T11413
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Phillip Ivor Sachman and K R & Y M Best Joinery
Industrial dispute - alleged breach of the Building Trades Award - contracting out of award - no provision for casual employment - offsetting - over award payments - evidentiary onus on applicant - annual leave - public holidays - sick leave - overtime - waiting time - directions issued REASONS FOR DECISION [1] On 24 March 2004, Phillip Ivor Sachman (the applicant) applied to the President, pursuant to Section 29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with K R & Y M Best Joinery arising out an alleged breach of the Building Trades Award. [2] This matter was listed for a conciliation conference on 11 May 2004. The applicant was self-represented. Miss K McCarthy, solicitor, with Mrs Y Best and Mr P Best, represented the employer. A hearing was subsequently scheduled for 14 July 2004. Mr W White, of the Construction, Forestry, Mining and Energy Union, Tasmanian Branch, represented the applicant and the employer representatives remained the same. [3] The employer operates a joinery business specialising in kitchens, bathrooms and general joinery. Mr Sachman was employed in the business as a joiner on 22 June 1997. He continued in employment until 22 May 2002, at which time he commenced a period of extended workers' compensation. The employment contract came to an end in May 2003 following settlement of the workers' compensation matter and rehabilitation into an alternative position. [4] Mr Sachman asserts that, during the period of employment, the employer was in breach of the Building Trades Award in a number of respects. The alleged breaches were identified as follows:
[5] The sum total of the application amounts to $44777.69. [6] The claims in respect of meal allowance and weekend work were not particularised and little or no evidence produced in support. Accordingly these aspects of the overall claim are dismissed. I so order. Background [7] Mr Sachman was first engaged by the business in June 1995. He was initially classified as an independent contractor, and other than to provide context, this period of engagement is not relevant for the purposes of this application. [8] In March 1997, the principal of the business, Mr Kevin Best, died suddenly. [9] Mrs Yvonne Best, who was hitherto a silent partner, out of necessity became closely involved in the business. Their son, Mr Phillip Best, who had been employed in the business on the factory floor, assumed additional administrative and supervisory responsibilities. Their evidence was that they relied heavily on professional advice from an external accounting practice, given that both lacked experience in the administrative and management areas. [10] Shortly after the passing of Mr Kevin Best, a representative of the external accountants met with the staff to discuss conditions of employment. In the case of Mr Sachman, this resulted in an arrangement whereby he was employed on a "casual basis" at the rate of $15/hour, for all hours worked. There were no payments for annual leave, sick leave or public holidays. [11] Mr Sachman said he was expected to work 40 hours each week, and that this was often exceeded. [12] The above arrangements were put into effect on 27 June 1997 and prevailed for the balance of his employment. [13] The applicant contends that the arrangement was contrary to both the Act and the award as it was not legally possible to contract out of award provisions. [14] The employer contends that Mr Sachman was happy with the arrangement throughout the term of his employment. Further, if for the duration of his employment, Mr Sachman's total remuneration is compared with entitlements under the award, Mr Sachman has been substantially overpaid. Indeed proceedings had been instituted in the Magistrates Court for recovery of same. The Relevant Award [15] The undisputed facts are that the employer operates a joinery business and that Mr Sachman was engaged as a qualified joiner. [16] Clause 2 Scope of the Building Trades Award relevantly reads:
[17] Division D of this award applies to:
[18] The Division also contains a classification of "Joiner and/or machinist". [19] There seems no doubt that the relevant award is Division D of the Building Trades Award, and I find accordingly. Employment Conditions of Best Joinery [20] Mr Sachman's evidence in relation to the initial meeting with the accountant was as follows:1
[21] Shortly thereafter the following document was placed in Mr Sachman's pay packet:2
[22] This document was drafted by the external accountant and transposed onto Best Joinery letterhead. It was not signed by either party. Nonetheless the terms of the document, insofar as conditions of employment were concerned, applied for the duration of Mr Sachman's employment. [23] Mr Phillip Best said in relation to this document:3
[24] Mrs Yvonne Best said she believed at the time that the arrangement was in compliance with the award and that she relied heavily on advice from the accountants. In relation to the Employment Conditions document, Mrs Best said:4
[25] It is common ground that Mr Sachman did, on an unspecified number of occasions, raise the question of the relevant award with his employer. Mr Sachman also approached Workplace Standards Tasmania on the same issue. He did not however specifically raise the question of payment for sick leave, annual leave and public holidays. [26] The document itself lacks precision. There is a blank as to what the normal hours of work are to be. There is a reference to "no holiday pay". Does this mean annual leave, public holidays or both? [27] It is clear that the document was presented on a take it or leave it basis. Nonetheless Mr Sachman worked under the arrangement for more than five years and did not raise a specific issue until after his employment terminated. [28] On balance I am prepared to accept that the arrangement represented an "agreement" whereby a certain hourly rate would be paid in lieu of payment for overtime, annual leave, sick leave and public holidays. [29] This of course only answers part of the question in that it has been established beyond doubt that it is not possible to contract out of the award unless the contract provides a more favourable benefit to that of the award. See s.85 of the Industrial Relations Act 1984. See also Textile Clothing and Footwear Union of Australia v. Givoni Pty Ltd.5 [30] The "agreement" must also be tested against a number of legal principles, which now amount to settled law. Authorities [31] There is a long line of decisions and judgements dealing with the question of "offsetting". These authorities are conveniently summarised in Matthewson v Egg Marketing Board.6 Shelley C (as she then was) cited in particular Ray v Radano and Poletti v Ecob. In relation to the latter Shelley C observed:7
[32] Applied to the facts of that case, the Commissioner concluded:8
[33] In TCFUA v Givoni, Goldberg J said:
[34] In relation to the relevant time period for offsetting, Shelley C said:9
[35] In Givoni, Goldberg J concluded:
[36] The settled law referred to above will be applied to the facts of the instant case. The Award [37] The Building Trades Award is divided into four divisions, of which Division D Weekly Hire, Maintenance and Workshops, is relevant to the instant case. [38] In relation to conditions of employment, the award at the time contained a number of clauses which were specific to Division D. Relevant to this matter they included: Payment of Wages; Sick Leave; and Termination of Employment. All other conditions of employment are picked up by a cross-reference to relevant clauses in Division A. [39] Clause 8 Wage Rates contained a specific section relating to Division D. The following preamble is found in subsection 1:
[40] Clause 75 Termination of Employment, relevantly reads:
[41] Nowhere in Division D is there provision for casual employment. This can be contrasted with Division B Builders Labourers, and Division C Equipment Operators, both of which, at the relevant time, made provision for casual employees. [42] This is a critical issue in that the Employment Conditions document specifically states that Mr Sachman was employed on a casual basis. [43] Miss McCarthy submitted that the award was ambiguous in that the annual leave, sick leave and public holiday clauses all make reference to casual employees. [44] Mr Brian Smith, the external accountant, said in his evidence that he had interpreted the award as allowing for casual employment. He said that the $15/hr was calculated on the award wage plus a 20 per cent loading, rounded up to $15. He said:11
[45] And later:12
[46] With the extensive cross-referencing in the award it is inevitable that the annual leave and public holiday clauses will make reference to casual employees to cater for Divisions B and C employees. I acknowledge that the reference to casual employees in the sick leave clause contained within Division D, might give rise to confusion. It is no doubt a consequence of drafting inattention when a standard clause was "lifted" from another area. [47] Notwithstanding this possible confusion it is not open to the employer to import something into the award which plainly is not there. Indeed Mr Smith said that he adopted the 20 per cent loading because "... all other awards are 20 per cent". [48] I find that it was not legally possible to employ Mr Sachman on a casual basis. [49] I turn now to the substance of the application. Annual Leave [50] From the evidence it is clear that Mr Sachman was not paid for annual leave although it would appear that, as a consequence of the annual shut down, the annual leave was "allowed", albeit unpaid. [51] Mr White submitted that all untaken annual leave should accumulate and be paid at the rate of $15/hr, with the annual leave loading applied to the total. Whilst such an approach is common and indeed correct under many awards, it is not the correct approach in relation to this award. [52] The annual leave clause relevantly reads:
[53] On the method of taking leave the award reads:
[54] I have previously found that it was not legally open to employ Mr Sachman on a casual basis. He is therefore entitled to paid annual leave in the same manner as a weekly employee. [55] The annual leave provisions make it clear than leave is to be given and taken annually within six months of an entitlement falling due. Absent a specific enabling provision (such as a casual employment clause), it is not possible to contract out of this requirement. [56] Aside from the absence of a casual employment provision, the arrangement in place for Mr Sachman would founder in the face of the well-established legal principle that each pay week stands alone, i.e. an overpayment in one pay period cannot be offset against an underpayment in another pay period. [57] On the evidence Mr Sachman was given leave and took it on an annual basis. However he was not paid for such leave. [58] The industrial reality is that employees are generally paid annual leave at the rate they would normally receive on a weekly basis, including any over award payment. However when it comes to disputes relating to an award breach (as distinct from an industrial dispute in a wider sense), it is not in my view open to the Commission to make an order involving an over award payment, unless the award expressly provided as such. [59] In the case of the Building Trades Award there is an express requirement that the annual leave be given and taken within six months of it falling due. [60] Accordingly I find as follows: [61] Mr Sachman was entitled to be paid annual leave and annual leave loading in accordance with the award. [62] The relevant wage rate is award rate at the time the leave fell due. [63] Subject to any error in calculation, the relevant wage rate during Mr Sachman's period of employment was as follows:
Public Holidays [64] It would appear from the evidence that Mr Sachman did not work on most public holidays. He was allowed the day off, but not paid for it. If he did work on a public holiday, he was paid at the rate of $15/hr. [65] The relevant award prescription reads:
[66] For reasons outlined in the previous section it was not possible to contract out of the requirement to provide paid public holidays to Mr Sachman. [67] I therefore find that Mr Sachman was entitled to be paid for public holidays that fell during his period of employment. [68] Absent a specific provision in relation to the inclusion of over award payments, I find that the relevant rate of pay was the award rate at the time the holiday occurred. [69] I further find that he should be paid at the relevant rate for 7 hours and 36 minutes for each holiday so occurring. [70] In the event that a public holiday was worked, then the amount owing to Mr Sachman is the difference between the applicable penalty rate (double time and a half of the relevant award rate at the time), and the amount actually paid to Mr Sachman, presumably $15/hr. Sick Leave [71] There can be no doubt that Mr Sachman was entitled to paid sick leave during his period of employment. It is equally clear that Mr Sachman was on occasions absent from work "on account of personal or on account of injury by accident". [72] However, for a retrospective claim for sick leave to succeed, the following elements must be satisfied:
[73] The evidence indicates that Mr Sachman did neither. This was understandable, given that Mr Sachman felt that to seek paid sick leave at the time of the illness was futile. In short, he knew he would not be paid. [74] However the time to pursue such a claim was at the time of the illness. Without clear evidence as to the date of the illness, the nature of the illness, and the steps he took at the time to secure paid sick leave, it is impossible to satisfy the evidentiary onus which falls to the applicant to prove his claim, for an event that occurred years earlier. [75] The claim for paid sick leave is dismissed. I so order. Overtime [76] The relevant clause stated that "all time beyond the ordinary time of work ... shall be paid for at the rate of one and a half times ordinary rates for the first two hours thereof and double time thereafter". [77] Mr White submitted that, as there was no reference in the clause to the well-known industrial expression, "each day shall stand alone", then the overtime should be calculated on a weekly rather than daily basis. That is, all overtime worked in excess of two hours in any week would be paid at the rate of double time. [78] In support of this contention Mr White relied on the Federal Court judgement in Poletti v Ecob [No.2]13. [79] An examination of this judgement reveals that the court was dealing with an award prescription markedly different to that of the Building Trades Award. In particular, the Horse Training Industry Award did not make reference to a daily spread of ordinary hours. By contrast the Hours of Work clause in the Building Trades Award provided a number of options for working a 38-hour week, one of which was:
[80] Clearly this expression contemplates the common arrangement of 7 hours 36 minutes per day. [81] To accept Mr White's contention would, in the context of this award, be contrary to the ordinary meaning of the words, and moreover, the widely accepted practice in relation to the calculation of overtime. [82] I find therefore that overtime in this award should be assessed on a daily, not weekly basis. [83] The only records available record weekly rather than daily hours worked. Whilst this may well amount to a breach of the Industrial Relations Regulations 1993 in respect of employment records, it does not alter the evidentiary onus that falls to the applicant. [84] The applicant did not produce evidence as to when more than two hours overtime was worked on any particular day. [85] In the circumstances it must be assumed that up to two hours overtime was worked on each day of the week. It follows that the double time payment will not have application until at least 10 hours overtime was worked in any week. I determine accordingly. [86] The relevant rate for the calculation of the penalty rate is the award rate at the time. From this calculation the amount of $15 for each hour of overtime worked is to be deducted. [87] I do not however accept that any over award payment applicable to the first 7 hours and 36 minutes on any day may be offset against the overtime obligation. Any such payment was not specifically identified as a payment for overtime, and, consistent with the authorities, cannot therefore be used as an offset. [88] I so order. Waiting Time [89] The relevant clause reads:
[90] According to the evidence Mr Sachman was paid on a fortnightly basis on three consecutive occasions during August/September 1997. [91] Mr White submitted that as the award prescribes that wages are to be paid weekly, Mr Sachman was entitled to be paid "waiting time" for the time he was kept "waiting" for his wages. [92] Mr White submitted that the "waiting time" should have been paid at the appropriate penalty rate, 24 hours a day until payment was made. This amounted to a claim for $11475. [93] There was limited evidence as to what actually occurred at the time. Mr Sachman said:14
[94] Mrs Best indicated that the fortnightly pay was a transitional arrangement for a short period of time. It coincided with the unfortunate set of circumstances that had forced her to take on the administrative role in the business, of which she had no previous experience. [95] Mr White relied on a decision of the Commission as presently constituted in Avadon v Classic Video Pty Ltd15 (This decision is under appeal). Mr White also referred to the Full Bench judgement in Re Commonwealth Works and Services (Northern Territory) Award.16 [96] In my view Avadon can be clearly distinguished both on the facts and the provisions of the clauses in question. At worst Mrs Best inadvertently breached the award at a time when she had been forced into an administrative role in very difficult circumstances. [97] Importantly the words used in the respective clauses are quite different. The Building Trades Award uses the following expression:
[98] This can be contrasted to the provision in the Miscellaneous Workers Award (applicable in Avadon) where there is no express limitation to an employee kept waiting for wages on pay day. [99] It strikes me that the provisions of the Building Trades Award are more consistent with the earlier judgements which were distinguished in Avadon. I refer to Mayo J in Cranford Webster v McFarlane and Connor CC in Re Darling Harbour Development Project. These authorities provide support for the notion that waiting time applies when an employee is physically kept waiting at the employer's establishment on pay day. [100] There is no evidence that this occurred in the case of Mr Sachman. [101] The application for payment of waiting time is dismissed. I so order. Directions [102] The parties are directed to confer with the view of finding an agreed settlement consistent with this decision. Leave is reserved to the applicant to seek orders in the event that agreement is not reached.
Tim Abey Appearances: Date and Place of Hearing: 1 Transcript PN 156 and following |