Coastal’s appeal involves four grounds which can be summarised as follows:
Ground 1:
That the Industrial Magistrate erred in fact in finding at paragraph 70(c) of the Set-Off and Penalty Decision that there was no evidence of what the parties understood the words in the contract ‘all leave entitlements as determined by Legislation’ meant.
Ground 2:
That in not being satisfied that the commission paid over the minimum REIA's commission was intended to meet future long service leave entitlements at 70(e) of the SetOff and Penalty Decision, the Industrial Magistrate erred:
(a) In fact, as the evidence was clear about what the intention was and the intention is clear on the face of clause 8; and
(b) In law, in that there is no requirement for evidence of specificity or the parties’ understanding of the meaning of the contract.
Ground 3:
That the Industrial Magistrate erred in law and in fact in finding, at 70(f) of the Set-Off and Penalty Decision, that the purpose of the appropriation by the respondent and any close connection between the purpose of the appropriate and the desire to satisfy long service leave entitlements was severed as:
(a) On the facts, the purpose of the appropriation never changed;
(b) The contract and the reason for the payment remained the same; and
(c) Section 5 of the LSL Act was the same until 20 June 2022.
Ground 4:
That the Industrial Magistrate erred in law by not applying James Turner Roofing.
146 The grounds were not elaborated on in any depth by Coastal’s written and oral submissions. Coastal did not make any reference to Rossato and while it listed James Turner Roofing in its list of authorities, it made no reference to any particular passage or principle derived from that case.
147 Mr Jowett’s submissions in response to these grounds simply denied there was any error because the legislation is clear on when and how any payment for long service leave is to be made, and in this case, payment was to be made on termination of the employment. Mr Jowett’s written submissions and list of authorities contained no authorities in relation to the question of set-off at all.
Principles: When will over-award commission payments operate to satisfy statutory obligations?
148 The principles that apply when determining whether payments made by an employer to an employee can be accounted for as discharging statutory or award obligations have been set out in a number of authorities, largely based on observations first made by Sheldon J in Ray v Radano [1967] AR (NSW) 471 at 478-479 and adopted and re-expressed in Poletti v Ecob (No 2) [1989] FCA 779; (1989) 31 IR 321 at 332-333. More recently, the principles were summarised by Wheelahan J in Wardman v Macquarie Bank Limited [2023] FCAFC 13, 322 IR 278 at [131]:
The seminal decision on these questions is that of the New South Wales Industrial Commission in Ray v Radano, and in particular the separate reasons for judgment of Sheldon J which have received subsequent appellate approval. Material passages in the reasons of Sheldon J were approved by the Full Court (Keely, Ryan and Gray JJ) in Poletti v Ecob (No 2), where it was held at 333 that if payments are made by an employer in discharge of a contractual obligation, the question whether concurrent statutory obligations are thereby discharged is answered by looking to the contractual purpose of the payment, objectively ascertained. Thus, if there is a coincidence of purpose, or at least a close correlation between the nature of the particular award obligation and the nature of the contractual obligation, then a payment may operate to discharge both obligations: Australia and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785; 111 IR 227 (ANZ v FSU) at [47], [51]-[52] (Black CJ, Wilcox and von Doussa JJ). See also, Linkhill at [98] (North and Bromberg JJ). And consistently with the observation by Sheldon J in Ray v Radano at 478 that the answer to the problem can be found by applying common sense, it is not necessary that the same label by used for the payments: ANZ v FSU at [52]. It follows from these propositions that the terms of a contract of employment need not advert to award or statutory obligations in order that payments made under the contract operate to discharge those concurrent obligations: James Turner Roofing at [29] and [44] (Anderson J, Scott J at [52] generally agreeing, and Parker J at [68] concurring).
149 In Rossato, White J made further observations about the principles derived from the authorities at [865]-[869]:
[865] For the purposes of the resolution of the present case, the authorities reviewed above may be taken to stand for the following propositions concerning the entitlement of an employer to set off in analogous circumstances:
(a) the issue may require the application of the parties’ contract: Poletti at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478–9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]–[52]. I will refer to this as the “Contractual Principle”;
(b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti at ALR 393–4; IR 332–3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the “Designation Principle”;
(c) close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and
(d) the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56].
…
[868] The Contractual and Designation Principles may not be an exhaustive statement of the circumstances in which set off may or may not be appropriate. The parties’ contractual arrangement and the principles of estoppel may be applicable in some circumstances. It is possible that the principles may require some adaptation, at least in the manner of expression, in some circumstances, for example, when the payments are made in compliance (or purported compliance) with statutory or regulatory obligations and not pursuant to the parties’ agreement.
[869] The authorities have expressed the required connection between the purpose with which the payment was made and the award/enterprise agreement in question in various ways. Expressions such as “properly attributable” and “close correlation” have been used and, in Pacific Publications, the payment was described as “independent” of the award entitlement. In Transpetrol, Rares J suggested that these relationships could be determined flexibly.
(original emphasis)
Consideration of Ground 1 - Relevance of the parties’ understanding of what the contract meant
150 In order that the amounts Coastal paid to Mr Jowett can be understood to have been paid (and received) in satisfaction of his long service leave entitlements, Coastal had to demonstrate that the commission was paid for that agreed purpose. It sought to do so by reference to cl 8 of the Contract.
151 The Industrial Magistrate’s findings in this regard are difficult to reconcile. At [55] her Honour says that the parties understood cl 8 meant that all leave would be unpaid on account of the commission being more than the REIAs minimum commission. Further, her Honour was satisfied that the contract had the effect of entitling Coastal to ‘set-off’ over-award commission payments towards annual leave entitlements accruing under the 2010 Award pre-2 April 2018: [64]. But then at [70] her Honour says that the clause does not define what legislation or leave the clause is directed to, and ‘there was no evidence of what the parties understood this to mean.’
152 Ultimately, what the parties understood the clause to mean was not relevant. The contractual purpose was to be ascertained objectively.
153 In Rossato, Bromberg J observed at [234]:
…[I]f a payment is made pursuant to a contract its purpose will be governed by the contract and must be objectively ascertained by reference to the common intention of the parties as understood by a reasonable person in the position of each of the parties taking into account the text of the contract as well as the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
154 To similar effect, Wheelahan J stated at [1007] that the question of whether the discharge of the indebtedness arising under the contracts of employment also operated to satisfy the statutory obligations to pay the entitlements that Mr Rossato claimed:
…[I]involves an inquiry that must look to the objective purpose of the payments under the terms of the contracts of employment set against the circumstances known to both parties, and the surrounding statutory framework, which amounts to determining what a reasonable person would have understood by the terms: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; 211 ALR 342; [2004] HCA 52 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
155 In my view, the Industrial Magistrate’s reliance on the parties’ subjective understanding meant that her Honour had regard to an irrelevant consideration.
156 Coastal have made out this ground of appeal.
Consideration of Ground 2 - What contractual specificity was required?
157 Coastal’s Ground 2 is directed at paragraph [70(e)] of her Honour’s reasons, by which her Honour concluded that it cannot be said with sufficient certainty that a percentage commission paid over the minimum commission-only percentage under the 2010 Award was intended to meet the future but unknown obligation of long service leave entitlements, thus precluding a conclusion that there was a sufficiently close connection between the purpose of the appropriation and the desire to satisfy long service leave entitlements.
158 Coastal submitted:
(a) Her Honour ignored the clear meaning of cl 8 of the contract: Appellant’s Outline of Submissions [14].
(b) Clause 8 was clearly designed to comply with s 5 of the LSL Act: Appellant’s Outline of Submissions [8(c)] and [14].
(c) The claimant gave evidence as to his understanding of the intent of both the contract, and the later variation to it: Appellant’s Outline of Submissions [7] and [14].
(d) There was no evidence that the claimant did not understand what his contractual terms meant: Appellant’s Outline of Submissions [8(c)], [13] and [14].
159 There is a tension between this ground of appeal, which directs the Full Bench’s attention to the evidence about the parties’ understanding of the contract, and Ground 1, which alleges that the parties’ subjective understanding was irrelevant in the face of the clear objective meaning of the contract.
160 I have already dealt with the issue of whether the parties’ subjective understanding was relevant.
161 Additionally, the ground misconstrues her Honour’s reasoning. Read in context, her Honour’s reference to the lack of specificity and certainty in the contract is not directed to the parties’ understanding of what the contract meant, or what its effects would be. Rather, her Honour was highlighting that the contract itself described its purpose in insufficiently clear terms to enable a conclusion that there was a clear connection between that purpose and the entitlement to long service leave the subject of Mr Jowett’s claim.
162 The authorities do not require that there be ‘specificity’ in the contract as to, for example, the percentage of an over-award payment that is attributable to a particular entitlement. The authorities do require that there be a close correlation between the purpose of the payment and the entitlement to be satisfied by the payment: Rossato [869]. To find the necessary close correlation, one must look to either the expression of the required connection in the contract, or evidence of the employer’s conduct from which such connection can be implied: Rossato [865]. It necessarily follows that the degree of specificity or generalisation in the contractual expression will be relevant to finding the required connection.
163 Clause 8 refers to ‘[a]n additional percentage amount’ being included in the commission remuneration for ‘all leave entitlements as determined by Legislation.’ The ‘additional’ percentage is not specified numerically and no apportionment is provided. However, that lack of specificity does not bear on the key issue, or what White J described as ‘the focus’, namely the purpose of the payment. It is the purpose of the payment which must have the sufficient connection.
164 To this end, her Honour has misapplied the test. Clause 8’s reference to ‘all leave entitlements as determined by Legislation’ is sufficiently specific to be connected to long service leave, including future accrued long service leave entitlements, under the LSL Act (and the current LSL Act).
165 I would uphold Ground 2 of the appeal.
Ground 3 - Was the connection between the purpose of the appropriation and the long service leave entitlement severed?
166 I understand this ground to be directed to the finding at [70(f)] of the Set-off and Penalty Decision, where her Honour concludes that the purpose of the appropriation and any close connection between the purpose of the appropriation and the desire to satisfy any long service leave entitlement was ‘severed.’
167 Coastal’s particulars of this ground are (Form 8 - Notice of Appeal, 7-8):
…
c. …
i. On the facts, the purpose of the appropriation never changed;
ii. The fact of the contract and the reason for the payment (the appropriation) was always the same. The claimant’s entitlement to payment of long service leave, on termination was part of “…all leave entitlements as determined by legislation…”
iii. Section 5 of the long service leave act remained the same until it was amended, with effect from 20 June 2022 (at which time, the Appellant complied with amended section 5);
(original emphasis)
168 Coastal made no written submissions or oral submissions directed to this ground of appeal.
169 Again, it appears that Coastal have misconstrued the Court’s reasons.
170 When her Honour uses the term ‘severed’ she was in effect saying that the purpose of the payment and the entitlement were not sufficiently closely connected. Her Honour’s reasons do not turn on there being a change in the purpose of the payment, nor on the enactment of the 2021 amendments to s 5. Rather it is all of the factors her Honour lists at [70] of the Set-off and Penalty Decision that result in her conclusion that there was an insufficient connection between the purpose of the payment, and the entitlement to be paid accrued but unused long service leave on termination.
171 Having said that, it is not entirely clear from the Set-off and Penalty Decision why the Industrial Magistrate considered the factors listed at 70(a), (b) and (d) were relevant to determining whether the contract adequately appropriated money to the satisfaction of Coastal’s liability for long service leave. It seems to me that the contract objectively reveals a common intention of the parties as understood by a reasonable person in the position of each of the parties that the commission paid to Mr Jowett would be in full satisfaction of his entitlements under the LSL Act, as well as all other leave entitlements derived from legislation.
172 It is a significant feature of this case that Mr Jowett’s remuneration was by way of a commission. It was not wages paid for time worked. The commission paid to Mr Jowett therefore had a less direct connection with the work he performed, or at least the time he spent doing the work, than would be the case with a wages based remuneration arrangement. This is a relevant factor in assessing the nature and character of the various payments and obligations arising out of the employment relationship, and the degree of closeness of connection required.
173 I am mindful that the statutory framework cannot be ignored: Wheelahan J in Rossato at [1007]. The LSL Act did not permit the parties to contract out of long service leave entitlements in the manner in which they did. However, the entitlement provisions of s 8 and s 9 of the LSL Act are not civil penalty provisions. The LSL Act enabled employees to apply to the IMC to enforce rights arising under those sections (entitlement provisions): s11. This contrasts with the position of modern award entitlements. Under s 45 of the FWA, a person must not contravene a term of a modern award. Section 45 is a civil penalty provision.
174 Further, s 84AA(2) of the IR Act provides that:
If in any proceedings under section 83 or 83E the industrial magistrate’s court finds that an employee was engaged under an illegal contract at the time a contravention occurred, the court may nonetheless deal with the matter as if the contract was valid.
175 This statutory framework, unlike that which the Full Court of the Federal Court was concerned with in Rossato, does not preclude a finding that the relationship between the purpose of the payment and the relevant entitlement was sufficiently closely connected to entitle Coastal to setoff its commission payments made to Mr Jowett against its liability to pay accrued and untaken long service leave.
176 The express terms of the contract are sufficient to show a clear ‘coincidence of purpose’ between the commissions paid to Mr Jowett under the contract the amounts that would have been due to him under the LSL Act. Payment of the commission over the Award minimum was made for the purpose of satisfying the kind of obligation sought to be satisfied, that is, long service leave entitlements. Indeed, as Kennett J recently observed in Ord Minnett Holdings Pty LTD v Theodorou [2025] FCA 721 at [123], it would be a strange result if an employer who entered into an employment contract providing for remuneration by commission only could not bring into account as satisfaction of its obligations those commissions actually paid.
177 I would uphold this ground of appeal. Coastal’s payments of commission to Mr Jowett can be set-off and are taken to have satisfied its obligation under the LSL Act.
Ground 4 - What is the principle established by James Turner Roofing?
178 By this ground, Coastal alleges that the Industrial Magistrate erred in law by not applying James Turner Roofing. It refers to Justice Anderson’s statement at [29] that ‘Justice and the law would have parted company’.
179 By advancing this ground, I understand Coastal to implicitly contend that the principle or principles established by James Turner Roofing are at odds with the principles applied by her Honour, derived from Rossato, in circumstances where the Full Bench is bound to follow the IAC, rather than the Full Bench of the Federal Court if there is a divergence of opinions between those courts.
180 However, Coastal has not identified a divergence of opinion, nor how practically the application of the principles as articulated in Rossato would lead to a different result compared with the application of the principles articulated in James Turner Roofing.
181 If Coastal is suggesting that James Turner Roofing contains a less strict test for set-off than Rossato, I would reject that suggestion. Anderson J’s statement of the principles is derived from the same authorities as are referred to in Rossato, and there is no suggestion that Anderson J intended to expand the law as it was stated in Ray v Radano. See White J in Rossato at [879].
182 Ultimately, because I would uphold Grounds 1, 2 and 3 in relation to the ‘set-off’ issue, it is unnecessary for me to deal with this ground.
Disposition
183 I would dismiss the appeal in FBA 11 of 2024 and the Cross-Appeal in FBA 12 of 2024 but uphold the appeal in FBA 18 of 2024.
184 At first instance, Coastal established, and the Industrial Magistrate accepted, that the commission payments made to Mr Jowett considerably exceeded his award wages entitlement and his legislative leave entitlements. His long service leave entitlements were fully satisfied by the commission Coastal paid to him. Accordingly, no order could be made under s 83A of the IR Act for payment in respect of any underpayment.
185 Accordingly, it is appropriate to order that:
(a) Order 3 of the Orders dated 5 April 2024 by which Coastal was ordered to pay an amount to Mr Jowett in respect of an entitlement to pro rata long service leave on termination of employment be quashed; and
(b) Order 3 of the Orders dated 14 August 2024 by which a caution was issued in respect of the failure to pay pro rata long service leave upon termination of employment be quashed.
TSANG C:
186 I have had the benefit of reading the Senior Commissioner’s draft reasons for decision. I broadly agree with the Senior Commissioner’s reasons summarising the decision at first instance, the grounds of appeal, the parties’ submissions and the structure and legislative history to the LSL Act; and that the correctness standard applies to the appeal.
187 I adopt the Senior Commissioner’s references, including at [9] above.
188 Furthermore, I agree with the Senior Commissioner that Coastal’s Grounds of Appeal 5 and 7 in FBA 11 of 2024 should be dismissed for the reasons outlined at [113]–‍[122] above.
189 I also agree with the Senior Commissioner’s reasons (at [123]–‍[132] above) regarding Coastal’s Grounds of Appeal 8, 12 and 13 in FBA 11 of 2024 that the contract (at [13] above) provided ‘an adequate benefit in lieu’.
190 For the reasons that follow, and as the contract provided an adequate benefit in lieu, I would allow Coastal’s appeal in FBA 11 of 2024 on the Grounds that relate to the proper construction of s 5 of the LSL Act.
191 Consequently, it is unnecessary for me to deal with FBA 12 of 2024 and FBA 18 of 2024.
Principles for statutory construction
192 The principles for statutory construction (at [34]–[36] above) provide that:
(a) The focus of statutory construction is upon the text of the provision, having regard to its context and purpose;
(b) The context includes the legislative history and extrinsic materials;
(c) While the legislative history and extrinsic materials cannot displace the meaning of statutory text, a court may have regard to them to ascertain the mischief which a statutory provision is intended to remedy;
(d) Legislation must be construed on the basis that its provisions are intended to give effect to harmonious goals; and
(e) Ultimately, the task of statutory construction is to discern what Parliament is to be taken to have intended.
193 Section 19 of the Interpretation Act states:
19. Extrinsic material, use of in interpretation
(1) Subject to subsection (3), in the interpretation of a provision of a written law, if any material not forming part of the written law is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material –
(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law; or
(b) to determine the meaning of the provision when –
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law leads to a result that is manifestly absurd or is unreasonable.
(2) Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of a written law includes –
(a) all matters not forming part of the written law that are set out in an official version of the law under the Legislation Act 2021; and
(b) any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of Parliament before the time when the provision was enacted; and
(c) any relevant report of a committee of Parliament or of either House of Parliament that was made to Parliament or that House of Parliament before the time when the provision was enacted; and
(d) any treaty or other international agreement that is referred to in the written law; and
(e) any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of Parliament by a Minister before the time when the provision was enacted; and
(f) the speech made to a House of Parliament by a Minister on the occasion of the moving of a motion that the Bill containing the provision be read a second time in that House; and
(g) any document (whether or not a document to which a preceding paragraph applies) that is declared by the written law to be a relevant document for the purposes of this section; and
(h) any relevant material in any official record of proceedings in either House of Parliament.
(3) In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to –
(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law; and
(b) the need to avoid prolonging legal or other proceedings without compensating advantage.
[Section 19 amended: No. 13 of 2021 s. 50.]
194 Section 5 of the LSL Act is headed ‘Limited contractingout of long service leave’.
195 While s 32(2) of the Interpretation Act states that section headings do not form part of the written law, s 19(2)(a) of the Interpretation Act, as amended by s 50 of the Legislation Act 2021 [No. 13 of 2021], states:
(2) Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of a written law includes –
(a) all matters not forming part of the written law that are set out in an official version of the law under the Legislation Act 2021; and
196 Prior to this amendment, s 19(2)(a) of the Interpretation Act stated:
(2) Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of a written law includes –
(a) all matters not forming part of the written law that are set out in the document containing the text of the written law as printed by the Government Printer; and
197 Accordingly, the s 5 heading would be a matter which may be considered in the interpretation of s 5 pursuant to s 19(2)(a) of the Interpretation Act.
198 That section headings are ‘extrinsic material’ which may be taken into account of pursuant to s 19(1) of the Interpretation Act was confirmed in Re The Honourable G D Kierath, Minister for Heritage; Ex Parte City of Fremantle at [62]–[63] (Wheeler J, Wallwork J agreeing at [19]): (emphasis added)
62 The heading of s 47 is ‘Criteria for entry in the Register’. The heading to a section of a statute does not form part of the statute (Interpretation Act, s 32(2)). In the absence of any statutory provision, there were divergent views expressed as to whether at common law a court may take account of a heading or marginal note for the purposes of interpreting a statute. A persuasive discussion of the issue leading to a conclusion that such matters will rarely be of significance but may nevertheless be referred to is to be found in The Ombudsman v Moroney [1983] 1 NSWLR 317 (per Street CJ). A similar view was taken in R v Schildcamp [1971] AC 1. However, it is not necessary to explore this matter at length, since if a heading is not part of the written law, it may nevertheless be ‘extrinsic material’ which may be taken account of pursuant to s 19(1) of the Interpretation Act.
63 In the case of this legislation, the heading in question is to be found in the report of the Standing Committee on Legislation presented in relation to the Bill, and therefore would appear to fall under the Interpretation Act, s 19(2)(h). In those circumstances, it appears to me that it is proper to refer to the heading so as to ascertain the ‘drift’ or main idea of the section. It appears to me to be an indication, although a weak one, that the section is intended to set out exhaustively the relevant criteria for directing entry.
199 Section 5 was inserted by the Industrial Relations Legislation Amendment and Repeal Act 1995 (WA) [No. 79 of 1995] (Amending Act No. 79 of 1995).
200 A review of the Industrial Relations Legislation Amendment and Repeal Bill 1995 (Bill), and the history to the Bill’s introduction to Parliament, indicates that:
(a) The Bill (No. 82–‍1) was introduced into the Legislative Assembly on 21 September 1995 and withdrawn on 14 November 1995: Parliamentary Debates, Legislative Assembly, 21 September 1995, 8357; Parliamentary Debates, Legislative Assembly, 14 November 1995, 10547.
(b) The Bill (No. 82–‍1) was revised and replaced by the Bill (No. 108–‍1), which was introduced into the Legislative Assembly on 14 November 1995: Parliamentary Debates, Legislative Assembly, 14 November 1995, 10547.
(c) In relation to the LSL Act, the only difference between Bill (No. 82–‍1) and Bill (No. 108–‍1) is the addition of the words, ‘during the employment of the employee and’ in s 26(2)(b): (emphasis added)
(2) The employer must ensure that –
(a) the records are kept in accordance with the regulations; and
(b) each entry is retained during the employment of the employee and for not less than 7 years thereafter.
(d) Accordingly, s 57 of the Bill (No. 82–‍1) and s 55 of the Bill (No. 108–1), are in the following identical terms:
Section 5 of the Long Service Leave Act is repealed and the following section is substituted –
“ Limited contractingout of long service leave
5. An employer and an employee may agree that the employee may forgo his entitlement to long service leave under this Act if –
(a) the employee is given a benefit in lieu of the entitlement; and
(b) the agreement is in writing. ”
(e) Relevantly, the Bill (No. 82–‍1) and the Bill (No. 108–1) which include ‘Limited contractingout of long service leave’ as the heading to s 5, would qualify as material that may be considered in accordance with s 19(1) of the Interpretation Act, by virtue of being ‘any other relevant document, that was laid before, or furnished to the members of, either House of Parliament by a Minister before the time when the provision was enacted’ under s 19(2)(e) of the Interpretation Act, or ‘any relevant material in any official record of proceedings in either House of Parliament’ under s 19(2)(h) of the Interpretation Act.
(f) Accordingly, whether by virtue of s 19(2)(a), s 19(2)(e) or s 19(2)(h) of the Interpretation Act, it would be ‘proper to refer to the heading so as to ascertain the ‘drift’ or main idea of the section’: Minister for Heritage; Ex Parte City of Fremantle [63] (at [198] above).
201 Given the correctness standard applies and the Full Bench is required to reach its own view as to the proper construction of s 5 of the LSL Act (see [33] above), in addition to the section heading to s 5, ss 19(1) and (2) of the Interpretation Act provide for the following extrinsic material to be considered in the interpretation of s 5:
(a) Commissioner GL Fielding, Review of Western Australian Labour Relations Legislation, A report to the Hon. GD Kierath, MLA, Minister for Labour Relations (July 1995) (Fielding Report), sent to the Minister for Labour Relations on 3 August 1995 (Parliamentary Debates, Legislative Council, 28 November 1995, 11660), and tabled before the Legislative Assembly on 19 December 1995 (Parliamentary Debates, Legislative Assembly, 19 December 1995, 13345).
(b) The Department of Productivity and Labour Relations, The Industrial Relations Legislation Amendment and Repeal Bill 1995 – SUMMARY (Plain English), November 1995 (Department’s Summary of the Bill).
(c) The Department of Productivity and Labour Relations, Industrial Relations Legislation Amendment and Repeal Bill 1995 – EXPLANATORY NOTES, (Explanatory Memorandum to the Bill)
(d) Parliamentary Debates, Legislative Assembly, 21 September 1995, 8357 (Second Reading of the Bill in the Assembly on 21 September 1995).
(e) Parliamentary Debates, Legislative Council, 12 December 1995, 12995 (Second Reading of the Bill in the Council on 12 December 1995).
(f) Parliamentary Debates, Legislative Assembly, 19 December 1995, 13398 (Debate in the Assembly on 19 December 1995 on the return of the Bill from the Council with amendments).
Extrinsic material
202 The Fielding Report states: (footnotes omitted) (emphasis added)
Terms of Reference
On the 2nd day of June, 1994 the Minister for Labour Relations announced to the State Parliament that there was to be an independent review of the State’s labour relations legislation, other than that concerned with the system of workplace agreements, with the following Terms of Reference –
1. To enquire into and report to the Minister for Labour Relations on the provisions and operation of the Industrial Relations Act 1979 and related legislation including but not limited to:
1.1 Factories and Shop Act 1963;
1.2 Public and Bank Holidays Act 1972;
1.3 Long Service Leave Act 1958;
1.4 Truck Act 1899;
1.5 Masters and Servants Act 1892; and
1.6 Trade Unions Act 1902.
2. Without limiting the generality of the review, where considered appropriate and necessary, to make recommendations for the repeal of, or amendment to any provisions of the legislation, or for any other action, in respect of:
2.1 The structure, role and effectiveness of:
2.1.1 The Western Australian Industrial Relations Commission including its Constituent Authorities;
2.1.2 The Industrial Magistrate’s Court;
2.1.3 The Industrial Appeal Court; and
2.1.4 Boards of Reference.
2.2 Those services provided by the Western Australian Industrial Relations Commission for which modest fees should be introduced and the levels of those fees;
2.3 Enhanced protection of individuals’ rights by:
2.3.1 allowing individuals greater access to the Western Australian Industrial Relations Commission;
2.3.2 facilitating the right to freedom of association;
2.4 Facilitating the right to collective organisation and representation;
2.5 The relationship between the State and Federal industrial relations systems with a view to minimising duplication;
2.6 The removal of any unnecessary procedural and legislative obstructions to users of the system of compulsory arbitration; and
2.7 Re-drafting the legislation using plain English and, where appropriate, repealing or consolidating Acts.
…
Chapter 7 – Long Service Leave Act 1958
… Moreover, I recommend that instead of having to seek permission from the Commission to be exempted from its provisions, the Act be amended to authorise parties to common law employment contracts or workplace agreements to contract out of the provisions of the Act in writing. In this way, employees not covered by an award or industrial agreement would be bound by the provisions of the Act, unless they agreed otherwise.
Workplace Agreements
The philosophy underlying the Act is that it should apply only to employees not covered by awards and industrial agreements made by or registered in the Commission. The Workplace Agreements Act 1993 provides that where a workplace agreement is in force, any award or industrial agreement, which once covered the employment, no longer applies. In consequence, the Long Service Leave Act 1958 currently applies to private sector employees covered by such an agreement. If, as I recommend, parties are able to contract out of the Act, employees covered by workplace agreements would be in no different position to other nonaward employees.
…
Enforcement
Board of Reference
…
Although Boards of Reference function as efficiently as could be expected, as mentioned in my review of the Industrial Relations Act 1979, the concept of a Board of Reference is not an efficient one. All those who commented on the subject, apart from the Registrar and a firm of city solicitors, were unanimous that Boards of Reference, including the Long Service Leave Boards, should be abolished. …
I recommend that the Boards of Reference under the Long Service Leave Act 1958 (and under the General Order) be abolished.
Industrial Magistrate’s Court
… Boards of Reference do not have authority to make an order or give a direction to enforce compliance with either the Long Service Leave Act 1958 or the Commission’s General Order. They only have authority to determine disputes with respect to matters such as the length of service or the status of an employee. Any monetary benefit which flows from such a determination must be enforced in the Industrial Magistrate’s Court. It would be more efficient if all these matters were dealt with at the one time by the Court exercising its power to determine the rights and liabilities arising under the Act, rather than simply enforcing determinations of the Board. Although the Industrial Relations Act 1979 expressly gives the Commission power to entertain disputes regarding long service leave entitlements, the Commission has no power to enforce an award or the provisions of the Act which fix the long service leave entitlements. In this respect, the Commission has no more authority than Boards of Reference. …
I therefore recommend that the jurisdiction previously exercised by the Boards of Reference to determine questions and disputes regarding rights and liabilities under the Act be exercised exclusively by the Industrial Magistrate’s Court.
…
Recommendation 223
That the Act be amended to authorise parties to common law employment contracts or workplace agreements to contract out of the provisions of the Act in writing.
(page 410)
…
Recommendation 226
That the jurisdiction previously exercised by the Boards of Reference to determine questions and disputes regarding rights and liabilities under the Act be exercised exclusively by the Industrial Magistrate’s Court.
(page 418)
203 The Department’s Summary of the Bill states: (emphasis added)
Flexible Long Service Leave
The Long Service Leave Act 1958 is being updated with provisions allowing for greater flexibility in the taking of leave. Employees can tradeoff the leave for another benefit, such as extra pay, if they so choose.
204 The Explanatory Memorandum to the Bill states: (emphasis added)
PART 9 LONG SERVICE LEAVE ACT AMENDMENTS
This Part amends the Long Service Leave Act 1958 with consequential amendments to other legislation. The Act gives an entitlement to long service leave for those that do not have such a benefit granted by any other instrument. The references to the relative industrial legislation are brought up to date, increased flexibility is made available for the taking of leave and contracting out provisions are inserted. The enforcement provisions are made consistent with the enforcement provisions of other instruments which confer benefits on employees.
…
Clause 54
…
Boards of Reference will no longer exist under the Act, with their function being carried out by the industrial magistrate’s court.
…
Subclause (3) excludes certain persons from the provisions of the Act by defining them not to be employees. … This amendment provides that where a person has a long service leave benefit given by an award or industrial agreement, a workplace agreement, a term of the person’s common law contract of employment or any enactment of the State, the Commonwealth or another State or Territory, then providing that entitlement is at least equivalent to what is available under this Act, such persons are not employees for the purposes of this Act.
Clause 55
Section 5 of the existing Act enabled a Board of Reference to exclude employers from the provisions of the Act if their employees had at least an equivalent long service leave benefit. That section has been repealed as Boards of Reference will no longer exist. Contracting out provisions have been inserted in lieu. Any exclusions that have been granted in the past are continued for 6 months or until the relevant employers and employees put their long service leave provisions into a contractual agreement or enter into a contracting out arrangement as provided by the substituted section (ie the long service leave benefit may be traded off by the parties). To be valid the contracting out agreement must be in writing.
…
Clause 69
…
The transitional provisions also provide that exemptions from the Act granted under the old section 5, continue until a contracting out agreement under the new section 5 is entered into or until 6 months after this Part comes into force. The 6 months may be extended by the Minister on application by an employer.
…
Clause 60
Parts IV, V and VI of the existing Act deal with Boards or Reference, appeals from their determinations and the enforcement of the Act respectively. As there are to be no Boards or Reference, Parts IV and V are redundant and are repealed. The new Part V, replacing Part VI confers jurisdiction on an industrial magistrate’s court to deal with claims for long service leave benefits.
Subsection 11(1) of the new Part V specifies some of the issues the industrial magistrate’s court can deal with. These were formally the areas of jurisdiction of the Board of Reference. …
Clause 62
Section 26 is Division 2 of Part VII and relates to the keeping of employment records. The existing section is repealed and replaced with record keeping provisions based on those in the Minimum Conditions of Employment Act and Workplace Agreements Act with special provision for the keeping of records of the amount and type of leave taken by the employee and details of any section 5 contracting out arrangement that has been entered into. The records must enable calculations to be made of the amount of long service leave, if any, that any employee is entitled to. It is an offence punishable by a fine of up to $5000 not to keep records showing the relevant details and the records must be kept for the entire period of employment and for 7 years thereafter.
205 The Second Reading of the Bill in the Assembly on 21 September 1995 notes:
MR KIERATH (Riverton – Minister for Labour Relations) [12.04 pm]: I move –
That the Bill be now read a second time.
...
Part 10: Amendments relating to long service leave –
The Long Service Leave Act 1958 will be generally renovated and new provisions will allow for greater flexibility in the taking of the leave. The Act will continue to apply to all those people who do not have an equivalent or better long service leave entitlement under an award, industrial agreement or workplace agreement, as part of their contract of employment or by virtue of an enactment of a State, Territory or the Commonwealth. The Act has been made more flexible through the insertion of provisions that enable parties to trade off long service leave for some other benefit if they so wish, or for leave to be taken in multiple periods, none of which can be less than a week. Boards of reference and the commission in court session will no longer deal with claims for long service leave entitlements. These, and any failure by an employer to keep relevant employment records, will be dealt with in the Industrial Magistrate’s Court.
…
This Bill provides a greater empowerment of individuals, and provides employees and employers with better means of dealing directly with each other and, with respect to long service leave, with greater flexibility. Furthermore, these provisions will bring to the industrial relations system in this State a greater certainty about the rights and responsibilities of organisations and of their members. In conclusion, while I recognise that some elements of this legislation have been portrayed as controversial, the reality is that, by the provisions of this Bill, the industrial relations legislation of this State will be comprehensively streamlined and modernised.
I commend the Bill to the House.
Debate adjourned, on motion by Ms Warnock.
206 The Second Reading of the Bill in the Council on 12 December 1995 notes: (emphasis added)
Hon AJG MacTIERNAN: … We are concerned about changes to the Long Service Leave Act and the capacity to effectively contract out long service leave entitlements. Although that is not the most earth-shattering provision, it is an erosion of the conditions that Australian workers have had for many years. …
…
Clause 47: Section 5 repealed and a section substituted –
Hon AJG MacTIERNAN: This clause proposes to repeal section 5 of the Long Service Leave Act and to replace it. The section that is proposed to be repealed held that the alternative scheme had to be approved by a board of reference. This proposed new section is allowing an employer and an employee to agree that the employee may forgo his or her entitlement to long service leave if the employee is given a benefit in lieu and the agreement is in writing.
We have a problem with this, as we have with agreeing with many of the pieces of legislation in the industrial arena put forward by the Government. This provision says that it is all about providing choice to employees and employers. Given the inequality of bargaining power, we know that by and large the choice is with the employer and not the employee. That is why we have the industrial relations system in the first instance. We would not bother to have an industrial relations system, an arbitration Act, awards or minimum conditions unless we recognised a profound inequality of bargaining power. When we get these sorts of provisions which purport to justify themselves on the basis of freedom of choice, we are rightly sceptical. The previous arrangements did allow for a contracting out of long service leave entitlements and for alternative arrangements to be put in place, but they were required to be put before a board of reference that would test whether the scheme was adequate. It is very similar to the system in the federal industrial relations arena where a person is entitled to enter into the enterprise agreement but the Industrial Relations Commission maintains an overriding supervisory role to ensure that the employees are not ripped off. That role has been discharged by the board of reference.
We now see a provision where the alternative system is not examined up-front when it is put in place. It may be 15 years down the track before this arrangement is found not to be truly an adequate benefit in lieu. We are opposed to this clause. There is neither a test of adequacy here nor a body to supervise whether the alternative that is given is adequate. This is yet another example of the supposed choice of what is really a provision that leaves employees highly exposed and in many instances will see them losing their entitlement. I move –
Page 54, line 22 – To delete the word ‘a’ and substitute ‘an adequate’.
Hon PETER FOSS: That amendment is acceptable. The idea of this is to maintain the flexibility of substituting some alternative benefit. This does give a considerable amount of flexibility but it does make certain that it is purely a nominal amount which is an appropriate substitution.
Hon AJG MacTIERNAN: I thank the Minister for indicating his preparedness to accept the amendment. This improves to some extent the operation of this provision. We still believe, however, that there should be a supervisor which determines the adequacy or otherwise of such an arrangement, and determines that adequacy at the beginning of the arrangement rather than at the end when it could often be too late. However, we do not have the numbers and we are grateful for any small concession thrown in our direction.
Amendment put and passed.
Clause, as amended, put and passed.
207 The Debate in the Assembly on 19 December 1995 on the return of the Bill from the Council with amendments notes: (emphasis added)
No 19
Clause 55, page 78, line 19 – to delete the words ‘a benefit’ and substitute ‘an adequate benefit’.
…
Mr KIERATH: I move –
That amendment No 19 made by the Council be agreed to.
Mrs HENDERSON: The amendment relates to long service leave and where, under the Bill, people are allowed to trade off long service leave. Members may recall that long service leave was originally provided to allow people in the colony to travel back to Britain. Later, it was provided to allow people a reasonable break after they had worked continuously for a number of years.
The Bill allowed people to trade off, under workplace agreements, their long service leave for any other benefit. The kind of benefit that people would receive in return was not specified. The provision would allow the kind of pressure, to which I drew the attention of the Chamber, in relation to many of my constituents who work in supermarkets. They were presented with workplace agreements which traded off their conditions.
Under the provisions in the Bill, people would have traded off long service leave for very paltry benefits. The amendment requires that, when people trade off part of their long service leave, they receive an adequate benefit in return. That is the very minimum. I would like there to be no provision allowing people to trade off long service leave. The intention of long service leave was to give people a reasonable break. I prefer people not to be coerced into trading off that leave. In that respect, I note that there is a notice beside the post office to the effect that workers in this building are under pressure to trade off their conditions, but they want to reject that pressure. I support the amendment which at least requires that, where there is trading off, people receive an adequate benefit in return for the loss of their long service leave.
Question put and passed; the Council’s amendment agreed to.
208 As a consequence of the matters at [206]–‍[207] above, s 5 of the LSL Act, which came into operation on 16 January 1996 when the Amending Act No. 79 of 1995 received Royal Assent, states: (emphasis added)
Limited contractingout of long service leave
5. An employer and an employee may agree that the employee may forgo his entitlement to long service leave under this Act if –
(a) the employee is given an adequate benefit in lieu of the entitlement; and
(b) the agreement is in writing.
Consideration
209 Applying the principles at [192] above, I find that the contract (at [13] above) between Coastal and Mr Jowett constituted a written agreement under s 5 of the LSL Act.
210 I find that s 5 of the LSL Act has a clear and unambiguous meaning, allowing an employer and an employee to agree to contractingout of the employee’s entitlement to long service leave under the LSL Act.
211 The ‘drift or main idea of’ s 5 is stated in the heading, ‘Limited contractingout of long service leave’: see [200(f)] above.
212 I find that the word, ‘Limited’ in the heading, means the limitation on an employer and an employee agreeing to what is in the chapeau to s 5, namely, agreeing to the employee foregoing their entitlement to long service leave under the LSL Act.
213 I find that the only ‘limitation’ on an employer and an employee agreeing to the employee foregoing their entitlement to long service leave under the LSL Act is outlined in ss 5(a) and (b), namely that:
(a) The employee is to be given a benefit in lieu of the entitlement, which needs to be an adequate benefit in lieu; and
(b) The agreement needs to be in writing.
214 I find that, properly construed, s 5 does not limit an employer and an employee agreeing to the employee forgoing their entitlement to long service leave under the LSL Act to when the employee has a crystallised entitlement to long service leave under the LSL Act. Rather, s 5 allows an employer and an employee to agree to the employee forgoing a contingent entitlement to long service leave under the LSL Act, for the reasons that follow.
215 Section 5 refers to an employer and an employee agreeing to the employee foregoing ‘his entitlement to long service leave under this Act’. The phrase, ‘his entitlement to long service leave under this Act’, only appears in s 5.
216 However, the phrase, ‘entitlement to long service leave under this Act’, appears in s 4(3), ss 7(1) and (2), and in s 26(1)(f) of the LSL Act.
217 Section 4(3) uses the phrase, ‘the entitlement to long service leave under this Act’: (emphasis added)
Where a person is, by virtue of –
(a) an award or industrial agreement;
(b) an employer-employee agreement under Part VID of the Industrial Relations Act 1979 or other agreement between the person and his employer; or
(c) an enactment of the State, the Commonwealth or of another State or Territory,
entitled to, or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under this Act, that person is not within the definition of ‘employee’ in subsection (1).
218 The Industrial Appeal Court (IAC) determined the proper construction of s 4(3) of the LSL Act in Yoon. The IAC said [58]–‍[64] (Buss and Murphy JJ, Kenneth J agreeing at [81] except regarding the reasons remitting the matter back to the Full Bench for a further hearing): (emphasis added)
58 Thirdly, the words ‘entitled to, or eligible to become entitled to’ in s 4(3) require consideration. They appear to be a vestige of the language of exclusion in the former version of the LSL Act, which referred to the person not being an employee ‘if and while the person is entitled, or eligible to become entitled, to long service leave [elsewhere]’ (emphasis added). The words in question are contained within that part of s 4(3) which provides ‘a person is, by virtue of [another instrument] entitled to, or eligible to become entitled to, long service leave’.
59 These words are to be read in the context of s 4(3) and the LSL Act as a whole, including s 8 and s 9. The words ‘entitled to, or eligible to become entitled to’ form a composite phrase upon which, as a whole, the preceding words operate. The preceding words are ‘a person’ who is ‘by virtue of [an agreement] …’. Read as a whole, and in this context, it appears to be used as an expansive phrase to comprehend an actual or contingent entitlement under another instrument, irrespective of whether it has accrued, or has not yet accrued. In other words, in its context, the phrase appears to be a comprehensive one used by the legislature to refer to an actual or contingent entitlement which any person has under another instrument to long service leave, irrespective of whether it has been accrued or not. Accordingly, it indicates that the comparison required by s 4(3) does not have its focus on the individual’s employment history from time to time (as the comparison is to be undertaken irrespective of any accrual of entitlement), but, rather, on the person’s entitlement as appears from the terms of the two respective instruments (the LSL Act and the other instrument).
60 Fourthly, the use of the definite article in the phrase ‘the entitlement to long service leave under this Act’ suggests that s 4(3) is intended to operate on the basis that the LSL Act provides for a comprehensive entitlement, albeit comprising successive specific entitlements or benefits with increasing longevity of service. That is consistent with the structure of s 8, under which s 8(1) provides that an employee ‘is entitled in accordance with, and subject to, the provisions of this Act, to long service leave’. The specific entitlements or benefits which make up ‘the entitlement to long service leave under’ the LSL Act are specified in s 8(2) and s 8(3). The words ‘[t]he entitlement’ with respect to leave under the LSL Act, also appear in s 7(3), discussed below.
61 The foregoing considerations indicate that the comparison required by s 4(3) is to be made prospectively by reference to the terms of the respective instruments, rather than from time to time during the course of the employment history of a particular employee. That construction is confirmed by a consideration of s 7 of the LSL Act.
62 As noted earlier, s 7(3) provides:
The entitlement to leave under this Act shall be in substitution for and satisfaction of any long service leave to which the employee may be entitled in respect of employment of the employee by the employer.
63 In other words, where the s 4(3) comparison results in the person being an ‘employee’ for the purposes of the LSL Act, and thereby entitled to leave under the LSL Act, ‘[t]he entitlement’ under the LSL Act applies in substitution for, and satisfaction of, ‘any’ long service leave entitlement under the other instrument. There appears to be no dual operation intended. Section 7(1) is complemented by s 7(2), which refers to the grant of leave ‘under any long service leave scheme and irrespective of this Act’ (emphasis added). The effect of s 7(2) is that where, by virtue of s 4(3), the LSL Act applies, but, in fact, there has been a grant of leave (or a payment in lieu) under any other long service leave ‘scheme’, then that is taken into account in calculating the employee’s entitlement to long service leave under the LSL Act as if it were long service leave taken (or payment in lieu made) under the LSL Act. Sections 7(2) and (3) indicate that when the statutory entitlement applies, it applies to the exclusion of the scheme under the other instrument. In other words, it appears that the legislature did not (objectively) intend that the two schemes should operate in tandem. On that basis, there could be no prospect of any doubling-up between the two.
64 That conclusion tends to be confirmed by reference to the long title to the LSL Act. The expression ‘the granting of long service leave to certain Western Australian employees’ denotes the provision of statutory long service leave to some employees only. Ms Yoon’s approach to construction suggests an enactment of a different character. On Ms Yoon’s approach, statutory long service leave is provided to virtually all employees (having regard to the breadth of the definition) in order, effectively, to ‘top up’ aspects of their existing benefits from time to time over the course of their working lives.
219 Relevantly, the IAC in Yoon [60]–‍[61] states:
(a) The use of ‘the’ in the phrase, ‘the entitlement to long service leave under this Act’, suggests that the LSL Act provides for a comprehensive entitlement, albeit comprising successive specific entitlements or benefits with increasing longevity of service.
(b) The interpretation in the preceding subparagraph is consistent with s 8 of the LSL Act, which under s 8(1) provides that an employee ‘is entitled in accordance with, and subject to, the provisions of this Act, to long service leave’.
(c) The specific entitlements or benefits which make up ‘the entitlement to long service leave under’ the LSL Act are specified in ss 8(2) and (3).
(d) The comparison required by s 4(3) of the terms of the other instrument and the terms of the LSL Act, is to be made prospectively, rather than from time to time during the course of the employee’s employment.
220 Accordingly, the phrase, ‘the entitlement to long service leave under this Act’ in s 4(3) refers to the comprehensive entitlements under the LSL Act, which comprise of the specific entitlements or benefits in ss 8(2) and (3), which accrue with increasing longevity of service.
221 Given the phrase, ‘the entitlement to long service leave under this Act’ in s 4(3) refers to entitlements or benefits that accrue with increasing longevity of service, which is a reference to a prospective entitlement, it would be incongruous to construe the phrase, ‘his entitlement to long service leave under this Act’ in s 5 as meaning only a crystallised entitlement.
222 Likewise, Yoon [63] refers to ‘the entitlement under the LSL Act’ as applying in substitution for, and satisfaction of, ‘any’ long service leave under the other instrument where the comparison required by s 4(3) results in the person being an ‘employee’ for the purposes of the LSL Act. Given Yoon [61] states that the comparison is to be made prospectively, it follows that the comparison would include prospective entitlements. Therefore, it would be incongruous to construe the phrase, ‘his entitlement to long service leave under this Act’ in s 5 as meaning only a crystallised entitlement.
223 Sections 7(1) and (2) of the LSL Act use the phrase, ‘the employee’s entitlement to long service leave under this Act’: (emphasis added)
7. Employment before commencement of this Act
(1) For the purpose of this Act the employment of an employee by the employer by whom he is employed on the coming into operation of this Act shall, subject to the provisions of this section and to those of section 6, be deemed to have commenced on the day on which the employee was first employed by that employer, but in the calculation of the employee’s entitlement to long service leave under this Act not more than 20 years’ continuous employment before the coming into operation of this Act shall be counted.
(2) Any leave, in the nature of long service leave or, as the case may be, payment in lieu thereof, granted, whether before or after the coming into operation of this Act, under any long service leave scheme and irrespective of this Act to an employee in respect of any period of continuous employment with his employer, shall be taken into account in the calculation of the employee’s entitlement to long service leave under this Act as if it were long service leave taken under this Act, or, as the case may be, payment in lieu of long service leave under this Act and to be satisfaction to the extent thereof of any entitlement of the employee under this Act.
(3) The entitlement to leave under this Act shall be in substitution for and satisfaction of any long service leave to which the employee may be entitled in respect of employment of the employee by the employer.
[Section 7 amended by No. 37 of 1964 s. 4.]
224 In considering s 7 of the LSL Act, the IAC in Yoon [25]–‍[26] and [63] states:
(a) While the heading to s 7 is ‘Employment before commencement of this Act’, only s 7(1) deals with that topic exclusively.
(b) Section 7(1) effectively provides that where an employee was employed when the LSL Act came into operation (24 December 1958), the day their employment commenced is deemed to be their commencement date for the purposes of the LSL Act; except in calculating their entitlement to long service leave under the LSL Act, any period prior to 24 December 1938 will not be counted.
(c) Section 7(1) is complemented by s 7(2).
(d) Sections 7(2) and (3) indicate that where a person is an ‘employee’ for the purposes of the LSL Act, is ‘when the statutory entitlement applies’, and it applies to the exclusion of the scheme under the other instrument.
225 Sections 7(1) and (2) use the phrase, ‘the calculation of the employee’s entitlement to long service leave under this Act’. The IAC in Yoon [63] states that this calculation is undertaken ‘where, by virtue of s 4(3), the LSL Act applies’. Yoon [61] states that the comparison required by s 4(3) ‘is to be made prospectively’. Furthermore, that where the s 4(3) comparison results in the person being an ‘employee’ for the purposes of the LSL Act, is when the statutory entitlement applies: Yoon [63].
226 Given Yoon [61] and [63] states that the phrase in s 4(3), ‘the entitlement to long service leave under this Act’ and the phrase in ss 7(1) and (2), ‘the calculation of the employee’s entitlement to long service leave under this Act’, refer to a comparison, and a calculation, each of which is to be made prospectively; it would be incongruous to construe the phrase, ‘his entitlement to long service leave under this Act’ in s 5 as meaning only a crystallised entitlement.
227 As it would be incongruous to construe the phrase in ss 7(1) and (2), ‘the calculation of the employee’s entitlement to long service leave under this Act’ as meaning only a crystallised entitlement; the same would apply to the phrase in s 26(1)(f), ‘the calculation of the entitlement to, and payment for, long service leave under this Act’: (emphasis added)
26. Keeping of employment records
(1) An employer must ensure that details are recorded of —
(a) each employee’s name and, if the employee is under 21 years of age, the employee’s date of birth;
(b) the date on which the employee commenced employment with the employer;
(c) the gross and net amounts paid to the employee under the contract of employment, and all deductions and the reasons for them;
(d) all leave taken by the employee, whether paid, partly paid or unpaid;
(e) details of any agreement made under section 5 between the employer and the employee;
(f) such other details as are necessary for the calculation of the entitlement to, and payment for, long service leave under this Act; and
(g) other matters prescribed by the regulations.
(2) The employer must ensure that –
(a) the records are kept in accordance with the regulations; and
(b) each entry is retained during the employment of the employee and for not less than 7 years thereafter.
Penalty: $5 000.
228 Section 26 was inserted by s 54 of the Amending Act No. 79 of 1995, which repealed and substituted the previous s 26, which stated:
26. (1) Each employer shall during the employment and for a period of twelve months thereafter or, in the case of termination by death of the employee a period of three years thereafter, keep a record from which can be readily ascertained the name of each employee and his occupation, the date of the commencement of his employment and his entitlement to long service leave and any leave which may have been granted to him or in respect of which payment may have been made under this Act.
(2) The record referred to in subsection (1) of this section shall be open for inspection in the manner and circumstances prescribed by this Act.
229 The substituted ss 26(1)(e) and 26(2) require the employer to keep a record of the details of the agreement made under s 5 during the employee’s employment and for not less than seven years thereafter.
230 The substituted s 26(1)(f) requires the employer to keep ‘such other details as are necessary’ for the calculation of the employee’s entitlement to, and payment for, long service leave under the LSL Act.
231 Accordingly, if an employer and an employee have made an agreement under s 5 of the LSL Act, while the employer would be required to keep a record of the details of the s 5 agreement under s 26(1)(e), the requirement for the employer to keep the records referred to in s 26(1)(f) would not arise as it would be unnecessary to undertake the calculation referred to in s 26(1)(f).
232 The Amending Act No. 79 of 1995 also inserted the following transitional provisions into the LSL Act:
(2) On the commencement day –
…
(b) where an exemption has been granted under section 5 of the former provisions to an employer in respect of the employees of that employer, that exemption continues until –
(i) an agreement is entered into under section 5 of the amended provisions by that employer with each of the employees of that employer; or
(ii) the expiry of the period of 6 months, or such extended period as is determined in relation to that employer pursuant to subsection (3), after the commencement day,
whichever is the earlier.
(3) The Minister may, on the application of an employer who has been granted an exemption under section 5 of the former provisions, extend the period of 6 months referred to in subsection (2)(b)(ii) for such further period as the Minister determines.
233 The former s 5 allowed the Board of Reference, on application by an employer, to exempt an employer from the operation of the LSL Act, if it was satisfied there was an existing or proposed scheme conferring benefits in the nature of long service leave which are, or will be, viewed as a whole, not less favourable to the whole of the employees of that employer than the benefits prescribed by the LSL Act.
234 As outlined in the transitional provisions at [232] above, an exemption granted by the Board of Reference under the former s 5 continues to apply following the commencement of the transitional provisions, until the earlier of:
(a) Six months, or the extended period determined by the Minister in accordance with subsection (3); and
(b) The employer entering an agreement under the amended s 5 with each employee.
235 Section 4(3) of the LSL Act was inserted by s 46(3) of the Amending Act No. 79 of 1995, concurrently with the following (now repealed) definition of ‘workplace agreement’:
‘workplace agreement’ means a workplace agreement that is in force under the Workplace Agreements Act 1993.
236 At that time, s 4(3)(b) stated: (emphasis added)
(b) a workplace agreement or other agreement between the person and his employer; or
237 Under the LSL Act, and in Yoon, s 4(3)(b) states: (emphasis added)
(b) an employer-employee agreement under Part VID of the Industrial Relations Act 1979 or other agreement between the person and his employer; or
238 Section 7 of the IR Act defines an ‘employer-employee agreement’ as an agreement provided for by s 97UA of the IR Act:
97UA. Employer and employee may make EEA
A single employer and a single employee may make an agreement, called an employer-employee agreement, that deals with any industrial matter.
[Section 97UA inserted: No. 20 of 2002 s. 4.]
239 In Yoon, Ms Yoon’s terms of employment were contained in an industrial agreement. Therefore, the IAC in Yoon did not need to consider the meaning of ‘or other agreement’ in s 4(3)(b).
240 As outlined at [235]–‍[238]] above, s 4(3)(b) originally referred to a workplace agreement, and subsequently refers to an employeremployee agreement, which are both registered agreements made between an employer and a single employee. In contrast, s 4(3)(a) refers to an award or industrial agreement, and s 4(3)(c) refers to statutory enactments.
241 Therefore, ‘or other agreement’ in the context of s 4(3)(b), refers to an agreement made between an employer and a single employee that is not a registered agreement; specifically, a common law contract of employment.
242 This construction is confirmed by the Explanatory Memorandum to the Bill (at [204] above), which states the following in relation to s 4(3): (emphasis added)
This amendment provides that where a person has a long service leave benefit given by an award or industrial agreement, a workplace agreement, a term of the person’s common law contract of employment or any enactment of the State, the Commonwealth or another State or Territory, then providing that entitlement is at least equivalent to what is available under this Act, such persons are not employees for the purposes of this Act.
243 On this construction, upon the proclamation of the Amending Act No. 79 of 1995 and despite the repeal of the provisions relating to the Board of Reference, the insertion of ss 4(3), 5 and the transitional provisions, mean:
(a) An employer previously granted an exemption by the Board of Reference, could continue the exemption (in substance but not in form) by entering into a s 5 agreement with each employee, within six months (or the extended period granted by the Minister under subsection (3) of the transitional provisions) of the date of proclamation of the Amending Act No. 79 of 1995.
(b) An employer could be exempted from the operation of the LSL Act by s 4(3), because of an award, industrial agreement, registered individual agreement, common law contract of employment or statutory enactment containing terms providing for long service leave at least equivalent to the entitlement to long service leave under the LSL Act.
(c) An employer could enter a s 5 agreement with a single employee.
244 This construction is confirmed by the Explanatory Memorandum to the Bill (at [204] above), which states the following in relation to s 5: (emphasis added)
Section 5 of the existing Act enabled a Board of Reference to exclude employers from the provisions of the Act if their employees had at least an equivalent long service leave benefit. That section has been repealed as Boards of Reference will no longer exist. Contracting out provisions have been inserted in lieu. Any exclusions that have been granted in the past are continued for 6 months or until the relevant employers and employees put their long service leave provisions into a contractual agreement or enter into a contracting out arrangement as provided by the substituted section (ie the long service leave benefit may be traded off by the parties). To be valid the contracting out agreement must be in writing.
…
The transitional provisions also provide that exemptions from the Act granted under the old section 5, continue until a contracting out agreement under the new section 5 is entered into or until 6 months after this Part comes into force. The 6 months may be extended by the Minister on application by an employer.
245 Specifically, the construction in [243] above is confirmed by the reference at [244] above, to the transitional provisions providing for the exclusions previously granted by the Board of Reference continuing for six months, or until the relevant employers and employees:
(a) ‘put their long service leave provisions into a contractual agreement’; or
(b) ‘enter into a contracting out arrangement as provided by the substituted section (ie the long service leave benefit may be traded off by the parties)’.
246 The use of the word ‘or’ in [244] above, between the contractual agreement referred to at [245(a)] above and the contracting out arrangement referred to at [245(b)] above, confirms the construction that the contractual agreement and the contracting out arrangement are alternatives.
247 That the contractual agreement and the contracting out arrangement at [245] above are alternatives, confirms the construction of s 5 as not limited to crystallised entitlements, for the following reasons.
248 As outlined at [233] above, the Board of Reference could exempt an employer from the operation of the LSL Act if it was satisfied that the employer had or was proposing a scheme conferring benefits in the nature of long service leave. Accordingly, [245(a)] above should be understood as referring to an exempted employer putting the scheme conferring benefits in the nature of long service leave ‘into a contractual agreement’. As outlined at [235]–‍[243] above, the exempted employer could put the scheme into a contractual agreement under s 4(3)(b).
249 Given the former s 5’s references to the Board of Reference assessing an existing or proposed scheme, and ensuring that the benefits under the scheme remain not less favourable to the whole of the employees than the benefits under the LSL Act by granting the exemption subject to conditions, and ‘from time to time’ adding to, varying or revoking any conditions imposed; it is implicit that the Board of Reference’s assessment was undertaken prospectively.
250 Likewise, under s 4(3)(b), the contractual agreement is considered prospectively; irrespective of whether or not the entitlements have accrued: Yoon [59], [61].
251 Specifically, [244] and [245(b)] above, refer to the exemption granted by the Board of Reference (which as noted at [249] above relates to prospective entitlements) continuing by the employer entering into a s 5 ‘contracting out arrangement’. These references confirm the construction of a s 5 contractingout arrangement as not limited to crystallised entitlements.
252 As outlined at [215] above, the phrase ‘his entitlement to long service leave under this Act’ only appears in s 5, whereas ss 4(3) and 26(1)(f) use the phrase, ‘the entitlement to’ ‘long service leave under this Act’.
253 In any event, the phrase in s 5, ‘his entitlement to long service leave under this Act’ should be construed consistently with the construction in Yoon of the phrase in s 4(3), ‘the entitlement to long service leave under this Act’, for the preceding reasons and for the reasons that follow.
254 Section 5 applies to an agreement between an employer and a single employee. Therefore, the reference to ‘his’ in the phrase, ‘his entitlement to long service leave under this Act’ refers to a specific employee, agreeing with ‘his’ employer, to forego ‘his’ entitlement to long service leave under the LSL Act, in exchange for an adequate benefit in lieu.
255 This contrasts with the reference to ‘the entitlement’ in s 4(3). While s 4(3)(b) refers to an agreement between an employer and a single employee, ss 4(3)(a) and (c) refer to an instrument (such as an award, or in the case of Yoon, an industrial agreement) and a statutory enactment, which would apply to an employer and its employees collectively. It is in this context, that s 4(3) refers to ‘the entitlement’. Likewise, as ss 7(1) and (2) and 26(1)(f) refer to the calculation of a specific employee’s entitlement, the phrases used are respectively, ‘the employee’s entitlement’ and ‘the entitlement’.
256 Accordingly, the construction of the phrase, ‘his entitlement to long service leave under this Act’ in s 5 as not limited to crystallised entitlements, is harmonious with the construction and operation of ss 4(3), 7(1) and (2) and 26(1) of the LSL Act.
257 The legislative history and extrinsic materials also confirm the construction of s 5 as not limited to crystallised entitlements. Specifically:
(a) The Minister for Labour Relations, on the Second Reading of the Bill in the Assembly on 21 September 1995 (at [205] above), stated:
Part 10: Amendments relating to long service leave –
… The Act has been made more flexible through the insertion of provisions that enable parties to trade off long service leave for some other benefit if they so wish …
This Bill provides a greater empowerment of individuals, and provides employees and employers with better means of dealing directly with each other and, with respect to long service leave, with greater flexibility.
(b) The Hon Alannah MacTiernan and the Hon Peter Foss, in putting and passing an amendment of s 5(a) that, ‘the employee is given a benefit in lieu of the entitlement’ to ‘the employee is given an adequate benefit in lieu of the entitlement’, on the Second Reading of the Bill in the Council on 12 December 1995 (at [206] above), stated:
Hon AJG MacTIERNAN: ... We now see a provision where the alternative system is not examined up-front when it is put in place. It may be 15 years down the track before this arrangement is found not to be truly an adequate benefit in lieu. …
Page 54, line 22 – To delete the word ‘a’ and substitute ‘an adequate’.
Hon PETER FOSS: That amendment is acceptable. The idea of this is to maintain the flexibility of substituting some alternative benefit. This does give a considerable amount of flexibility but it does make certain that it is purely a nominal amount which is an appropriate substitution.
Hon AJG MacTIERNAN: I thank the Minister for indicating his preparedness to accept the amendment. This improves to some extent the operation of this provision. We still believe, however, that there should be a supervisor which determines the adequacy or otherwise of such an arrangement, and determines that adequacy at the beginning of the arrangement rather than at the end when it could often be too late.
(c) Shadow Minister, Yvonne Henderson, upon the Minister for Labour Relations moving the amendment of s 5(a) that, ‘the employee is given a benefit in lieu of the entitlement’ to ‘the employee is given an adequate benefit in lieu of the entitlement’, and the amendment passing, during the Debate in the Assembly on 19 December 1995 on the return of the Bill from the Council with amendments (at [207] above), stated:
Mrs HENDERSON: The amendment relates to long service leave and where, under the Bill, people are allowed to trade off long service leave. …
The Bill allowed people to trade off, under workplace agreements, their long service leave for any other benefit. The kind of benefit that people would receive in return was not specified. …
Under the provisions in the Bill, people would have traded off long service leave for very paltry benefits. The amendment requires that, when people trade off part of their long service leave, they receive an adequate benefit in return. That is the very minimum. I would like there to be no provision allowing people to trade off long service leave. The intention of long service leave was to give people a reasonable break. I prefer people not to be coerced into trading off that leave. … I support the amendment which at least requires that, where there is trading off, people receive an adequate benefit in return for the loss of their long service leave.
258 Furthermore, the construction of s 5 as not limited to crystallised entitlements gives effect to harmonious goals in respect of s 11 of the LSL Act, which (like ss 4(3) and 5) was also inserted by the Amending Act No. 79 of 1995:
11. Industrial magistrate’s courts
(1) An industrial magistrates court has jurisdiction to hear and determine all questions and disputes in relation to rights and liabilities under this Act, including without limiting the generality of the forgoing, questions and disputes –
(a) as to whether a person is or is not an employee, or an employer, to whom this Act applies;
(b) whether and when and to what extent an employee is or has become entitled to long service leave, or payment in lieu of long service leave;
(c) as to the ordinary rate of pay of an employee;
(d) as to whether the employment of the employee was or was not ended by an employer in order to avoid or to attempt to avoid liability for long service leave; and
(e) with respect to the benefit in lieu of long service leave under an agreement made under section 5.
(2) Jurisdiction granted under subsection (1) is exclusive to any other court except where an appeal lies to that other court.
[Section 11 inserted: No. 79 of 1995 s.52.]
259 Relevantly, ss 11(1)(a) and 11(2) provide the IMC with exclusive jurisdiction to hear and determine any question or dispute as to whether a person is or is not an employee, to whom the LSL Act applies, under s 4(3). Furthermore, ss 11(1)(e) and 11(2) provide the IMC with exclusive jurisdiction to hear and determine any question or dispute with respect to the benefit in lieu of long service leave under an agreement made under s 5.
260 The legislative history and extrinsic materials confirm a construction of s 5 that provides for ss 5, 11 and 26, each introduced by the Amending Act No. 79 of 1995, to operate together. Specifically, the following confirm Parliament’s intention of providing greater flexibility, allowing an employer and an employee to agree to the employee tradingoff their long service leave entitlement under the LSL Act, while introducing provisions for the IMC to have exclusive jurisdiction over an employer’s failure to keep relevant employment records, and to hear and determine any question or dispute of the ‘benefit in lieu’, which under the former s 5 was the jurisdiction of the Board of Reference:
(a) The Department’s Summary of the Bill (at [203] above).
(b) The Explanatory Memorandum to the Bill (at [204] above): (emphasis added)
… The references to the relative industrial legislation are brought up to date, increased flexibility is made available for the taking of leave and contracting out provisions are inserted. …
Boards of Reference will no longer exist under the Act, with their function being carried out by the industrial magistrate’s court. …
Section 5 of the existing Act enabled a Board of Reference to exclude employers from the provisions of the Act if their employees had at least an equivalent long service leave benefit. That section has been repealed as Boards of Reference will no longer exist. Contracting out provisions have been inserted in lieu. …
As there are to be no Boards or Reference, Parts IV and V are redundant and are repealed. The new Part V, replacing Part VI confers jurisdiction on an industrial magistrate’s court to deal with claims for long service leave benefits.
Subsection 11(1) of the new Part V specifies some of the issues the industrial magistrate’s court can deal with. These were formally the areas of jurisdiction of the Board of Reference. …
Section 26 is Division 2 of Part VII and relates to the keeping of employment records. The existing section is repealed and replaced with record keeping provisions based on those in the Minimum Conditions of Employment Act and Workplace Agreements Act with special provision for the keeping of records of the amount and type of leave taken by the employee and details of any section 5 contracting out arrangement that has been entered into.
(c) The Minister for Labour Relations, on the Second Reading of the Bill in the Assembly on 21 September 1995 (at [205] above), stated: (emphasis added)
… The Act has been made more flexible through the insertion of provisions that enable parties to trade off long service leave for some other benefit if they so wish … Boards of reference … will no longer deal with claims for long service leave entitlements. These, and any failure by an employer to keep relevant employment records, will be dealt with in the Industrial Magistrate’s Court.
… This Bill provides a greater empowerment of individuals, and provides employees and employers with better means of dealing directly with each other and, with respect to long service leave, with greater flexibility.
(d) The Hon Peter Foss on the Second Reading of the Bill in the Council on 12 December 1995 (at [206] above), stated: (emphasis added)
Hon PETER FOSS: … The idea of this is to maintain the flexibility of substituting some alternative benefit.
Section 5 of the current LSL Act
261 Coastal argued that s 5 of the current LSL Act, inserted by s 84 of the Industrial Relations Legislation Amendment Act 2021 (WA), provides further support to its contended construction.
262 However, where I have found that s 5 of the LSL Act has a clear and unambiguous meaning, little may be gained by, and it is in fact unnecessary to, call in aid the language of s 5 of the current LSL Act upon the interpretation of s 5 of the LSL Act: Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203 at 212; 99 ALR at 303.
Conclusion
263 For the preceding reasons, I find that:
(a) Section 5 of the LSL Act, having regard to its context and purpose, has a clear and unambiguous meaning, allowing an employer and an employee to agree to the employee foregoing their contingent entitlement to long service leave under the LSL Act if the employee is given an adequate benefit in lieu of the entitlement and the agreement is in writing; and
(b) The contract between Coastal and Mr Jowett constituted an agreement under s 5 of the LSL Act, as Mr Jowett was given an adequate benefit in lieu of his contingent entitlement to long service leave under the LSL Act and the agreement was in writing.
264 Consequently, I would dispose of each appeal as follows:
(a) FBA 11 of 2024 – I would uphold the appeal and set aside:
(i) Order 3 of the Orders dated 5 April 2024, which required Coastal to pay Mr Jowett $54,567.22 in respect of his entitlement to pro rata long service leave upon termination of his employment pursuant to s 9(2A)(a) of the LSL Act; and
(ii) Order 3 of the Orders dated 14 August 2024, by which Coastal was issued a caution in respect of the failure to pay pro rata long service leave upon termination of employment pursuant to s 83(4)(a)(i) of the IR Act.
(b) FBA 12 of 2024 – I would dismiss the appeal.
(c) FBA 18 of 2024 – I would dismiss the appeal.
KUCERA C:
265 I have had the benefit of reading the Senior Commissioner’s draft reasons and those that were prepared by Commissioner Tsang.
266 I agree with Commissioner Tsang’s reasons, including those that relate to the grounds of appeal in FBA 11 of 2024 regarding the correct construction of s 5 of the LSL Act.
267 For the avoidance of doubt this means that like Commissioner Tsang, I also agree with the Senior Commissioner’s reasons, dismissing Coastal’s appeal Grounds 5 and 7 in FBA 11 of 2024.
268 I had no difficulty in accepting the Senior Commissioner’s reasoning in [123]–‍[132] that Mr Jowett, under the contractual arrangement had with Coastal, was provided with an adequate benefit in lieu of his entitlement to long service leave under the LSL Act.
269 Having agreed with Commissioner Tsang’s reasons, which confirms that Coastal and Mr Jowett were prior to 20 June 2022 and by way of a written agreement, able to contract out of the entitlement provisions of the LSL Act, I would also allow Coastal’s appeal in FBA 11 of 2024.
270 It therefore follows, that because of my decision in FBA 11 of 2024, I do not have to deal with the appeals in FBA 12 of 2024 and FBA 18 of 2024. Accordingly, I would dismiss both of these appeals.