Federal Court of Australia

Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v Simpec Pty Ltd (Liability) [2025] FCA 470

ORDERS

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    There be liberty to apply on or before 30 May 2025 for any order as to costs.

3.    The liberty reserved by order 2 may be exercised by any party filing submissions of no more than three pages together with any necessary affidavit in support.

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

REASONS FOR JUDGMENT

COLVIN J:

1    SIMPEC was contracted to provide works at the Iron Bridge Project, a magnetite mining operation due south of Port Hedland. It employed communications technicians and electricians to work on the project on a fly-in fly-out basis. They were required to work a roster that involved 21 days on and 7 days off. During their employment on the project, an issue arose as to the accrual of their annual leave and personal leave entitlements.

2    The leave entitlements were calculated by SIMPEC on the basis that 114 ordinary hours were worked during each on-swing (38 ordinary hours for each week) and unpaid authorised leave was given for 38 ordinary hours during each off-swing. Hours above 114 ordinary hours during the on-swing were paid at overtime rates. The roster was such that the total hours worked were well above 152 hours each on-swing (being the total ordinary hours for a full-time employee working a regular five day working week plus overtime over a four week period).

3    If the workers had been employed to work the same hours but on a regular five day working week, then they would have accrued annual leave and personal leave entitlements based on working 152 ordinary hours for every four weeks of work. However, they would have worked those hours over four weeks and less hours would have been paid at overtime rates. SIMPEC's position was that because the off-swing week was taken as 'unpaid authorised leave' the ordinary hours for the leave period did not count towards the accrual of annual leave and personal leave. Further, as the employees were paid overtime for each hour after 38 hours in an on-swing week the workers had been properly remunerated.

4    The workers were covered by the SIMPEC Pty Ltd Enterprise Agreement 2019 (EA).

5    In 2023, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia brought proceedings against SIMPEC claiming that the workers had not been afforded their full leave entitlements. The Union advanced the claim on the basis that it had standing under s 539 and s 540 of the Fair Work Act 2009 (Cth) to seek relief in respect of the leave entitlements of workers under the EA. It alleged that upon a proper construction of the EA the workers accrued annual leave and personal leave entitlements based upon ordinary hours worked of 152 hours for each swing. The claim was advanced on the basis that the 21 days on, 7 days off roster compressed four weeks of ordinary hours for a full-time employee into the three weeks of the on-swing. As the workers were employed on a full-time basis, it was contended that they were entitled to the same annual leave and personal leave entitlements they would have accrued if they had worked the regular hours provided for in the EA (accruing 152 ordinary hours for each four weeks of full-time employment). The Union maintained that overtime payments made to workers had been properly earned and paid.

6    The Union sought declaratory relief, orders for assessment of compensation and interest to be paid to the workers and pecuniary penalties.

7    The Union's claim was brought on the basis that there was an identified class or category of full-time employees covered by the EA who had worked for SIMPEC on the Iron Bridge Project. The Union maintained that it could bring the claim for the benefit of that class or category of workers.

8    SIMPEC alleged that the claim could not be advanced based on a class of unnamed employees and that the claim should be treated as confined to any entitlements of Mr Benjamin John Cations (whose evidence was relied upon to support the claim).

9    SIMPEC also claimed that upon a proper construction of the EA and relevant provisions of the Fair Work Act, under the rostering arrangement that had been put in place in accordance with the EA, annual leave accrued at the rate of 114 hours for the 21 days of each on-swing and not during the 7 days of the off-swing.

10    In the alternative, SIMPEC alleged that there had been a common mistake or there was an estoppel by convention which meant that it was entitled to set-off 'the amount of overtime pay and/or that proportion of the rates of pay paid [to Mr Cations] that are above the rates of pay under [the EA]'. It relied upon the same allegations to support a plea that it was 'inappropriate' to award compensation to Mr Cations under the statutory provisions in the Fair Work Act.

11    By the time of the hearing, SIMPEC formulated its alternative case solely on the basis that there should be no compensation remedy that would amount to unjust enrichment. It was said that any award of compensation to Mr Cations should be adjusted by reference to evidence that it proposed to lead as to certain calculations undertaken by Mr Brent Swan, a commercial manager at SIMPEC. The Union objected to SIMPEC's apparent reformulation of its position in this way.

12    At the commencement of the hearing, SIMPEC formally stated that it did not maintain the claims of common mistake or estoppel. However, it sought to maintain the claim that it was 'inappropriate' to award compensation. I indicated that I saw difficulty with that course because the plea that compensation was 'inappropriate' simply relied upon the matters advanced to support the claims of common mistake and estoppel. It was the existence of the alleged mistake or common assumption that was said to found the plea that compensation was 'inappropriate' and SIMPEC had made clear that it was not advancing a claim of that kind. Instead, it appeared that SIMPEC was reformulating its alternative plea to allege some form of overpayment of other entitlements (principally overtime) if the Union's case as to the interpretation of the EA when it came to leave entitlements was to be accepted. I indicated that, in the absence of a formal application to amend, in my view the claim (as pleaded) that compensation was 'inappropriate' could not be maintained if the common mistake and estoppel claims were not pressed. In the result, the matter proceeded on the basis that it would be necessary for an amendment to be formulated as to the terms on which it was put that it was 'inappropriate' for the purposes of the statutory provision to award compensation.

13    Ultimately, I allowed an application for leave to amend to delete the existing claims and to add a claim that it would be inappropriate to award compensation to Mr Cations in the exercise of any discretion under s 545 of the Fair Work Act without providing for adjustments for the additional overtime payments received by Mr Cations on the basis that he worked 38 ordinary hours in each week of his three week on-swing period: Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v Simpec Pty Ltd [2025] FCA 370. I did so on the basis that there would be an opportunity for the Union to provide additional written submissions as to that aspect and for SIMPEC to provide short written submissions strictly in response. Those submissions were received.

14    Finally, as to the appropriate way in which to determine any compensation, the Union contended that a referee should be appointed to undertake the required calculations (based on the declared legal position) and that workers should be paid based upon the outcome of the referee process. SIMPEC contended that the appropriate course if the claim to compensation was upheld would be to allow time for it to undertake those calculations at its own cost.

15    The final hearing proceeded on the basis that it was a hearing to determine all issues raised by the application other than the quantum of any pecuniary penalty that may be appropriate if the claim was otherwise successful.

16    In consequence, the issues raised by the application are as follows:

(1)    Upon the proper construction of the EA and the Fair Work Act, how did the workers accrue entitlements to annual leave and personal leave?

(2)    Should the claim be treated as confined to Mr Cations or is it properly brought on behalf of a class?

(3)    Having regard to the answer to (2), in what terms should any declaratory relief be expressed?

(4)    Is it 'inappropriate' to order compensation unless there is provision for an adjustment for overtime payments?

(5)    In what terms should any orders for compensation be expressed?

(6)    Should an order be made for pecuniary penalties in an amount to be assessed?

17    Before considering these issues, I will first address the relevant provisions of the EA and the Fair Work Act.

The provisions of the EA

18    Significantly for present purposes, the EA provided for employees to be employed in one of three categories: 'full-time', 'part-time' or 'casual': cl 5.1. Subject to one matter (not presently relevant), 'a full-time Employee' was an employee who worked 'an average of 38 ordinary hours per week': cl 5.2. For the Union, it was said that the reference to 'average' had some significance. It was said to indicate that for the purposes of the EA, an employee would be full-time provided they worked an average of 38 ordinary hours per week of their employment.

19    The following provision pertained to part-time employment (cl 5.3 to cl 5.5):

Subject to [a clause not presently relevant], a part-time Employee is an Employee who works an average of fewer than 38 ordinary hours per week.

The terms of this Agreement will apply pro rata to part time Employees on the basis of their ordinary hours compared to a full-time Employee's hours.

On engagement, the Employer and the Employee shall agree on the number of hours to be worked per week and the days to be worked. The terms of this agreement may be varied by consent between the Employer and the Employee.

20    Accordingly, the EA contemplated a pro rata application of the EA to part-time employees based upon full-time hours. A part-time employee had specified hours that were agreed (which had to be less than an average of 38 ordinary hours per week).

21    Significantly, the EA provided that a category of employment must be established for each employee. This conclusion flowed from the language of cl 5.1 which stated that employees would be employed 'in one of the following categories'. The claim brought by the Union related to those employees who had been employed as full-time employees. SIMPEC did not contend that those who regularly worked the 21 days on and 7 days off roster were not full-time employees.

22    The EA provided for employees to be stood down in certain circumstances: cl 5.18. However, it also provided expressly that the stand down did 'not break continuity of employment for the purposes of any entitlements'.

23    As to hours of work, save for presently irrelevant exceptions, the EA provided that 'Ordinary Hours will not exceed an average of 38 per week': cl 8.1. It also provided that no more than 8 ordinary hours may be worked in any one day: cl 8.2. As to when ordinary hours may be worked, the EA provided in cl 8.3 as follows:

Ordinary Hours shall be worked between 6.00 a.m. and 6.00 p.m., Monday to Friday (Ordinary Hours). The Employer will determine the actual method of working ordinary hours. The pattern of working hours within the spread of Ordinary Hours may be altered by agreement with an individual Employee or with the majority of Employees in the plant, site, workshop, section or sections concerned or by the Employer giving 1 weeks' notice.

24    The provision within cl 8.3 for the pattern of ordinary hours to be altered made clear that, once determined, the pattern could be changed by agreement or by the employer giving 1 weeks' notice. However, the pattern was still required to conform to the requirement that ordinary hours were to be between 6.00 am and 6.00 pm, Monday to Friday.

25    Unhelpfully, the insertion of the defined term 'Ordinary Hours' in cl 8.3 appears to itself deploy the otherwise undefined term 'ordinary hours' to define 'Ordinary Hours' as those ordinary hours worked between 6.00 am and 6.00 pm, Monday to Friday. Consequently, the compound expression ordinary hours is used at some points in the EA to refer to a type of hours of that are ordinarily worked within a day or a week (identified by number) and at other points to a defined period of hours within a week when that type of hours may be worked, namely 6.00 am to 6.00 pm, Monday to Friday. Obviously, in each case reference is being made to the ordinary hours to be worked. However, there are two different parameters being expressed by reference to those ordinary hours. The first concerns how many ordinary hours are to be worked and the second concerns when those ordinary hours may be worked (requiring the pattern of hours to be worked within the period of 'Ordinary Hours' and to be specified, subject to alteration by agreement).

26    Elsewhere in the EA, sometimes the expression ordinary hours is capitalised and sometimes it is not. However, it is apparent that the EA fails to use capitalisation of the term ordinary hours to differentiate between the two different usages. So much can be seen from cl 8.3. The uncapitalised term is used appropriately in cl 5 of the EA in describing the categories of full-time employees and part-time employees. However, it is also used in cl 8.4 which said: 'Work done outside of ordinary hours will be payable at overtime rates as provided for by this Agreement'. In that context, the phrase 'outside of ordinary hours' is consistent with the use of the capitalised term, namely the period within which hours are worked. Plainly, despite the lack of capitalisation, the reference is to the period of 'Ordinary Hours' as defined in cl 8.3.

27    Despite these infelicities, it is sufficiently clear that the EA provided for four distinct things when it came to ordinary hours. First, full-time employees would be entitled to work, on average, 38 ordinary hours per week (and part-time employees would have a pro rata entitlement). Second, full-time employees could not be made to work more than an average of 38 ordinary hours per week (noting that the EA provisions as to reasonable overtime are considered below). Third, employees could not be made to work more than 8 ordinary hours in any day. Fourth, ordinary hours were to be worked during the specified window of 6.00 am to 6.00 pm, Monday to Friday.

28    Irrespective of whether a full-time employee was rostered for the requisite number of ordinary hours of work within the specified window of 'Ordinary Hours', the employee was entitled to be paid for those ordinary hours at the rates provided for in the EA. That was because a full-time employee had an entitlement to 38 ordinary hours of work per week within the window. There was, in addition, an entitlement to be paid overtime rates for work done outside that window. SIMPEC could not satisfy the first of those obligations by offering hours outside the window and all rostered hours outside the window were required to be paid at overtime rates. Therefore, SIMPEC could not perform the obligation to provide full-time employees with 38 ordinary hours of work per week by rostering some 'ordinary hours' outside the window.

29    There was also provision for SIMPEC to require an employee 'to work a reasonable amount of overtime including rostered overtime': cl 9.1. Rates were specified for computing overtime pay: cl 9.2 to cl 9.4. Consequently, reasonable hours required to be worked above ordinary hours were to be paid at overtime rates. Those hours may or may not be within the 'Ordinary Hours' period depending upon the roster. However, what was clear was that cl 8.3 required the ordinary hours to be worked between 6.00 am and 6.00 pm, Monday to Friday.

30    Of some significance for present purposes are cl 9.5 and cl 9.6. They required an employee working overtime to have at least 10 consecutive hours off between work on successive days. Where the time between the end of work on one day and the start of work on the next was less than 10 hours then the employee was entitled to the 10 hour break without loss of pay. This too was a protection for employees as to when ordinary hours may be rostered. It required ordinary hours to be paid for, but for the employee to be released from having to work those ordinary hours having regard to when overtime hours were worked.

31    Then there was the provision at the heart of the present dispute, cl 12. It provided:

12.    REST AND RECREATION LEAVE

12.1    An Employee may be required to work a system of works that includes Rest and Recreation Leave (R&R). R&R usually consists of a period of unpaid authorised leave, accrued RDOs (if applicable) and any paid leave which has been requested and approved.

12.2    If, in such a case, the Employer elects to roster the Employee on a system which provides for R&R, any accrued RDO's shall generally be taken concurrently with the Employee's R&R.

32    The above provision allowed the employer to introduce a 'system of works' that included within the roster particular days that were specified as 'unpaid authorised leave'. Outside the terms of cl 12 there was no provision for SIMPEC to be able to require an employee to take unpaid authorised leave in respect of ordinary hours of work. Rather, as has been explained, full-time employees were entitled to 38 ordinary hours of work per week on average and to be remunerated for that work. The proper construction of cl 12 must be considered in the context of the other terms of the EA in relation to ordinary hours.

33    The combination of the requirements that no more than 8 ordinary hours be worked in a day and that ordinary hours had to be worked between 6.00 am and 6.00 pm, Monday to Friday meant that the maximum number of ordinary hours that could be worked in a week was 40 hours and the times when those hours could be worked was confined. Further, as has been explained, hours that were not ordinary hours were required to be paid at overtime rates. So, according to the overtime provisions, all hours worked during the 21 days on-swing that did not meet the 8 hours per day and the 'Ordinary Hours' period requirements were required to be paid at overtime rates.

34    The case for SIMPEC was that cl 12 operated to allow a roster that included unpaid authorised leave that would count as ordinary hours for the purposes of the EA, but not accrue any entitlements to annual or personal leave. Its contentions were founded not upon the terms of the EA but upon the provisions of the Fair Work Act. As will emerge, the intersection between the express provisions of the EA that confer rights as to ordinary hours of work (on the one hand) and the statutory provisions as to leave (on the other hand) are at the heart of the controversy between the parties in the present case.

35    As to annual leave, the EA began by providing: 'Annual leave is provided for in the NES': cl 15.1. The reference to 'the NES' is to the National Employment Standards as specified in the Fair Work Act. Where any provision in the EA was less beneficial than the NES then it was the NES that was to prevail: cl 4.3. Further, provisions which recited benefits under the NES were not to replace the operation of those provisions: cl 4.2. The clause stated expressly that references to entitlements provided for in the NES were for information only and did not incorporate those entitlements into the EA. So, the EA contemplated that annual leave would be as provided for in the NES and for those entitlements to remain statutory entitlements conferred by the Fair Work Act.

36    It will be necessary, in due course, to refer to the provisions in the Fair Work Act that operate to express the standard as to annual leave. At this point it may be noted that the EA stated that for 'each year of service, the NES entitles Employees to … 4 weeks of paid annual leave': cl 15.2. Then, cl 15.3 provided:

Under the NES, annual leave accrues progressively during a year of service according to the Employee's ordinary hours of work and accumulates from year to year. Annual leave does not accrue during any period of unpaid leave, unauthorised absence or workers' compensation.

37    Accordingly, the EA described the NES as providing expressly that annual leave accrues according to 'the Employee's ordinary hours of work'. As is explained below, this is correct. The NES was also described as providing that annual leave did not accrue during any period of 'unpaid leave, unauthorised absence or workers' compensation'. The extent to which that is an accurate record of the way in which annual leave accrues is considered below. For reasons that have been given, it is not the terms in which cl 15.3 are expressed that confer the annual leave entitlement. As the EA itself makes clear, annual leave entitlements accrue according to the terms of the NES.

38    Clause 15.7 stated: 'Any untaken annual leave is paid out on termination'. That also reflects the terms of the NES.

39    There were equivalent provisions as to personal leave that also reflected the NES: cl 16. Like the annual leave entitlements, they remained sourced in the Fair Work Act.

40    So, those covered by the EA did not have any entitlement to annual or personal leave that was conferred by the EA but they did have the statutory NES entitlements to leave. Those statutory entitlements depended upon the employee's ordinary hours of work.

The competing positions of the parties

41    The competing positions of the parties expose three alternatives:

(1)    the adoption of the system of works could not (and did not) reduce the ordinary hours of work of employees below 38 hours per week on average and they accrued annual leave and personal leave on that basis - this was the approach contended for by the Union;

(2)    the adoption of the system of works resulted in full-time employees accruing entitlements to annual leave and personal leave on the basis that periods of unpaid authorised leave were in respect of ordinary hours that did not count for the purposes of the NES leave entitlements - this was the approach adopted by SIMPEC in administering the employment of the workers; and

(3)    if it was the case that sufficient ordinary hours were worked in the 21 days on-swing to amount to an average of 38 hours over the four week roster thereby accruing annual and personal leave at the rate of a full-time employee then overtime entitlements would only apply to hours worked in addition to those ordinary hours - this was the approach advanced by SIMPEC in support of its alternative contention as to the appropriate approach to compensation if the Union's claim was otherwise accepted.

The contract of employment

42    The claim by the Union was based upon entitlements said to be conferred by operation of the EA and the Fair Work Act. It was not possible for SIMPEC to contract out of those entitlements. Therefore, the resolution of the dispute could not turn upon the proper construction of the contract of employment. Its only significance was the fact that it imposed the system of works whereby full-time employees were required to work 21 days on-swing followed by 7 days of unpaid authorised leave.

43    It may be observed that the contract of employment for Mr Cations provided that the basis upon which he was employed was 'Full-time Specific Task'. As to hours of work, it stated:

Your roster will be 21 days on followed by 7 days of R&R. You will be required to work each of the 21 days on site and anticipated working hours are 10 per day Monday to Saturday and 5 hours on Sunday. This is subject to change at any time due to operational requirements.

Across the 10-hour workday SIMPEC will provide for one thirty (30) minute rest period without deduction of pay, and one thirty (30) minute unpaid meal break for each day Monday to Saturday. To clarify, the total hours on site are 10.5 hours.

A thirty (30) minute meal break is provided on Sundays and is paid at the base rate but is not treated as time worked.

Your hours on this Project will be comprised of 38 ordinary hours per week plus reasonable additional hours as required to meet SIMPEC's operational requirements.

44    As to superannuation, the contract stated that SIMPEC would make superannuation contributions 'on your ordinary hours of work' and then stated: 'For the avoidance of doubt, the first 38 hours worked by you in any given week are considered ordinary hours and attract superannuation contributions'.

45    Otherwise, the provisions of the employment agreement relevantly reflected the terms of the EA.

Relevant provisions of the Fair Work Act

46    Some provisions in the Fair Work Act deploy the concept of a 'period of service'. It is a period during which the employee is employed by the employer, but does not include any period that does not count as service because of s 22(2) (excluded period): s 22(1). Section 22(2) provides:

The following periods do not count as service:

(a)    any period of unauthorised absence;

(b)    any period of unpaid leave or unpaid authorised absence, other than:

(i)    a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or

(ii)    a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee's contract of employment; or

(iii)    a period of leave or absence of a kind prescribed by the regulations;

(c)    any other period of a kind prescribed by the regulations.

(emphasis added)

47    Section 22(3) then makes the following provision as to the meaning of continuous service:

An excluded period does not break a national system employee's continuous service with his or her national system employer, but does not count towards the length of the employee's continuous service.

48    Section 384 provides that an employee's 'period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee'.

49    So, the concept of period of service is deployed in the concept of continuous service. Amongst other things, a period of 'unpaid authorised absence' does not count in determining the length of continuous service, but does not restart the period of continuous service. At any point in time, the period of employment of an employee is the completed period of continuous service.

50    The concept of 'period of employment' is deployed in the Fair Work Act to define the circumstances in which a person is protected from unfair dismissal: s 382. It is also used to specify a cap on the compensation to which a person may be entitled as compensation in lieu of reinstatement: s 392(6)(a)(ii). It is also used in s 194 to identify a type of term of an enterprise agreement that is an unlawful term.

51    Further, as is explained below, the term 'periods of employment' is used to state the NES annual leave and personal leave entitlements. It is also used to describe entitlements to redundancy pay.

52    As to the NES in respect of annual leave, for 'each year of service with an employer (other than periods of employment as a casual employee of the employer)' an employee is entitled to four weeks annual leave (or five weeks in some specified instances): s 87(1). As to the accrual of the entitlement to annual leave, s 87(2) provides:

An employee's entitlement to [be] paid annual leave accrues progressively during a year of service (other than periods of employment as a casual employee of the employer) according to the employee's ordinary hours of work, and accumulates from year to year.

(emphasis added)

53    Personal leave entitlements provided for as part of the NES accrue in the same way: s 95 and s 96.

54    Importantly, these leave provisions deploy the concept of 'the employee's ordinary hours of work' as the basis upon which an employee will accrue annual leave and personal leave entitlements. It is not the expiration of a period of a year from commencement of employment that generates an annual leave entitlement. Rather, it is the progressive accumulation of ordinary hours of work. Reference has already been made to the statutory definition of period of service and its significance for the concept of a period of employment.

55    The NES also includes a provision to the effect that an employer must not request or require a full-time employee to work more than 38 hours in a week unless the additional hours are reasonable: s 62(1). In determining whether additional hours are reasonable one matter to be considered is whether the employee is entitled to overtime payments: s 62(3)(d). For the purposes of s 62(1), hours worked in a week include 'hours of leave, or absence, whether paid or unpaid … that are authorised': see s 62(4).

56    As to ordinary hours of work, there are various provisions in the legislation that deal with the ordinary hours that an employee may be required to work. They deal with employees who are not covered by awards or enterprise agreements as well as what may be provided in those awards and agreements. As to the latter, s 63 provides:

(1)    A modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period. The average weekly hours over the period must not exceed:

(a)    for a full-time employee - 38 hours; or

(b)    for an employee who is not a full-time employee - the lesser of:

(i)    38 hours; and

(ii)    the employee's ordinary hours of work in a week.

(2)    The terms of a modern award or enterprise agreement may provide for average weekly hours that exceed the hours referred to in paragraph (1)(a) or (b) if the excess hours are reasonable for the purposes of subsection 62(1).

57    There is a note to s 63 which states:

Note: Hours in excess of the hours referred to in paragraph (1)(a) or (b) that are worked in a week in accordance with averaging terms in a modern award or enterprise agreement (whether the terms comply with subsection (1) or (2)) will be treated as additional hours for the purposes of section 62. The averaging terms will be relevant in determining whether the additional hours are reasonable (see paragraph 62(3)(i)).

58    So, all hours beyond the ordinary hours worked in a week under an averaging arrangement are subject to the requirements of s 62 in relation to the working of reasonable overtime.

59    However, the point of present relevance is that the statutory provision that a period of unpaid authorised leave does not count as a period of service must mean that ordinary hours that would otherwise have been worked in that period do not count towards the accrual of annual leave or personal leave. Periods of annual leave and personal leave do not work in that way. They are not excluded from the period of service. Therefore, ordinary hours that would have been worked in those leave periods do count towards the accrual of further annual leave and personal leave.

60    These distinctions explain why it is 'the employee's ordinary hours of work' (and not the employee's ordinary hours actually worked) that are the basis for the accumulation of annual leave and personal leave entitlements. They also explain the existence of s 22(2) which makes clear what is excluded when counting the period of service and, consequently, calculating the period of employment.

61    Section 44 of the Fair Work Act provides that an employer must not contravene a provision of the NES. Section 50 provides that a person must not contravene a term of an enterprise agreement. Each of these provisions is a 'civil remedy provision'. Contraventions of such provisions may give rise to the imposition of pecuniary penalties.

62    Section 55(1) provides that a modern award or an enterprise agreement must not exclude the NES. Terms which contravene s 55(1) have no effect to the extent of the contravention: s 56.

The 21 days on-swing, 7 days off-swing roster

63    The evidence as to the 21 days on-swing, 7 days off-swing roster worked by full-time employees is that it required employees to work 152 hours within the 21 days on-swing. They worked 10 hours per day Monday to Saturday starting at 6.00 am and finishing at 4.30 pm save that on Wednesday they worked 7.6 hours with the work day concluding at 1.36 pm.

64    The 7 days off-swing was taken as unpaid authorised leave.

65    Therefore, the roster established by SIMPEC pursuant to cl 12 meant that:

(1)    full-time employees worked 152 hours per four week roster;

(2)    of those hours, 10 were worked outside the window of 6.00 am to 6.00 pm, Monday to Friday; and

(3)    on all rostered days except Wednesday, more than 8 hours were worked.

66    If the rights under cl 12 were not exercised to impose the 21 days on-swing, 7 days off-swing roster then full-time employees would be entitled to work an average of 38 ordinary hours per week within the 'Ordinary Hours' period, with no more than 8 ordinary hours a day and would be entitled to overtime for hours above those ordinary hours. That would require no more than 40 ordinary hours to be worked in any week (being the most that could be worked in a way that would conform with all of the ordinary hours requirements of the EA). Further, save for cl 12, there was no term of the EA that authorised SIMPEC to require employees to take unpaid authorised leave. So, there would be an entitlement to be paid for ordinary hours of work for the 7 days off-swing. Assuming the maximum of 40 ordinary hours were worked during each of the three weeks of the on-swing, then 32 ordinary hours of work would be required to be provided to the employees in the 7 days off-swing to meet the EA requirement to provide 38 ordinary hours of work per week on average. Of course, this analysis assumes that the very extended work during the on-swing days could be worked as reasonable overtime.

67    So, it is clear that if the rights under cl 12 were not exercised then full-time employees would be able to accumulate a year's worth of entitlements to annual and personal leave after a period of service of one year because they could not be made to take unpaid authorised leave. However, the accumulation of those rights would depend upon working ordinary hours during the off-swing periods.

Enterprise agreements

68    The Fair Work Act provides for collective bargaining for enterprise agreements that deliver productivity benefits: see s 171. There are detailed provisions in the Fair Work Act concerning the way in which an enterprise agreement may be made. Enterprise agreements are subject to approval by the Fair Work Commission. There are also detailed provisions in the Fair Work Act concerning the approval process.

Issue (1): Upon the proper construction of the EA and the Fair Work Act, how did the workers accrue entitlements to annual leave and personal leave?

69    There is no real issue between the parties as to the proper construction of the annual leave and personal leave provisions in the Fair Work Act. Those entitlements accrue based upon ordinary hours worked. A period of unpaid authorised absence does not count. As has been explained, the EA provided for the NES provisions as to annual leave and personal leave to apply to employees covered by the EA.

70    However, even if a period of unpaid authorised absence does not count, there remains the question of how to assess the ordinary hours worked by full-time employees in each 28 day roster cycle (21 days on-swing, 7 days off-swing) having regard to the terms of the EA. In particular, how did cl 12 intersect with the provision in cl 5 that full-time employees were to work on average 38 ordinary hours per week.

71    Consequently, the real issue between the parties concerned the proper construction of the EA and the way in which the provisions of the EA that concerned the ordinary hours to be worked by full-time employees might have consequences for their entitlements to annual leave and personal leave under the NES provisions.

72    The Court's interpretation of an enterprise agreement 'turns upon 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] HCA 10; (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). Also, it has been said that the Court may presume that an agreement is intended to 'operate consistently with' the Fair Work Act: Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182 at [17] (Reeves, Bromberg and O'Callaghan JJ).

73    The relevant principles of construction for enterprise agreements were summarised in James Cook University v Ridd [2020] FCAFC 123; (2020) 278 FCR 566 at [65] (Griffiths and SC Derrington JJ). See also my collection of the authorities in Construction, Forestry, Maritime, Mining and Energy Union v Fremantle Port Authority [2024] FCA 848 at [23]-[25].

74    'The principles governing the interpretation of enterprise agreements are the same as those governing the interpretation of awards': One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; (2018) 262 FCR 527 at [189] (Bromberg, Katzmann and O'Callaghan JJ). Further, as was recently stated in Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots [2025] FCAFC 45 in dealing with the construction of an award (but on the basis that the same principles apply to enterprise agreements) 'a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced': at [12] (Logan, Dowling and McDonald JJ). It is a point often made on the basis that those who draft such documents are likely to be dealing in a practical way with industrial realities rather than the niceties of legal drafting.

75    As has been explained, the EA required all employees to be employed in one of three categories. The category of present relevance is a full-time employee. Under the EA such a person worked 38 ordinary hours per week on average. So, a full-time employee working the ordinary hours provided for by the EA would accrue annual leave and personal leave under the NES provisions at the rate of 38 hours per week. Further, save for the provision in cl 12 of the EA relating to a system of works, a full-time employee could not be required to take unpaid authorised leave. There was a stand down provision that could apply in limited circumstances. Otherwise, there was an entitlement under the EA for full-time employees to be provided with (and paid for) ordinary hours of work at an average of 38 hours per week which, when worked, would entitle the full-time employee to four weeks paid annual leave (and 10 days of paid personal leave).

76    Further, as has been explained, under the terms of the EA those ordinary hours must be worked between 6.00 am and 6.00 pm, Monday to Friday and hours worked outside that window would give rise to an obligation to pay overtime rates. Also, employees could not be required to work more than 8 ordinary hours in a day.

77    The Union characterised SIMPEC's case as one which meant that cl 12 allowed SIMPEC to require full-time employees to accrue leave as if they were part-time employees working an average of 28.5 ordinary hours per week (over the four week roster). It is true that on SIMPEC's case cl 12 not only allowed for the specification of a system of works that required full-time employees to work 21 days straight, it also allowed SIMPEC to require ordinary hours to be taken as unpaid authorised leave with the consequence that the annual leave and personal leave that a full-time employee would otherwise accrue would be less than if the system of works was not put in place. SIMPEC's calculation as to how it met the obligation to provide an average of 38 ordinary hours per week requires the unpaid authorised leave to operate in respect of ordinary hours, thereby reducing the number of paid ordinary hours to which the full-time employees would otherwise be entitled.

78    In effect, SIMPEC says that a clause in the EA which provided for flexibility in rostering operated in a manner that reduced the annual and personal leave entitlements of full-time employees which would otherwise arise on the express terms of the EA. SIMPEC's case is that it could deploy cl 12 to specify a system of works which would mean that full-time employees would not be able to earn the leave entitlements that would otherwise be earned by a full-time employee. Instead, they would accrue the same annual leave and personal leave entitlements of part-time employees who were working just 75% of the ordinary hours of a full-time employee (or, on SIMPEC's alternative case, they could be required to work many additional hours above 38 ordinary hours per week without overtime). Further, all this was possible without any terms of the EA expressly exposing that consequence to the employees.

79    Nevertheless, for the following reasons, I am persuaded that SIMPEC's position is legally correct. In my view, the following contextual aspects of the EA are of significance when it comes to construing cl 12:

(1)    the EA provides for employees to be employed in one of three categories;

(2)    the EA provides that employees who work in the full-time category work an average of 38 ordinary hours per week;

(3)    the EA applies pro rata to part-time employees on the basis of their ordinary hours compared to those of a full-time employee;

(4)    the EA provides that ordinary hours will not exceed an average of 38 hours per week and limits when those ordinary hours may be worked;

(5)    the EA provides that ordinary hours will not exceed 8 hours per day;

(6)    the EA requires work done outside of the 'Ordinary Hours' window to be paid at overtime rates;

(7)    the EA requires employees to work a reasonable amount of overtime including rostered overtime (a provision that operates in the context of the other provisions requiring work outside 'Ordinary Hours' to be paid at overtime rates and requiring a break of 10 hours between the end of ordinary work on one day and the commencement of ordinary work the following day);

(8)    none of the above provisions are expressed to be subject to cl 12;

(9)    clause 12 itself does not provide for any consequential adjustment to entitlements if the employee is required to work a system of works that includes Rest and Recreation Leave (usually to consist of unpaid authorised leave, accrued RDOs and any paid leave); and

(10)    the EA provides for annual leave and personal leave to be as provided for in the NES.

80    The last of the above aspects assumes considerable significance because it is not the EA that confers the leave entitlements. Rather, those entitlements depend upon the operation of the provisions of the EA in relation to ordinary hours of work and, most importantly, the contractual authority conferred by cl 12 to require employees to take days of unpaid authorised leave as part of a system of works.

81    Clause 12 expressly allows for SIMPEC to require its employees to work a 'system of works that includes Rest and Recreation Leave'. However, it does not otherwise alter the terms of the EA in relation to ordinary hours. This is significant because it means that those other obligations remain. As has been explained, the only way they can be met is if there are ordinary hours in each of the four weeks.

82    Significantly, the terms of cl 12 contain no language to suggest that its terms may be relied upon to adjust or alter the ordinary hours entitlements. The only adjustment it allows is for certain days to be required to be taken as unpaid authorised leave.

83    If the ordinary hours worked in the 21 days on-swing were counted as including 152 ordinary hours then there would be a failure to meet the requirement that no more than 8 ordinary hours be worked in a day and a failure to meet the requirement that ordinary hours be worked within the period of 'Ordinary Hours'. Therefore, in order to meet the ordinary hours requirements of the EA it had to be the case that the ordinary hours worked each week included a fair number of ordinary hours in respect of the 7 days off-swing. It is possible that the averaging allowed by the EA might permit 120 ordinary hours to be rostered in the 21 days on-swing, but that would mean that there would be less overtime hours in those weeks. The roster that was arranged was for 38 ordinary hours in each of the four weeks with those in the 7 days off-swing period being counted as unpaid authorised leave.

84    Clause 12 expressly allowed for a roster to be formulated in those terms and otherwise did not contemplate any adjustment to the ordinary hours provisions of the EA. The only mechanism that it allowed was the provision for Rest and Recreation Leave which could comprise unpaid authorised leave.

85    The difficulty for the Union is that the EA does not permit the allocation of 152 ordinary hours in the 21 days on-swing. There is the further issue that would arise concerning overtime calculations because, in effect, it seeks to have the same hours counted both as ordinary hours and overtime hours.

86    By the express terms of cl 12, full-time employees were not entitled to any payment for the days they were rostered off where those days were to be treated as unpaid authorised leave. So much followed from the language of cl 12. Otherwise, the requirements under the EA (a) to work an average of 38 ordinary hours per week; (b) to work no more than 8 ordinary hours per day; and (c) to work those ordinary hours in the specified window, were entitlements that remained in place and had to be met by any roster imposed under cl 12.

87    Consequently, by the end of a year, full-time employees working the 21 days on-swing, 7 days off-swing roster would not accrue a year's leave entitlements under the NES provisions because they would not have completed a period of employment of 12 months. Every fourth week of their continuous service would not be counted under the NES provisions because the unpaid authorised leave in respect of ordinary hours that was allowed by cl 12 would not count towards the accrual of annual leave and personal leave. Those employees were employed for an average of 38 ordinary hours per week. However, the ordinary hours in the off-swing week were taken as unpaid authorised leave and when it came to determining their NES annual leave and personal leave entitlements those hours did not count.

88    The off-setting benefit for the employees was that in order for the system of works to comply with the EA they were paid for many more hours at overtime rates than if they had worked the ordinary hours under the EA without the invocation by SIMPEC of cl 12 to establish the 21 days on-swing, 7 days off-swing system of works.

89    In a sense, the consequence of the roster is that there were less paid ordinary hours than were contemplated for a full-time employee and the accrual of three-quarters of the leave entitlements of a person who was paid for all those ordinary hours. However, that part of the Union's case fails to allow for the operation of cl 12 and the fact that the leave entitlements were sourced in the NES, not the EA. The system of works did not result in less ordinary hours. Rather, the system of works meant that 38 ordinary hours of each four week swing were required to be taken as unpaid authorised leave. This was a course expressly authorised by the EA. Its consequence for the operation of the NES leave provisions was a statutory outcome.

Issue (2): Should the claim be treated as confined to Mr Cations or is it properly brought on behalf of a class?

90    The claim made by the Union is in respect of workers employed by SIMPEC on contracts which contained written terms that provided:

a.    they were engaged as full-time employees;

b.    their employment was for the specified project of SIMPEC's contract at Iron Bridge;

c.    their ordinary hours of work would be 38 per week; and

d.    these hours would be worked on the first three weeks of a four week roster.

91    As to the above claim, SIMPEC accepts, in substance, that Mr Cations was employed under a contract of that kind. Otherwise, it says that the Union's plea as to SIMPEC employing workers under contracts which contained such terms is 'embarrassing'.

92    Before the hearing, the Union served a notice upon SIMPEC to admit the following facts:

1.     The Workers, as defined in the Statement of Claim filed in these proceedings were engaged pursuant to contracts of employment which contained written terms providing that:

a.    they were engaged as full time employees;

b.    their ordinary hours of work would be 38 per week;

c.    these hours would be worked on the first three weeks of a four-week roster.

2.    SIMPEC rostered the Workers on a 21/7 roster over a 28 day period, in that they would work 21 days straight then have 7 days off.

3.    In the 21 day working period, the Workers worked at least a total of 202.8 rostered hours.

4.    In respect of the Workers, SIMPEC applied a system where it credited the Workers annual leave based on an accrual of 8.76 hours per 28-day roster. Over the course of the year, this system resulted in the Workers being treated as having accrued a maximum of 114 hours of annual leave.

5.    In respect of the Workers, SIMPEC applied a system where it credited the Workers personal leave based on an accrual of 4.38 hours per 28-day roster. Over the course of the year, this system resulted in the Workers being treated as having accrued a maximum of 56.94 hours of personal leave.

6.    The CEPU is entitled to represent the industrial interests of the Workers.

93    In response, SIMPEC maintained that the Union was only entitled to seek orders in respect of 'the identified employee' in the statement of claim. This was a very odd position to take because there was no employee identified in the Union's statement of claim. Rather, as has been explained, the claim identified a class of employees. SIMPEC appears to have sought to engineer the position that the statement of claim related only to Mr Cations by including the following plea in its amended defence under the heading 'Jurisdiction':

On 19 April 2024, the Applicant (Union) provided to the Respondent (SIMPEC) a contract of employment for its member, Mr Benjamin Cations (Cations Contract). On the basis that the Union's statement of claim raises allegations in respect of the Cations Contract and raises allegations in respect of Mr Cations accruals of annual leave and personal leave (Cations Claim), SIMPEC accepts this Court has jurisdiction to determine the matters in respect of Cations Claim.

94    Implicitly, SIMPEC's position was that the Court did not have jurisdiction beyond dealing with the 'Cations Claim'.

95    As to the notice to admit, SIMPEC's position was stated in a letter to those acting for the Union. It said:

You are correct that our client's position, as explained to you on various occasions, is that your client is only entitled to seek orders in respect of the identified employee in your client's statement of claim, namely, Benjamin Cations.

It follows that our client does not agree to the tender of facts that do not relate to Mr Cations (and Mr Bucci, who has filed an affidavit in the proceeding). Facts beyond this scope are not relevant; see s 55 of the Evidence Act 1995 (Cth). This is not a 'jurisdictional issue' that turns on 'legal argument'; this is limiting evidence to what is relevant and legitimately raised on the pleadings, in light of the extent of the Court's powers to order relief under the Fair Work Act 2009 (Cth).

However, in the interests of moving the proceeding forward, we are instructed that our client is willing to withdraw the Notice of Dispute, on the basis that the relevance of the matters in the Notice to Admit is disputed by our client.

If you are content to proceed in this way, we suggest that the parties jointly address the matter before the judge at the commencement of the trial. If there is agreement to proceed in this way, then this letter could be produced by either party to explain the situation.

96    The letter was produced at the hearing as the basis upon which SIMPEC responded to the notice to admit. Therefore, the facts in the notice to admit have been established for the purposes of the proceedings. It follows that it has been established that there is a class of full-time employees of the kind alleged by the Union.

97    SIMPEC maintained its position that the case was conducted by the Union as a claim by Mr Cations and its opening written submission was expressed on that basis suggesting that claims as to employees other than Mr Cations were 'unpleaded'. As to relief, SIMPEC asserted in its opening written submission, that: 'Any declaratory relief can only be framed with respect to Mr Cations' employment'. Precisely why that may be so was not addressed. At the hearing, senior counsel for SIMPEC explained its position in the following way:

But our concern is that if you apply the situation of Mr Cations to a class which has not been identified in terms of individuals and their contractual arrangements, there is the risk you will be moving into an area of providing an advisory opinion regarding a hypothetical class. And so… we felt it was safer for your Honour simply to determine Mr Cations case, which is a clear vehicle, and then the parties and your Honour could then determine what is the best way forward after that.

98    Section 540(6) of the Fair Work Act provides that a union may apply for orders under Division 2 of Chapter 4 of the legislation in relation to a contravention of a civil remedy provision in relation to a person only if the person is affected or will be affected by the contravention and the union is entitled to represent the industrial interests of the person.

99    As has been explained, a contravention of an NES provision is a contravention of a civil remedy provision.

100    The expression 'entitled to represent the industrial interests of the person' equates with the historical concept developed in cases that began with Burwood Cinema Ltd v Australian Theatrical and Amusement Employees' Association (1925) 35 CLR 528. This was explained in Regional Express Holdings Limited v Australian Federation of Air Pilots [2017] HCA 55; (2017) 262 CLR 456, particularly at [32] where the High Court said:

Dunlop Rubber then added to what had been established in Burwood Cinema and Metal Trades the critical insight that an association acts in an industrial dispute in an independent capacity because the association represents 'not definite or then ascertainable individuals but a group or class the actual membership of which is subject to constant change'. Thus, as it was held, a trade union had the capacity 'to formulate industrial claims in the interests of that group or class ascertainable by reference to the "conditions of eligibility" prescribed by its rules' (emphasis added). It was no obstacle to the existence of an industrial dispute initiated by the trade union serving a log of claims on an employer that none of the employer's employees was a union member. It was sufficient if the employer's employees were eligible for membership of the union.

(footnotes omitted)

101    Section 540(6) 'is concerned with the standing of an organisation to bring in its own right civil remedy proceedings for contraventions of the Act affecting a designated class of persons in relation to whom the organisation has industrial coverage': Regional Express at [50]. The class has been appropriately designated.

102    The Court has broad statutory powers to make orders. It can make declaratory orders.

103    The claim was properly brought by the Union on behalf of a class of persons being workers engaged by SIMPEC as full-time employees at the Iron Bridge Project who worked on a roster of 21 days on-swing and 7 days off-swing.

Issue (3): Having regard to the answer to (2), in what terms should any declaratory relief be expressed?

104    For reasons that have been given in resolving Issue (1), the basis for the claim to declaratory relief has not been established.

Issue (4): Is it 'inappropriate' to order compensation unless there is provision for an adjustment for overtime payments?

105    Given the conclusion I have reached on Issue (1), this issue does not arise.

Issue (5): In what terms should any orders for compensation be expressed?

106    The claim by the Union was brought on the basis that there should be orders for appropriate compensation to be assessed by a referee process if its claim was otherwise successful. It sought orders to the following effect:

(1)    SIMPEC engage at its expense a suitably qualified independent referee;

(2)    The referee audit the wages records of SIMPEC for each worker in the class;

(3)    The referee provide a report setting out:

(a)    the identity of each worker;

(b)    the amounts of annual leave and personal leave that ought to have accrued to each worker according to the position as declared by the Court;

(c)    the amounts of annual leave and personal leave that in fact accrued to each worker; and

(d)    the amount that would compensate each worker for the difference between (b) and (c).

(4)    Following an adoption hearing, there be orders as to the amount of compensation to be paid to each worker.

107    SIMPEC disputed the need for a referee. It maintained that there was nothing to suggest that SIMPEC would not appropriately give effect to the declared position and it should have an opportunity to do so before any referee was appointed. Reliance was placed by the Union on the decisions by Rares J in Australian Rail, Tram and Bus Industry Union v Transit Systems West Services Pty Ltd [2021] FCA 1436 and Australian Rail, Tram and Bus Industry Union v Transit Systems West Services Pty Ltd (No 2) [2022] FCA 389. It was concerned to ensure that the cost burden of determining the amount of compensation was born by SIMPEC. It was also concerned that there would need to be some form of audit in any event because the Union was not in a position to be able to determine for individual workers whether any calculations presented by SIMPEC may be appropriate.

108    Had I found that there was a basis to award compensation, I would have concluded that there the appointment of a suitably qualified referee as proposed by the Union was the appropriate course. Nevertheless, I would have allowed SIMPEC a fixed period of time in which to undertake its own calculations as to the appropriate compensation.

109    However, for reasons that I have given, there should be no order for assessment of compensation.

Issue (6): Should an order be made for pecuniary penalties in an amount to be assessed?

110    As the contraventions have not been made out, there should be no order for pecuniary penalties.

Conclusion and orders

111    The application must be dismissed. The parties sought to make submissions as to costs once the outcome was known. I will preserve liberty to apply for any order as to costs. If that liberty is exercised, I will determine whether it is appropriate for any such application to be determined on the papers.

A postscript: the decision in Corporate Air Charter

112    The Court gave leave for the parties to provide written submissions as to the relevance of the recent decision in Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots for the resolution of the issues in these proceedings. SIMPEC claimed that the judgment in that appeal 'all but confirms' that the Union's approach to the construction of the ordinary hours entitlements under the EA is incorrect. It submitted that the decision was to the effect that the period of unpaid authorised leave also counted as ordinary hours.

113    For reasons that have been given, the resolution of Issue (1) concerns the interaction between cl 12 and the ordinary hours provisions of the EA. It is a very different issue to that under consideration in Corporate Air Charter which concerned the Air Pilots Award 2020 which included a provision (cl 15.2) which stated:

Hours of work, days off and rest periods will be determined in accordance with the following provided that ordinary hours of work must not average more than 38 per week:

(a)    the regulations approved by CASA from time to time;

(b)    general or employer-specific exemptions to, or concessions under, the regulations approved by CASA from time to time; or

(c)    a Fatigue Risk Management System (FRMS) that has been developed by the employer after consultation with the affected pilots and/or their representatives and approved by CASA to apply to particular employers and employees.

114    There was an issue as to whether the hours of paid leave are added to the total weekly hours for overtime purposes. The appellants submitted that the decision below was in error in finding that they were to be added: at [73]. The respondent relied upon s 62(4) as an answer to the contention. As has been mentioned, s 62 is concerned with the maximum hours that an employee may be requested or required to work. It specifies 38 hours per week for a full-time employee. However, it allows for additional hours that 'are reasonable'. It identifies various matters to be taken into account in determining whether additional hours are reasonable. In that context, s 62(4) then says:

For the purposes of subsection (1), the hours an employee works in a week are taken to include any hours of leave, or absence, whether paid or unpaid, that the employee takes in the week and that are authorised:

(a)    by the employee's employer; or

(b)    by or under a term or condition of the employee's employment; or

(c)    by or under a law of the Commonwealth, a State or a Territory, or an instrument in force under such a law.

115    The Full Court concluded that there was no error in including hours of leave in the total weekly hours of work for overtime purposes: at [77].

116    I am not persuaded that the reasoning in Corporate Air Charter informs the resolution of the very different issue that arises in the present case in respect of a different industrial instrument concerned with different employment terms and which relates to the operation of a rostering clause.

Associate:

Dated:    14 May 2025