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T13146

TASMANIAN INDUSTRIAL COMMISSION

 

Industrial Relations Act 1984
s29(1) application for hearing of an industrial dispute

 

(T13146 of 2008)

 

The Community and Public Sector Union (State Public
Services Federation (Tasmania) Inc

 

and

 

The Minister Administering the State Service Act 2000

 

 

 

DEPUTY PRESIDENT P C SHELLEY

HOBART, 11 September 2008

 

 

Industrial dispute – breach of award – overtime – time off in lieu – payout of TOIL – appropriate rate – order issued

 

REASONS FOR DECISION

 

[1] On 9 May 2008 the Community and Public Sector Union (State Public Services Federation Tasmania) Inc. (the union), applied to the President, pursuant to s.29(1) of the Industrial Relations Act 1984 (the Act) for a hearing before a Commissioner in respect of an industrial dispute with the Minister Administering the State Service Act 2000 (the employer) arising out of the alleged breach of an award or a registered agreement with respect to Ms E Noonan.

 

[2] The dispute was heard in Hobart, commencing on Monday 2 June 2008 and continuing on Thursday 10 July 2008. Ms K Tyson and Mr M Di Pretoro appeared on behalf of the union and Ms K Steenhuis with Mr D Bracken and Mr D Gillie appeared for the employer.

 

BACKGROUND

 

[3] Ms Noonan has been employed as a Scientific Officer with the Department of Primary Industries and Water (the Department). She is, according to the application, employed under the terms of the Professional Employees Award, Level 1, Year 3. During August 2005 to September 2007 she worked additional hours as part of her work as a Technical Officer on the Devil Facial Tumour Program. She made no claim for overtime payment for those hours and they were accrued as time off in lieu of overtime (TOIL). In October 2007, when she took up another contract position within the Department, Ms Noonan requested that the untaken TOIL be paid out, as provided for in Clause 12 – Reasonable Hours - of the Public Sector Unions Wages Agreement No. 2 of 2004 (PSUWA).

 

[4] Ms Noonan was paid one hour’s pay at ordinary time for each hour of TOIL that was accrued. The union argues that she should have been paid at the overtime rates that would have applied had the additional hours been treated as overtime rather than as TOIL. They argue that the term used in the agreement -“the appropriate rate” - means payment at the penalty rates for overtime as provided for in the General Conditions of Employment Award (the award).

 

[5] It is the employer’s position that the “appropriate rate” is the rate at which the time was accrued for TOIL purposes, that is, on an hour for hour basis, which equates to one hour’s pay for each additional hour of work.

 

SUBMISSIONS

 

Ms Tyson for the union

 

[6] Ms Tyson told the Commission that the dispute arose when, on 7 May 2008, the Department paid Ms Noonan 127 hours of overtime calculated on the basis of payment of one ordinary hour for every overtime hour that was worked, instead of at the appropriate overtime rate as provided for in the award. Consequently, she said, the Department is in breach of the award.

 

[7] Ms Tyson said that the arrangements for overtime to be taken as time off in lieu were not by agreement as Ms Noonan was given no opportunity make an election based on her preference. [This point was conceded by the employer].

 

[8] Ms Tyson submitted that the “appropriate rate” referred to in the agreement is the overtime rate set out in Part V - Hours of Work and Overtime – of the award. Clause 1(c) provides:

 

“Subject to subclauses (e), (f) and (g) of this clause, an employee required to work overtime shall be entitled to payment for such overtime worked, in accordance with the following rates:

 

…” [The award provides for time and a half, double time and double time and a half, depending on when the overtime is worked].

 

[9] Ms Tyson referred to clause 12 of the PSUWA, which provides:

 

“(a) Subject to this clause the employer may require an employee to work reasonable overtime at overtime rates, provided that nothing in this clause bestows an entitlement to paid overtime for employees who do not have an entitlement to paid overtime.”

 

[10] She said that Ms Noonan had an entitlement under the award, so, in accordance with clause 12(a) of the PSUWA she is entitled to overtime at the overtime rates. The appropriate rates are contained within the award. Clause 12 of the agreement also says:

 

“Where an employee works additional hours and is entitled to time off in lieu of overtime (TOIL), if the TOIL is not taken within twenty-eight days of the additional hours being worked the employee is entitled upon request to be paid at the appropriate rate for those hours.”

 

[11] According to Ms Tyson, because the preceding paragraphs in the agreement refer to overtime, then the reference to “appropriate rate” must mean the appropriate rate for overtime, as set out in the award; if it had been intended that TOIL were to be paid out at single time then the clause in the agreement would be silent and there would be no need to use the term “at the appropriate rate”.

 

[12] Clause 12 of the agreement contains a proviso that:

 

“…an employee, not being entitled to payment for overtime but nevertheless granted time off in lieu of additional hours worked, will not be entitled for payment for TOIL granted but not taken.”

 

[13] In the union’s submission, because the clause distinguishes between those employees who have an entitlement to payment of overtime and those that don’t, that is evidence that the appropriate rate of payment for overtime worked but not taken as time off in lieu is the payment for overtime as set out in the award.

 

[14] The union is seeking an order for the payment of the accrued hours at the overtime rates specified in the award. The details of the claim are set out in a spreadsheet, amounting to a claim of $2834.47.[1]

 

Ms Steenhuis for the employer

 

[15] Ms Steenhuis submitted that the PSUWA allows for the payment of TOIL, not for the payment of overtime.

 

[16] Ms Steenhuis said that in the Tasmanian State Public Service TOIL has been taken on a time for time basis since 1990, dating from the time of the State Service Structural Efficiency Principle (SEP) Adjustments.  She provided the Commission with a decision of the Commission and a copy of an agreement which, she said, set out the agreed terms in relation to TOIL and which clearly showed that there was agreement that TOIL was to be taken on an hour for hour basis – ie at single time rates.

 

[17] Ms Steenhuis advised that the SEP arrangements still applied and in the absence of the General Conditions of Employment Award being up to date, the agency relied upon agreements [to ascertain conditions of employment]. It was obvious that the award had not been updated in line with the decision of the Full Bench.

 

[18] Ms Steenhuis told the Commission that, at the time of the introduction of the PSUWA [in 2004], advice had been sought on what rate TOIL should be paid out at because the agreement did not specify payment at appropriate overtime rates and the understanding throughout the state service has always been that TOIL is time for time, whether taken or paid out.

 

[19] The reason for the introduction of the entitlement to have TOIL paid out was because of concerns about large TOIL balances and a desire to reduce those balances.

 

[20] She submitted that an employee always has the option to be paid overtime or to take additional hours worked as TOIL.  If Ms Noonan had elected to be paid overtime and it was denied, then she would be entitled to be paid at overtime rates because the employee has the right to elect whether to be paid overtime or to take TOIL.

 

FINDINGS

 

[21] Pursuant to the Public Sector Unions Wages Agreement 2004, there is now the ability for public sector employees, in certain circumstances, to “cash out” untaken TOIL. It is, apparently, the policy of the state service to accrue (and pay out) TOIL on a time for time basis, that is, for each additional hour worked one hour of TOIL is accrued.

 

[22] During the hearing the parties were asked on several occasions to identify the industrial instruments that provide the ability for time off to be taken in lieu of payment for overtime and which allow for it to be taken on a time for time basis. That question was not satisfactorily addressed, although the Commission was told that TOIL has been taken on a time for time basis since 1990. Ms Steenhuis told the Commission that, in the absence of up-to-date awards, the Department relied upon agreements and she referred to an “agreement” dating from 1990 whilst acknowledging that the award had not been updated in accordance with that “agreement”. Nothing else was put to the Commission as a basis for the TOIL arrangements that are being applied by the Department.

 

[23] I shall address three questions:

 

(1) Are there provisions in an industrial instrument which allow Ms Noonan to take time off in lieu of overtime?

 

(2) If so, at what rate should the overtime that she worked be converted to TOIL for accrual purposes?

 

(3) What is the “appropriate rate” at which untaken TOIL should be paid out?

 

[24] In 1990 an agreed agenda was developed between the industrial parties in relation to productivity and efficiency improvements in return for the second of two wage increases available under the Structural Efficiency Principle (SEP). An interim decision of the Full Bench of the Commission in T2399 of 1990 dated 6 August 1990 (the first of a series of decisions in relation to the SEP) referred to an agreed document setting out structural efficiency measures intended to be implemented in the various awards. This document, headed Structural Efficiency Adjustments Tasmanian Public Sector, was Exhibit 3 in the Full Bench matter and is Exhibit R2 in the instant proceedings.  One of the productivity and efficiency measures referred to in the document is the introduction of TOIL on a time for time basis.

 

[25] The Full Bench said:

 

“…Mr Bacon, for the Tasmanian Trades and Labor Council (TTLC), tendered a document…..The document, predicated on a statement of principles, detailed the structural efficiency measures to be implemented in the various awards. The principles and issues are described below in summary form:

 

 

Issues

 

 

6. Salary and Overtime

 

Eligible employees may elect, subject to Agency exigencies, to take time off in lieu of overtime. Such time to be available on an hour for hour basis.”[2]  (My emphasis – I observe that “eligible employees” is not defined)

 

[26] And, later in the Decision, the Full Bench said:

 

“It is noted that the agreed document Exhibit 3, is principally a statement of the Government’s intentions…” [3]

 

[27] The Commission awarded the wage increase, effective from 18 July 1990. No orders were issued in relation to the identified “issues”.  The award was not varied to reflect the statement of intention in respect of TOIL.

 

[28] Since 1988, TOIL has been available on a time for time basis for employees who receive salaries in excess of the salary for a Clerical Employee Class X (translated to Level 7 in 1997, although the award does not reflect this change).  TOIL was provided for in an Industrial Agreement (T1233 of 1988), entered into as a result of the 4% Second Tier Increase; it provides:

 

“2. OVERTIME

 

Employees receiving a salary in excess of the maximum salary paid for a Clerical Employee Class X, shall not be paid overtime but may be granted time off in lieu on a time for time basis.”[4]

 

[29] Given that the 1988 agreement predates the Full Bench decision by two years, it follows that the introduction of the TOIL provisions referred to in the Full Bench exhibit in 1990 must have been intended to apply to employees who did not already have such provisions, ie those employees below the salary cap referred to in the 1988 agreement.

 

[30] On 9 November 1990, Mr F Ogle, for the Director of Human Resources Division, Department of Premier and Cabinet, wrote to the Secretary of the Department of Tourism Sport and Recreation, in the following terms:

 

“Structural Efficiency 3% Agreement

 

Attached please find a copy of conditions of service matters (Exhibit TTLC3) that formed part of the decision of the TIC in relation to granting the second 3%.

 

As discussed, in particular I refer you to the following extract which relates to Time off in lieu of Overtime:

 

“All eligible employees to be paid overtime have an entitlement at the appropriate rate. Subject to exigencies of the Department, eligible employees may elect (Time off in lieu) TOIL of Overtime. TOIL of overtime will be reimbursed on an hour for hour basis for all employees – i.e. single time.

 

The Industrial Agreement takes precedence over present Regulations and awards, therefore changes to these conditions are to be acted upon effective from 18 July 1990.

 

Action is being taken to amend relevant Regulations and Awards to reflect these changes.

 

…”[5] (my emphasis)

 

[31] For whatever reason, Exhibit 3 in the 1990 Full Bench decision came to be regarded as an “industrial agreement” which enabled the taking of TOIL on a time for time basis. It was not, however, an industrial agreement. It was simply a document setting out intended changes and issues to be addressed, or, as the Full Bench described it: “a statement of the Government’s intentions.”  It is this document that was relied upon by the employer in the instant case, Ms Steenhuis said: “It is our understanding that the provisions of the decision in relation to salary and overtime is still afoot”.She also referred to TOIL payments at single time “as per the Full Bench decision T2399 of this Commission.[6]

 

[32] The Full Bench did not make any decision or make any orders in relation to overtime provisions; what it did was award a pay increase on the basis of an agreed package of things intended to be done. The employer acknowledged that the award was not updated to include those provisions. “What obviously seems to have happened is the GCOE has not been updated in line with the decision of the Full Bench.”[7]

 

[33] Section 3 of the Act defines an “industrial agreement” as “an agreement referred to in section 55(1).” An agreement is required to be filed with the Registrar of the Tasmanian Industrial Commission, after a hearing conducted by a Commissioner and the issuing of a decision.

 

[34] The “industrial agreement” referred to in Mr Ogle’s letter is not an industrial agreement pursuant to s55 of the Act. The operative date of 18 July 1990, referred to in the letter, is the date of the operation of the 3% wage increase.  I can find no industrial award or agreement provisions in relation to TOIL that apply from that date. (There are limited subsequent TOIL arrangements that have been entered into, for example, in Adult Education).

 

[35] The taking of TOIL on a time for time basis is available to employees on salaries above that which applies to an Administrative and Clerical Employee Level 7, as a result of the 1988 agreement. It should be noted that these employees do not receive paid overtime.

 

[36] Under the terms of the General Conditions of Employment Award, the taking of TOIL is limited to those employees who do not work under close supervision or those who do not have set hours. For those employees, the award provides that TOIL is to be taken at overtime rates. Part V, clause 1(f) reads:

 

“(f) Employees who do not work under close supervision, or whose hours of duty are not specifically defined, shall be entitled to payment for overtime worked provided that such overtime is authorised by the controlling authority.

 

Such overtime may be compensated for in one of the following ways provided there is mutual agreement between the employee and the controlling authority:

 

(i) Payment at appropriate rates as set out in subclause (c) hereof.

 

(ii) Time off in lieu at overtime rates as set out in subclause (c) hereof.

 

(iii) A combination of paragraphs (i) and (ii) above.

 

(iv) Payment of an allowance in settlement of any overtime worked

 

PROVIDED that the method of compensation for field officers shall be agreed between the employee and controlling authority as soon as practicable after 1 July each year....”. (my emphasis).

 

[37] Reference is made to TOIL in several other places in the award but only in the context of determining how other conditions apply in conjunction with TOIL, eg the State Service Accumulated Leave Scheme.

 

[38] It is clear that, despite the assumption that from 1990 TOIL was generally available and applied on a time for time basis, that is not the case.

 

[39] The only other provisions in relation to TOIL that I have been able to identify relate to the taking of additional leave.  In 2001 a Ministerial Direction pursuant to the State Service Act 2000 was issued – Ministerial Direction No. 2:2001 - with an operative date of 1 May 2001. This was superseded by a subsequent Ministerial Direction – No. 2 of 2002, which has an identical provision. The Direction has application to the Professional Employees Award which is included at Schedule 1.

 

[40] Section 2 of the Direction deals with Leave; it reads, at 2.8:

 

“Leave in lieu of overtime

 

An employee who has been required to perform overtime work in respect if (sic) which an allowance is payable, may, at the discretion of the relevant Head of Agency and with the agreement of the employee, be granted leave of absence for a period equivalent to the period during which that overtime work was performed.” (my emphasis)

 

[41] It should be noted that the employer did not reference the Ministerial Direction as authority for the payment of time off in lieu on a time for time basis; I am including it for reasons of completeness.

 

[42] The only reference to “allowance” payable in respect of overtime in the award is at Part V clause 1(f) which provides the ability for eligible employees (those who do not work under close supervision or whose hours of duty are not specifically stated) to have overtime compensated in a number of ways, including: “(iv) Payment of an allowance in settlement of any overtime worked.”The allowance is not the same thing as payment of penalty rates, which is another alternative within the same subclause.  The effect of the Direction is that an employee in receipt of an allowance may make application for additional leave on a time for time basis. An employee who enters into this arrangement does not have an entitlement to take time off at overtime equivalent rates as provided for at subclause 1(f)(ii), unlike an employee who is not in receipt of an allowance. In other words, the Direction allows an employee to receive an allowance and TOIL on a time for time basis, but not an allowance and TOIL at overtime rates.

 

[43] In summary, under the terms of the award and the 1988 agreement (and in the absence of any other industrial agreement), TOIL is only able to be taken on a time for time basis by employees who are above the salary cap, or, on application to the Head of Agency, by employees who are in receipt of an allowance in lieu of paid overtime. Apart from the abovementioned employees, TOIL is only available to employees who do not work under close supervision or who do not have set hours, in the case of these employees, TOIL accrues on the basis of overtime rates.

 

[44] In 2004 the Public Sector Union Wages Agreement provided the option for employees to request that accrued TOIL be paid out in circumstances where the time off had not been taken within 28 days of the additional time being worked.  One of the reasons advanced for doing this was a desire to reduce large accruals of TOIL.

 

[45] At clause 12 the agreement provides:

 

“Where an employee works additional hours and is entitled to time off in lieu of overtime (TOIL), if the TOIL is not taken within twenty-eight days of the additional hours being worked the employee is entitled upon request to be paid at the appropriate rate for those hours.”

 

[46] The agreement provides for TOIL to be paid out at “the appropriate rate” but does not specifically state what that rate is. The question to be determined is: what is meant by “the appropriate rate”?

 

[47] The union has argued that TOIL should be paid to Ms Noonan at the overtime penalty equivalent rate because, they say, it was overtime that was worked and, accordingly, it should be paid at overtime, not at a discounted rate.

 

[48] Ms Noonan is covered by the Professional Employees Award.Clause 11 – Overtime – of that award provides:

 

“(a) Employees classified up to and including Level 1, 6th year of service are entitled to payment for authorised overtime worked at the direction of the employer. The payment is to be calculated by reference to the employee’s actual salary as prescribed in this award and the overtime rates as prescribed in the General Conditions of Employment Award.”

 

[49] Miss Noonan is an employee who is entitled to be paid overtime because she earns less than the salary level at which payment for overtime cuts out.

 

[50] Her overtime entitlement is derived from the provisions of the General Conditions of Employment Award.Those provisions, at Part V subclause (1)(f) allow an employee who does not work under close supervision to take time off in lieu of overtime at overtime rates as set out in subclause (c).

 

[51] I have formed the view that Ms Noonan is an employee who does not work under close supervision; I base that on what I was told regarding the nature of Ms Noonan’s work as a Scientific Officer in the Devils Facial Tumour Program and also on the provisions of the Professional Officers Award in which the relevant classification descriptor says:

 

“Initially the work of a new graduate is subject to professional supervision. As experience is gained, the contribution and the level of professional judgment increases and professional supervision decreases until a wide range of professional tasks is capable of being performed under general professional guidance. It is expected that independent professional judgement will be exercised when required, particularly in recognising and solving problems and managing cases where principles, procedures, techniques and methods require expansion, adaptation or modification…”

 

[52] Having found that Ms Noonan is an employee who is able to take TOIL under the terms of the award, the question becomes, what is the appropriate rate that she can cash it out at?

 

[53] I am of the view that the real dispute is not, in fact, about the rate at which TOIL should be paid out, it is about the rate at which TOIL should be accrued.

 

[54] TOIL is time off in lieu of payment for overtime. The concept is predicated on the basis that overtime is not paid at all, it is exchanged for time off. If, in any pay period, overtime is worked and not paid (and where such provisions exist) the overtime can be converted to time off, presumably to be taken at a mutually agreed time. Those hours are converted to TOIL hours and are accrued as such. If the award provides for TOIL at overtime rates then the hours should be converted and accrued on that basis.

 

[55] It seems to me that the critical aspect is the rate at which the additional hours are converted from actual hours worked to accrued time off. The question in this case becomes: whether the conversion from overtime hours to TOIL should be done on a time for time basis or at overtime penalty equivalents?  Once the hours have been converted to TOIL hours then the quantum of the employee’s entitlement to TOIL hours is established.  

 

[56] The rate of conversion depends upon the industrial provisions that apply to the employee.  In Ms Noonan’s case those provisions are found at Part V subclause 1(f) of the General Conditions of Employment Award

 

[57] As a result of the 2004 PSUWA, untaken balances of TOIL are able to be paid out if the time off has not been taken within 28 days. The words in the agreement are:

 

“Where an employee works additional hours and is entitled to time off in lieu of overtime (TOIL), if the TOIL is not taken within twenty-eight days of the additional hours being worked the employee is entitled upon request to be paid at the appropriate rate for those hours”.

 

[58] It is clear that what is to be paid is the entitlement to accrued time off in lieu of overtime, which is not the same thing as the payment of overtime.

 

[59] I have concluded that the words in the agreement that say that payment is to be made “at the appropriate rate for those hours” mean at the employee’s appropriate hourly rate. This is, I believe, the only logical reading. When additional hours are worked and not paid as overtime at the end of that pay period it is THEN that the additional hours should be converted to the appropriate TOIL rate. Apart from that being the correct approach industrially, it also makes sense administratively. If there is an entitlement to TOIL at overtime rates and the additional hours are not converted to overtime rates but are simply recorded on the basis of the number of hours worked, then it is difficult (if not impossible in some circumstances) to ascertain at a later date the value of accrued hours of TOIL - that is, whether they worth time and a half, double time or double time and a half.

 

[60] If additional time worked is converted at the appropriate rate at the time of accrual and is paid out later at the employee’s hourly rate then it is, in effect, being paid out at the rate at which it was accrued, which is fair. Whether an employee is entitled to a time for conversion or a conversion at overtime rates, “the appropriate rate” for payout purposes is the employee’s hourly rate. This is logical and simple.  

 

[61] For the reasons given above, I find that Ms Noonan is an employee who was entitled to accrue time off in lieu of overtime at a rate equivalent to the overtime rates set out in Part V – Clause I – Overtime – subclause (c), which sets out overtime penalty rates.  Her accrued hours of TOIL should have been based on a conversion at overtime penalty equivalent hours. They were not, the hours were accrued on an hour for hour basis.  She is entitled to be paid the difference between the number of hours that should have been accrued and the number of hours that were actually accrued. The “appropriate rate” at which those hours should be paid is the hourly rate at which Ms Noonan is paid.

 

[62] In addition to making an order for payment to Ms Noonan, I make a number of observations and recommendations in relation to what is obviously an unsatisfactory situation.

 

[63] As things stand, award employees who earn above the salary cap are entitled to TOIL on a time for time basis; employees who are below the salary cap but who work autonomously or who do not have set hours are entitled to TOIL at overtime rates; and employees in receipt of an allowance for overtime are able to apply for leave on a time for time basis. Other employees have no TOIL provisions at all. The latter category would generally be employees classified at the lower levels of the awards. This is an inequitable situation and I strongly recommend that it be rectified at the earliest opportunity so that all award employees have access to TOIL, by agreement between the employee and the controlling authority.

 

[64] In the case of employees who are able, under the terms of the award, to take TOIL, I strongly recommend that it be made clear that TOIL is available by agreement, and that they have the option to elect for overtime payment instead. It appears that Ms Noonan was not given such an opportunity – it seems to have been assumed, for whatever reason, that she (and perhaps other employees in similar situations) would take time off in lieu of overtime. However, because Ms Noonan did not request overtime payments instead of TOIL during a period of more than two years and only decided to elect for payment when she entered into a different contract with the department, her actions must be taken to indicate agreement.

 

[65] It is up to the parties whether or not they make application to vary the award provisions to reflect the 1990 statement of intention as outlined in Exhibit R2.

 


ORDER BY CONSENT

 

I hereby Order, pursuant to s.31 of the Industrial Relations Act 1984, in full and final settlement of the matter referred to in T13146 of 2008 that the Minister administering the State Service Act 2000 pay to Erin Noonan the sum of Two Thousand Eight Hundred and Thirty Four Dollars and Forty Seven Cents by close of business on 7 October 2008.

 

 

 

 

 

 

 

 

P C Shelley
Deputy President

 

Appearances:
Ms K Tyson of the Community and Public Sector Union (State Public Services Federation Tasmania) Inc. with Ms E Noonan
Ms K Steenhuis of Department of Primary Industries and Water with Mr D Bracken and Mr D Gillie for the Minister administering the State Service Act 2000

 

Date and place of hearing:
2008
June 2, July 10
Hobart


[1] Exhibit A2

[2] Exhibit R1

[3] Exhibit R1

[4] T1233 of 1988, s55 TPSA State Service Proper, Restructuring & Efficiency Industrial Agreement

[5] Exhibit R2

[6] Transcript P21 Line 17

[7] Transcript P21 Line 13