T189
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IN THE TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984
REASONS FOR DECISION
This application by the Tasmanian Chamber of Industries was filed pursuant to Section 43 of the Act. It seeks from the Commission a declaration regarding the correct meaning to be attached to the expression "ordinary rate of wage" when read in the context in which it appears in subclause (f) of Clause 7 of Section 1 of Part II of the Shipbuilders' Award. The application was made following disagreement between Conaust (Tasmania) Pty Ltd - a TCI member providing ship services including dunnaging - and the Australian Metal Workers' Union and the Building Workers' Industrial Union. The precise matter at issue was whether the hourly rate for double time payable for work done in excess of or outside the ordinary Monday to Friday daily spread of 7.15am to 5.15pm; or for work on Saturday, Sunday and public holidays, should be twice the specified award hourly rate or some other amount. Prior to the most recent National Wage adjustment this stood at $9.2201 per hour. Mr Edwards submitted that on application of those principles usually called in aid in interpreting industrial awards, including the principle of generous construction, the ordinary time rate for the purposes of calculating "double time" was not the rate established by Clause 1 of Part I of Section 1 of the Shipbuilders' Award. He did not, however, indicate what the exact rate should be. He argued that as the hourly rate referred to in the award as "the minimum rate of wage that may be paid by employers to employees engaged in the dunnaging of ships during ordinary working hours" included a known component for certain extraneous matters not relating to the value of the work performed, the ordinary time rate needed to be derived from the "all up" hourly prescription. Messrs Adams and Currie, representing the interested employee organisations, disagreed with this view. They asserted that the award was unambiguous. According to their collective reasoning, and as will be shown later, understanding, reference in subclause (f) of Clause 7 of Part II (as it relates to Section 1 - Employees Engaged on Dunnaging of Ships) to the requirement that "penalty rates for overtime shall be calculated on the ordinary rate of wage" meant just that. It was their firm belief therefore that the penalty rate of double time meant double the hourly rate (together with any additions thereto, one assumes) as set out in the wage rates clause of Section 1 of Part I of the award. Moreover in support of this contention, Mr Adams tendered as Exhibit A1 a letter signed by the Secretary for Labour dated 27 June 1985 which stated:
According to Mr Adams, some employers were already paying the rates stipulated by the Department of Labour and Industry but Conaust (Tasmania) Pty Ltd was not. These then are the understood facts. It will now be necessary to proceed to a consideration of the relevant parts of the award in order to clarify what is in issue. The award is divided into two parts and three sections. Part I sets out wage rates assigned to the various classifications contained in each of the three sections. Part II is given over to the prescription of employment conditions applicable to employees for whom classifications appear in Part I. The award is established in respect of the trades (industries) of -
Section 1 where it appears in both parts I and II of the award refers exclusively to "employees engaged on dunnaging of ships". In Part I of the award Section 1 contains only one clause headed "Wage Rates". I now reproduce the full text of this clause. It will be clearly seen that the wage rate "prescribed" is in fact derived from Section II of Part I. This section is reserved for "Employees Engaged on the Construction Altering or Repairing of Ships or Boats". It also establishes a common basic minimum wage for the whole award. The wage rate clause in Section I reads:- "1. WAGE RATES
It is clear from the language used by the award-maker that employees engaged on dunnaging of ships are -
However extra compensation relating to the working environment (disabilities of the job) has been separately assessed as an add-on component. This appears to have been determined at 30 cents per hour. [Note: The actual amounts are of no concern for the purposes of this interpretation. Where reference is made to rates of pay those references should be understood to be examples only, and are not current rates. I have in fact chosen Variation 3 of 1984 relating to Part I as those rates were given during the hearing. Current rates embodying the April 1985 CPI adjustment (presumably) have not yet been gazetted.] At the date of Amendment 3 of 1984 the minimum rate of wage for work done during the prescribed ordinary working hours was $9.2201 per hour. The award-maker then proceeds to explain how that rate is to be calculated. He states that the (then) prescribed rate of $9.2201 is comprised of the following components:
The hourly equivalent of the total of these components for working a 40-hour week would be ascertained thus:
This equals the minimum unloaded award wage for a Shipwright. To this hourly rate must be added certain extra components payable only during ordinary hours on Monday to Friday, between the times of 7.15 am and 5.15 pm (exclusive of meal times). These add-on segments must be pro rated and reduced to hourly equivalents. The non work value additions which are expressed in terms of annual equivalents are identified as:
The cash value of these add-ons equals $2,860.62 for a full year. Except for the 8-day allowance for following the job the specific items represent no more and no less than the maximum that would have been attracted by a weekly employee had that employee taken in one year all his annual and sick leave, and enjoyed each public holiday as it occurred. But the working "year" for the purposes of determining the appropriate hourly add on for the 49 notional "paid" non-working days must be reduced by the total days represented by these factor items - in this case 490 working days or 9.8 weeks. As a result of this exercise the notional working year then becomes: 52 weeks minus 9.8 weeks = 42.2 weeks This means that (theoretically at any rate) for working 42.2 weeks of 40 ordinary time hours an employee should receive the equivalent of 52 weeks pay as a Shipwright.
But to this figure must be added 52 weeks tool allowance at $7.40 per week, as the award includes this as an "add on" for ordinary hours. Therefore: $7.40 x 52 = $384.80 $15,563.60 In order to determine the ordinary hourly rate for ordinary working hours Monday to Friday the calculation would be: Divide $15,563.60 by the number of ordinary working hours in 42.2 weeks, namely 16,880. The result is $9.2196 or $9.22 rounded. This is the amount stated in Section I of Part I of the award. The award then allows two more additions. The first is a 30 cent per hour disability payment for each hour worked. [This means that no penalty additions apply.] The second is "an amount for annual leave loading equivalent to the minimum wage prescribed in Clause 3 of Section II". Prior to the April 1985 C.P.I. adjustment that amount stood at $182.40. It is therefore manifest that the equivalent hourly add on for leave loading must be calculated by dividing the sum of $182.40 by the same notional divisor of 16,880, i.e. 42.2 weeks equivalent of ordinary time. This produces an hourly equivalent of .0108056 cents. For working ordinary hours Monday to Friday therefore an employee dunnaging a ship's cargo would be entitled to receive per hour:-
The overtime rate is set at double time. This rate is attracted when the conditions prescribed by Clauses 7 and 9 of Section I in Part II have been met. Double time must then be calculated on the "ordinary rate". Subclause (f) of Clause 7 makes this clear. The ordinary rate can therefore be deduced as follows:
The ordinary rate for overtime must therefore be calculated on the sum of the basic wage and margin only. But to this should be added back 30 cents disability allowance which is to be paid for each hour worked. Thus an employee working 8 hours overtime on Saturday would be entitled to be paid by either of the following methods:-
OR:
For working ordinary time Monday to Friday between 7.15am and 5.15pm the rate is $9.22 (rounded), plus 30 cents per hour disability allowance, plus .01080 cents per hour leave loading. For double time on any day the rate is $14.60 (rounded), plus a flat 30 cents per hour for each actual overtime hour worked. It follows from the foregoing that I do not accept the "interpretation" given by the Department of Labour and Industry in its letter of 27/6/85; or that expressed jointly by Messrs Adams and Currie during the hearing. While the relevant award provisions may at first glance appear to support the D.L.I. "interpretation", closer examination unquestionably demonstrates that this prima facie belief is not sustainable. DECLARATION Accordingly I declare that the ordinary time hourly rate for overtime is to be ascertained by taking the sum of the basic wage and margin prescribed from time to time for a Shipwright, and dividing the result by forty. Payment at double time may then be calculated by doubling the actual overtime hours worked at that rate; or by doubling the Shipwright hourly rate and multiplying by the actual hours worked. To either calculation must then be added a further component at the rate of 30 cents per hour disability allowance for each hour worked. This is not subject to premium or penalty addition. DATE OF OPERATION Having interpreted the award in this way I am now required to indicate whether the interpretation given shall operate retrospectively or prospectively. For reasons given during the hearing, but more particularly because the Department of Labour and Industry has purported to interpret the award another way and some payments have been made in accordance with that "interpretation", I declare this interpretation shall operate prospectively from 1 October 1985. This will allow the Department of Labour and Industry time to revise its advice to persons bound by this award. It will also afford any interested organisation sufficient time to apply as it might be advised to remedy any perceived error or drafting defect in the existing award configuration regarding overtime rates. For these reasons I refrain from varying the award. This will become a matter for the Commissioner concerned in the event any application made necessitates an award alteration.
L. A. Koerbin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||