FEDERAL COURT OF AUSTRALIA

Shop, Distributive and Allied Employees' Association v Target Australia Pty Ltd [2021] FCA 1038

ORDERS

THE COURT ORDERS THAT:

1.    By 14 September 2021 the applicant provide to the respondent and the Court a minute of proposed orders setting out the form of the declaratory relief it seeks consistent with these reasons for judgment.

2.    By 21 September 2021 the respondent notify the Court that it agrees with the applicant's proposed orders, or failing agreement, provide to the applicant and the Court its proposed orders consistent with these reasons for judgment.

3.    The Court will finalise the orders on the papers or, if either party requests, at a case management hearing to be convened on a date to be fixed for that purpose.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    The Shop, Distributive & Allied Employees' Association (Association) has brought this application on behalf of relevant retail employees of Target Australia Pty Ltd (Target), seeking a declaration as to the construction of the clause in the applicable enterprise agreement that provides for annual leave payment entitlements.

2    The question in issue is whether leave entitlements of employees, apart from casual employees, are calculated taking into account both rates of pay and shift penalties, a matter that also affects the base upon which leave loading is calculated.

3    The question is not without difficulty, but for the reasons that follow I have determined that on the proper construction of the enterprise agreement both rates of pay and certain penalties are to be taken into account, generally, but not entirely, as submitted by the Association.

PART A - INTRODUCTION AND PRINCIPLES OF CONSTRUCTION

Introduction

4    The Association is an association of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth) and is an Industrial Association, as defined in s 12 of the Fair Work Act 2009 (Cth) (FW Act). It is not in issue that the Association has standing to bring this application.

5    Target carries on business operating retail department stores around Australia and at the time of the hearing it employed about 13,500 employees. Many stores are open seven days a week.

6    Since 19 December 2012, and under the terms of the FW Act, the Target Australia Retail Agreement 2012 (Agreement) has bound Target and regulates the terms and conditions of those of its employees covered by the Agreement. The Agreement was approved by Fair Work Australia (now the Fair Work Commission) on 12 December 2012 and the parties agreed that it continues to apply.

7    This application was precipitated by a dispute raised by a member of the Association who was a part-time employee of a Target store in Western Australia. The parties agreed that the employee did not accept that he was paid correctly under the Agreement for a period when he was on annual leave.

8    The interpretation issue that arises is the meaning of the words 'their ordinary time earnings' in the following clause:

Payment for Period of Leave

7.2.10    A team member going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5% prior to the commencement of such leave

9    Both the Association and Target contend that the clause is unambiguous, although each asserts it has quite different meanings.

10    The Association's claim as to the manner in which the clause operates is reflected in the declaration it seeks:

A declaration that on the proper interpretation of cl 7.2.10 of the Agreement an employee going on annual leave is entitled to be paid for that period of annual leave the following:

(a)    the amounts which would be payable to the employee if the employee was not taking leave:

(i)    including the employee's ordinary hourly rate of pay and any penalties, loadings, allowances and over-award payments;

(ii)    but not including overtime rates of pay or payments the purpose of which [is] to reimburse the employee for expenses incurred by the employee; and

(b)    an additional amount of 17.5% of the amounts referred to in [(a)(i)].

11    Target claims that cl 7.2.10 operates so that 'ordinary time earnings' referred to in cl 7.2.10 does not include 'penalties, loadings, allowances and over-award payments' as claimed by the Association. Rather, according to Target, it means the amount that an employee would be paid is calculated on the basis of the 'ordinary hourly rate' (prescribed by cl 5.1.1 and cl 5.1.6(6) of the Agreement) payable for work as prescribed by the Agreement and being the rate for work undertaken during a particular span of 'sociable' hours (defined below as Span 1), for which no penalty rate is payable.

12    On Target's argument, the amount payable will be calculated as if only the ordinary hourly rate, or base rate, is paid for the employee's number of contracted hours, even if some of those hours are usually rostered outside Span 1 and would otherwise attract the penalty rate. It follows that the leave loading of 17.5% is to be calculated on that lower base rate.

13    The parties agree that overtime is not relevant to the calculation of 'ordinary time earnings'. Overtime relates to hours worked in addition to ordinary rostered hours.

14    The competing claims of the parties are to be considered having regard to the principles of construction to be applied to industrial agreements.

Principles of construction

15    The Agreement was made between Target and its employees on 22 October 2012 when a majority of Target's employees voted to approve the Agreement: s 182(1) of the FW Act.

16    The Agreement was approved by the Fair Work Commission (then Fair Work Australia) on Target's application and took effect as an instrument given statutory force when it was approved by the Fair Work Commission under s 54 of the FW Act on 19 December 2012: s 185 and s 186.

17    The effect of s 50, taken together with s 51, s 53 and s 54 of the FW Act is that an employer, employee or employee organisation covered by an approved enterprise agreement is bound to comply with its terms.

18    However, enterprise agreements are not contracts. Unlike contracts, enterprise agreements bind people who are not parties to it. Employees will be covered by it, regardless of whether they were engaged before or after the time the agreement was entered into. Unlike contracts, enterprise agreements require the approval of the Fair Work Commission before they come into effect and are only enforceable under the FW Act: Association of Professional Engineers, Scientists and Managers, Australia v Dendrobium Coal Pty Ltd [2015] FCA 11 at [43] (Katzmann J); Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148 at [40].

19    Nor are they legislative instruments, but are instruments given the force of law: Ex parte McLean (1930) 43 CLR 472 at 479 (Isaacs and Starke JJ); and see generally James Cook University v Ridd [2020] FCAFC 123; (2020) 278 FCR 566 at [42] (Griffiths and SC Derrington JJ), [222]-[227] (Rangiah J).

20    In WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 the Full Court said (and this statement of principle was not the subject of adverse comment in WorkPac Pty Ltd v Rossato [2021] HCA 23):

[197]    The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (French J). The interpretation '… turns on the language of the particular agreement, understood in the light of its industrial context and purpose …': Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378-9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a 'practical bent of mind' and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Limited (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).

21    The parties also agreed that the principles were accurately summarised by Wheelahan J in King v Melbourne Vicentre Swimming Club Inc [2020] FCA 1173 (King) at [122]-[133]. His Honour said the following about context:

[126]    The significance of history and context as an aid to the construction of awards was referred to by Burchett J in Short v F W Hercus Pty Ltd in another frequently cited passage, at 518 -

Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. 'Sometimes', McHugh J said in Saraswati v The Queen (1991) 172 CLR 1 at 21, the purpose of legislation 'can be discerned only by reference to the history of the legislation and the state of the law when it was enacted'. Awards must be in the same position.

[127]    The authorities relating to the construction of industrial instruments illustrate that context may shed light on the proper meaning to be given to expressions that take their colour from the industrial context. The history of provisions of an industrial instrument may also demonstrate that particular expressions have been the subject of interpretation by the courts or industrial tribunals, which may then be taken to have an accepted meaning when, in the same or a similar context, they find their way into later instruments: Short v FW Hercus Pty Ltd at 517-518. Practices in the relevant industry may provide material context. An illustration is Transport Workers Union v Linfox Australia Pty Ltd [2014] FCA 829; 318 ALR 54, where Tracey J held that evidence about the morning commencement time of work in the transport industry, together with an examination of the history of relevant award provisions, informed the construction of the term 'day shift' with the consequence that ordinary day workers were not to be regarded as shift workers for the purposes of the award, and were therefore not entitled to 'crib time'.

[128]    Part of the context in construing an industrial instrument may, in an appropriate case, be a recognition that the instrument may have been drafted by lay persons with a practical bent of mind, with the consequence that the construction of ambiguous terms should favour a sensible and practical industrial result, shorn of narrow legalism and pedantry: see, Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Nine Brisbane Sites Appeal) [2019] FCAFC 59; 269 FCR 262 at [5] (Allsop CJ); Kucks v CSR Ltd at 184 (Madgwick J). There are, however, limits on the extent to which the resolution of questions of construction may be driven by reference to history and context, and a liberal approach to construction, because ultimately what is to be determined is the proper construction of the instrument based on the objective meaning of the text. The Fair Work Act contains provisions that require the Commission to publish its written decisions, reasons, approved enterprise agreements, and variations to modern awards, with the consequence that they are widely available to members of the public: s 168, s 601. There is much to be said for the notion that instruments such as awards should be reasonably capable of being understood and implemented by the participants in the industries to which they apply by reference to the language employed in the instrument itself, without having to investigate and ascertain the pedigree of the instrument in order to identify some latent meaning to be discerned by an analysis of the mental states or purposes of others: see, The Nine Brisbane Sites Appeal at [8] (Allsop CJ). In City of Wanneroo v Holmes at 380, French J stated -

Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.

[129]    In addition, industrial instruments such as awards are liable to be binding on persons who took no part in their making. To adapt the words of Lord Simon of Glaisdale in Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231 at 237, in a society living under the rule of law, employers and employees are entitled to regulate their conduct according to what an award says, rather than by what it was meant to say, or by what it would have otherwise said if a newly considered situation had been envisaged.

22    Although allowing an appeal, the Full Court in King v Melbourne Vicentre Swimming Club Inc [2021] FCAFC 123 at [40]-[43] did not challenge Wheelahan J's exposition of the relevant principles. Another useful summary of the principles is provided in James Cook University at [65].

23    The focus on the text of a modern agreement rather than 'what it was meant to say' (King at [129]) directs attention to the relevance or otherwise of evidence that the parties might seek to rely upon to establish what the persons who negotiated the agreement intended to say by the words used. As Colvin J observed in Sheehan v Thiess Pty Ltd [2019] FCA 1762 (upheld by the Full Court in Thiess Pty Ltd v Sheehan [2020] FCAFC 198):

[22]    Therefore, peculiar contextual matters that may have been commonly known to representatives of Thiess and the Union when negotiating the terms of the Agreement are not matters to be brought to account. The Agreement is within the category of instruments where it is intended to apply to parties who were not participants in the process by which the terms of the instrument were formulated. In such cases, it may not be appropriate for surrounding circumstances to be brought to account unless they rise to the level of matters that would be notorious or known to those intended to be bound by the instrument who did not participate in the negotiations or dealings by which the terms were formulated: see, for example, Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103 (a case concerned with planning consents); Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144; (2006) 156 FCR 1 at [57]-[66], [73] (Weinberg J), [225]-[226] (Lander J), cp [123]-[124] (Kenny J) (a case concerned with company constitutions); and Westfield Management Limited v Perpetual Trustee Company Limited [2007] HCA 45; (2007) 233 CLR 528 at [36]-[39] (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ) (a case concerned with easements).

24    Principles that apply generally to commercial instruments also have a role in relation to industrial instruments. For example, an agreement is not to be construed by reference to the conduct of the parties subsequent to the agreement: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [35] (Gummow, Hayne and Kiefel JJ); and more generally Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [46]-[52] (French CJ, Nettle and Gordon JJ).

25    The use of evidence that pre-dates an industrial agreement was raised in this case. The parties referred to predecessor agreements. Target also sought to rely on evidence of negotiations and its manner of payment to employees of annual leave entitlements prior to the Agreement. The Association objected to much of the evidence about the circumstances leading up to the Agreement on the basis that it was inadmissible for the purpose of construing the relevant clause and because, in some cases, it reflected without prejudice discussions. It will be necessary to return to these matters. However, before doing so, it is appropriate to turn to the terms of the Agreement itself.

PART B - THE TERMS OF THE AGREEMENT

Contents

26    The Agreement is divided into 11 Parts, being:

(1)    Application & Operation of Agreement.

(2)    Agreement Flexibility.

(3)    Communication and Resolution of Issues.

(4)    Employer and Team Members' Duties, Employment Relationships & Related Arrangements.

(5)    Wages & Related Matters.

(6)    Hours of Work, Overtime and Breaks.

(7)    Leave and Public Holidays.

(8)    Transfers, Travelling & Working Away From Usual Place of Work.

(9)    Training & Related Matters.

(10)    Workplace Health and Safety, Equipment, Tools and Amenities.

(11)    Signatories to the Agreement.

27    It is necessary to set out a number of clauses. References in the quoted clauses to 'the Company' are references to Target; references to 'the Union' are references to the Association.

28    Clause 1.3 addresses the 'Scope & Parties Bound' to the Agreement. It relevantly provides that the Agreement covers 'team members', being employees of Target who are employed in its retail stores, and whether or not they are members of the Association. It also provides that the Agreement operates in complete substitution of any award or agreement, state or federal, that previously covered such employees.

29    The objectives of the Agreement are set out in cl 1.5.1:

The objective of this Agreement is to ensure that the Company is a highly competitive retailer excelling in employee relations, safety and welfare, quality, productivity, flexibility, communication and commitment so that the Company is the preferred employer in the retail industry.

This shall be achieved by:

(a)    Enhancing productivity and efficiencies within the workplace.

(b)    Continuing to create a flexible work environment which shall enable team members to work to the limits of their skills and capabilities.

(c)    Continuing to communicate and consult with team members encouraging them to participate and become involved in matters that have an impact on their environment and positions within the organisation.

(d)    Constantly seeking improvement in customer service, safety and welfare, quality or efficiency.

(e)    Providing stable and secure employment for all team members with the objective of both minimal turnover and long term employment.

(f)    Developing a culture that focuses on commitment and trust whilst working towards shared goals and objectives.

(g)    Providing a healthy, safe and harmonious working environment.

(h)    Positive Union representation that shall contribute to the interest of team members and the efficiency of the Company.

30    Clause 4.1 deals with 'Full-Time Employment' and provides that:

4.1.1    A full-time team member shall be hired by the week to work 152 hours over a 4 week cycle.

4.1.2    The minimum daily engagement is 4 hours.

4.1.3    A full-time team member who is ready, willing and available to work the number of hours prescribed in sub-class 4.1.1 as a week's work shall be paid the full weekly wage specified in clause 5.1.

31    Clause 4.2 deals with 'Part-Time Employment' and relevantly provides that:

4.2.1    A part-time team member shall be hired by the week to work an agreed contract number of hours between a minimum of 36 hours and a maximum of 144 hours over a 4 week cycle.

…

4.2.3    A part-time team member shall be paid the rates of pay specified in clause 5.1 on a pro-rata basis.

4.2.4    A part-time team member's hours may be increased within the span of ordinary hours in clause 6.1 and clause 6.2.9 on a temporary basis during any 4 week cycle, provided:

  (i)    that the team member agrees; and

(ii)    the total hours does not exceed the maximum hours prescribed elsewhere in the Agreement.

The additional hours worked shall be paid at ordinary time plus 15%.

Provided that additional hours worked on Saturday after 8.00pm shall be paid at ordinary time plus 40% and on Sunday at ordinary time plus 65%.

Any extra hours paid with a loading on this basis shall not be taken into account when calculating leave entitlements.

32    Clause 4.6 deals with termination of employment. Clause 4.6.5 provides:

Subject to the relevant State or Territory Long Service Leave legislation, if a team member fails to give notice in accordance with clause 4.6.4, or to work out the full period of notice, the Company shall have the right to withhold moneys due to the team member under this Agreement to a maximum amount equal to the ordinary time earnings for the period of notice required.

33    Clause 5.1.1 sets out in tabular form the 'weekly rates of pay' as fixed monetary sums depending upon a classification of level 3, level 2 or level 1 (cl 5.1.3 and cl 5.1.4 refer to the specific junior rate and 'Offsite Reserves' applicable allowances respectively).

34    Clause 5.1.5 sets out those classifications, referring to the major skills required and example roles.

35    Clause 5.1.6 sets out the classification payment principles. Relevantly, cl 5.1.6(6) provides that:

The ordinary hourly rate of pay shall be calculated by dividing the appropriate weekly rate for a team member by 38.

36    Clause 5.3 deals with 'Payment of Wages' and relevantly provides:

5.3.1    Wages shall be paid weekly or fortnightly in arrears into a bank account or building society account or credit union account nominated by the team member not later than Wednesday of the following pay cycle and not later than 4 days after the end of the pay cycle. Provided that where a public holiday falls on a Monday or a Tuesday prior to pay day wages shall be paid no later than Thursday in that week.

5.3.2    In the case of full-time team members the wage paid weekly or fortnightly shall be calculated as an average of the wage for the 4 week roster cycle.

37    Clause 5.4 relates to superannuation. Only in this part of the Agreement is the phrase 'ordinary time earnings' given express content. Clause 5.4 relevantly provides:

5.4.2    The Company shall contribute monthly to [the Retail Employees Superannuation Trust] on behalf of each eligible team member 9% of ordinary time earnings or such percentage of ordinary time earnings as required by legislation.

An eligible team member is one who:

(ii)    Earns $450 or more in ordinary time earnings in any month; and

(iii)    In the case of a team member aged below 18 years, works at least 30 hours per week.

'Ordinary time earnings' shall include the classification rate; any over-award payment; casual loadings; penalty rates; shift loadings and work related allowances that form part of the weekly rate of pay (for example, supervisory allowances).

'Ordinary time earnings' shall not include overtime; payment made to reimburse expenses (for example meal allowance or laundry allowance) or disability allowances.

38    Part 6, relating to hours of work and overtime, is of particular importance. Clause 6.1.1 relevantly provides that, subject to the saving provisions contained within the Agreement, 'team members may be rostered to work on any day of the week at any time'.

39    Clause 6.1.2 and cl 6.1.3 provide for two different spans of work. I will refer to the span provided for in cl 6.1.2 as Span 1. To adopt the expression of counsel for the Association, Span 1 refers to 'sociable' hours, as against the 'unsociable' hours set out in cl 6.1.3. I will refer to the span of hours provided in cl 6.1.3 as Span 2. The clauses are as follows:

6.1.2    A team member shall be paid the ordinary hourly rate for work rostered between the span of hours listed below:

6.1.3    Work rostered outside the span of hours listed in sub-clause 6.1.2, shall be paid at the penalties set out in this sub-clause, in addition to the team member's ordinary hourly rate of pay:

40    Clause 6.1.4 anticipates that an employee's agreed ordinary hours may be rostered other than during Span 1:

6.1.4    In stores where it is not legal to trade on a Sunday, a team member may be rostered as part of their ordinary hours between 7.00am to 7.00pm on a Sunday during store refurbishments, and shall be paid the ordinary hourly rate plus 50% for permanent team members …

41    Clause 6.2 deals with 'Rostering Principles'. Clause 6.2.14 to cl 6.2.17 have some significance and provide:

Rosters - Full time and part time team members

6.2.14    Excluding casuals, rosters shall be set on a regular weekly basis and may be changed by 7 days' written notice or at shorter notice by mutual consent. Should a team member disagree with any roster change they shall be provided with a minimum 14 days' written notice in lieu of 7 days. As far as practicable rosters shall be set by mutual agreement.

6.2.15    Subject to sub-clause 6.2.14 a team member shall be provided with a roster for their contracted hours, which shall not be subject to frequent variations from one cycle to another.

6.2.16    When establishing or changing a roster, the Company shall as far as practicable, take into consideration the family responsibilities of the team member and whether the team member can arrange safe transport home.

6.2.17    A team member's roster may not be changed with the intent of avoiding payment of penalties, loadings or other benefits applicable. Should such circumstances arise the team member shall be entitled to such penalty, loading or benefit as if the roster had not been changed.

42    Clause 6.5 deals with overtime. Clause 6.5.1 provides that Target may require a team member to work reasonable overtime at appropriate overtime rates other than on public holidays. Clause 6.5.2 provides that team members are entitled to the payment of overtime when:

(a)    they are required to work before or after their rostered shift, (except for a part-time team member who has been offered and has accepted additional hours of work in accordance with sub-clause 4.2.4);

(b)    a full-time team member works in excess of 48 hours in any week or in excess of 152 hours in any 4 week cycle;

(c)    a part-time team member works in excess of 40 hours in any week or in excess of 144 hours in any 4 week cycle;

(d)    a casual team member works in excess of 38 hours in any week except during peak periods, whereby a casual team member may work up to 48 hours per week averaged over a four week cycle in accordance with 4.3.1;

(e)    a team member works in excess of 5 days in any week (or 6 days in accordance with sub-clauses 6.2.10 or 6.2.11);

(f)    a team member is required to work a non rostered shift (except for either the circumstances provided for in sub-clause 6.2.14 or for a part-time team member who has been offered and has accepted additional hours of work in accordance with subclause 4.2.4);

(g)    a full-time team member in stores, other than those trading as Target Country, works in excess of 19 days in any 4 week cycle except in circumstances where a team member is rostered to work 20 days in any 28 day roster cycle in accordance with sub-clause 6.2.3;

(h)    a full time team member in stores trading as Target Country works in excess of 20 days in any 4 week cycle. Full time team members in Target Country stores employed prior to the commencement of the Target Country Retail Agreement 2008, in a store who had an RDO at that time, shall be entitled to overtime for work in excess of 19 days in any 4 week cycle;

(i)    a part-time team member works in excess of 20 days in any 4 week cycle;

(j)    should a team member recommence work without a 10 hour break, as per clause 6.2.2, they shall be paid at overtime rates until a minimum 10 hour break is provided;

(k)    a team member works outside the span of hours as provided in sub-clause 6.1.2 of this Agreement; and

(l)    a team member works in excess of 9 hours (excluding meal breaks) on any shift, provided that a team member may work up to 10.5 hours in accordance with subclause 6.2.1 without the payment of overtime.

43    Clause 7.2 deals with annual leave (noting Part 7 does not apply to casual employees). It relevantly provides:

Period of Leave

7.2.l    A period of 152 hours (4 x 38 hour weeks) paid leave shall be allowed annually to full-time team members. Part-time team members shall be entitled to annual leave on a pro-rata basis. Where the number of hours worked vary throughout the course of the year, entitlements to annual leave shall be calculated upon the average number of rostered hours worked during the year of accrual excluding additional hours worked pursuant to sub-clause 4.2.4.

7.2.2    A team member's entitlement to paid annual leave accrues progressively during a year according to the team member's ordinary hours of work and accumulates from year to year.

Time of taking leave

…

7.2.9    Where practicable, a full-time team member shall be given preference to take their non-working day in conjunction with Annual Leave or to move their non-working day so that it adjoins a period of Annual Leave.

Payment for Period of Leave

7.2.10    A team member going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5% prior to the commencement of such leave.

7.2.11    Prior to the commencement of Annual Leave, a team member shall be paid all wages in respect of the period of Annual Leave.

Provided that at the written request of the team member, a team member may be paid for such leave by receiving the payment progressively using the normal weekly or fortnightly pay cycle.

7.2.12    Except as specified in 7.2.17, payment shall not be made in lieu of Annual Leave.

Annual Leave exclusive of Public Holidays

7.2.13    Where any Public Holiday for which the team member is entitled payment under the Agreement occurs during the period of Annual Leave taken by a team member, the period of the leave shall be increased by one day in respect of that public holiday.

…

Cashing out of Annual Leave

7.2.17    Where a full time team member has an accrued annual leave entitlement in excess of 152 hours (or a pro rata amount for a part time team member), the Company may, at the request of the team member, pay to the team member an amount equal to the team member's ordinary time earnings (plus annual leave loading of 17.5%), up to a maximum of 152 hours per annum for a full time team member (or a pro rata amount for a part time team member), for his or her annual leave entitlement in excess of 152 hours (or a pro rata amount for a part time team member), and reduce the team member's annual leave entitlement accordingly.

Payment in lieu of taking annual leave in accordance with this sub-clause will only be made if the team member makes the request in writing and the Company authorises the request. A separate request must be made on each occasion.

44    Other clauses in Part 7 then address personal or carer's leave, and paid carer's leave.

45    Clause 7.3.1 relevantly provides that a team member is entitled to personal or carer's leave in prescribed circumstances. Clause 7.3.2 and cl 7.3.3 set out how it accrues. Relevantly, cl 7.3.6 provides:

7.3.6    Payment whilst on paid personal/carer's leave will be at the team member's ordinary time earnings for the hours normally rostered to work, excluding any penalties. Where a public holiday falls during a team member's personal/carer's leave, the team member is deemed not to be on personal/carer's leave on that public holiday.

46    Similarly, cl 7.3.11 deals with paid carer's leave and provides:

7.3.11    Entitlement to personal/carer's leave for the purpose of providing care or support to a member of the team member's household or immediate family is on the basis that the team member is the most suitable person, in the circumstances, to provide such care or support. For events that can be planned ahead, a team member shall, where possible, request roster changes or utilise available annual leave or accrued days.

Payment whilst on paid personal/carer's leave will be at the team member's ordinary time earnings for the hours normally rostered to work excluding any penalties.

A permanent employee shall, upon approval, be entitled to a maximum of 3 rostered shifts of paid personal/carer's leave in each anniversary year of their employment for the purpose of attending to unforeseen personal issues.

47    Clause 7.6 provides certain entitlements relating to compassionate leave. Relevantly, it provides:

7.6.8    Payment whilst on Compassionate Leave will be at the team member's ordinary time earnings for the hours normally rostered to work excluding any penalties. Proof of the illness or injury shall be required to be produced, when requested by the Company.

48    Clause 7.9 deals with defence force leave. It relevantly provides:

7.9.2    During such leave, team members who are required to attend full-time training shall be paid an amount equal to the difference between the payment received in respect of their attendance at camp and the amount of ordinary time earnings they would have received for working ordinary time during that period.

49    Clause 7.11 deals with natural disaster leave. It provides:

7.11.1    Where a yellow alert is announced for cyclones, or there is flooding or bush fires which pose a genuine threat to a team member's property and this creates a need for a team member to care for their children, or prevents a team member from attending work due to being geographically cut off with no viable alternative route to work, team members shall be allowed to be absent from work. In such circumstances a full time team member will be able to access up to 3 days' paid leave per year (or a pro rata amount for a part time team member) non cumulative, paid at the ordinary time earnings rate.

50    Clause 7.13 deals with public holidays, and relevantly provides as follows:

7.13.8    Where a store does not open for trade on a public holiday, and a team member would have been rostered to work on such a day, they shall be entitled to payment for the day based upon their ordinary time earnings (including penalties as appropriate) for the hours normally rostered to work.

…

7.13.18    Easter Sunday, Christmas Eve and New Years Eve (if not a public holiday)

Work on Easter Sunday, and after 7.00pm on Christmas Eve or New Year Eve (if not a public holiday) is voluntary, subject to the following:

…

(e)    permanent team members rostered on Easter Sunday in a store which is not permitted to open on Easter Sunday shall be give the day off with pay at the ordinary time earnings rate.

51    Clause 8.1 provides for transport allowance, and relevantly provides:

8.1.2    A team member shall also be entitled to payment of additional travelling time at the ordinary time earnings rate except on Sundays and Public Holidays when payment shall be at time and a half provided such payments shall cease when the team member has been permanently transferred to the store.

Different use of 'ordinary time earnings' in different clauses

52    It is apparent from those extracts that the phrase 'ordinary time earnings' is used without qualification on some occasions (cl 4.6.5, cl 7.2.10, cl 7.2.17, cl 7.9.2, cl 7.11 and cl 8.1.2); is used with the qualification that penalties are excluded from its scope in other clauses (cl 7.3.6, cl 7.3.11 and cl 7.6.8); is used with the qualification that it includes penalties on one occasion (cl 7.13.8); and is defined inclusively of a number of loadings and rates in the clause that addresses superannuation (cl 5.4.2). There is no other definition of the phrase in the Agreement. Apart from the reference in cl 4.6.5, all uses of the phrase are located in the Agreement after cl 5.4.2.

Range of other terms

53    The drafters of the Agreement have also used a range of terms that refer to ordinary hours of work or ordinary rates of pay (in contradistinction to 'earnings'). For example, there are references to 'paid at ordinary time' (cl 4.2.4(ii)); the 'weekly rates of pay' or 'weekly rate' (cl 5.1.1, cl 5.1.6(6)); 'ordinary hourly rate of pay' (cl 5.1.6(6), cl 6.1.3); 'ordinary hourly rate' (cl 6.1.2, cl 6.1.4); 'ordinary time rate of pay' (cl 4.7.4, 4.7.10(a)); 'ordinary time rates' (cl 4.7.4); and 'ordinary hours of work' (cl 7.2.2).

54    There is also reference to 'all wages' (cl 7.2.11); or 'wages' (cl 5.3).

55    There is no doubt that such references are apt to cause confusion and complicate the interpretation of the Agreement. They are considered further below.

PART C - AGREED BACKGROUND MATTERS

Joint statement of agreed facts

56    The parties relied on a joint statement of agreed facts made for the purpose of s 191 of the Evidence Act 1995 (Cth). However, the use to be made of certain facts was the subject of objections and submissions that are dealt with later in these reasons.

The predecessor agreements and awards

57    As noted, cl 13.4 of the Agreement provides that it operates in substitution of any award or agreement covering the employees who are covered by the Agreement. By the joint statement of agreed facts, the parties agreed that the following awards and agreements were in place at various times prior to commencement of the Agreement.

58    The Agreement replaced the following predecessor agreements (Predecessor Agreements):

(a)    the Target Retail Agreement 2008, which commenced on 3 June 2009;

(b)    the Target Country Retail Agreement 2008, which commenced on 3 June 2009;

(c)    the Urban by Target Retail Agreement 2011, which commenced on 12 July 2011;

(d)    the Target North Queensland Retail Agreement 2006, which commenced on 14 August 2006; and

(e)    the Target Country North Queensland Retail Agreement 2006, which commenced on 14 August 2006.

59    The Target Retail Agreement 2008 was preceded by the following agreements:

(a)    the Target Retail Agreement 2006, which commenced on 14 August 2006;

(b)    the Target Retail Agreement 2003, which commenced on 1 February 2003;

(c)    the Target Retail Agreement 2001, which commenced on 26 April 2001; and

(d)    the Target Australia Pty Ltd Retail Agreement 1997, which commenced on 11 September 1997.

60    The awards in place that covered Target at the times the agreements were made were said to be as follows:

(a)    the Target Australia Pty Ltd Award 2002, which commenced operation on 9 August 2002 as an award under s 113 of the Workplace Relations Act 1996 (Cth) and Item 51 of Part 2 of Schedule 5 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth). It continued to operate as a 'pre-reform award' pursuant to Item 4 of Part 2 of Schedule 4 of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) and then as an 'award based transitional instrument' pursuant to Part 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), until it terminated on 31 December 2013 pursuant to Item 9(4) of Part 2 of Schedule 6 of that Act; and

(b)    the Target Australia Pty Ltd Award 1994, which commenced operation on 1 August 1994 as an award under s 111(1)(b) of the Industrial Relations Act 1988 (Cth) and operated until it was varied by the Target Australia Pty Ltd Award 2002.

61    Each of the instruments referred to in [58]-[60], including the Agreement, refer to the Coles Myer Occupational Superannuation Award 1992. Further, the parties agreed that under the Agreement, Target has paid its 'Offsite Reserve or Multi Offsite Reserve' employees for a period of annual leave certain allowances in accordance with Appendix C of the Agreement.

62    For present purposes, two topics, being payments for periods of leave and superannuation, and how they are treated in the various agreements and awards, have some relevance. There is a general consistency in the clauses relating to those topic over the years. For convenience, I have set out in the Schedule to the reasons the clauses that address those topics in each of those agreements and awards, in chronological order.

Target's history of payment

63    By the joint statement of agreed facts it was agreed that during the time that the Agreement has been in place, Target has paid its full-time and part-time employees for a period of annual leave the rate of pay the employee would have been paid but for the period of annual leave, calculated by reference to the rate of pay prescribed by cl 5.1.1 of the Agreement; and an additional loading of 17.5% of that amount. Target has not paid relevant employees any other amounts they would have been paid but for the period of leave such as loadings payable to part-time employees in respect of additional hours or shifts under cl 4.2.4 and cl 6.2.18; loadings payable to employees performing supervisory duties under cl 5.1.6 and cl 5.1.7; allowances payable under cl 5.2 and cl 8.1; penalties payable under cl 6.1.3; or amounts payable for work in stores where it is not legal to trade on a Sunday under cl 6.1.4. This post-Agreement conduct is not relied upon by the parties for the purpose of construing the Agreement.

64    Further, the parties agreed that Target paid its employees in the same manner under the Predecessor Agreements (having regard to corresponding clauses). Nor were such amounts taken into account for the purpose of calculating any 17.5% leave loading.

65    Target relies upon this history of payment under the Predecessor Agreements in support of an argument that there was a common understanding as to how cl 7.2.10 operates. The Association objected to reliance on the evidence for this purpose.

Series of bargaining meetings prior to the Agreement

66    The following history of bargaining meetings is also recited from the joint statement of agreed facts. Target seeks to rely on the evidence of the process as an aid to construction, submitting that it is too relevant to a common understanding at the time of the negotiations as to the operation of cl 7.2.10. The Association also objected to reliance on this evidence for that purpose.

67    On 29 February 2012, an enterprise bargaining meeting was held and attended by representatives of the Association and Target. At that meeting the Association provided a Log of Claims. Target also provided a Log of Claims. A representative of the National Office of the Association produced a written document of that meeting. A representative of Target produced a typed document of that meeting and attached a copy of the Association's Log of Claims with typed annotations produced during that meeting.

68    Claim 27 of the Association's Log of Claims (referred to as 'S27' in notes of enterprise agreement negotiation meetings taken by the Association and Target) (S27) reads as follows:

When proceeding on Annual Leave, in addition to their ordinary times earnings a team member shall receive the penalty / loading payment(s) that they would have received had they not been on annual leave.

69    On 7 March 2012, an enterprise bargaining meeting was held and attended by representatives of the Association and Target. At that meeting, a representative of the National Office of the Association produced a handwritten document of that meeting.

70    On 18 April 2012, an enterprise bargaining meeting was held and attended by representatives of the Association, Target and the Australian Workers' Union, Queensland. Representatives of each of the National Office of the Association, the Tasmania Branch and the Victorian Branch produced a handwritten document of the meeting and a representative of Target produced a typed document of that meeting. A further meeting was held which was attended only by representatives of the Association. The Association's notes of that further meeting state the word 'drop' in connection with S27.

71    On 1 May 2012, an enterprise bargaining meeting was held and attended by representatives of the Association and Target. At that meeting, representatives of the National Office, the New South Wales Branch, the Queensland Branch, the Tasmanian Branch and the Victorian Branch produced a handwritten document of the meeting. Representatives of the Queensland Branch and Target also each produced a typed document. At the meeting, the Association proposed a 'package' dealing with the Association's and Target's leave and public holiday claims. The Association's notes of that meeting state the word 'drop' in connection with S27.

72    At further bargaining meetings held after 1 May 2012, the Association did not pursue S27.

73    It will be necessary to return to this history further below, and the underlying logs of claims and notes.

PART D - CONSTRUCTION OF THE AGREEMENT

Summary of the Association's arguments

74    The Association's starting point in its argument is that certain terms have a recognised meaning in industrial law, and that such meaning is consistent with the view it propounds.

75    It contends that there is a long-recognised distinction between fixed ordinary hours of work for which ordinary rates of pay are payable, and overtime hours, being hours in addition to the ordinary hours of work or outside the period of time for which the ordinary rate of pay is payable: so much is supported by a line of authorities, including United Voice v Wilson Security Pty Ltd [2019] FCAFC 66; (2019) 269 FCR 66 at [30].

76    It contends that the various terms for ordinary rates of pay that I have extracted at [53] above are coterminous references to the relevant ordinary rate of pay for ordinary hours of work, exclusive of any additional amounts such as penalties, loading and allowances. It also does not include overtime rates.

77    The Association contends that 'earnings' in cl 7.2.10 refers to an employee's total remuneration, and so its use in the phrase 'ordinary time earnings' in cl 7.2.10 means the total remuneration which would have been paid to the employee, excluding any overtime, had the employee not taken the period of annual leave and instead had continued to work. The total remuneration will vary depending upon whether the employee would ordinarily be entitled to amounts such as supervisory loadings (cl 5.1.6(4)) and penalties for work outside the specified span of hours (cl 6.1.3).

78    Therefore, the Association contends, the 17.5% leave loading referred to in cl 7.2.10 is plainly to be calculated on the basis of the total remuneration for the employee's regular rostered hours.

79    The Association submitted that there are textual matters in the agreement that support this approach. First, it submitted that the breadth of 'ordinary time earnings' in cl 5.4.2 is telling, and the phrase should not have a different meaning where used elsewhere in the Agreement, absent clear words of distinction. Second, it contended that all other references to 'ordinary time earnings' (see [52] above) may be understood by applying the broader meaning and do not compel a finding to the contrary. Third, it contended that the broader view is supported by the historical context and a purposive approach that recognises that employees should not be worse off financially when taking annual leave. Target's construction would mean that those employees who regularly work the unsociable Span 2 shifts would be financially disadvantaged, even allowing for the 17.5% leave loading, when taking annual leave. There would be no incentive for them to do so.

Summary of Target's arguments

80    Target submitted that for the purpose of cl 7.2.10, 'ordinary time earnings' is not a defined term. Its contention is that ordinary time earnings are those provided for by cl 5.1.1. Clause 5.1 does not use the term 'earnings'. It prescribes weekly rates of pay, with the ordinary hourly rate of pay calculated by dividing the appropriate weekly rate for a team member by 38. Penalty rates are prescribed by cl 6.1.3 and are expressly 'in addition to the team member's ordinary hourly rate of pay'. It follows that Target contends that 'earnings' is synonymous with ordinary rates of pay in cl 5.1.1 and does not include any penalty.

81    Target submitted that the evident purpose of the 17.5% loading is to compensate the employee for penalties and overtime that the employee might earn if not taking a period of annual leave. The loading is not limited to recognition of lost overtime but also any penalties or loadings. Alternatively, Target submitted, the 17.5% leave loading is simply a benefit bargained for and agreed to and therefore not referrable to any other purpose.

82    Target also relied upon the history of annual leave entitlements, pointing to the introduction of annual leave loadings of 17.5% in the 1970s, but submitting that it was limited to augmenting an employee's payment above minimum rates of pay. Target also contended that the parties' past conduct and negotiations evidenced an objective framework of facts said to give rise to a common understanding between it and the Association as to how cl 7.2.10 was to operate.

83    Target contended that the definition of ordinary time earnings in cl 5 is limited in its application to that clause and has no broader application. It also maintained that its narrow view of the meaning of that phrase where used in cl 7.2.10 is consistent with the use of the phrase elsewhere in the Agreement.

The text

84    The starting point is to assess the language of the text of the Agreement and ascertain whether it logically leads to a particular meaning.

85    Starting with cl 4.1 and cl 4.2, full-time and part-time employees are hired by the week to work a set number of hours. In the case of full-time employees, that agreed number of hours is 152 hours over a four week cycle. For part-time employees, the number of hours per week is agreed separately ('an agreed contract number of hours'), but falls within a minimum of 36 hours and a maximum of 144 hours over a four week cycle.

86    The entitlement to be paid is provided by cl 4.1.3, which entitles a full-time employee to be paid a weekly wage specified in cl 5.1. Clause 5.1.1 refers to a 'weekly rate of pay' in dollars. Clause 4.2.3 provides that a part-time employee is to be paid the rates of pay in cl 5.1 on a pro-rata basis. Clause 5.1 covers the cl 5.1.1 rates of pay together with the capacity for decreased or increased rates of pay subject to classification payment principles. For example, the rate for a junior aged 19 years of age is 80% of the cl 5.1.1 rate. The rate of a team member undertaking supervisory or duty manager duties is the supervisor's rate of pay at 110%. Clause 5.1.6 provides that the 'ordinary hourly rate of pay shall be calculated by dividing the appropriate weekly rate for a team member by 38'.

87    It can be seen that in this manner there is an assured minimum weekly rate of pay and an identifiable 'ordinary hourly rate of pay' for each full-time and part-time employee, calculated by reference to the cl 5.1.1 'weekly rate of pay', the classification principles in cl 5.1 and the agreed number of hours of work per four week cycle.

88    Nothing in those clauses dictates the days on which an employee is to work, or the span of hours within which those hours may be allocated. Employees may potentially be required to work any day of the week. So much is made express by cl 6.1.1: 'team members may be rostered to work on any day of the week, at any time'. That is perhaps not surprising in a retail environment.

89    Nothing in cl 6.1.2 or cl 6.1.3 suggests that an employee will work their agreed hours only during Span 1 or during Span 2. Their hours may be 'rostered' during Span 1 and may also be 'rostered' during Span 2, as those clauses expressly state. Further, 'their ordinary hours' may be allocated to a Sunday: this is implicit from cl 6.1.4 which provides that where it is not legal to trade on a Sunday, an employee may be rostered 'as part of their ordinary hours' to work on a Sunday.

90    Where used in this context, a reference to 'their ordinary hours' is to be understood sensibly as a reference to the number of hours agreed and rostered for the relevant employee, regardless of whether they are allocated or worked during Span 1, Span 2 or across both.

91    The words 'ordinary hours' are also used in cl 7.2.2 and in the context that leave 'accrues progressively during a year according to the team member's ordinary hours of work'.

92    There are two ways in which the ordinary hours worked by a part-time employee may be increased.

93    First, they may be increased under cl 4.2.4 such that they might by agreement work additional hours 'within the span of ordinary hours in clause 6.1'. The reference is to hours allocated to either Span 1 or Span 2. This follows because cl 4.2.4 provides that the additional hours may be worked on a Saturday after 8.00 pm or a Sunday, both being time periods that are not within Span 1 but are within Span 2. The reference to 'ordinary hours' in cl 4.2.4 cannot logically mean the employee's number of ordinary hours, as the provision addresses 'additional hours'. But also, it cannot mean only hours worked during Span 1 at the 'ordinary rate', because it provides for hours to be worked during Span 2. This indicates that 'ordinary hours' may have a different meaning depending on context.

94    However, what is important about cl 4.2.4 is that it provides for additional hours of work to be agreed with a part-time employee in circumstances where such additional hours are not overtime. Such hours fall within a separate category of additional hours for which a loading is paid, but as cl 4.2.4 expressly provides, those hours are not taken into account for the purpose of calculating leave entitlements.

95    Second, extra hours might be worked by overtime. To paraphrase, overtime in cl 6 refers to time that is not otherwise rostered but where Target requires an employee to work reasonable overtime. Clause 6.5 provides that an employee shall be entitled to payment of overtime, for example when they are required to work a non-rostered shift, apart from where they have accepted additional hours under cl 4.2.4: cl 6.5.2(f). Clause 6.5.2(k) on its face adds some confusion: it provides that a team member shall be entitled to the payment of overtime when they work outside the span of hours as provided in cl 6.1.2 (being Span 1). That provision must sensibly be read subject to the more specific terms of cl 6.1.1 and cl 6.1.3, which provide for the rostering of work outside of those hours, and with prescribed penalty rates. It is implicit, in my view, that cl 6.5.2(k) extends only to non-rostered work outside the span of hours as provided in cl 6.1.2.

96    Therefore, it is anticipated by the Agreement that a part-time employee may agree to work additional hours under cl 4.2.4 or may be required to work additional hours by way of overtime. Neither are taken into account for the purpose of annual leave entitlements. A full-time employee may also be required to work overtime under cl 6.5. Similarly, such hours are not taken into account for the purpose of annual leave entitlements. Therefore, 'ordinary time earnings' in cl 7.2.10 does not include such amounts.

97    It is then appropriate to turn to rates of pay. Clause 5.1.1 sets out the 'weekly rates of pay'. As noted, cl 5.1.6 provides the mechanism for calculating the 'ordinary hourly rate of pay' (dividing the 'appropriate weekly rate' for a team member by 38). Clause 4.2.3 provides that a part-time employee shall be paid that 'rate of pay' on a pro-rata basis. Then by returning to cl 6.1.2 and cl 6.1.3, it is apparent that an employee is paid that 'ordinary hourly rate' for all work rostered during Span 1. Work rostered during Span 2 is also renumerated on the basis of the 'ordinary hourly rate' but a penalty is paid 'in addition to the team member's ordinary hourly rate of pay'. It is apparent then that the use of 'ordinary' in this context qualifies the rate of pay.

98    The question in the present case is the meaning of 'ordinary time earnings' in cl 7.2.10. It is immediately apparent that the linguistic components of the expression are different again to 'ordinary hours of work' or 'ordinary hourly rate of pay'.

99    Under the Agreement an employee's rostered ordinary hours may routinely be worked across either or both of Span 1 and Span 2. Therefore, an employee may regularly be entitled to payment that includes the cl 6.1.2 ordinary hourly rate and the cl 6.1.3 hourly rate plus penalty. In my view, as a matter of objective common usage, the word 'earnings' may be construed more broadly than 'ordinary hourly rate of pay' such that it includes all pay for rostered hours, including cl 6.1.3 penalties. In determining whether such a construction is justified, it must be recognised that the meaning of expressions such as 'ordinary hours of work' has been considered by the courts in a number of different contexts, and those authorities provide some guidance in resolving these questions.

100    It can be accepted, as the Association submitted, that industrial law has long recognised a distinction between ordinary hours of work and overtime. As Allsop CJ observed in Bluescope Steel (AIS) Pty Ltd v Australian Workers Union [2019] FCAFC 84; (2019) 270 FCR 359:

[38]    The context is the payment of salaries and wages in the workplace. In that context, the word 'ordinary' and the phrase 'ordinary hours' have assumed different meanings depending on context and circumstance. There are circumstances and contexts where the word and phrase can be seen to refer to regular, normal, customary or usual hours; and there are circumstances or contexts where the word and phrase can be seen to refer to the hours of work referred to in applicable industrial instruments as standard hours to be paid at ordinary rates, as opposed to additional hours (even if required, usual, regular, normal or customary) and paid at a special or higher rate. As such, the word and phrase can be seen to reflect the long-recognised distinction between ordinary hours of work and overtime: cf Thompson v Roche Bros Pty Ltd [2004] WASCA 110 at [31].

[39]    The notion of standard or ordinary working hours has long had a place in the industrial relations landscape of Australia. The standard working week was once 48 hours (Australian Builders' Labourers' Federation v Archer (1913) 7 CAR 210); reduced to 44 hours during the 1920s (Amalgamated Engineering Union v J Alderdice & Company Pty Ltd (1927) 24 CAR 755 (the 44 Hour Week Case)); to 40 hours after the War (Standard Hours Inquiry (1947) 59 CAR 581); and to 38 hours in 1983 (National Wage Case (1983) 4 IR 429). The standard of 38 hours was not departed from by the Australian Industrial Relations Commission in 2002 (Re Working Hours Case July 2002 (2002) 114 IR 390). The standard of 38 hours has not been departed from in the award modernisation process. The notion of 'ordinary hours of work' remains a working integer of the modern award system: s 147 of the Fair Work Act.

101    Whilst bearing in mind that the present issue is not one of statutory construction, in order to understand the meaning of 'ordinary time earnings', it is instructive to recall that it is defined in cl 5.4 of the Agreement and that the introduction of cl 5.4 and its corresponding clauses in the industrial agreements to which the parties referred, being initially in the Target Australia Pty Ltd Retail Agreement 1997 and up to and including the Predecessor Agreements, followed chronologically after the enactment of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act).

102    The history and interpretation of the phrase 'ordinary time earnings' as used in the SGA Act was addressed in detail by the Full Court in Bluescope. The relevant provision is s 6 of the SGA Act, which defined 'ordinary time earnings':

(1)    In this Act, unless the contrary intention appears:

'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.

103    Relevantly, it can be seen that the definition includes earnings in respect of 'ordinary hours of work' and earnings consisting of over-award payments and shift-loading.

104    Having considered the text and context of the provision, including the notion of 'ordinary hours' (at [33]-[42]), and having noted the purpose of the legislation (at [43]), Allsop CJ considered the enactment history. In that context his Honour said that:

[44]    … the enactment history assists in understanding 'ordinary time earnings' as earnings referable to standard hours at ordinary rates of pay. It is not just the number of hours, but also their character as paid at an ordinary rate.

105    His Honour continued:

[54]    The definition of 'ordinary time earnings', including the expression 'earnings in respect of ordinary hours of work' was introduced in 1992, not long after the High Court decision in Catlow v Accident Compensation Commission (1989) 167 CLR 543 in which the majority of the Court considered that the phrase 'ordinary time rate of pay' meant 'ordinary time rate of pay for the worker's standard or ordinary hours per week as fixed by award, agreement or contract': 167 CLR at 561. The construction of those cognate words by the High Court in a cognate industrial field is of some assistance in concluding that the legislature was intending to adopt language with a similar effect: see Ex parte Campbell; Re Cathcart (1870) LR 5 Ch App 703 at 706: …

…

[56]    The text, context, purpose and enactment history do not direct one to a meaning constituted solely by hours (factually) usually worked. They tend to a meaning that provides for an objective standard that aids in simplicity and lack of complexity. The use, from 1992, of the relevant phraseology in a context of industrial awards and instruments; the well-known conception contained within industrial awards and instruments of standards hours at ordinary rates of pay, and of overtime; the need for the phraseology to be practical, general and flexible to pick up all circumstances of employment; and the need for the task set for the employer to administer and the ATO to audit, quarter by quarter, individual by individual, to be as simple or non-complex as possible all direct one to a meaning that reflects those considerations. The meaning that best reflects these considerations and the 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 industrial instrument, or contract of employment, but if such does not exist (and there is no distinction between ordinary or standard hours and other hours by reference to rates of pay) earnings in respect of the hours that the employee has agreed to work or, if different, the hours usually or ordinarily worked.

[57]    This meaning adopts as central (to the extent that it is present) 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. If in a particular context such distinction does not exist in the remuneration for the labour provided, the required comprehensiveness and flexibility of the meaning will fix upon the hours agreed to be worked, or the hours normally worked if different. This is not to give a variable meaning to the expression, it is to recognise that the context and particular circumstances will provide by way of factual application, the answer to the reach of the phrase which has a simple meaning by reference to real life.

…

[76]    It can be accepted that if the relevant distinction is not made, in the award or industrial instrument or contract of employment, between, on the one hand, standard or ordinary hours and ordinary rates of pay, and on the other, additional hours at higher rates of pay, then the ordinary hours will be the hours agreed to be worked, or the usual or normal hours worked, if they be different.

106    It is appropriate to refer briefly to some of the authorities addressed in detail by Allsop CJ in reaching this conclusion, a conclusion with which Rangiah J agreed (at [358]) and with which Collier J (writing separately) also concurred (at [297]-[314]).

107    Catlow v Accident Compensation Commission (1989) 167 CLR 543, delivered three years before the SGA Act regime was introduced, was concerned with whether, when a standard number of ordinary working hours has been fixed for a worker's employment, their 'normal number of hours per week' for the purpose of the Accident Compensation Act 1985 (Vic) are those standard hours or the number of hours usually worked.

108    Catlow was decided after the previous High Court decision in Kezich v Leighton Contractors Pty Ltd (1974) 131 CLR 362, where Gibbs J at 365 held that the 'ordinary hours he would have worked' meant, in the statutory context of workers compensation, the hours the employee usually worked, such that 'ordinary' meant 'regular, normal, customary, usual'.

109    The Court in Catlow considered the context of the legislation in Kezich and Catlow to be different, acknowledging that there may be two different ways of understanding words such as 'usual' or 'ordinary'. In Catlow, it was held that unless the context otherwise requires, 'ordinary time rate of pay' means the rate of pay for the standard or ordinary hours of work as fixed by contract or agreement, in contrast to the overtime or penalty rates of pay for work other than those standard or ordinary hours.

110    Further examples confirm the approach and principles discussed in Catlow: Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1 at 5-6 (following Catlow and indicating that if there is no ordinary time rate of pay or a formula for pay with no temporal element, it might be that compensation is payable by reference to average weekly earnings); and Quest Personnel Temping Pty Ltd v Commissioner of Taxation [2002] FCA 85; (2002) 116 FCR 338 at [19]-[20] (Gray J) (an example where only minimum hours were set and there was no pay differential for additional hours, such that reference to the actual hours worked was appropriate).

111    The Agreement in this case provides a mechanism for assessing ordinary hours and also provides a mechanism for assessing an ordinary rate. Therefore, assuming for argument's sake that a Bluescope analysis is undertaken, the text of the Agreement supports an interpretation that 'ordinary hours of work' means the employee's agreed ordinary hours (that is, the number of hours determined under cl 4.1.1 and 4.2.1) at the ordinary rate (calculated by reference relevantly to cl 4.1.3, cl 4.2.3 and cl 5.1).

112    Further, it is apparent from Bluescope that 'ordinary time earnings' for the purpose of s 6 is not limited to 'earnings in respect of ordinary hours of work', but is broader. Section 6(1)(a)(ii) operates to include within the term 'ordinary time earnings' those earnings consisting of over award payments, shift loading and commissions (but not overtime). Indeed, if 'earnings in respect of ordinary hours of work' included the particular shift allowances or penalties for hours actually worked, there would be no need to include s 6(1)(a)(ii) at all (as explained by Collier J at [302]).

113    This consideration of Bluescope, indicates that the expression 'ordinary time earnings' as defined in the SGA Act is consistent with the inclusive definition of 'ordinary time earnings' in cl 5.4.2 of the Agreement.

114    That meaning of 'ordinary time earnings' to recap, is:

'Ordinary time earnings' shall include the classification rate; any over-award payment; casual loadings; penalty rates; shift loadings and work related allowances that form part of the weekly rate of pay (for example, supervisory allowances).

'Ordinary time earnings' shall not include overtime; payment made to reimburse expenses (for example meal allowance or laundry allowance) or disability allowances.

115    It can be seen the definition of 'ordinary time earnings' in cl 5.4.2 includes the matters covered by s 6(1)(a) of the SGA Act as explained in Bluescope: that is, the ordinary weekly rate of pay or 'classification' rate plus penalty rates and shift loadings. It also includes amounts that by reason of cl 5.1 of the Agreement become part of the weekly rate of pay in accordance with the classification payment principles (for example, a 'supervisor's rate of pay'). It also expressly does not include payments for overtime and allowances, consistent with the scope of s 6(1)(a) as explained in Bluescope.

116    None of this necessarily determines how the expression 'ordinary time earnings' is to be understood in the Agreement other than where it is used in cl 5.4.2, such as in cl 7.2.10. However, I consider it is significant that:

(a)    the issue as to 'standard' or 'actual' hours was clearly identified by authorities such as Catlow prior to the enactment of the SGA Act in 1992 and well prior to the Agreement;

(b)    this issue was identified prior to the introduction of those predecessor Target industrial agreements referred to by the parties in the joint statement of agreed facts;

(c)    as to those agreements, the use of the phrase 'ordinary time earnings' with respect to annual leave entitlements first appears in the Target Australia Pty Ltd Retail Agreement 1997, so after the introduction of the SGA Act;

(d)    that particular phrase was utilised in relation to annual leave entitlements, as against any number of other phrases used elsewhere in the Agreement that might have been adopted to reflect a narrower scope, such as 'ordinary rates of pay'; and

(e)    one of the earlier awards (Target Australia Pty Ltd Award 2002) does not refer to payment of 'ordinary time earnings' in the context of annual leave, but instead refers to payment of 'the amount of wages they would have received' - and 'wages' had historically been interpreted broadly, as discussed below.

117    The fact that the expression 'ordinary time earnings' is defined within the Agreement is important. The Agreement does not have a definitions section or dictionary, and it is not surprising that some terms are defined within the body of its parts. Nothing in cl 5.4 expressly limits the operation of the definition to cl 5.4.2. It sits within the part of the Agreement that deals with 'Wages & Related Matters' and, apart from one occasion, all other uses of that phrase appear after the definition. Nothing in the organisation of the terms of the Agreement therefore appears to confine its application to cl 5.4.2.

118    The provenance of the expression 'ordinary time earnings' in provisions relating to superannuation may be accepted: so much is apparent from its use in s 6 of the SGA Act, the Coles Myer Occupational Superannuation Award 1992 (extracts in the Schedule) and the fact that predecessor agreements expressly referred to the SGA Act: see the extracts from the Target Australia Pty Ltd Award 1994, the Target Australia Pty Ltd Retail Agreement 1997 and the Target Australia Pty Ltd Award 2002, as set out in the Schedule. However, the drafters have also used that expression elsewhere in the Agreement and in other clauses related to leave, and not only with respect to superannuation.

119    It may be accepted that although consistency in the use of terminology throughout a contract or agreement aids in interpretation, words may have a different meaning depending upon where they appear in a document: Shop Distributive and Allied Employees' Association v Woolworths Limited [2006] FCA 616; (2006) 151 FCR 513 at [26] (Gray ACJ). Any presumption as to consistent meaning might be displaced by context.

120    I also note for completeness that there is one example among the Predecessor Agreements where the drafters have purported to confine the operation of the definition of 'ordinary time earnings' to the clause dealing with superannuation: Target Country North Queensland Retail Agreement 2006 (included in the Schedule). That drafting is not seen in any of the other awards or agreements, and no explanation was offered as to why its terms differed.

121    However, recalling that the Agreement is to be understood by reference to a 'practical bent of mind', an examination of the use of the expression 'ordinary time earnings' elsewhere in the Agreement does not direct a conclusion that it should have any different meaning to that in cl 5.4.2, nor any conclusion that it must be understood narrowly.

122    In each of cl 7.3.6 (personal or carer's leave), cl 7.3.11 (paid carer's leave) and cl 7.6.8 (compassionate leave), the Agreement provides that an employee is to be paid 'at the team members' ordinary time earnings for the hours normally rostered to work, excluding any penalties'. It is to be recalled that an employee might normally be rostered during Span 1 or Span 2 (with its penalties) or both. The fact that penalties are expressly excluded for such hours normally rostered is consistent with an understanding that such penalties are otherwise included in 'ordinary time earnings'.

123    In cl 7.13.8 (when a store does not open on a public holiday) an employee otherwise rostered to work on the public holiday shall be entitled to payment for the day 'based upon their ordinary time earnings (including penalties as appropriate)'. Again, this use of the expression is consistent with the cl 5.4.2 definition. The words might perhaps be unnecessary, but they are not inconsistent. If the cl 6.1.3 penalties were an additional entitlement, one would have expected the drafter to have said 'ordinary time earnings and penalties as appropriate'.

124    The expression is used elsewhere without relevant additional words: cl 4.6.5 (withholding of termination payments); cl 7.2.17 (cashing out annual leave); cl 7.9.2 (defence force service leave); cl 7.11.1 (natural disaster leave); cl 17.13.18(e) (Easter Sunday pay where rostered but store closed); and cl 8.1.2 (transport home). Its use in the context of those entitlements does not provide any particular assistance either way as to the parties' divergent contentions. But nor do they tell against the aggregate interpretation propounded by the Association. No relevant inconsistency arises.

125    It is also appropriate to consider the use of the term 'wages' in the Agreement. This follows in particular from the fact that cl 7.2.11 of the leave provision, which immediately follows the central cl 7.2.10, refers not to payment of 'ordinary time earnings' but to payment of 'wages'. The question arises as to how those clauses are to be read consistently and if that exercise informs the construction question. 'Wages' is not defined in the Agreement. Target accepts that it has a potentially broad meaning, but contends that it must be limited in the case of cl 7.2.11 to those amounts payable under cl 7.2.10. That may be so, but it does not answer the question. If 'wages' may be construed broadly, it may be read consistently with the Association's contended meaning of 'ordinary time earnings'. However, if wages is limited to the weekly wage calculated only on the basis of cl 4.1.3 and cl 5.1 and without regard to penalties for rostered hours, then a desirable consistency between cl 7.2.10 and cl 7.2.11 might support Target's argument as to a narrow meaning of 'ordinary time earnings'.

126    In the end I am not satisfied that 'wages' must be construed narrowly. Clause 5.3 refers to 'Payment of Wages'. It provides the mechanism for payment of entitlements. It is expressed generally and must encompass all remuneration to which an employee is entitled to be paid for the relevant pay cycle. Otherwise, nothing in the Agreement sets out how or when an employee is paid their entitlements, whatever they may be. If it were not open to interpret 'wages' to include penalties, there would be no process provided for payment to employees of any penalty or other entitlements. To my mind, cl 7.2.11 provides a mechanism by which the employee can alter that arrangement to facilitate payment in advance of leave so that they may access those funds during their leave. 'Wages' may be understood where used in cl 7.2.11 to encompass 'ordinary time earnings', including where that expression is understood to include penalties payable under cl 6.1.3.

127    I note that the Association also referred to Construction Forestry Mining & Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd [2003] FCA 787; (2003) 132 FCR 1 (Wilcox J) (reference to 'earnings') and Glover v Tip Top Bakeries (1984) 8 IR 308, (reference to 'full pay') in support of its submission that 'earnings' is to be given a broad meaning, but I have not found those cases useful. Their context is particular.

128    There are a number of further points relied upon by Target that should be noted. First, it was said that had the drafters intended the definition in cl 5.4.2 to apply more broadly to the agreement they could have said so. That argument is met by the fact that it can similarly be said that had the drafters intended the definition apply only to cl 5.4, they could have said so. And indeed in other parts of the Agreement, definitions are said to apply only to certain clauses: for example, cl 5.6.1 (supported wage) introduces certain definitions with the words 'in the context of this clause …'. Similarly, Target submitted that there would have been no need to include the cl 5.4.2 definition if the words were understood to have that meaning in any event. But similarly it could be said that if those words were intended to have a different meaning to that referred to in cl 5.4.2, the drafters could have so provided.

129    Second, Target relies on the general application of cl 5.4 to all employees, including casuals, to seek to limit its value in construing cl 7.2.10. Clause 7 does not apply to casuals. It is not apparent how this submission assists. There is no question that cl 5.4 applies to full-time and part-time employees. It is therefore relevant to ask whether it informs the scope of cl 7.2.10. Both clauses are relevant to part-time and full-time employees. There is value in having regard to both, for example in order to consider whether they may operate consistently. The definition in cl 5.4.2 does not apply completely in the context of cl 7.2.10, because its reference to 'casual loadings' in the context of cl 7.2.10 is otiose. But that does not mean that the expression does not or cannot otherwise operate consistently.

130    Third, Target referred to the provisions relating to annual leave in the National Employment Standards in the FW Act, submitting that the effect of the Agreement is to provide for that standard and supplement it with a 17.5% loading. It says that in the absence of a clear intention to depart from that position, the Agreement should be read conformably with 'base rate of pay' in s 90(1), which relevantly excludes monetary allowances, penalty rates and any other separately identifiable amounts. But if the parties intended to incorporate the terminology and content of 'base rate of pay' from the National Employment Standards, then they could have done so. Having regard to the different language used, and the different context of an enterprise agreement, it does not follow that the drafters intended to adopt the 'base rate of pay', and such an inference cannot readily be drawn.

131    Fourth, Target appeared to suggest by some of its submissions that it would be administratively difficult to assess annual leave on anything other than a base rate calculation, and that such difficulty tells against the Association's position. There was no evidence as to any such perceived difficulty. The rostering principles are designed to ensure consistency where possible - rosters shall 'be set on a regular weekly basis' and 'not be subject to frequent variations' (cl 6.2.14 - cl 6.2.15). They may not be changed to avoid penalties or loadings (cl 6.2.17). In any event, steps put in place to promote flexibility, as referred to in the Objectives in cl 1.5, should not be diminished in value by a focus on additional administrative steps they might entail. There is no doubt that administration of an industrial agreement should be as non-complex as possible, for employees, employers and the Australian Tax Office as appropriate: Bluescope at [56]. Focus on administrative difficulties has been described elsewhere as a 'furphy': Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100 at [42]. In this case, it seems to me that the presence of cl 5.4.2 and Target's responsibilities in that regard lead to an obligation on its part to record the break down in all remuneration entitlements of an employee in any event. I do not consider that an alleged layer of administrative difficulties directs a narrow construction of the relevant expression. I infer that there are likely to be accounting tools and programs in place to facilitate Target in meeting its superannuation obligations, and that Target is likely to be in a position to utilise tools of that nature to ameliorate any difficulties, including by reference to averaging (for example) across different rosters worked by an employee where applicable, if it is necessary to anticipate leave entitlements.

132    Finally as to the text, I note that Target did not point to any authorities that supported a finding that 'ordinary time earnings' has a well-understood contrasting meaning, a meaning which on its case arises independently and without regard to how the expression is understood in the context of superannuation obligations. In an Agreement with a number of references to ordinary time, ordinary time rates and ordinary hours of work, it is noteworthy that the drafters have used the expression 'ordinary time earnings' when it comes to leave entitlements. I am not persuaded that the words have a different meaning where used elsewhere in the Agreement to that encompassed by cl 5.4.2. In any event, even without regard to the definition in cl 5.4.2, in my view the expression is broad enough, having regard to [121]-[124] above, to sensibly include the relevant cl 5.1 rates and cl 6.1.3 penalty payments.

133    Taking into account all of the above matters, I consider the text of the Agreement supports the following construction: that for an employee going on annual leave, 'ordinary time earnings' in cl 7.2.10 includes pay at the classification rates under cl 5.1 for their ordinary hours including penalties payable for any such hours under cl 6.1.3. It does not include allowances under cl 5.2, or take into account additional hours worked by way of overtime or in accordance with cl 4.2.4.

134    This construction permits regard to all of cl 5.1 ('Rates of Pay and Classifications') for the purpose of ascertaining the classification rate of pay. It is also consistent with Target's practice, referred to in the joint statement of agreed facts, of paying Offsite Reserve or Multi Offsite Reserve employee certain allowances for a period of annual leave, as they are notably referred to within cl 5.1 (in cl 5.1.4) of the Agreement. I was not persuaded by the Association's submission that 'ordinary time earnings' is to be read so as to include some of the allowances provided for in cl 5.2 ('Allowances'). Those allowances are notably provided separately to cl 5.1 and can generally be seen to have the purpose of compensating for particular expenses.

135    It is necessary to turn to other matters of context to understand whether this conclusion can be supported.

136    In particular, it is appropriate to consider the historical industrial landscape; the iterations of the provisions in the Target awards and identified agreements and the conduct of the parties.

The historical industrial landscape

137    The Association contends that the annual leave entitlement provision that has been incorporated in the various agreements, including cl 7.2.10 of the Agreement, is a short-form method of including two different entitlements, and that to understand the history of those entitlements it is necessary to go back to the Conciliation and Arbitration Commission's Annual Leave Cases 1971-1972: Annual Leave Cases 1971-1972 (1972) 144 CAR 530.

138    In response to a number of notifications of dispute, the Commission in the Annual Leave Cases 1971-1972 considered by way of a test case the issue of whether the amount paid to an employee when they are on annual leave and therefore not working should be their minimum award wage or something more (page 534).

139    The impetus for an increase in the amount of payment when on annual leave revolved around the issue of inequity. The Commission noted (page 523):

It was pointed out that many, probably the majority, of employees during their working year received more than their ordinary award rate each week while they are at work. They are paid over awards, shift allowances, special penalties, overtime and other amounts which give them a regular income over the award minimum, though it may well be an income which varies from time to time, even from week to week.

140    It was further submitted that the income received while at work created an expectation that caused employees to commit to necessary expenditures (including hire purchase commitments) 'up to the amount of his regular earnings'. It was submitted that when employees went on leave, they were often unable to continue to meet regular commitments: 'Even worse … if annual leave is to be a period of relaxation and recuperation, a worker, particularly a family man, may well wish to spend more on entertainment of one kind or another. If he desires to go away on his leave he finds even greater difficulty' (page 533).

141    The Commission said at 534 (without making any order) that its prima facie expressed view was that:

[A]n employee taking annual leave before going on leave shall be paid the amount of wages (or salary) the employee would have received in respect of the ordinary time which he would have worked had he not been on leave during the relevant period.

142    The Commission included (page 544) an announcement of the manner in which its view could be given effect, noting that it was dealing only with general propositions and that the question of annual leave was to be considered on an award by award basis. It said that the items it considered should be included in payment for annual leave were over award payments for ordinary hours of work; shift work premiums (penalty rates) according to roster or projected rosters including weekend and public holiday shifts; and allowances such as first aid and regional location allowances. However, it explained that it was not its intention to require employers who were already paying an annual leave bonus to pay both the bonus and the amounts that it suggested. It also said that items that in the general run of cases should be excluded from payment for annual leave include overtime ('in essence, an irregular payment'), or allowances that were reimbursable in nature, such as meal allowances.

143    There are two things to note from the Commission's recommendation. First, the phrase 'the amount of wages (or salary) the employee would have received in respect of … ordinary time' is used. That is, there is no specific mention of earnings, and there is no mention of penalties or allowances. But, second, the Commission made it clear that it expected that items that should fall within that 'amount of wages … in respect of ordinary time' entitlement would include over award payments and penalties. That is, the Commission favoured the broad approach to items considered to be remuneration or wages for the purpose of annual leave entitlements as now promoted by the Association. It was also clear that such an entitlement was not intended to be in lieu of overtime entitlements that might otherwise have been received during the leave period.

144    At the time of the Annual Leave Cases 1971-1972, a leave loading for annual leave was not standard. According to the Association, after that announcement, variations to awards started to appear that incorporated a 17.5% loading for the purpose of compensating employees for loss of overtime earnings caused by taking periods of annual leave.

145    Care must be taken in relying upon other awards as evidence of a purported common approach. In Kelly R, Plowman D and Watson R, 'Flexibility in Annual Leave Loadings' (Centre for Labour Market Research, Discussion Paper, 2002), cited by Target in its submissions, the authors examined the origins and rationale for the introduction of annual leave loadings and analysed entitlements in awards and collective and individual agreements.

146    Whilst acknowledging that leave loading was fairly standard in awards, and having noted that there are some differences in the percentage of the loading, they note the important issue of the base to which leave loading is applied, observing (at pages 12-13):

There are also differences in the base to which the loading applies. In about 55 per cent of cases the loading applies to 'ordinary pay'. This is usually defined to mean the weekly rate of pay exclusive of penalties and allowances. In other cases, however, the term 'ordinary pay' is defined more generously as instanced by the Security Employees (Victorian) Award. This award defines 'ordinary pay' for the purposes of calculating annual leave loadings to mean:

remuneration for the employees' normal weekly number of hours of work calculated at the ordinary time rate of pay and in addition will include: over-award payments for ordinary hours of work; shift premium according to the roster or projected roster; Saturday and Sunday premiums, according to the roster or projected rosters; leading hand allowances; first aid allowance (Clause 27.1).

The issue of shift allowances is a matter of consideration in many awards. Typically employees' working shifts have the shift allowances included in the amount to which annual leave loadings apply. In addition, many awards providing for continuous shift also provide an additional weeks' leave for such workers.

The above would suggest that the vast majority of employees whose conditions are governed by federal awards are in receipt of an annual leave loading. Though a loading of 17.5 per cent is common, about half of these employees receive a loading in excess of the 17.5 per cent. Further, though the loading applies to ordinary pay, in many cases this is generously defined to include a range of allowances and penalties. As noted, some awards provide for more than four weeks' annual leave. Taking all these considerations into account, it would be reasonable to assume that annual leave loadings constitute a minimum of 17.5 per cent of average earnings for a period of four weeks.

147    There is more recent discussion of the introduction of leave loading in Creighton B and Stewart A, Labour Law (The Federation Press, 5th ed, 2010) at 397:

The original purpose of the leave loading was to compensate employees for the notional loss of overtime earnings during periods of leave. It subsequently spread to most sectors of the workforce, including those areas where there was normally no payment in respect of overtime. It is a benefit that has been traded away in many areas and, ironically, is now most common in non-overtime areas such as tertiary education.

148    The Association relied on this extract as supporting its contention that leave loading was not intended to address payment for anything other than lost overtime, and did not address other lost benefits that would ordinarily have been received and which were to be considered as part of earnings. Target relied on the extract as supporting a 'modern approach' that leave loading was not directed at the lost opportunity to be paid overtime, but at compensating the employee for any other benefits they would have otherwise received.

149    This discussion indicates that there have been different approaches to this issue in different awards, and it ought not to be assumed, without more, that there is a common practice or common understanding as to the base upon which leave loading might be applied, or as to what the leave loading is directed.

150    I do not consider the historical context derogates from the Association's argument. In short, it is apparent that 'wages' could be construed broadly having regard to the Annual Leave Cases 1971-1972 to include entitlements such as shift loadings or penalties. The fact that leave loading was later introduced did not necessarily disentitle employees to penalties or other benefits that might otherwise have been received (unrelated to overtime). It is apparent that the base upon which leave loading was calculated might vary, depending upon the award or industrial agreement.

151    I note that the Association called in aid the reference in the Annual Leave Cases 1971-1972 to first aid and regional location allowances as potentially being within the scope of 'wages' - see [142] above. However, having regard to the manner in which cl 5.1 and cl 5.2 distinguish rates and such allowances in the Agreement, I was not persuaded that a reference to the Annual Leave Cases 1971-1972 justified a construction that would have those allowances treated differently to other allowances collected in cl 5.2.

The introduction and iterations of the provisions in the Target awards and agreements

152    The starting point insofar as employees of Target are concerned is the Target Australia Pty Ltd Award 1994. Clause 12.1.7 stated:

A Retail Employee before going on leave will be paid the amount of wages they would have received in respect of the period of Annual Leave plus a loading of 17 1/2% for up to 152 hours leave per anniversary year or pro-rata for part-time employees.

153    The Association submitted that the Target Australia Pty Ltd Award 1994 reflected both the Annual Leave Cases 1971-1972 recommendation of the Commission (by use of 'wages') and the additional leave loading that had been introduced in some awards, resulting in an entitlement to the types of shift work penalties envisaged by the Commission plus an overall 17.5% loading. That clause remained in the 2002 Award, but renumbered as cl 18.7.

154    In the 1997 Agreement, the relevant clauses that were included were:

7.2.8    An employee going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5%, prior to the commencement of such leave.

7.2.9    Prior to the commencement of Annual Leave, an employee shall be paid all wages in respect of the period of Annual Leave. Provided that at the written request of the employee, an employee may be paid for such leave by receiving the payment progressively using the normal fortnightly pay cycle.

7.2.10    Payment shall not be made in lieu of Annual Leave.

155    As already noted, based on the materials that the parties provided to the Court, instead of 'wages', the phrase 'ordinary time earnings' first appears in the corresponding clause to cl 7.2.10 in the 1997 Agreement.

Prior conduct and common intention

156    Whilst it asserts the meaning of cl 7.2.10 of the Agreement is clear and unambiguous, Target contends that the Court may in any event take into account maters of context including, relevantly, the payment practice that had been in place under the 2006 Agreement, being the Agreement in place at the time the 2012 Agreement was negotiated and voted upon, and the bargaining process undertaken at that latter time. Expressed generally, it may be accepted that the context in which the Agreement was entered into is relevant, but care should be exercised in determining what evidence may be adduced and the proper use it may have in the construction task: Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [14]-[18]; Sheehan v Thiess at [22]; and Health Services Union v Ballarat Health Services [2011] FCA 1256 (Gray J) at [77]-[79].

157    It is an objective fact that while the Predecessor Agreements were in operation, Target paid annual leave entitlements by way of the base rate of pay referred to in cl 5.1.1 (adjusted for part-time employees) and a loading of 17.5% on that rate. The Association objected to reference to evidence about the prior payment practices on the basis that the meaning of 'ordinary time earnings' in the Agreement is unambiguous; because it was evidence of past conduct (citing Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd at [48]-[49]); and because it provided no evidence of any common understanding (citing relevantly Ballarat Health Services v Health Services Union [2012] FCAFC 79, which affirmed the decision in Health Services Union v Ballarat Health Services).

158    It is also an objective fact that the 2012 Agreement was finalised after a bargaining process. The agreed facts as to that process are set out above at [67]-[72]. The Association objects to the admission of such facts (and the underlying logs, notes and minutes) as evidence of the understanding or intention of the parties on the basis that they comprise without prejudice communications and on the basis that they reflect, at most, the subjective intention of bargaining representatives and are of no assistance in the context of construing an enterprise agreement that covers current and future employees (citing relevantly Australian and International Pilots Association v Qantas Airways Limited [2017] FCA 346 at [22], [24]-[30]; and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123; (2015) 235 FCR 305 (ALS Industrial) at [120]-[123], [134]).

159    I consider the evidence upon which Target seeks to rely is admissible. However, the weight to be accorded it and its probative value is a different matter.

160    Whilst I consider that the text of cl 7.2.10 has a particular meaning, that does not mean that the Agreement is unarguably clear on its face or cannot be understood differently. In any event, the principles set out above permit access to such contextual matters when construing industrial agreements: Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 517-518; Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [14]-[18]; and King at [124], [127].

161    Nor, having considered the careful submissions on the part of the Association, do I consider that the communications by way of the logs of claims, minutes of meetings and notes about the logs of claims can properly be considered 'without prejudice' communications in the circumstances of this case.

162    Based on the documents, both the Association representatives and Target asserted (at least initially) that their negotiations were 'without prejudice'. The Association's log of claims provided for the purpose of the meeting of 29 February 2021 is headed 'without prejudice'. Target's minutes of that meeting state that the negotiations would take place 'without prejudice' and that 'nothing is agreed until all items are agreed'. However, it is trite to say that the mere marking of a document as 'without prejudice' does not make it inadmissible. It is necessary to address the question more closely.

163    Section 131 of the Evidence Act relevantly provides that:

(1)    Evidence is not to be adduced of:

(a)    a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or

(b)    a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

(2)    Subsection (1) does not apply if:

…

(f)    the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue;

…

(5)    In this section:

(a)    a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding;

164    Target contends that the negotiations did not involve a dispute within the meaning of s 131. The parties were negotiating respective logs of claims. There was no compromise of litigation, pending or prospective. The communications between representatives of the Association and Target and said to be recorded in the relevant minutes and notes were not made in the context of any current, contemplated or anticipated dispute, but in the context of negotiations of the respective logs of claims.

165    The question arose but in a different context in Volunteer Fire Brigades Vic Inc v Country Fire Authority (No 2) [2016] VSC 613; (2016) 50 VR 630. In issue in the main proceeding was a proposed enterprise agreement between the defendant and the United Firefighters Union of Australia. The defendant asserted without prejudice privilege over documents it had discovered in the course of a dispute as to the terms and conditions of the proposed enterprise agreement that had been referred to the Fair Work Commission under s 240 of the FW Act. In detailed reasons, Ierodiaconou AsJ made evidence rulings upholding certain claims asserting that communications were without prejudice, finding that: the parties were in dispute; relief was available in a proceeding in an Australian court (as defined), because the Fair Work Commission has the power to hear, receive and examine evidence; and applications made to the Fair Work Commission under s 240 can be considered 'proceedings': at [23]-[31].

166    Target, distinguishing Volunteer Fire Brigades Vic Inc, submitted that there was no compulsion as between the Association and Target to agree anything and whilst the FW Act allows the parties to negotiations to seek the assistance of the Fair Work Commission to facilitate bargaining (Part 2.4, Division 8), there was no s 240 FW Act dispute in this case. I accept Target's submission that Volunteer Fire Brigades Vic Inc is distinguishable. Whilst in any particular case the demarcation between negotiations and a dispute may factually be imprecise, it should not be assumed that simply because the Association and Target participated in a bargaining process, it was perceived or likely they would end up in a dispute that would require resolution through any proceedings.

167    In coming to this view I have taken into account the other authorities to which the Association referred, including Korean Air Lines v Australian Competition and Consumer Commission (No 3) [2008] FCA 701 (the privilege operates where litigation has not yet commenced but would result in litigation if not resolved); and Field v Commissioner for Railways (NSW) (1957) 99 CLR 285 at 291-293 (the form of privilege protects admissions in the course of negotiations to settle litigation). The facts in those cases are distinguishable and the statements of principles are not inconsistent with the view I have preferred, having regard to the context of the negotiations.

168    However, even if I am wrong as to the nature of those communications, the documents upon which Target seeks to rely do not in my view assist it.

169    The matters recorded in the logs of claims, notes and minutes do not rise to an admission by the Association as to the meaning of cl 7.2.10 and do not evidence any objective common understanding of its meaning.

170    At this point it is appropriate to consider a number of authorities that guide the manner in which prior conduct might be relevant to the question of a common understanding or intention.

171    In Australian Liquor, Hospitality and Miscellaneous Workers' Union v Prestige Property Services Pty Ltd [2006] FCA 11; (2006) 149 FCR 209 (Gray J), the Court considered whether the Victorian Arts Centre fell within the category of 'premises of State Government Departments and Instrumentalities' for the purposes of provisions in industrial awards relating to the payment of cleaning persons. The respondent was alleged to have failed to pay certain employees amounts that it was required to pay under the relevant awards. The question turned on whether the Victorian Arts Centre Trust (a statutory corporation established by the Victorian Arts Centre Act 1979 (Vic)) was properly described as a State Government department or instrumentality for the purposes of the award provisions. His Honour said:

[44]    … For present purposes, I am prepared to accept that the construction of an award can be affected by a common understanding of the parties to it about a particular state of affairs. If such a common understanding existed when the award was made, it should not be departed from when the Court comes to construe the award at a subsequent time. Care must be taken, however, to distinguish a common understanding from common inadvertence. If the only reason why the government instrumentality rates were not paid at the Centre was that neither the union nor the employer adverted to the possibility that there was an obligation to pay them, no common understanding results. In order to have an understanding, it is necessary that there be a meeting of minds, a consensus. There can be no meeting of mind, no consensus, if no-one has thought about the issue.

172    In Shop Distributive and Allied Employees' Association v Woolworths Limited [2006] FCA 616; (2006) 151 FCR 513, the Court considered a submission as to the relevance of past conduct in determining the correct calculation of the rate of pay for a part-time employee entitled to long service leave. The relevant agreement incorporated provisions of the Long Service Leave Act 1992 (Vic) entitling employees to long service leave on 'ordinary pay'. The legislation included a definition of 'ordinary pay', but the agreement included a different definition of 'ordinary pay'. The parties disputed which definition was to apply and the meaning of the legislative definition.

173    It had been Woolworths' practice to include penalties or shift premiums as part of an employee's long service leave, a practice from which it later resiled. The Union contended that past conduct could be relied on as an aid in the construction of the relevant agreement. Gray ACJ said:

[31]    … There is authority that, if a provision has appeared in a series of agreements between the same parties, and if they can be shown to have conducted themselves according to a common understanding of the meaning of that provision, then it can be taken that they have agreed that the term should continue to have the commonly understood meaning in the current agreement. See Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Assn (1958) 1 FLR 248 at 251 per Spicer CJ, 254 per Dunphy J and 257 per Morgan J, and Printing and Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 452-453. It is necessary to take great care in the application of this limited principle, to avoid infringing the general principle that the conduct of parties to an agreement cannot be taken into account in construing the agreement. For the limited principle to operate, there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons, such as common inadvertence as to its true meaning. See Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd [2006] FCA 11; (2006) 149 FCR 209 at [44].

[32]    In the present case, there is no evidence to indicate that there was any common understanding between the applicant and the respondent about the meaning of the relevant clauses in preceding agreements. All that has been established is that, until 2004, the respondent had a practice of paying employees entitled to long service leave at a rate of pay inclusive of penalties and shift premiums, if applicable. There is no evidence as to why it did this. The reason might have been inadvertence on the part of those responsible for making the payments as to the presence of the definition in the LSL Act. It may have been an act of generosity on the part of the respondent, from which it has now resiled. There is no evidence that any relevant person on the applicant's side was aware of the respondent's practice of making payments at the higher rate, much less of any belief on the part of any relevant officer of the applicant that payment at the higher rate represented the appropriate construction of the relevant provisions. There is therefore no evidence of a settled interpretation, of which the parties had a common understanding.

174    In Health Services Union v Ballarat Health Services the Court was concerned with the ambit of a clause that had appeared in three successive collective agreements governing the terms of mental health nurses. A group of employees who were rostered to perform regular work on weekends and public holidays received a 'commuted allowance', an allowance that was introduced to increase their ordinary salaries in lieu of payment of additional rates. In each of the three collective agreements, there was also provision for shift allowances, which involved increased rates for employees whose shifts include work at night. The issue was whether those who received the commuted allowance and who worked afternoon and night shifts, were also entitled to receive the shift allowance. Those employees had not been receiving the shift allowance. The term 'commuted allowance' was not defined and in issue was whether it was intended to replace only the payment of additional rates for ordinary time worked on Saturdays, Sunday and public holidays, or whether it was intended to also replace other allowances, such as the shift allowance for non-standard hours worked on those days.

175    The Court found that those workers who received the commuted allowance should have also been paid the shift allowance with respect to their afternoon and night shifts on weekends and public holidays.

176    In making this finding, the Court considered a number of matters said to be relevant to the construction exercise, including prior awards that referred to 'employees in receipt of commuted allowance' (at [65]); the text including that which introduced the shift allowance (at [67]-[68]); and the purpose of the different allowances (at [72]). The Court rejected an argument based on a 'common understanding', stating as follows:

[77]    Aside from this conclusion, the common understanding argument of the respondent cannot be accepted. An industrial instrument that has a consensual basis, such as an agreement negotiated between a trade union and an employer, is in that sense subject to the normal rule that the subjective understandings or intentions of the parties at the time they entered into the agreement cannot be used thereafter to aid in the construction of the terms of the agreement. Similarly, the conduct of the parties subsequent to the making of the agreement cannot be used as a guide to the construction of its terms. There have been cases in which it has been held that a common understanding of a term used in an industrial agreement can be used to aid in the interpretation of that term. In those cases, the parties to such agreements have acted on a common understanding as to the meaning of terms in those agreements, and the terms have been repeated in successive instruments, so that it can be said that the parties have entered into the successive agreements on the basis of their common understanding of those terms. Care is needed in approaching any suggestion of a common understanding as to terms used. In the first place, there must be positive evidence of a common understanding. Ordinarily, a failure to advance an argument as to the effect of a particular provision will not constitute such evidence. A failure to advance an argument is consistent with inadvertence, and common inadvertence is not common understanding. See Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd [2006] FCA 11 (2006) 149 FCR 209 at [44]-[46] and Shop Distributive and Allied Employees' Association v Woolworths Ltd [2006] FCA 616 (2006) 151 FCR 513 at [31]-[32].

[78]    In the present case, the relevant terms of the 1998 Agreement can only have been taken to have come into operation in that agreement or, at best for the respondent, in the Heads of Agreement. There is no evidence that could give rise to the proposition that there was a common understanding that the commuted allowance should be regarded as being paid in substitution for an entirely new entitlement, shift allowances for afternoon and night shifts worked at weekends and on public holidays. Nor is there any evidence that, before the 2004 and the 2005 Agreements came into being, such a common understanding developed. Any failure of the respondent to appreciate its obligation to pay shift allowances to all employees working shifts at weekends and on public holidays is just as likely to have been due to inadvertence to the issue as to have been due to any understanding of the meaning of any term in any of the 1998 Agreement, the 2004 Agreement or the 2005 Agreement. Similarly, any failure by the applicant, or by anybody else, to make a claim for payment of shift allowances for weekend and public holiday work to those in receipt of the commuted allowance until this case arose is at least as consistent with inadvertence as it is with any understanding that such a claim could not be made.

[79]    The second need for care arises in the context of the manner in which industrial instruments are now created. In the days when an award might be negotiated between a union and an employer, and made by consent, the existence of a common understanding between the union and the employer as to the meaning of terms might have had some role to play in their construction. Whatever were the terms of such an agreement, and whatever was their meaning, those terms were imposed upon the employees who became bound by the award. In the current era, most industrial instruments are required to be put to a vote of the employees whose work will be covered by them, before they can be certified or approved so as to become enforceable by statute. The union and the employer who negotiated the terms might have had a common understanding of the meaning of them, but that understanding might not have been shared by all or some of the employees who voted for the operation of the agreement. They may have been entirely ignorant of the common understanding. In those circumstances, the occasions on which it can be said that a party to an agreement who entered into it on a common understanding should not be allowed to resile from that understanding will be rarer than they have been in the past.

177    In Transport Workers' Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829 (Tracey J) the Court considered whether under the terms of the relevant enterprise agreement day shift workers were entitled to paid 'crib time'. Although it was accepted that a literal reading of the agreement would support the position that day shift workers were entitled to such pay, there was historical evidence that suggested that the benefit of crib time was made available only to shift workers who worked outside the span of ordinary hours. It was not a benefit that workers who completed day shifts would receive. Tracey J considered that a literal construction had to give way to the parties' common understanding as to how the clause was to operate. His Honour said as to this historical evidence:

[89]    The concept of a 'day shift' was introduced into the 1983 Award for the first time in August 1987: see Print G8355. The variation was proposed jointly by the Union and the relevant employer organisation. Had it been intended that employees, who had hitherto been treated as day workers who performed their duties in the ordinary span of hours, were thereafter to be treated as being shift workers, to whom specific provisions of the Award were to apply, it would have been necessary for the parties to so advise the Commission in order that it could be satisfied that the proposed variations complied with the wage fixation principles. No such advice was provided.

[90]    It might also have been expected that, immediately after the revised Award came into force, the respondent employers would have provided the workers, whose status had changed to shift workers, with the enhanced benefits which that status attracted. Had they failed to do so it would also reasonably be expected that the Union would have sought to enforce the performance of the obligations. Neither the employers nor the Union reacted in this way. It was not until March 2012 when the present demands were made that the Union, for the first time, advocated the construction for which it now contends. Not surprisingly the employers reacted with bemusement.

[91]    Had matters rested there, it may have been possible to argue that both the Union and the employers (including Linfox) had failed to appreciate the significance of the changes and that their inaction resulted from 'common inadvertence'. Subsequent events, however, render such an argument unsustainable.

[92]    Almost a decade later the Union served a log of claims which clearly drew a distinction between day workers, who worked within the ordinary range of hours, and shift workers in respect of whom separate claims were made. The dispute created by this log led to the making of the 1996 Award which contained clauses in the same terms as those which are centrally relevant in the present proceeding. The parties again assured the Commission that the terms of the proposed Award satisfied the then applicable wage fixation principles (including the 'no extra claims' commitment) and no intimation was given that a consequence of the making of the Award would be that the majority of workers covered by it would cease to be day workers and become shift workers. Indeed, the Union's representative informed the Commission that the Union did not consider that the proposed Award effected any change to the then extant terms and conditions of employment.

[93]    When the 2004 Award was made it incorporated the same provisions relating to crib time entitlements for shift workers as had appeared in the 1996 Award. This latter award, in turn, incorporated similar provisions which had previously been found in an appendix to the 1983 Award. The fact that the parties had, at each stage, agreed on the terms of the relevant provision which had consistently been applied in the manner contended for by Linfox in the present proceeding, supports its argument that a common understanding existed. That common understanding should inform the construction of the relevant provisions of the 2004 Award.

[94]    It is also to be borne in mind that the relevant provisions were incorporated in successive instruments during a period in which changes to awards and agreements were constrained by principles which restricted the granting of wage increases to employees and, more generally, additions to the cost of labour. To this end, it was necessary that parties, who sought adjustments to wages and conditions, satisfy the Commission that such adjustments could be made consistently with the principles. Had the Commission been advised, during the currency of the principles, that successive amendments had the effect of converting the bulk of the workforce covered by the 2004 Award and the Linfox Agreement from day workers to day shift workers with the attendant financial and other consequences, it may be doubted that the Commission's imprimatur would have been forthcoming.

[94]    This review supports the conclusion that, between the advent of the 1983 Award and, in particular, since the introduction into it in 1987 of the shift work provisions, and March 2012, the parties had, by their conduct, demonstrated that they held a common understanding that the provisions relating to crib time applied only to shift workers and that the large majority of workers who were treated as 'day workers' were not 'day shift' workers within the meaning of the award. In such circumstances the literal construction of Clause 26 must give way to the common understanding, over almost a quarter of a century, of the parties whose conduct it regulated.

178    In ALS Industrial, the Full Court considered the manner in which the Fair Work Commission dealt with context in construing a clause of the relevant enterprise agreement. It was the Union's submission that the Fair Work Commission made a jurisdictional error in failing to have regard to the context, including certain negotiations between the parties leading up to the making of the agreement. The Full Court said:

[111]    As we understand the Context ground, it is that the Full Bench fell into jurisdictional error in that although it, 'acknowledged that it was necessary to interpret clause 15 in the context of surrounding circumstances including the history of making the Agreement', it did not do so. The Union submits that in the course of the negotiations leading up to the making of the 2012 Agreement, ALS had initially taken a position which suggested that it understood the existing arrangement under the 2009 Agreement to have been in accordance with the construction of cl 15 now advanced by the Union. The Union submits that at some stage in the negotiations, ALS changed its position. It is said to follow that the Court should construe cl 15 in the 2012 Agreement on the basis that the parties had both so understood the analogous provisions in the 2009 Agreement.

179    The Court then set out the relevant evidence (at [112]-[120]) including assertions made by ALS to the Fair Work Commission; documentary evidence relating to ALS's objectives and agenda; meeting minutes; and witness evidence as to the negotiation process. The Court then said:

[120]    In assessing the evidence concerning negotiations, sparse as it is, we must keep in mind the points made by Mason J in Codelfa at 352-353 concerning the use of negotiations in construing the resulting contract. First, evidence of negotiations may be used to determine the 'background facts', known to both parties. However such evidence may not be adduced if it goes only to intentions or expectations. Second, where the parties were united in refusing to include a term which would give effect to the presumed intention of persons in their position, evidence of such refusal may be used to rebut any inference that they shared such presumed intention.

[121]    In the present case, at least after 18 January 2013, ALS was clearly asserting that the clause, as it stood in the 2009 agreement and as proposed, permitted it to change an employee's Company base by appointing an Alcoa site as such a base. The Union was disputing its right to do so. Both parties were seeking to achieve a benefit from negotiation, but they could not agree. They resolved the matter by leaving the clause as it was. The only inference that can be drawn is that the parties agreed to leave the question for resolution on another day. In our view such evidence as there was of the negotiations between the parties is far from complete and of no assistance in construing cl 15. The Full Bench correctly concluded that 'in this case' the evidence concerning the negotiations was of no assistance. In this regard, no jurisdictional error is demonstrated.

180    Finally, I refer again to Colvin J's judgment in Sheehan v Thiess, in which his Honour noted that the agreement was the type of agreement intended to apply to parties who are not participants in the process and that it may not be appropriate for surrounding circumstances to be brought to account unless they rise to the level of matters that would be notorious or known to those intended to be bound by the instrument who did not participate in the negotiations or dealings by which the terms were formulated: see [23] above.

181    Returning to the statement at [169] above, I do not consider the evidence supports a finding of an objective common intention as to the construction of cl 7.2.10.

182    The history or pattern of payment by Target is insufficient to justify any particular construction. It is not known whether anyone had previously complained about the calculation of their annual leave entitlement; whether the representatives at the bargaining meetings had knowledge of Target's practice of payment; nor is it known whether any failure to complain may have resulted from inadvertence or a misplaced understanding of the scope of the clause. If it were sufficient to refer to past practices, the terms of an industrial agreement could be put to the side, and any new employee would be significantly disadvantaged in seeking to understand the entitlements of their employment.

183    But Target did not seek to rely on only its past payment practices. It also relied on the 'bargaining' evidence. Having reviewed the evidence, it is at best equivocal. These matters should be read together with what was said in the joint statement of agreed facts about the bargaining process. Clause 7.2.10 does not appear to be referred to by number by either Target or the Association in the logs or notes (and many other clauses of the preceding agreement are specifically referred to by number in those records). There is only very brief reference to the question of annual leave entitlements.

184    The joint statement of agreed facts sets out in full the item in the Association's log of claims referred to as S27: see [68] above. There were 43 items in the log of claims.

185    A note of one of the representatives of the Association of the 29 February 2012 meeting next to 'S27' states that 'People on annual leave shouldn't get less than they would otherwise earn. 17.5% or loading - whatever is greater'. Target stated in its minutes 'SDA team members should receive 17.5% loading or actual penalties for the period - whichever is the greater'. There is no reference to cl 7.2.10 and no record in the notes of any further discussion about that statement (in contrast to notes of other explanations about claims). It was not one of the discussion points listed in the minutes.

186    There is also reference to Target's 29 February 2012 log of claims, including 'T27' and 'T29' which were:

(a)    for [then] cl 7.3.4, 'payment for sick leave to be at the ordinary time earnings for the hours normally rostered to work excluding any applicable penalties'; and

(b)    for [then] cl 7.6.7, 'payment for carer's leave to be at the ordinary time earnings for the hours normally rostered to work excluding any applicable penalties'.

187    A note of the representative of the Association of that meeting states next to the notation T27 'Jon M - exclude penalties on [sick leave]' (Jon M presumably being the Target representative).

188    One of the Association's representative's notes of the 7 March 2012 meeting adds 'Not prepared to agree to recognise if [greater than annual leave loading] or penalties', a comment attributed to 'JM' (presumably of Target).

189    The notes of the meeting of 18 April 2012 reflect a read through of many clauses of the agreement, but cl 7.2.10 is not referred to. The single word 'drop' next to S27 forms part of the notes of the Association's internal meeting.

190    As to the meeting of 1 May 2012, the Target Minutes note that S27 was withdrawn by the Union 'in the interests of moving negotiations forward' and 'as part of a package relating to leave and public holidays'. They also note that Target's log of claims T27 and T29 were accepted.

191    One of the representative's notes of the meeting of 1 May 2012 refers to T29 and states that 'reluctantly agree to excluding penalties' and such reluctance was also recorded in the note of another representative.

192    That such records are equivocal and do not rise to evidence of any objective common intention is apparent from the absence of any reference to cl 7.2.10; the absence of any discussion as to what was meant by 'ordinary time earnings' in cl 7.2.10; the absence in S27 to reference to the 17.5% leave loading although those words were included in the predecessor cl 7.2.10 at that time; and the cryptic reference on the part of the Target representative to not 'recognising' amounts in the notes of the February meeting. It is also not entirely clear what was being 'dropped' by the Association, having regard to the pre-existing wording of cl 7.2.10. It is not apparent whether the representatives had regard to the wording of cl 7.2.10 at the time. In addition, the lack of clear evidence of consensus is indicated by the fact that Target was expressly seeking to remove penalties from the scope of T27 and T29, suggesting that its representatives were proceeding on the basis that 'ordinary time earnings' in those clauses at the time otherwise included such penalties, a position arguably endorsed by the Association's representatives' 'reluctant' agreement to their exclusion.

193    In summary, no consensus, agreement or admission as to the meaning of 'ordinary time earnings' or annual leave entitlements is disclosed. As was made clear in Shop Distributive and Allied Employees' Association v Woolworths Limited [2006] FCA 616; 151 FCR 513 at [31], the search is for clear evidence that the parties have acted on a common intention. The subjective views of those present at the meetings do not inform the construction of the Agreement in circumstances where neither the meaning of cl 7.2.10 nor the history of Target's payment practices could properly be described as notorious facts. There may have been one or several reasons for the Association's representatives to refrain from a further contest as to the annual leave claim, ranging from inadvertence to a deliberate decision based on broader industrial interests, to an absence of recognition of the particular terms of cl 7.2.10. These are not matters of common understanding. Additionally, Target's reference to excluding penalties from the ambit of ordinary time earnings for other leave entitlements also indicates an absence of any clear common understanding of the meaning of that expression when used in the Agreement. There is no evidence of the information or explanation that was put to the employees at the time of the vote on the Agreement. It must also be recalled that whatever the terms of the Agreement, they were imposed upon employees covered by the Agreement. Further, having regard to all of these matters, I do not consider this to be the type of rare exception referred to in Health Services Union v Ballarat Health Service at [79] such that the Association should not be permitted to resile from whatever its particular representatives subjectively intended or expected by their reference to 'drop' in the 2012 negotiations. The nature of the negotiations does not disclose the clarity of any intervening event such as that described by Tracey J in Transport Workers Union of Australia v Linfox at [92].

194    The evidence of prior payment practices and the bargaining process was relevant to understanding the background facts known to both parties, but it does not evidence any common understanding. It does not assist in construing cl 7.2.10.

Conclusion

195    It then remains to assess whether the finding based on the text of the Agreement that I have preferred at [133] is supported, having considered these other matters. In my view, it is, and for a number of reasons.

196    The construction is consistent with a history of annual leave entitlements that points to a purpose of avoiding disadvantage to those who take their annual leave entitlements, particularly in a retail environment where employees might regularly work shifts that attract penalty payments. It is consistent with a rostering regime which encourages flexibility but also predictability of shifts, and, it follows, predictability of income.

197    The construction has the benefit of a certain ease of reading for an employee, compared with the various alternatives proposed. Under its terms, the Agreement must be 'posted and maintained in a prominent place accessible to all team members': cl 1.7.12. Its terms anticipate that it must be readily understandable by a team member. The construction I have preferred accords consistency to the notion of 'ordinary time earnings' throughout the Agreement, and is also consistent with the manner in which the expression is understood in the SGA Act, an Act which at the time the Agreement came into effect had been part of the superannuation and employment landscape for some 20 years.

198    To expect an employee to read the Agreement, with its references to phrases such as an ordinary rate of pay, a weekly rate of pay, an ordinary time rate of pay and ordinary hourly rates, and to understand that the expression 'ordinary time earnings' should be read such that all of those phrases are coterminous (as Target submits) is, to my mind, an unrealistic expectation, particularly where the term is otherwise defined in the Agreement. The expression, properly understood in the manner I have described, is intelligible and meets the purposive approach described in WorkPac Pt Ltd v Skene and the cases collected by Wheelahan J in King at [128]. It is reasonably capable of being understood by those it covers and by members of the public without resort to a detailed investigation.

199    It is also consistent as a product of history with the broad scope of 'wages' promoted in the Annual Leave Cases 1971-1972. It is consistent with the use of the word 'wages' combined with a leave loading in the Target Australia Pty Ltd Award 1994 and the introduction of the expression 'ordinary time earnings' with respect to annual leave entitlements in the Target Australia Pty Ltd Retail Agreement 1997, following the enactment of the SGA Act.

200    Whilst acknowledging that some time has passed since these events, I have not ignored this consistent history: Short v FW Hercus. No clear events that might have supported a different approach to the meaning of 'ordinary time earnings' as at 2012 were highlighted that diminished the value of having regard to that history. However, in the end, the history does not drive the result. The task has remained one of interpreting the Agreement based on the objective meaning of the text.

Evidence

201    For completeness, it is to be noted that although affidavits were filed by the parties, none were read. Instead there was reliance on the joint statement of agreed facts and a tender bundle of documents. Each of the documents behind tabs 9-43 inclusive of the bundle (predecessor agreements and awards, and logs of claims, minutes and notes, Target letter confirming matters for letter of understanding), having regard to the comments above as to admissibility, were accordingly received as exhibits.

Orders

202    It seems to me that a declaration in the terms at [133] is sufficiently clear. However, as I did not hear from the parties specifically on that issue, I will invite the parties to provide proposed orders consistent with these reasons for judgment.

Associate:

Dated:    31 August 2021

SCHEDULE

LEAVE PAYMENT AND SUPERANNUATION PROVISIONS FROM PRDECESSOR AWARDS AND AGREEMENTS

1    Coles Myer Occupational Superannuation Award 1992

Payment to fund:

Subject to clause 5(ii) of this award Coles Myer Ltd shall contribute to REST [retail employees superannuation fund] in respect of each eligible employee an amount equal to 3 per cent of the employee's ordinary time earnings.

Definition of 'ordinary time earnings':

Ordinary time earnings: includes the classification rate; supplementary payments (if any); over-award payments; casual loadings; penalty rates; shift loadings and work related allowances that form part of the weekly rate of pay (for example, supervisory and buying allowances). Ordinary time earnings does not include overtime; payments made to reimburse expenses (for example tea money, uniform allowance); or disability allowances.

2    Target Australia Pty Ltd Award 1994

(a)    Leave payment:

Payment for period of leave

12.1.7    A Retail Employee before going on leave will be paid the amount of wages they would have received in respect of the period of Annual Leave plus a loading of 17 1/2% for up to 152 hours leave per anniversary year or pro-rata for part-time employees.

12.1.8    Payment will not be made in lieu of Annual Leave.

(b)    Superannuation:

15 - SUPERANNUATION

All Retail Employees shall be subject to the provisions of the Federal Coles Myer Occupational Superannuation Award 1992 and the Superannuation Guarantee (Administration) Act of June, 1992 and any amendments thereof.

3    Target Australia Pty Ltd Retail Agreement 1997

(a)    Leave payment:

Payment for Period of Leave

7.2.8    An employee going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5%, prior to the commencement of such leave.

7.2.9    Prior to the commencement of Annual Leave, an employee shall be paid all wages in respect of the period of Annual Leave. Provided that at the written request of the employee, an employee may be paid for such leave by receiving the payment progressively using the normal fortnightly pay cycle.

7.2.10    Payment shall not be made in lieu of Annual Leave.

(b)    Superannuation:

5.3    Superannuation

All Retail Employees shall be subject to the provisions of the Federal Coles Myer Occupational Superannuation Award 1992 [Print K2517 [C0312]] and the Superannuation Guarantee (Administration) Act 1992 and as amended.

4    Target Retail Agreement 2001

(a)    Leave payment:

Payment for period of leave

7.2.8    An employee going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5% prior to the commencement of such leave.

7.2.9     Prior to the commencement of Annual Leave, an employee shall be paid all wages in respect of the period of Annual Leave.

Provided that at the written request of the employee, an employee may be paid for such leave by receiving the payment progressively using the normal fortnightly pay cycle.

7.2.10    Payment shall not be made in lieu of Annual Leave.

(b)    Superannuation:

5.3    Superannuation

5.3.1    The Company shall be and remain a participating employer of the Retail Employees Superannuation Trust (REST) and shall participate in accordance with the Fund Trust Deed.

5.3.2    The employer shall contribute monthly to REST on behalf of each eligible employee the following levels of contributions: -

From commencement of this Agreement - 8% of ordinary time earnings

From 1 July, 2002 - 9 % of ordinary time earnings

An eligible employee is one who: -

(i)    Earns $450 or more in ordinary time earnings in any month; and

(ii)    In the case of an employee aged below 18 years, works at least 30 hours per week.

Ordinary time earnings shall include the classification rate; any over-award payment; casual loadings; penalty rates; shift loadings and work related allowances that form part of the weekly rate of pay (for example, supervisory allowances).

It shall not include overtime; payment made to reimburse expenses (for example meal allowance, uniform allowance); or disability allowances.

5.3.3    The Company shall provide each employee upon commencement of employment with the appropriate membership application form(s) of REST and shall forward the completed form(s) to REST within 14 days of the employee returning completed forms to the Company.

5.3.4 (i)     An employee may make personal contributions to REST in addition to those made by the Company.

(ii)    An employee who wishes to make such additional contributions must authorise the Company in writing to pay into the Fund, from the employee's wages, a specified amount in accordance with the REST Trust Deed and Rules.

(iii)    Upon receipt of written authorisation from the employee, the Company shall commence making monthly payments into the on behalf of the employee following receipt of the authorisation.

(iv)    An employee may vary his or her additional contributions by a written authorisation and the Company shall alter the additional contributions within 14 days of receipt of the authorisation.

(v)    Additional employee contributions to REST requested under this sub-clause shall be expressed in whole dollars.

(vi)    The ability to opt in and out of the fund as provided within the Superannuation Guarantee (Administration) Act 1992 (as amended) and the applicable regulations shall not apply.

5.3.5    An existing employee at the commencement of this Agreement who was eligible for superannuation contributions paid under the Coles Myer Occupational Superannuation Award [Print K25l7] shall continue to receive such contributions.

5    Target Australia Pty Ltd Award 2002

(a)    Leave payment:

Payment for period of leave

18.7    A Retail Employee before going on leave will be paid the amount of wages they would have received in respect of the period of Annual Leave plus a loading of 17 1/2% for up to 152 hours leave per anniversary year or pro-rata for part-time employees.

18.8    Payment will not be made in lieu of Annual Leave.

(b)    Superannuation:

13.7    Superannuation

All Retail Employees shall be subject to the provisions of the Federal Coles Myer Occupational Superannuation Award 1992 and the Superannuation Guarantee (Administration) Act 1992 and any amendments thereof.

6    Target Retail Agreement 2003

(a)    Leave payment:

Payment for period of leave

7.2.8    An employee going on Annual Leave shall be paid in addition to their ordinary time earnings for the period of leave a loading of 17.5% prior to the commencement of such leave.

7.2.9    Prior to the commencement of Annual Leave, an employee shall be paid all wages in respect of the period of Annual Leave.

Provided that at the written request of the employee, an employee may be paid for such leave by receiving the payment progressively using the normal fortnightly pay cycle.

7.2.10    Payment shall not be made in lieu of Annual Leave.

(b)    Superannuation:

5.3    Superannuation

5.3.1    The Company shall be and remain a participating employer of the Retail Employees Superannuation Trust (REST) and shall participate in accordance with the Fund Trust Deed.

5.3.2    The employer shall contribute monthly to REST on behalf of each eligible employee 9% of ordinary time earnings.

An eligible employee is one who: -

(i)    Earns $450 or more in ordinary time earnings in any month; and

(ii)    In the case of an employee aged below 18 years, works at least 30 hours per week.

Ordinary time earnings shall include the classification rate; any over-award payment; casual loadings; penalty rates; shift loadings and work related allowances that form part of the weekly rate of pay (for example, supervisory allowances).

It shall not include overtime; payment made to reimburse expenses (for example meal allowance, laundry allowance); or disability allowances.

5.3.3    The Company shall provide each employee upon commencement of employment with the appropriate membership application form(s) of REST and shall forward the completed form(s) to REST within 14 days of the employee returning completed forms to the Company.

5.3.4    (i)    An employee may make personal contributions to REST in addition to those made by the Company.

(ii)    An employee who wishes to make such additional contributions must authorise the Company in writing to pay into the Fund, from the employee's wages, a specified amount in accordance with the REST Trust Deed and Rules.

(iii)    Upon receipt of written authorisation from the employee, the Company shall commence making monthly payments into the Fund on behalf of the employee following receipt of the authorisation.

(iv)    An employee may vary his or her additional contributions by a written authorisation and the Company shall alter the additional contributions within 14 days of receipt of the authorisation.

(v)    Additional employee contributions to REST requested under this sub-clause shall be expressed in whole dollars.

(vi)    The ability to opt in and out of the fund as provided the Superannuation Guarantee (Administration) Act 1992 (as amended) and the applicable regulations shall not apply.

5.3.5    An existing employee at the commencement of this Agreement who was eligible for superannuation contributions paid under the Coles Myer Occupational Superannuation Award [Print K2517] shall continue to receive such contributions.

7    Target Retail Agreement 2006