FEDERAL COURT OF AUSTRALIA INDUSTRIAL RELATIONS - breach of Teaching Service (Tasmanian Public Sector) Award 1995 - whether cl 16 of award applicable to part-time employees - incremental salary increase -inconsistency between federal award and state regulations - whether entitled to underpayments before commencement of award - penalty Tasmanian State Service Regulations 1985 (Tas) reg 606(2) Tasmanian State Service Act 1984 (Tas) ss 3, 81 Acts Interpretation Act 1931 (Tas) s 5(2) Industrial Relations Act 1988 (Cth) ss 38, 155 Workplace Relations Act 1996 (Cth) ss 152, 178(4)(a) Constitution 1901 (Cth) s 109 Teaching Service (Tasmanian Public Sector) Award 1995 cl 5, 6, 16, sch 1 Teaching Service (Teaching Staff) Award 1993 cl 18 Pickard v John Heine & Son Ltd (1924) 35 CLR 1 applied In the Matter of a Referral from Anomalies Conference No 6 to Vary the Teaching Service (Teaching Staff) Award TA 20 of 1987 Re: Rates of Pay for Part-time, Casual and Temporary Teachers referred to Printing & Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 referred to Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 applied VICKI JUNE FREARSON v THE MINISTER FOR PUBLIC SECTOR MANAGEMENT ON BEHALF OF THE CROWN IN THE RIGHT OF TASMANIA NO. TG 16 of 1997 JUDGE: HEEREY J DATE: 22 APRIL 1998 PLACE: HOBART (heard in Melbourne) IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY TG 16 of 1997 BETWEEN: Vicki June Frearson Applicant AND: The Minister for Public Sector Management on Behalf of the Crown in the Right of Tasmania Respondent JUDGE: HEEREY J DATE: 22 APRIL 1998 PLACE: HOBART (heard in melbourne) THE COURT ORDERS THAT: 1. The respondent pay the applicant $2,425.99. 2. A penalty of $1500 be imposed on the respondent. 3. The respondent pay the said sum of $1500 to the applicant. 4. The respondent pay to the applicant interest on the said sums of $2,425.99 and $1500 in an amount agreed upon or in default of agreement to be fixed by a Registrar or Judicial Registrar. 5. Liberty to apply reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY TG 16 of 1997 BETWEEN: Vicki June Frearson Applicant AND: The Minister for Public Sector Management on Behalf of the Crown in the Right of Tasmania Respondent JUDGE: HEEREY J DATE: 22 APRIL 1998 PLACE: HOBART (heard in melbourne) REASONS FOR JUDGMENT This proceeding concerns the interpretation of cl 16 of the Teaching Service (Tasmanian Public Sector) Award 1995 ("the Award"). The applicant claims that she was not paid amounts to which she was entitled under the Award while she was employed by the respondent as a permanent part-time teacher. Clause 16 of the Award provides for annual incremental salary increases for employees bound by the Award. The respondent incrementally increased the applicant's salary, but only when she had worked hours of service equivalent to 12 months' full-time service, rather than annually. The applicant contends that cl 16 provides for employees' salaries to be increased annually regardless of whether the employee worked full-time or part-time. The respondent contends that cl 16 does not apply to part-time employees at all, or in the alternative that its application is subject to reg 606(2) of the Tasmanian State Service Regulations 1985 (Tas). Regulation 606(2) provides for part-time employees' salaries to be increased according to the actual number of hours worked. The applicant seeks the amount by which she claims she was underpaid. She also seeks orders penalising the respondent for breaching the Award. The Award The Award came into operation on 1 January 1995 and remained in force for 12 months. It bound the respondent, the Australian Education Union and employees covered by the Award. Under the Award, teachers are classified according to their qualifications, position and experience. Clause 16 of the Award provides: "16 - SALARY INCREMENTS (a) Except where otherwise specifically determined by this award, or where inconsistent with any Act, an employee, while holding a position within a band, level, class or grade in respect of which a salary scale is prescribed by this award, and who for not less than twelve months has been in receipt of a salary less than the maximum salary prescribed for such classification, shall be entitled to receive the annual increment prescribed for such classification until the maximum salary is reached. Provided that an employee who was an employee on the date of this award shall be entitled to receive such increment on the anniversary of the date upon which he received his/her last salary increment in respect of his/her present position. (b) An employee whilst continuing to hold the same office or position shall, unless the employer otherwise determines, be deemed, for the purposes of this clause, to have been in receipt of a salary during any period of leave without pay in the twelve months immediately following the date upon which his previous salary increment was awarded. (c) Notwithstanding anything contained in this award, no employee shall be entitled to receive any increase in salary by virtue of this award unless, in the opinion of the employer, his/her conduct, diligence and efficiency during the twelve months immediately prior to the date from which such increase would be payable shall have been satisfactory." As can be seen, cl 16 does not distinguish in its terms between full-time and part-time employees. It refers to an "employee" without qualification. "Employee" is defined in cl 5 of the Award as"a person employed under the provisions of the Tasmanian State Service Act 1984". Section 3 of the Tasmanian State Service Act 1984 (Tas) defines "employee" as "a permanent employee or temporary employee", with some exceptions which are not relevant for present purposes. Cl 5 of the Award defines a "full-time employee" as "a person engaged to work for the full ordinary hours prescribed". "Part-time employee" is defined in cl 5 as "a person other than a full-time or relief employee, engaged to work regularly in each pay period for less hours than an equivalently-classified full-time employee." Nothing in those definitions suggests that the word "employee" in cl 16 should be read down to only refer to a full-time employee. While an employee may be classified as a full-time, part-time, permanent, temporary or relief employee, nothing in the definitions indicates that the word "employee" in cl 16 does not cover each of those categories of employee. The applicant was a permanent part-time employee. Accordingly, it appears that she was an "employee" for the purposes of cl 16. The respondent's arguments The respondent relies upon four arguments to support his contention that cl 16 does not apply to part-time employees. Those arguments are based upon: 1. a literal interpretation of cl 16; 2. the history of cl 16; 3. the overall theme of the Award; and 4. the operation of reg 606(2) of the Tasmanian State Service Regulations 1985 (Tas). 1. Literal interpretation of clause 16 Clause 16 only applies where the Award prescribes a "salary scale" for an employee. The respondent contends that the Award does not prescribe a salary scale for part-time employees, so cl 16 does not apply to them. Paragraphs (a), (b) and (c) of cl 6 prescribe the classifications for teachers based on their qualifications and previous relevant experience. The salary for each classification is set out in Schedule 1. Sub-Clause 6(e) provides that: "Part-time employees shall be paid such proportion of the salary of an equivalent full-time teacher as their fractional appointment bears to a full-time teacher." The respondent contends that sub-cl 6(e) of the Award stands alone and does not confer "salary scales" for part-time teachers. I do not agree. The salary of a part-time teacher cannot be determined without reference to paras (a), (b) and (c) and of cl 6 and schedule 1 of the Award. The proportional calculation required by sub-cl 6(e) is based upon the figures provided by those provisions. Read with schedule 1, cl 6 as a whole prescribes salary scales for both full-time and part-time employees. I conclude that the Award does prescribe a salary scale for part-time employees. 2. History of clause 16 The respondent contends that cl 16 is ambiguous, and that I should look to its history to resolve that ambiguity. I am not persuaded that cl 16 is ambiguous. However for the purposes of argument I will accept that it is, and will consider its history (see Pickard v John Heine & Son Ltd (1924) 35 CLR 1 at 9). Clause 16 has its genesis in Tasmanian awards dating from 1962. In each of the predecessor awards, however, the incremental salary increase clause failed to specify whether or not it applied to part-time employees. The respondent notes that State awards did not prescribe salaries payable to part-time employees until 1987. He contends that, because the pre-1987 increment provisions did not provide for part-time employees, neither did the post-1987 increment provisions. I do not find that argument convincing. On the contrary, a more plausible historical rationale is that once part-time employees came within the coverage of the Award in 1987 they were to be treated, mutatis mutandis, in the same way as full-time employees, including their entitlement to annual increments. 3. Overall theme of the Award The respondent contends that the application of cl 16 to part-time employees will undermine the overall theme of the Award, which is progression according to qualifications and experience. Part-time employees, the respondent argues, will advance through the salary scale at an accelerated rate compared to their full-time colleagues. The respondent points to the salary structure set up in paragraphs (a), (b) and (c) of cl 6 (mentioned above) as an example of that theme. However, cl 6 should be read as a whole. Part-time employees are also classified under the classifications set up in cl 6(a), (b) and (c). In any case, the argument that part-time employees will move at an "accelerated rate" begs the question. It assumes that cl 16 was not intended to have the effect of increasing part-time employees' salaries annually. It appears to be based on the premise that cl 16 (as read by the applicant) gives part-time employees a faster incremental increase in salary than they deserve. However, the incremental increase which part-time employees deserve should be determined by the terms of the Award, not by the respondent's interpretation of the Award at a later date. The respondent also cited an Education Department circular memorandum dated 14 May 1987 in support of its contention that the overall theme of the Award indicated that increments should be calculated according to hours worked. In the memorandum, the Department says: "There is a possibility that decisions to be made by the Tasmanian Industrial Commission may result in hourly rates being struck for each rung of the salary scales, with progression from one rung to the next when the equivalent of a year's full-time service has been accumulated." (Emphasis in original) The memorandum is cited by Commissioner Gozzi in TA 20 of 1987 In the Matter of a Referral from Anomalies Conference No 6 to Vary the Teaching Service (Teaching Staff) Award; Re: Rates of Pay for Part-time, Casual and Temporary Teachers at p 20. However, Commissioner Gozzi fails to say whether the memorandum correctly interprets the proposed increment provision. Moreover, as the applicant points out, evidence of what one party to an award hoped to achieve in relation to a particular provision cannot assist in its interpretation: Printing & Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 451. It is true that the effect of cl 16 is that the salary of a part-time employee is increased by the same increment as a full-time employee. However, as the applicant submits, it would have been possible to draft cl 16 so that it only applied to full-time employees or at least only applied to part-time employees according to the number of hours worked. That was not done. As a matter of policy, arguments could be advanced either way as to the desirability of part-time employees receiving annual increments. Such increments are an encouragement to employment stability and the use of employees' experience built up over the years. Both employer and employee benefit thereby. Of course it is not for the Court to say whether this argument should outweigh the "acceleration" argument. Suffice to say that the construction for which the applicant contends does not produce a result which is absurd, capricious or unjust: see Cooper Brookes (Wollongong) Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297. 4. Regulation 606(2) of the Tasmanian State Service Regulations In 1984, Tasmanian teachers were incorporated into the State service. Their work conditions were accordingly governed by the Tasmanian State Service Act 1984 (Tas). Regulation 606(2) of the Tasmanian State Service Regulations 1985 (Tas) provides: "Where a permanent part-time employee holds a position for which annual increments of salary have been assigned, such an increment shall only be paid upon the completion of the equivalent of a full-time year of service." The respondent contends that reg 606(2), and not cl 16, governs the incremental salary increase of part-time employees. The respondent relies upon the proviso contained in cl 16 to support his contention. Clause 16 commences with the proviso: "Except where otherwise specifically determined by this award, or where inconsistent with any Act...". The predecessor provision of cl 16, cl 18 of the Teaching Service (Teaching Staff) Award 1993 ("1993 State award"), also contained that proviso. The respondent contends that "any Act" in the 1993 State award included a reference to any regulations made under an Act (Acts Interpretation Act 1931 (Tas) s 5(2)), which includes reg 606(2) of the Tasmanian State Service Regulations 1985 (Tas). Since cl 18 of the 1993 State award referred only to full-time employees, and the federal award was not intended to substantially alter the 1993 State award (so the arguments goes), cl 16 should likewise only apply to full-time employees. Regulation 606(2) should continue to apply to part-time employees. For the following reasons, I do not consider that reg 606(2) applies to part-time employees bound by the Award. First, the fact that the Award is now grounded in federal jurisdiction cannot be ignored. Accordingly, the Tasmanian Acts Interpretation Act has no application here, whatever its application to the 1993 State award. Section 155 of the Industrial Relations Act 1988 (Cth) provides that an expression used in an award "has the same meaning as it has in an Act by virtue of the Acts Interpretation Act 1901 or it has in this Act". Section 38 of the Acts Interpretation Act 1901 (Cth) provides that in Commonwealth Acts, "[a]n Act passed by the Parliament of the Commonwealth may be referred to by the word 'Act' alone", while "[a]n Act passed by the Parliament of a State may be referred to by the term 'State Act'". Therefore, the reference in cl 16 to "any Act" should be read as a reference to any Commonwealth Act, and not a State Act. Accordingly, cl 16 is not subject to reg 606(2) of the Tasmanian State Service Regulations 1985 (Tas). Secondly, even if reg 606(2) does apply to part-time employees covered by the Award, the regulation is expressed to apply only where a part-time employee holds a position "for which annual increments have been assigned". On the respondent's case, cl 16 has no application to part-time employees at all. That conclusion leaves reg 606(2) with no operation, because part-time employees have not been assigned annual increments. Finally, State regulations cannot prevail over a federal enactment dealing with the same matter: s 81 of the Tasmanian State Service Act 1984 (Tas), s 152 of the Workplace Relations Act 1996 (Cth) and s 109 of the Constitution. Section 81(1) of the Tasmanian State Service Act 1984 (Tas) provides: "81(1)The Governor may make regulations for the purposes of this Act. (1A) Except as provided in subsection (2), subsection (1) does not authorize regulations to be made fixing or altering rates of salaries or wages payable to employees. (2) Without limiting the generality of subsection (1), the Governor may make regulations for or with respect to the following matters: (a) the payment of salaries and wages to employees or specified classes of employees and the rates and amounts of payments to employees or specified classes of employees for overtime work, and the conditions applicable to those payments; .... (12) If a regulation under - (a) subsection (2)(a) or (2)(b); or ... is inconsistent with an award, it is, to the extent of the inconsistency, of no effect." The definition of "award" in the Tasmanian State Service Act 1984 (Tas) includes a federal award: s 3. Similarly, s 152 of the Workplace Relations Act 1996 (Cth) provides: "Subject to this section, if a State law or a State award is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid." Finally, s 109 of the Constitution provides: "When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid." I have already found that the Award deals with the matter of salary scales of part-time employees. The Award also deals with the incremental salary increase of employees in general. Accordingly, cl 16 of the Award deals with part-time incremental salary increases. By virtue of s 81(1) of the Tasmanian State Service Act 1984 (Tas), s 152 of the Workplace Relations Act 1996 (Cth) and s 109 of the Constitution, reg 606(2) of the Tasmanian State Service Regulations 1985 (Tas) is invalid to the extent that it purports to apply to the incremental salary increase of part-time employees covered by the Award. Relief The applicant places her claim in the alternative. Her primary claim is for the amount by which she says she was underpaid from the time she started working for the respondent until the date of her statement of claim. In the alternative, she claims the amount by which she was underpaid from the date of commencement of the Award (1 January 1995) until the date of her statement of claim. The applicant contends that her accrued rights in respect of incremental salary increases were unaffected by the Award. I agree. Nothing in the Award suggests that it "re-started the clock" with respect to any accrued entitlements gained under previous awards. That interpretation is supported by the following statement in cl 16 of the Award: "Provided that an employee who was an employee on the date of this award shall be entitled to receive such increment on the anniversary of the date upon which he received his/her last salary increment in respect of his/her present position." I therefore order that the respondent pay the applicant the amount specified in her primary claim, which is $2,425.99 Penalty The applicant asks that I impose a significant penalty on the respondent for breaching the Award. The maximum penalty for breach of an award is $10,000 for a body corporate and $2,000 for an individual: Workplace Relations Act 1996 (Cth) s 178(4)(a). Even though the respondent is sued in his official capacity, he is nevertheless an individual. The interpretation of this clause has been the subject of an ongoing dispute between the respondent and the applicant's union since 1993. There has therefore been a conscious decision on the part of the respondent to deny the applicant what has been found to be her lawful entitlement. In the circumstances, $1500 is an appropriate penalty. I certify that this and the preceding nine pages (9) are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey Associate: Dated: 22 April 1998 Counsel for the Applicant: Rachel Doyle Solicitor for the Applicant: Australian Education Union Counsel for the Respondent: Mark Miller Solicitor for the Respondent: Director of Public Prosecutions (Tasmania) Date of Hearing: 16 February 1998 Date of Judgment: 22 April 1998