IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

No VI 5396 of 1995

B E T W E E N :

AUSTRALIAN EDUCATION UNION

Applicant

AND

THE STATE OF VICTORIA

Respondent

MINUTES OF ORDERS

BEFORE:      North J

PLACE:         Melbourne

DATE:          23 December 1996

THE COURT DECLARES THAT:

On the proper interpretation of clause 2.1.14(1) of the Teachers (Victorian Government Schools - Interim) Award 1994:

1.     the entitlement of a teacher employed during the six months ending 30 June 1995 to a salary loading allowance for service during that period is to be calculated in accordance with clause 2.1.14(1)(c)(ii) of the Award;

2.     no period of service of a teacher prior to 1 January 1995 constitutes service for the purpose of clause 2.1.14(1) (c) of the Award;

3.     a day upon which a teacher has been absent without leave within the meaning of clause 4.1.8(1) of the Award and with respect to which the teacher has forfeited his or her salary is not a day of service within the meaning of clause 2.1.14(1)(c)(ii) of the Award.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

No VI 5396 of 1995

B E T W E E N :

AUSTRALIAN EDUCATION UNION

Applicant

AND

THE STATE OF VICTORIA

Respondent

BEFORE:      North J

PLACE:         Melbourne

DATE:          23 December 1996

REASONS FOR JUDGMENT

        The applicant, the Australian Education Union, is an organisation of employees registered under the Industrial Relations Act 1988 (the Act). On 23 October 1995, it applied to the Court under s 413(1) of the Act for an interpretation of clause 2.1.14 (a) and (c) of the Teachers (Victorian Government Schools - Interim) Award 1994. The respondent, the State of Victoria, is bound by the award in respect of its employment of teachers. Clause 2.1.14 of the award reads:

“2.1.14   Salary loading allowance

(1)   (a)   A teacher employed on 30 June of any year who has at that date completed one year of full-time service for which salary has been received commencing on 1 July of the preceding year, shall be entitled to receive an annual salary loading allowance equivalent to 17½% of four weeks of the total emolument to which he or she is normally entitled at that date, or the maximum amount specified in Schedule 2, whichever is the lesser.

               Provided that the allowance for 1995 shall be calculated on a pro rata basis for the six months ending 30 June 1995.

(1)   (b)   No payment shall be made in respect of service prior to resignation except in the case where a member resigns only for the purpose of changing his/her conditions of employment without a break in the continuity of service.

(1)   (c)    Pro rata payment in respect of service at 0.4 time fraction or greater shall be made in the case of -

(1)   (c)    (i)      members who die or members who retire on account of age or ill health - at their final salary rates;

                        or

(1)   (c)    (ii)     members who have completed a minimum of 90 days service within the twelve months preceding 30 June. For the purpose of payment under this subclause the allowance shall accrue at the rate of one quarter of the entitlement for each completed 90 days of service and in the case of part-time service the rate of payment shall be determined by the time fraction for which service within the preceding twelve months was the longest in the aggregate.

                        For the purpose of this subclause a temporary member shall be deemed to retire -

(1)   (c)    (1)     on account of age - if on or after attaining the age of 55 he/she ceases to be employed;

(1)   (c)    (2)     on account of ill health - if he/she produces to the Chief General Manager satisfactory evidence that his/her ceasing to be employed is due to ill health which is likely to be permanent.

(1)   (d)   For the purpose of this clause, leave without pay for religious observance, and vacation periods which do not attract pay but are otherwise counted as service, shall be regarded as service, shall be regarded as service for which salary has been paid.” [sic]

The decision to provide for the salary loading allowance was issued on 23 December 1994, and clause 2.1.14 was inserted into the award on 29 June 1995. It was expressed to have effect from:

“the first pay period to commence on or after 31 December 1994 ....”

        Controversy has arisen between the applicant and the respondent concerning the proper payment of annual salary loading allowance for 1995. Some teachers employed throughout the period from 1 January 1995 to 30 June 1995 were absent from work for 2.5 days in the period from 1 April 1995 to 30 June 1995 while engaged in industrial action, and were not paid salary for that time. The respondent paid those teachers one-quarter of the annual entitlement of salary loading allowance. The applicant contended that these teachers were entitled to half of the annual salary loading allowance.

        Clause 2.1.14 is in the same terms as the pre-existing State awards, except for the proviso in subclause (1)(a). It had effect from the first pay period to commence on or after 31 December 1994. Apparently, the system for the payment of salary loading allowance to teachers operates on a 1 July to 30 June accounting period. This is reflected in the terms of subclause (1)(a). Without the proviso to subclause (1)(a) full time teachers, who had completed one year of full time service for which salary had been received commencing on 1 July 1994, would have been entitled to receive the full annual allowance on 30 June 1995. As the award had been operating for only about half of the period from 1 July 1994 to 30 June 1995, the proviso aimed to ensure that the full annual entitlement would not be payable for the period from the commencement of the award until 30 June 1995. The conflicting interpretations concern the operation of the proviso.

        Mr Hinkley, who appeared as counsel for the applicant, argued that subclause (1)(c)(ii) applied in respect of the teachers concerned, but that the period of calculation commenced on 1 July 1994, not 1 January 1995. This followed, he argued, because the central concept in subclause (1)(c)(ii) was the entitlement to the allowance, and the entitlement established by subclause (1)(a) was an allowance based on one year of full time service for which salary had been received. In the case of the teachers concerned who were employed for the whole of the period from 1 January 1995 to 30 June 1995, the proviso was concerned to ensure that they would receive no more than half of the full annual allowance on 30 June 1995. Mr Hinkley argued that the proviso did not provide for the calculation of the allowance to begin at any time other than 1 July 1994, as was required by the first paragraph of subclause (1)(a). The first paragraph of subclause (1)(a) required payment of the full annual allowance to a teacher employed on 30 June 1995, who had completed one year of full time service for which salary had been received commencing on 1 July 1994. Mr Hinkley submitted that the proviso then required the entitlement to be reduced by half for the 1995 year. Where subclause (1)(c)(ii) applied, as it did in respect of the teachers concerned in the present case, it operated in the same way. The pro rata entitlement for service in the whole period from 1 July 1994 to 30 July 1995 had to be calculated. Then the proviso was applied by reducing that entitlement by half. On this basis, although the teachers concerned were on strike for 2.5 days in the 365 day period, they still worked more than four periods of 90 days. In the absence of the proviso, they would each be entitled to four-quarters of the annual allowance, that is to say, the full allowance. The proviso operated to reduce the entitlement by half for 1995. Consequently, the applicant submitted that the teachers concerned were entitled to half the annual allowance for 1995.

        Dr Jessup QC, who appeared with Mr O’Grady for the respondent, submitted that the reference in the proviso to the calculation of the allowance on a pro rata basis directed the reader to subclause (1)(c)(ii) because it provided for the calculation of the allowance on a pro rata basis. He contended that the period of service for the calculation of the allowance commenced on 1 January 1995. For the first 90 days after 1 January 1995, the teachers concerned were entitled to one-quarter of the full allowance under subclause (1)(c)(ii). The respondent paid them that amount. The period from 1 January 1995 to 30 June 1995 comprised 181 days. Because the teachers were on strike for 2.5 days in the remainder of the period, they did not serve another full 90‑day period before 30 June 1995. They served 88.5 days. Consequently, it was argued, they did not qualify for the next quarter of the full allowance under subclause (1)(c)(ii). Thus, the central controversy in relation to the teachers concerned in this case was whether the commencement of the period of time for the calculation of the allowance was 1 July 1994, as contended by the applicant, or 1 January 1995, as contended by the respondent. In my view, it was the latter.

        The structure of subclause (1)(a) without the proviso, and subclause (1)(c)(ii) is quite straightforward. Subclause (1)(a) provided for the full entitlement of salary loading allowance for a teacher who provided the specified service for a full year between 1 July in one year and 30 June in the next year. It set the amount which constituted the entire annual allowance, and set the period of service which qualified a teacher to receive that full amount of allowance. Subclause (1)(c)(ii) provided for the situation in which a teacher had served for less than the full 12-month period but had served within that period. It set the minimum period of service for which some payment of allowance would be made, namely, 90 days. It also set the rate at which the payment for each period of 90 days would be made, namely, 25 per cent of the annual rate. Importantly, the proportionate amount of allowance was payable for service of 90-day periods within the 12-month period from 1 July in one year to 30 June in the next year.

        The proviso to subclause (1)(a) operated within this structure. As a proviso, it signalled that it was to make provision in a way which was different from the provision in the first paragraph. It dealt with an exception to that provision. The subject of the proviso was the allowance for 1995, which meant that it provided for the allowance payable on 30 June 1995. It specified the method to be used to establish the amount of the allowance, namely, that the allowance was to be calculated on a pro rata basis. This was a reference to subclause (1)(c)(ii), which commenced with the words “pro rata payment”, and which provided for payment of one-quarter of the annual amount for each completed 90 days of service. The proviso also specified that the pro rata calculation should be “for the six months ending on 30 June 1995”. This phrase indicated the final alteration in the structure of the clause necessary to accommodate the requirement that the allowance was to be paid in respect of less than a full year. In other words, it provided for the overall period within which the 90-day pro rata qualification period or periods would occur. It thereby applied the pro rata provisions in subclause (1)(c)(ii) to members who had completed 90 days service within, not the twelve months preceding 30 June 1995, but within the six months preceding 30 June 1995.

        On this approach the proviso is seen to follow the pre-existing structure of the subclauses. The construction urged by the applicant reads the reference to the “allowance for 1995” in the proviso as a reference to the “annual salary loading allowance” referred to in the first paragraph of the proviso. That reference means that calculation of  the 1995 period was to start with the determination of the amount payable for the whole year. I do not see this as a sensible reading of the proviso. The reference to “the allowance for 1995” merely described the object of the calculation. The basis of the calculation was then set out, namely, on a pro rata basis for the six months ending 30 June 1995. The phrase did not suggest an annual basis for the calculation. The applicant further argued that the proviso was designed to allow a simple calculation of the allowance, namely, a calculation achieved by arriving at an annual entitlement and dividing it in half. In other words, the proviso had the meaning that the allowance for 1995 would be half of the allowance which would have been payable for a full year. On this construction, a teacher who served from 1 April 1995 to 30 June 1995 would have an annual entitlement of one-quarter of the full entitlement because the teacher served for 90 days in the full year. The proviso would apply to reduce the entitlement by half. The result would be that in 1995 the teacher would receive one-eighth of the total annual entitlement. Mr Hinkley contended that this result was consistent with the purpose of the clause. Had this result been intended, however, the clause would have been expressed in just those terms. In my view, the proviso operated with respect to service which occurred within the period starting on 1 January 1995 and ending on 30 June 1995. It is more likely that the provision was meant to entitle a teacher to a pro rata portion of the full allowance for the period of service in the last six months of the period because this was the only period during which the award was in operation in the twelve-month period between 1 July 1994 and 30 June 1995.

        The applicant initially contended that an absence without leave while engaging in industrial action nonetheless constituted service for the purpose of subclause (1)(c)(ii). On this basis, the teachers who were absent for 2.5 days between 1 April 1995 and 30 June 1995 would be regarded as having rendered service on those days. Even if the period for calculation of the allowance commenced on 1 January 1995, the teachers would have served a second 90‑day period within the period, and would have qualified for a second quarter payment of the allowance. It was common ground that service in subclause (1)(c)(ii) meant service for which salary has been received, as appears in subclause (1)(a) and (1)(d). Clause 4.1.8 of the Award prohibits absence without leave and provides for the forfeiture of salary for periods of absence without leave as follows:

“(1)  No member shall be absent without leave. Provided that a member prevented by sudden illness or other emergency from attending his/her place of employment shall not be deemed to be absent without leave if he/she reports such absence as soon as practicable and furnishes satisfactory evidence that the absence was unavoidable and not due to any misconduct by the member.

(2)  Where a member is absent from duty without leave and the absence was not authorised, the Chief General Manager may direct the forfeiture of the salary of the member for the period concerned.

(3)  In addition to sub-clause (2), where a member is absent from duty without leave immediately before or after a school vacation period, the Chief General Manager may direct the forfeiture of salary or pay of the member for that vacation period.”

When a teacher is absent without leave and does not receive salary because that teacher is engaging in industrial action, the period of absence is not service for which salary is received. Thus, a teacher employed between 1 January 1995 and 30 June 1995 who has been absent for 2.5 days without leave on account of industrial action, and has not received salary for that time, is entitled to one-quarter of the annual entitlement for service for 90 days. The teacher is not entitled to a further quarter payment because the teacher has not completed service for which salary has been received for another 90‑day period between 1 January 1995 and 30 June 1995.

        Towards the end of the hearing, the applicant accepted that if 1 January 1995 was the commencement of the period for calculation of the allowance, then the teachers concerned in this case were not entitled to the second quarter portion of the allowance. In light of the acceptance of this consequence, counsel for the applicant asked the Court to refrain from giving an interpretation that time spent on strike without pay was not service for which salary was received. Counsel was reluctant to concede that the days on strike did not amount to service for which salary was received. On the other hand, the respondent argued that the Court should give an interpretation that days on strike without pay did not constitute relevant service because it was obviously correct, and the case had initially been conducted on the basis that the issue was in contention. In my view, an interpretation should be given on this issue, for the reasons argued by the respondent. However, as both parties agreed that the controversy between them related to the application of subclause (1)(c)(ii) and not (1)(a), it is appropriate that the interpretation be limited to subclause (1)(c)(ii). While the interpretation of (1)(c)(ii) should elucidate some aspects of (1)(a), it is better that any further interpretation of (1)(a) await a specific controversy concerning its application.

        The Court therefore determines that on the proper interpretation of clause 2.1.14(1) of the Award:

1.     the entitlement of a teacher employed during the six months ending 30 June 1995 to a salary loading allowance for service during that period is to be calculated in accordance with clause 2.1.14(1)(c)(ii) of the Award;

2.     no period of service of a teacher prior to 1 January 1995 constitutes service for the purpose of clause 2.1.14(1)(c) of the Award;

3.     a day upon which a teacher has been absent without leave within the meaning of clause 4.1.8(1) of the Award and with respect to which the teacher has forfeited his or her salary is not a day of service within the meaning of clause 2.1.14(1)(c)(ii) of the Award.

I certify that this and the preceding

ten (10) pages are a true copy of the reasons

for judgment of his Honour Justice North.

Associate:

Dated:            23 December 1996

APPEARANCES

Counsel appearing for the applicant:           R. Hinkley

Solicitors for the applicant:                         Holding Redlich

Counsel appearing for the respondent:        C. Jessup QC, with C. O’Grady

Solicitors for the respondent:                      Minter Ellison

Date of hearing:                                           4, 6 December 1996

Date of judgment:                                       23 December 1996