Federal Court of Australia

Australian Workers’ Union v UGL Resources (Contracting) Pty Ltd [2025] FCAFC 107

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1    This appeal concerns the entitlements of nine fly-in fly-out workers employed by UGL Resources (Contracting) Pty Ltd at the Karratha gas plant in Western Australia. The appellant, the Australian Workers’ Union (AWU), contends that those employees are entitled to “Shift Over Cycle rates” of pay whenever their shift exceeds 10 hours duration, as provided for by the UGL Resources (Contracting) Pty Ltd Karratha Enterprise Agreement 2019.

2    The AWU brought proceedings in the Industrial Magistrates Court of Western Australia alleging that UGL had breached s 323 of the Fair Work Act 2009 (Cth) by failing to pay the Shift Over Cycle rates provided by cl 14.8 of the Agreement. The Industrial Magistrate dismissed that claim: Australian Workers’ Union v UGL Resources (Contracting) Pty Ltd [2025] WAIRC 00015. The AWU appeals that decision. There is no dispute that an appeal lies to this Court from that decision. The appeal requires the Court to determine the correct construction of cl 14.8 of the Agreement.

3    The Agreement was approved by the Fair Work Commission on 3 July 2019. The parties agree that at the time the Agreement was made, the relevant fly-in fly-out employees were engaged on a 28 day roster cycle of 19 days on, 9 days off (19:9), with 10 hour rostered shifts. Over the course of a roster cycle the employees worked a total of 190 hours, comprising 152 ordinary hours and 38 overtime hours, paid at the same flat rate which was a “rolled up rate of pay inclusive of all payment entitlements”. That rolled up rate meant that ordinary and overtime rates were the same. The Agreement also contemplated a change to an “18 days on, 10 days off” (18:10) arrangement. That was to require 180 hours in a four week period where each rostered day of work would be 10 hours in duration and the rate would continue to be the same “rolled up” rate.

4    Before the Industrial Magistrate, UGL relied upon the evidence of Mr Terence Elliott, its “Group Manager Industrial Relations - Corporate". There was no dispute about that part of Mr Elliott’s evidence that explained that, in or around February 2020, and as a result of the COVID-19 pandemic, UGL commenced consultation for amended rostering arrangements with Woodside Energy, the operator of the gas plant, the union parties to the Agreement, and the employees covered by the Agreement. The union parties to the Agreement were the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). The AWU was not a party to the Agreement. The aim of that consultation was an amended rostering arrangement that would allow works at the gas plant to continue and to provide the employees with ongoing employment in light of border restrictions, public health orders, and the need to restrict contact between employees. The Agreement provided UGL with the right to introduce new rosters based on operational requirements.

5    During the consultation, UGL proposed a “14 on, 14 off” roster (14:14 roster) to deal with the COVID-19 circumstances. Had UGL maintained 10 hour shifts under that 14:14 roster, the employees would work less than 152 hours over 4 weeks. To ensure that the full-time employees worked 152 ordinary hours averaged out over a four week period, UGL, the AMWU and the CEPU agreed to increase the length of the employees’ shifts from 10 hours to 10.867 hours (being 10 hours and 52 minutes). The employees continued to be paid at the “rolled up” flat rate for those hours even though they would not be working any “overtime” hours in excess of the 152 ordinary hours.

6    While the 14:14 roster was in place, the employees were not paid at the Shift Over Cycle rates for the extra 52 minutes of their shifts. The AWU submits that they should have been. The AWU seeks, in respect of shifts worked between 7 May 2020 to 4 March 2022, a declaration that UGL has contravened the Act by its failure to pay the Shift Over Cycle rates and an order remitting the matter to the Industrial Magistrates Court for determination of compensation, interest and penalties.

Clause 14.8 and the Competing Constructions

7    Clause 14.8 of the Agreement provides:

If an employee is required to work in excess of 10 hours per shift, the employee will be paid the flat Shift Over Cycle rate at Appendix 4(b) for those hours. Shift Over Cycle rates do not attract superannuation as they do not form part of the Ordinary Time Earnings. For example, where the rostered hours are 10 hours per day and an employee is required to work an additional one hour then this one hour shall be paid at the Shift Over Cycle Rate.

8    The AWU contends that the critical part of the clause is the first sentence. It says that sentence unambiguously provides for the payment of the Shift Over Cycle rates in any circumstance where the employee is required to work any shift that exceeds 10 hours in duration. However, it accepts that the first sentence cannot be read in isolation. It says the second sentence should not be construed as limiting the Shift Over Cycle rates to hours outside of ordinary hours, rather it is “preoccupied with rates, not the nature of the work”. It says that where the Shift Over Cycle rates are payable on ordinary hours, the sentence operates to exclude the loaded aspect of the amount and superannuation is only payable on the ordinary hourly rate. It says, at best, the second and third sentences introduce the possibility of ambiguity allowing regard to be had to the surrounding context.

9    UGL contends that whilst the first sentence appears to be a “clear and unqualified rule”, the second sentence evinces an objective intention as to the nature and character of the Shift Over Cycle rates. It says that the Shift Over Cycle rates are approximately 45% above the ordinary and overtime hourly rate. It submits that where the second sentence provides that the Shift Over Cycle rates do not form part of Ordinary Time Earnings (as defined by the Superannuation Guarantee Administration Act 1992 (Cth)), it evinces an intention that the Shift Over Cycle rates do not apply to ordinary or standard hours of work. It says here that the 10 hours and 52 minutes were ordinary or standard hours of work. It points to other constructional factors and context to support its construction.

10    Consistent with those constructions, the AWU says the purpose of the Shift Over Cycle rates is to compensate an employee for working over 10 hours in any shift, whereas UGL says the purpose of the rate is to compensate the employee for the inconvenience of working over rostered hours.

The Industrial Magistrate’s decision

11    The Industrial Magistrate found that, when regard is had to the entire Agreement taken in context, the Shift Over Cycle rates do not apply to the 0.867 hours worked by the affected employees. In reaching this finding, the Industrial Magistrate reasoned (at [87]-[88]) that:

(1)    The intention of the Shift Over Cycle rates is to compensate employees for something more than overtime. Otherwise, the Agreement would not provide (as it does) for payment of unrostered overtime at the Shift Over Cycle rates or the rolled-up rates, whichever is applicable.

(2)    The Agreement also treats the Shift Over Cycle rates as, in effect, a penalty rate where the employer fails to give adequate notice of a roster change, indicating its intention to compensate for something other than overtime.

(3)    The Shift Over Cycle rates compensate employees who are required to work outside ordinary rostered hours and to that end superannuation does not apply to the Shift Over Cycle rates because it is work required to be done outside of work-designated Ordinary Time Earnings.

(4)    The change to the 14:14 roster meant a change to the roster cycle and roster hours or roster shift. This meant that fly-in fly-out employees were required to work their 38 ordinary hours per week or 152 hours per four week period by working new roster hours or roster shifts of 10.867 hours per shift. Under that roster, the Shift Over Cycle rates did not apply unless the employee was required to work in excess of 10.867 hours per shift.

(5)    To find otherwise would make “commercial nonsense” because fly-in fly-out employees would be compensated to do no more than the minimum requirement under the Agreement and would be liable to repay UGL superannuation paid on 0.867 hours to which they are not entitled.

(6)    While not determinative, the evidence of the negotiations surrounding the change to the 14:14 roster and the hours of work were consistent with UGL’s construction. One of the issues in that negotiation was the underpayment of superannuation of employees who worked 140 hours rather than 152. It is reasonable to infer then that the relevant union was aware of cl 14.8 and did not seek to substitute this clause in lieu of the 12 hours of superannuation.

Principles of construction

12    The parties agreed that the relevant principles governing the construction of enterprise agreements are uncontroversial and not in dispute. The parties were content to accept the summary provided in James Cook University v Ridd [2020] FCAFC 123; 278 FCR 566 at [65] (Griffiths and SC Derrington JJ). These principles as summarised by Ridd are:

(1)    The starting point is the ordinary meaning of the words, read as a whole and in context (including the industrial context), citing City of Wanneroo v Holmes (1989) 30 IR 362 at 378; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 at [53]; WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [197].

(2)    A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a practical bent of mind, citing Kucks v CSR Ltd [1996] 66 IR 182 at 184; Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16]; WorkPac at [197].

(3)    The interpretation turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, citing Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 at [2].

(4)    Context is not confined to the words of the instrument surrounding the expression to be construed. It may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include ideas that gave rise to an expression in a document from which it has been taken, citing City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union at [53]; Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518; Australian Municipal, Administrative, Clerical and Services Union v Treasurer (Cth) (1998) 82 FCR 175 at 178.

(5)    Recourse may be had to the history of a particular clause, citing Short at 518.

(6)    A generous construction is preferred over a strictly literal approach, but the instrument should make sense according to the basic conventions of the English language, citing Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union at [57], City of Wanneroo v Holmes at 380.

(7)    Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry, citing City of Wanneroo v Holmes at 378-9; WorkPac at [197].

13    UGL also relied on Treasury Wine Estates Vintners Ltd v Pearson [2019] FCAFC 21; 268 FCR 12 at [72]-[79] (Rares, Perry and Charlesworth JJ). In that case, the Full Court read down the automatic application of the clause in question because it was qualified by other clauses in the relevant enterprise agreement. The Full Court arrived at this conclusion by considering that the relevant clause should be read as part of the enterprise agreement as a whole, having regard to the industrial and legislative context in which it was made, its industrial and stated purposes, and how reasonable persons in the position of the parties would have understood it (at [75]). The Full Court also considered the incongruous result produced if a literal construction of the relevant clause was adopted (at [79]).

14    For the following reasons, ultimately, when the text is construed within the wider context of the Agreement, UGL’s construction must be preferred.

The Text of clause 14.8

15    Consistent with those principles, it is appropriate to return to the words of cl 14.8:

If an employee is required to work in excess of 10 hours per shift, the employee will be paid the flat Shift Over Cycle rate at Appendix 4(b) for those hours. Shift Over Cycle rates do not attract superannuation as they do not form part of the Ordinary Time Earnings. For example, where the rostered hours are 10 hours per day and an employee is required to work an additional one hour then this one hour shall be paid at the Shift Over Cycle Rate.

16    The ordinary meaning of the words in the first sentence are unambiguous: where an employee is required to work in excess of 10 hours per shift they will be paid at the Shift Over Cycle rates. However, as the principles direct and as both parties accepted, those words must be read as a whole and in context.

17    The second sentence provides that the Shift Over Cycle rates do not attract superannuation as they do not form part of the Ordinary Time Earnings. The Agreement does not define Ordinary Time Earnings. However, cl 13 of the Agreement provides for UGL to make “appropriate [superannuation] contributions as required” by the Superannuation Guarantee Act. Section 6(1) of that Act defines Ordinary Time Earnings as follows:

ordinary time earnings, in relation to an employee, means:

(a) the total of:

(i) earnings in respect of Ordinary Hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:

(A) a payment in lieu of unused sick leave;

(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and

(ii) earnings consisting of over-award payments, shift-loading or commission; or

(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter—the maximum contribution base.

18    Paragraph (b) was not relevant in the present circumstances. Paragraph (a) relevantly directs attention to earnings in respect of ordinary hours.

19    UGL relied upon Bluescope Steel (IS) Pty Ltd v Australian Workers Union [2019] FCAFC 84; 270 FCR 359, where the Full Court was called upon to construe the meaning of “Ordinary Time Earnings” within s 6(1) of the Superannuation Guarantee Act. Chief Justice Allsop determined (at [56]-[57]) that the meaning that best reflects the considerations of text, context, purpose and history of the provision is “earnings in respects of ordinary or standard hours of work at ordinary rates of pay as provided for in a relevant instrument, or contract of employment”. His Honour said further that where ordinary or standard hours are not provided for by instrument or contract then the definition is directed at “the hours that the employee has agreed to work or, if different, the hours usually or ordinarily worked”. That meaning, his Honour outlined “adopts as central … the distinction long familiar in the industrial and employment context, and widely understood, between earnings for ordinary time and earnings for an additional or greater number of hours beyond ordinary or standard hours”. Collier J similarly considered that “Ordinary Time Earnings” within s 6 are referable to earnings in respect of ordinary hours of work (at [301]-[302], [314]). Rangiah J agreed with the reasons of Allsop CJ and Collier J in this regard (at [357]-[358]).

20    In that way, UGL contended that the second sentence qualifies the first sentence such that the Shift Over Cycle rates are payable for hours required to be worked in excess of 10 hours per shift where those excess hours are not ordinary or standard hours.

21    The AWU contended that the second sentence is “preoccupied with rates, not the nature of the time worked”. UGL submitted that this argument is unsustainable for three reasons. First, applying Bluescope, one cannot identify the Ordinary Time Earnings without identifying ordinary or standard hours. Therefore, the second sentence of cl 14.8 cannot be understood as applying to rates in isolation of hours. Second, the AWU’s proposed construction of the second sentence involves “shearing off the ‘loaded aspect’ of the [Shift Over Cycle] rates from the ‘underlying ordinary time rate’”. This interpretation is inconsistent with Bluescope, which emphasises that when considering Ordinary Time Earnings, one must consider earnings in relation to ordinary or standard hours. Third, if Shift Over Cycle rates were intended to be payable for ordinary hours, the AWU’s construction of the second sentence would provide for a superannuation contributions shortfall. The 10.867 roster worked by the employees encompassed 10.867 ordinary hours. Superannuation is payable on ordinary hours. Yet, superannuation could not be payable because of the second sentence of cl 14.8. It appears unlikely that the parties to the Agreement intended employees run up short in relation to employer superannuation contributions.

22    UGL said further that the third sentence would not be necessary if the AWU’s construction of cl 14.8 was correct. It asks why such an example would be necessary where the AWU construction provides for the Shift Over Cycle rates to be paid in any circumstances when the employee is required to work any shift that exceeds 10 hours duration.

23    There is a clear tension between the first and second sentences of the clause 14.8. The text of the clause itself does not resolve that tension. It is necessary and appropriate to consider the context of the Agreement more broadly and the industrial context of the entitlement. It is also appropriate to separately address the context of the phrase “Shift Over Cycle” as it appears in cl 14.8 of the Agreement.

The Context of Clause 14.8

Context within the Agreement

24    For the reasons which follow, the relevant context supports UGL’s construction of cl 14.8 that its purpose is directed to compensating an employee for the inconvenience of working more than the rostered hours rather than working more than 10 hours in any one shift.

Ordinary hours of work: cll 1 and 5

25    First, the combined operation and effect of a number of key definitions support UGL’s construction.

26    At clause 5.2 of the Agreement, under the heading “Employment Categories”, two types of engagement are provided for: full-time and casual. Clause 5.2.2 defines full-time employees as those engaged to work an average of 38 ordinary hours per week averaged over a 4 week period, which equates to 152 hours. It also explains that ordinary hours and overtime hours will be worked in accordance with the rostered hours at a site. The roster allows for a compounding of ordinary hours in weeks of work, thereby allowing for rest and recreation where applicable.

27    Clause 1.1 defines a number of key expressions. “Ordinary Hours” is defined as “38 Ordinary Hours per week, or an average of 76 hours per fortnight, or 152 hours each 4 week period. The Ordinary Hours per week of work will equal 1976 Ordinary Hours per calendar year”.

28    “Overtime Hours” is defined as “all time worked in excess of the Ordinary Hours. Overtime may be rostered, and due to the nature of the work is acknowledged as reasonable and required to be worked. Additional unrostered overtime may also be required to be worked. All Overtime Hours will be paid at the flat overtime hourly rates of pay in Appendix 2 or 3 (as applicable) or at the Shift Over Cycle Rate as applicable”.

29    “Roster Cycle” is defined as “a 4 week cycle, of which 19 days will be worked and 9 days will be rest and recreation. This cycle may be varied through consultation with employees”.

30    “Rostered Hours” or “Rostered Shift” are defined as “the number of Ordinary Hours and Overtime Hours required to be worked by employees in the Roster Cycle. Work may be rostered 10 hours per day or as otherwise amended from time to time”.

31    These definitions demonstrate that:

(1)    The 19:9 roster cycle, consisting of 10 hour days of rostered work and 9 days off, was the default when the Agreement was made and approved;

(2)    Despite that default position, the Agreement provided flexibility to amend both the roster cycle and the rostered hours;

(3)    The roster cycle was constituted by the required number of ordinary hours and overtime hours over a 4 week period; and

(4)    The 152 hours each 4 week period encompassed ordinary hours.

Rates of pay: cll 5, 8 and the Appendices

32    Second, the remuneration structure as stipulated in cll 5 and 8 and in the Appendices reveals the overall intention of the parties, that employees receive a blended, rolled up all-inclusive rate for 152 ordinary hours. This effect is consistent with what is intended to be achieved, on UGL’s view, by cl 14.8: where an employee is required to work beyond the “ordinary” rostered 152 hours in a 4 week period, the employee will be entitled to the Shift Over Cycle rate.

33    The Appendices provide the applicable rates of pay under the Agreement, and cll 5 and 8 provide explanations as to the remuneration structure. The rates of pay are provided by reference to the employee’s classification level. Appendix 2 provides the ordinary hourly rate and the overtime hourly rate. These rates are the same at each classification level, as explained in the first sentence to clause 8.1.1: “Employees will be paid the applicable flat, Ordinary Hours and Overtime Hours hourly rates of pay in accordance with Appendix 2 (Permanents) or Appendix 3 (Casuals)”.

34    Appendix 2 also provides the night shift rate at each classification level. UGL contended that the night shift rate is 21% greater than the applicable day shift rate (calculated on the basis of percentage change between the day shift rate and night shift rate, rather than on the basis of percentage difference).

35    Appendix 3 provides the casual ordinary and overtime hourly rates, which differ based on day and night shift. The pay is identical as between ordinary and overtime hourly rates.

36    Appendix 4 provides the training and Shift Over Cycle rates of pay at each classification level. For Shift Over Cycle rates, the pay is identical as between full-time and casual employees. There is also no distinction between day shift or night shift rates. For full-time employees on day shift, UGL contended that the Shift Over Cycle rates are approximately 45% greater at each level as compared to the ordinary time/overtime hourly rate (again, calculated on the basis of a percentage change). Clause 8.1.1 provides further detail on Appendix 4, stating “Training and Shift Over Cycle work performed will be paid at the hourly rates provided in Appendix 4. The hourly rates have been specifically calculated as rolled up rates of pay inclusive of all payment entitlements. They have also been specifically set to lift compensation to the employee in Ordinary Hours so that the employee’s Overtime Hours can also be paid at an equivalent amount”.

37    Account may be taken, to the extent necessary, of the uncontested evidence of Mr Elliott (employed by UGL) that the Agreement was bargained and drafted with the existing 19:9 roster in mind, with pay rates tailored to reflect the hours worked under the 19:9 roster. Employees were paid a flat all-inclusive rate pursuant to cl 8.1.1 which was designed to lift the rate paid for ordinary hours so that the employees’ 152 ordinary hours and 38 overtime hours could be paid at the same rate. During bargaining, UGL also signalled the advent of the 18:10 roster. Again, employees were paid a flat all-inclusive rate under that roster for the 152 ordinary hours and 28 overtime hours worked: cl 14.5.

38    In any event, the practical effect of the move to the 14:14 roster meant that employees were required to work the minimum for their engagement as a full-time employee, being 152 ordinary hours, to receive the blended, rolled up all-inclusive rate. In order to reach 152 ordinary hours on the 14:14 roster cycle, employees were required to work 10.867 hours per day. This effect, working 152 ordinary hours and receiving the rolled-up rate, coheres with the intended operation of the Agreement, as gleaned from the definitional provisions, and coheres with UGL’s contention that the 0.867 hours are ordinary hours.

The roster: cl 14

39    Third, a review of the combination effect of many of the sub-clauses of cl 14 supports UGL’s construction. Clause 14 of the Agreement is headed “Hours of Work and Rosters”, and contains 18 sub-clauses, including 14.8.

40    A number of clauses within cl 14 support the conclusion that the 10 hours provided for in cl 14.8 was intended to be an example of the rostered hours as they were at the time the Agreement was drafted:

(1)    Until the agreed roster change described at 14.5, rosters for fly-in fly-out employees are based on the 19:9 roster cycle whereby rostered hours each day are “currently 10 hours in duration” (emphasis added), and employees are paid 190 hours each roster cycle when working 10 hour days: cl 14.4.

(2)    Rosters for fly-in fly-out employees will be altered on or before 30 June 2019 to be based on an 18:10 model whereby rostered hours each day are “currently 10 hours in duration” (emphasis added), and employees are paid 180 hours each roster cycle when working 10 hour days: cl 14.5.

(3)    UGL could exercise its rights to require employees to work shifts of up to 12 hours: cl 14.11.

(4)    UGL has the right to introduce new rosters based on operational requirements, and shall consult with employees and provide a minimum of four weeks’ notice before introducing a new roster. Ten days’ notice is also required to change between existing rosters. Shorter periods of notice may operate by agreement between UGL and any affected employee, or in the event of emergency: cl 14.15.

41    In its submissions, the AWU relied on the above clauses, and cl 14.3 which provides that where current workers were required to work 12 hour shutdown shifts Shift Over Cycle rates apply after 10 hours, to contend that all hours after 10 hours would be paid at the Shift Over Cycle rates regardless of whether time was rostered or not. The AWU submitted that these clauses “make clear that the concept of a 10 hour rostered shift was not an inherent assumption” such that the phrase “in excess of 10 hours per shift” in cl 14.8 cannot be read as “in excess of rostered hours per shift”. That is to say, the 10 hours mentioned in cl 14.8 do not hinge on changes to rostering, it reflects an existing practice that is to be maintained through any roster changes. We reject this contention.

42    From the accepted context in which the Agreement was made, and from the above clauses, it is clear that at the time the Agreement was made, employees worked rostered 10 hour shifts. The references to 10 hours in cl 14.8 (and cl 14.3) must be understood in that context. Those 10 hours represent ordinary hours under that roster cycle. That is consistent with the contemplation of being rostered to work more than the “current” 10 hour duration raised in cl 14.4 and 14.5. The 10.867 hours assigned to the new 14:14 roster cycle should be likewise construed as ordinary hours under that roster cycle.

Twelve hour shift limit and night shifts: cl 14.11

43    Fourth, the constraint imposed of a 12 hour limit on a rostered shift, by operation of cl 14.11, supports UGL’s construction.

44    Clause 14.11 imposes a limit of 12 hours on the rostered shift length, whether that shift is a day or night shift. UGL submitted, and we agree, that cl 14.11 is difficult to reconcile with the AWU’s construction. It is unlikely that the Agreement would set a 12 hour shift limit and yet would otherwise stipulate that all work completed in the 10-12 hour window would be paid at the Shift Over Cycle rates and would not attract superannuation contributions.

45    Having made the 12 hour limit clear, cl 14.11 continues: “Employees rostered on night shift are paid the specific flat night shift rates contained in Appendices 2 and 3”. The Shift Over Cycle rates are provided in Appendix 4. This indicates that night shift employees are paid the flat, all-inclusive night shift rate found in Appendices 2 or 3 for their rostered shift, including where they are rostered on for over 10 hours. That is, rostered night shifts over 10 hours do not attract Shift Over Cycle rates. There is no apparent reason, exposed in the Agreement, why day shift employees should be treated differently from night shift employees in qualifying for Shift Over Cycle rates on shifts beyond 10 hours.

46    The AWU submitted that the night shift rates provided in Appendices 2 and 3 “include compensation for any additional payments for allowances, overtime, penalties, etcetera, as mentioned in clause 8.1.2”. We understand this to mean that the night shift rate compensates for what cl 14.8 would otherwise cover for working rostered shifts over 10 hours. UGL submitted, and we accept, that this is an unlikely reading of cl 14.11. The night shift rates in Appendices 2 and 3 are approximately 21% higher than the day shift rates. Yet, the Shift Over Cycle rates are approximately 45% higher than the applicable day shift ordinary/overtime hourly rates.

47    This unexplained differential treatment between day and night shift employees who work shifts of over 10 hours gives weight to UGL’s construction that day shift employees working shifts of over 10 hours do not automatically attract Shift Over Cycle rates.

48    The AWU alternatively contended that the first sentence of cl 14.8 effectively trumps cl 14.11 such that night shift employees are eligible for Shift Over Cycle rates on shifts over 10 hours. The AWU said this is a “more comfortable interpretation” of cl 14.11. UGL submitted that the AWU’s submission is a “conclusory preference” rather than a “submission with reasons as to why you would prefer, or you would use the first sentence in cl 14.8 to trump 14.11”.

49    UGL’s construction of cl 14.8 is more consistent with the clear meaning of cl 14.11. As outlined above, the latter clause explicitly prescribes both what employees on night shift are paid and the scope of “compensation for any additional payments” for which that rate provides.

Work in excess of Ordinary Hours: cll 8.1.3 and 14.9

50    Fifth, the text of cl 8.1.3 supports the construction of cl 14.8 that it is concerned with compensation for the inconvenience caused by working more than one’s ordinary rostered hours.

51    Clause 8.1.3 provides: “A Casual Employee who works in excess of the Ordinary Hours shall be paid the applicable flat Overtime Hourly Rate, or Training Rate, or Shift Over Cycle Rate, as applicable”.

52    The AWU submitted that this clause was directed only to casual employees, who are themselves in a different category of employees and are engaged in a different way to full-time employees. We take this submission to mean that this clause should not have bearing on the how Shift Over Cycle rates are to be interpreted under the Agreement as the clause solely applies to casuals.

53    We reject this submission. Consistent with UGL’s submission and absent any clear explanation for why casuals should be treated differently under the Agreement in relation to Shift Over Cycle rates, this clause indicates that the Agreement only applies Shift Over Cycle rates to work in excess of ordinary hours, and that work during ordinary hours does not attract Shift Over Cycle rates.

54    The AWU further submitted that the words “as applicable” in cl 8.1.3 indicate “some contemplation that casuals will … in some circumstances, at least, be paid Shift Over Cycle [rates]”. To identify those circumstances, the AWU said one must go to cl 14, including, but not limited to, cl 14.9.

55    Clause 14.9 states:

If an employee is required to work additional days in excess of the normal roster pattern, the employee will be paid the flat Ordinary Hours hourly rate and Overtime Hours hourly rate as applicable at Appendix 2 for those additional days. For example, where the normal roster pattern is 19 days on, 9 days off, 10 hours per day per day and an employee is required to work on the 20th day for 12 hours, the employee is paid the flat Ordinary Hours and Overtime Hours hourly rates for 10 hours and is paid the Shift Over Cycle rate for the remaining 2 hours.

56    In effect, cl 14.9 provides that if an employee is rostered to work an additional day in excess of the normal roster pattern, they will be paid as if it was a rostered shift at the applicable rates in Appendices 2 and 3, plus the Shift Over Cycle rates for hours worked in excess of the equivalent of their rostered hours.

57    The AWU submitted that cl 14.9 is inconsistent with UGL’s reliance on the idea that Shift Over Cycle rates apply to compensate employees for having worked in excess of their rostered hours. Instead, cl 14.9 directs itself at shift length, whereby employees are not entitled to Shift Over Cycle rates simply because they work unrostered hours. Those hours must be, on a normal roster pattern of 10 hours per day, between the 10th to 12th hour.

58    UGL submitted that cl 14.9 presents as “ungenerous” in its effect. However, UGL described the clause as consistent with its construction in that it demonstrates that Shift Over Cycle rates are tightly confined. This is in contradistinction to the AWU’s unqualified construction of cl 14.8 whereby any time worked over 10 hours, even if it is ordinary hours, is to be paid at the Shift Over Cycle rates.

59    We agree with the submissions of UGL. Clause 14.9 demonstrates, by reference to an example of a 12 hour additional day on top of a normal roster pattern of 10 hour days, that Shift Over Cycle rates are tightly confined. On the example provided in cl 14.9, Shift Over Cycle rates are not payable in respect of the first 10 hours of an overtime shift. On the AWU’s construction of cl 14.8, Shift Over Cycle rates would still be payable for employees working ordinary hours during the rostered cycle.

Public holidays: cl 17.13(e)

60    Sixth, if the AWU’s construction were preferred, it would lead to inconsistency.

61    Clause 17.13(e) states that: “Payment for work on a public holiday shall be paid at the applicable flat Ordinary Hours and Overtime Hours hourly rates of pay in accordance with Appendix 2 (Permanents)”. That is, the Shift Over Cycle rates are not payable for any time worked on a public holiday, even a shift of unrostered overtime hours.

62    We accept the submission of UGL that it would be incongruous if the Shift Over Cycle rates are payable for any time worked in excess of 10 hours, even if that time consists of ordinary hours, and otherwise all public holidays hours are paid at the flat ordinary hour and overtime hourly rate.

Notice periods: cl 14.13

63    Seventh, the requirement under cl 14.13 that an employee be given timely notice of the commencement or change of a shift absent which Shift Over Cycle rates are payable, coheres with the intended purpose of cl 14.8.

64    Clause 14.13 provides that UGL shall give employees 24 hours’ notice of the commencement or change of a shift. Where such notice is not given, Shift Over Cycle rates will be paid for the work until the expiration of the notice period.

65    The AWU relied on this provision to say that a shift swap does not necessarily mean that an employee works beyond the quantum of their rostered hours, they simply work those hours at a different time. They say that the concept of Shift Over Cycle contemplated by cl 14.13 therefore differs in meaning from the ordinary industrial meaning of Shift Over Cycle, described further below at [70].

66    UGL submitted that cl 14.13 simply provides another circumstance in which Shift Over Cycle rates are payable, alongside cl 14.8 and 14.9. It submitted that it is not unusual in an industrial agreement to require a penalty to be paid for a lack of notice for a shift.

67    We are not persuaded that the penalties for late notice provided by cl 14.13 meaningfully undermine UGL’s construction or support the AWU’s construction. That aspect of the clause is neutral given the specific circumstance for which it provides. Further, the fact of the need for the payment, where such notice is not provided, is consistent with what we understand to be the purpose of cl 14.8.

An idiosyncratic Agreement: cl 14.17

68    In the course of its oral reply, the AWU submitted that the Agreement has “drafting idiosyncrasies” and “reading into these precise limitations [within the Agreement] is difficult”. As an example of this, the AWU pointed to cl 14.17, which provides for paid meal breaks where employees are rostered on a 12 hour or more shift. Pursuant to cl 14.11, however, employees are to be rostered on for a duration of “no longer than 12 hours”. The AWU said that this inconsistency points away from “the more globalised construction” urged by UGL, and speaks to the possibility that the examples provided in the Agreement are directed to specific things.

69    We do not find this submission persuasive. The fact that two clauses within the Agreement are at odds, and those clauses are not directed at the relevant inquiry as to Shift Over Cycle rates, does not lead to the conclusion that the provisions within the Agreement as to Shift Over Cycle rates cannot be understood in a contextualised, globalised manner.

Industrial and other context of “Shift Over Cycle”

70    The UGL relied upon the evidence of Mr Elliott where he explained what he described as the “industry understanding of ‘over cycle’”. Mr Elliott described it as “widely accepted that the phrase ‘over cycle’ refers to hours or work performed in addition to either the normal shift length in an employee’s roster cycle, or for days worked in excess of an employee’s “on cycle”. The AWU accepted that there was no evidence filed to contradict Mr Elliott, but contended that the phrase Shift Over Cycle “attaches to certain circumstances and, here, exclusively, either where two hours, hours between 10 and 12, are worked or insufficient notice is given for a shift”.

71    Whilst we accept that Mr Elliott’s evidence was not contradicted, it is appropriate to exercise some caution about evidence of “industry understanding”. In any event, the context of the Agreement itself informs the expression “Shift Over Cycle”.

72    The word “cycle” appears in the agreement as part of the composite expressions “roster cycle”, “Shift Over Cycle”, “28 day cycle” or “4 week cycle”. It most commonly appears as “roster cycle”. That term is defined as “a 4 week cycle, of which 19 days will be worked and 9 days will be rest and recreation”.

73    Clauses 14.4 and 14.5 define the 19:9 roster. Those clauses refer to the first and last day of the “roster cycle” and to employees being “paid 190 [or 180] hours each roster cycle”. In that context the words “Shift Over Cycle” suggest something that is a shift or part of a shift that is over or beyond the roster cycle. In the present circumstances the roster cycle was 10 hours and 52 minutes. We consider those words support the construction contended for by UGL.

The Purpose of the Agreement and the rate

74    In line with the approaches in Ridd and Treasury Wines, it is appropriate to have regard to the purposes of the Agreement and the purpose of the rate itself.

75    The objective of the parties to the Agreement is expressed at cl 2.4. It is “to ensure that the UGL operations on Woodside operated facilities remain highly competitive and sustainable, committed to zero harm and focused upon productivity, quality and performance improvement”. Clause 2.3 also provides that:

UGL and the employees are committed to genuinely identifying and implementing measures to improve productivity and efficiency at the site/s during the life of this Agreement, and are committed to continuous improvement programmes.

76    UGL submitted that its construction gives effect to these stated objectives. UGL referenced in oral submissions the objectives of remaining competitive and improving productivity and efficiency contained within those clauses, however, it was not explained how these purposes favour UGL’s construction. The AWU submitted that there is no indication that its construction, which would require Shift Over Cycle rates to be paid to the employees, would in any way stop UGL from being competitive. The AWU otherwise submitted that the objective of flexibility is provided by the broad rights under the Agreement for UGL to change its shift patterns in response to changing circumstances. In our view, the objectives in cll 2.3 and 2.4 do not clearly suggest that either construction should be preferred.

77    As for the purpose of the Shift Over Cycle rates itself, for the textual and contextual reasons identified above, we accept UGL’s submission that the purpose of the rate was to compensate an employee for having to work over ordinary rostered hours. We do not consider that the purpose of the clause is to compensate for the inconvenience of being required to work any shift over 10 hours.

Conclusion on Construction

78    For all of the above reasons, we consider that UGL’s construction of cl 14.8 is the correct construction. The 52 minutes worked in excess of the employees’ 10 hour shifts during the claim period should not be paid at Shift Over Cycle rates.

Section 323 of the Fair Work Act

79    As explained above, the AWU alleges that UGL has breached s 323 of the Act by failing to pay the Shift Over Cycle rates provided by cl 14.8 of the Agreement. As part of its submissions the AWU addressed the Court on the proper operation of s 323 and a conflict in the authorities regarding that operation. Given our conclusion on the construction of cl 14.8, it is not necessary to address s 323. However, in circumstances where a conflict exists, we consider it appropriate to make the following observations.

80    In Wilkinson v Wilson Security Pty Ltd (No 3) [2024] FCA 705; 332 IR 387, Colvin J considered (at [102]-[103]) that s 323(1) is not contravened in circumstances where the reason for the non-payment was a dispute about the particular amount that is payable in relation to the performance of work, although Colvin J noted there may be exceptions where the employer wilfully ignores whether there is any payment obligation, or fails to undertake any genuine consideration as to the amounts due to the employee, or defers identifying the amount to be paid (at [105]). There are two decisions of the Federal Circuit and Family Court of Australia which have followed Colvin J’s approach: Sabapathy v Viveganantham [2024] FedCFamC2G 666 at [98] (Mansini J) and Dimkovski v Majorsite Property Group Pty Ltd [2024] FedCFamC2G 683 at [39]-[40] (Young J); and an earlier decision which appears to somewhat support the approach: Coote v Mainline Access Pty Ltd (No 3) [2019] FCCA 383; 344 FLR 1 at [45]-[57] (Manousaridis J).

81    There are, however, two recent decisions of this Court (relying upon earlier dicta from this Court) which have interpreted s 323(1) more broadly and determined that it creates an independent obligation to pay amounts due under any instrument, including a contract, in full: Euro Car Parts Pty Ltd v Cannon [2024] FCA 828; 304 FCR 349 at [85] (Halley J) and Wollermann v Fortrend Securities Pty Ltd [2025] FCA 103; 337 IR 457 at [11] (O’Callaghan J).

82    In our view, the approaches in Euro Car and Wollermann are correct. The obligation arising under s 323(1) is plain on its words; it is for an employer to pay the employee amounts payable in relation to the performance of work in full (and in money, and at least monthly), except as provided by s 324. There is nothing in the text or context of s 323 that suggests that the obligation to pay “in full” depends on whether those amounts are disputed, or the extent to which an employer has given “genuine consideration” as to the amounts due to the employee. A review of the text, context and purpose of the provision reveals that it confronts the mischief of ensuring that employees are not paid in kind but in full and have certainty as to the frequency of payment. If the approach in Wilkinson were taken it would mean that s 323 would operate in a different way to all other civil penalty provisions in the Act which require strict compliance with payment obligations. That approach might also, when applied in cases where the employer disputes an amount payable to an employee under a modern award, have the effect of undermining the objective of the Act to provide a “guaranteed safety net” of minimum terms and conditions provided under modern awards: s 3(b). Of course, while the employer’s subjective view on the amount owing may be relevant to the assessment of any penalty, it is not relevant when determining a breach of s 323.

Disposition

83    For the reasons explained above, the appeal should be dismissed.

84    Section 570(1) of the Act restricts the Court in awarding costs. No cost order was sought or will be made.

Associate:

Dated:    20 August 2025