Star City Pty Limited v Liquor, Hospitality and Miscellaneous Union, New South Wales Branch, on behalf of David Hau [2006] FCA 619

FEDERAL COURT OF AUSTRALIA

Star City Pty Limited v Liquor, Hospitality and Miscellaneous Union, New South Wales Branch, on behalf of David Hau [2006] FCA 619 INDUSTRIAL LAW – the Commonwealth – minimum entitlements of employees – overtime – interpretation of enterprise agreement. STAR CITY PTY LIMITED v LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION, NEW SOUTH WALES BRANCH ON BEHALF OF DAVID HAU NSD 2519 OF 2005 MADGWICK J 3 MAY 2006 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 2519 OF 2005

BETWEEN: STAR CITY PTY LIMITED

APPELLANT

AND: LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION, NEW SOUTH WALES BRANCH, ON BEHALF OF DAVID HAU

RESPONDENT

JUDGE: MADGWICK J

DATE OF ORDER: 3 MAY 2006

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The orders of the Chief Industrial Magistrate's Court be vacated.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 2519 OF 2005

BETWEEN: STAR CITY PTY LIMITED

APPELLANT

AND: LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION, NEW SOUTH WALES BRANCH, ON BEHALF OF DAVID HAU

RESPONDENT

JUDGE: MADGWICK J

DATE: 3 MAY 2006

PLACE: SYDNEY

REASONS FOR JUDGMENT HIS HONOUR: 1 This is an appeal against a judgment of the New South Wales Chief Industrial Magistrate's Court ordering that an employer pay an employee, on whose behalf a registered organisation has sued, a sum of money for unpaid overtime said to have been due over a period of years. The case involved the interpretation of an enterprise agreement known as the Star City Pty Limited Enterprise Agreement 1998 which has been amended and replaced by subsequent Agreements made in 2000, 2002 and 2004. 2 The background of the matter is that the appellant, Star City Pty Limited ('Star City') operates the well-known casino at Pyrmont in Sydney. Mr Hau, the employee concerned, was employed by Star City at all relevant times as a security officer. At relevant times his employment was governed by the Agreements to which I have referred. 3 The short particulars of the claim were given by the respondent organisation (which I will refer to as the 'Union') on his behalf as follows: '1.1 Mr David Hau (hereinafter "employee") was employed as a security guard by Star City Pty Ltd. 1.2 The employee was engaged pursuant to the Star City Enterprise Agreement 2000 (hereinafter "the Agreement") which prescribes ... that extended shifts may be worked to a maximum of 12 hours. 1.3 The employee was required to attend work for a total of 12 hours and fifteen minutes per day. 1.4 The amount of fifteen minutes per day has been claimed at the applicable overtime rate.' Calculations were put forward, based on the contested period of 15 minutes per 12 hour shift worked from July 1998 through to February 2005. The rosters prepared for staff typically showed (and also on days other than when he worked 'short shifts' – see below) that Mr Hau was rostered for duty from '0700' to '1915' hours, that is 12.25 hours, in a 24 hour period. 4 In 1995 Star City, the Union and employees had introduced what was known as a 12 hour shift system to a number of employees including the security staff. It was always contemplated that the ordinary hours which would entitle employees to payment (other than at penalty rates) for excessive hours worked would be 76 hours per fortnight. It was always contemplated that there would be '12 hour shifts' as well as what were known as 'short shifts' of something less than 12 hours. 5 Originally, the ordinary rosters would provide for 76 hours ordinary time worked in a fortnight. Apparently Star City desired some further flexibility, to which the employees and the Union were not opposed, and it was agreed in the 1998 Agreement that the 76 hours per fortnight might be achieved by averaging over two successive fortnights. 6 As a practical matter the security staff were required to attend the employer's premises a few minutes before the commencement of the notified roster period, in order to be issued with the two-way radios that they would need to have during their work, and to ensure that they were clad in the appropriate uniform, so that they could be fully operational at the commencement of the roster at the notified time. 7 The 15 minute period at the end of what would otherwise be a 12 hour rostered period acknowledged that the employer required employees finishing a shift to remain for up to another 15 minutes, in order to accomplish a hand-over of the radio equipment and to cope with any brief period of lateness or unreadiness of the employees to succeed them. The intention was that, as far as possible, at all times there would be an adequate and appropriate level of security staff for Star City. In their nature, Star City's operations would be likely from time to time to give rise to security problems. 8 At all relevant times the Agreements provided for unpaid meal breaks during the 12 hour roster of not less than half an hour during each work day (see for example, cl 20 of the 1998 Agreement). 9 The employee's claim arose out of the provisions of cl 19 and cl 27 of the 1998 Agreement and their successors which, so far as material, were unchanged. Those clauses so far as presently relevant provide as follows: '19. HOURS OF WORK The ordinary hours of work for full time employees shall be 76 hours per fortnight. Roster 19.1 The ordinary hours of work for both full time and part time employees will be as laid out in a roster determined by the Company having regard to the objectives set out in this agreement. Such rosters as determined shall ensure that; 19.1.1 all employees shall have at least 4 days off each pay period, 2 days of which will be consecutive. 19.1.2 all employees shall have at least a 10 hour break between shifts except when there is a changeover of shift cycle or a roster swap then a 8 hour break may apply; 19.1.3 no employee will be rostered to work for more than 9 consecutive days in a 14 day period unless the employee has voluntarily applied for a shift swap or voluntarily applied for any other change to the rostering arrangements. 19.1.4 for each shift the minimum engagement will be 4 hours and the maximum engagement will be 10 hours, but may be up to 12 hours with the consent of the employee. 19.1.5 Notwithstanding sub clause 19.1.4, with respect to the introduction of 12 hour shifts, where the Company and a group of employees wish to introduce 12 hour shifts, discussions will be held with the employees and the Union to facilitate the introduction of such shifts. The employees must genuinely agree to the introduction and method of working such shifts. Where agreement is reached the Company will provide the Union a written memorandum detailing the agreement. 19.1.6 Broken Shifts may be worked with periods of work of each no less than 4 hours subject to the span of hours including the breaks being no more than 12 hours. The parties agree to review the operation of this sub clause every six (6) months. 19.1.7 The Company may adopt a system of ordinary hours averaging, in each two fortnight cycle, that provides for the working of up to 80 hours in one fortnight but no more than 152 hours in the two fortnightly period. Shift Rostering Arrangements 19.2 The Company and the LHMU agree that due to the need to maintain a 24 hour operation at the Casino complex employees will be rostered to work rotating or permanent shifts. Permanent Shifts 19.3 Permanent night shift is defined as a shift commencing on or after 9.00 pm. Where an employee is rostered to work permanent night shift, such employee shall be granted a loading of 30% on the base rates of pay in clause 26.1. Such penalty payment is designed to compensate the employee for all penalties except as otherwise provided for in this agreement. Permanent afternoon shift is defined as a shift commencing on or after 1.00 pm. Where an employee is rostered to work permanent afternoon shift such employee shall be granted a loading of 17% on the base rates of pay in clause 26.1. Such penalty payment is designed to compensate the employee for all penalties except as otherwise provided for in this agreement. Permanent day shift is defined as a shift commencing on or after 6.00 am. Where an employee is rostered to work permanent day shift such employee shall be granted a loading of 10% on the base rates of pay in clause 26.1. Such penalty payment is designed to compensate the employee for all penalties except as otherwise provided for in this agreement. Permanent evening shift is defined as shift commencing on or after 6.00 pm. Where an employee is rostered to work permanent evening shift such employee shall be granted a loading of 25% on the base rates of pay in clause 26.1. Such penalty payment is designed to compensate the employee for all penalties except as otherwise provided for in this agreement. Notwithstanding the above, no employee rostered to work permanent night, afternoon, day or evening shifts will be required to work more than 40 Saturday shifts and 35 Sunday shifts in any 12 month period. … 27. OVERTIME 27.1 Full time and part time employees who are required to work in excess of 76 hours per fortnight or outside the notified roster times for the day or their rostered days off shall be paid overtime at the rate of time and a half for the first two hours and double time thereafter. 27.2 An employee can be directed to perform reasonable overtime. 27.3 Each period of overtime worked stands alone but shall be paid in the next pay period provided that specific approval for the overtime to be worked has been obtained and provided that no employee may be paid overtime twice for the same period of work.' 10 The difficulty arises because there is, apart from cl 19, no specific 'spread of hours' clause in the Agreement of kinds of which are, and were familiar, at the relevant times, in the industrial landscape. 11 The contention of the Union and Mr Hau was that in subcl 19.1.4 the concept of the 'maximum engagement' should be taken to fill that gap and that what was apparently contemplated was that there would be a spread of hours not exceeding 12 hours. Counsel for the Union pointed out that in the same subclause the notion of the minimum engagement referred to a minimum reservation of the employee's time during which he or she would be liable to be paid, even if less than four hours were worked. Unless 'maximum engagement' were similarly regarded as referring to the maximum period of reservation of employees' time, that is to say, the spread of hours during which paid work and requisite unpaid meal breaks should occur, there would be no obstacle to the employer requiring an employee to reserve, say, 14 hours' continuous time during which only 12 hours of paid working time might be achieved. That, given the Agreement as a whole, would appear both unjust and not in accordance with the probable intention of the parties. 12 The employer, until this challenge, paid the employees (including Mr Hau) 12 hours' pay, but Mr Hau did not work in any of those notified rostered periods more than 11 and a half hours and quite frequently worked 11 hours and 15 minutes on what I might call 'actual on-floor, fully operational security work'. Given the practical requirement that employees be present and spend some time at the employer's business before the commencement of that work, together with the notified requirement that they be there for 12 hours and 15 minutes, and the practical requirements of what might occur in the last 15 minutes of that time, it is by no means surprising that a practical arrangement for the payment of 12 hours' pay might have been made and adhered to without complaint. 13 Against the background of that unchanged practice, it seems to me that, if the Agreement can be interpreted, having regard to its language, in a way that recognises the propriety of what was done and a lack of requirement in the employer to do more or to pay more than was paid, then such an interpretation should be adopted. Counsel for the employer suggests that this may be done by regarding the word 'engagement' as referring to a choice by an employer of the number of hours during which it might require the employee to perform actual work with the consequent obligation on it to pay for those hours. 14 The Union, as indicated, argued that the context of the term 'engagement' as used in cl 19 should be seen as referring to a spread of hours to include the time necessarily taken for requisite unpaid meal breaks. Counsel for the appellant points out that the term 'engagement' which normally does mean reserving an employee's time for a certain period and undertaking to pay for it, differs from the notion of 'notified roster times' in cl 27 which is used in a context suggesting that it is the notified roster times which, as a practical matter, would constitute the spread of hours for ordinary time payment purposes. 15 Further, there are limits on the extent of such possible notified roster times beyond which something more than ordinary time payment would have to be made. In the first place, cl 19.1.2 requires at least a ten hour break between shifts, except at changeover of a shift cycle or on a roster swap. In the ordinary case that could not be accomplished if the notified roster times exceeded standard hours numbering 14. Secondly, in later Agreements, the concept of a broken shift, which carries its own penalty rate, was clarified to mean that, if there is a break between periods of work exceeding 90 minutes during a period in which an employee is rostered for duty, then that rostered period would be a broken shift. The consequence would be that originally there was a practical ordinary time spread of hours of 14 hours and there is now a practical spread of hours of 13 and a half hours for ordinary time payment purposes. 16 I agree that the Agreement can be so interpreted. It has to be acknowledged that, as a matter of the language used in the Agreement, that is not a wholly satisfactory outcome. However, we live in an imperfect world, and busy people were drawing up the Agreements to deal with situations that they well understood, rather than to provide perfection for lawyers who might later mull over their language. Any imperfections or difficulties of that interpretation are, to my mind, considerably less than the imperfections and difficulties which would be involved in overturning what was a perfectly satisfactory, uncomplained of, industrial practice between parties not lacking sufficient resources to be regarded as having contracted at arm's length. 17 For these reasons I consider, with respect, that his Honour fell into error and his orders cannot stand. 18 The appeal will be allowed and the orders of the learned Chief Industrial Magistrate vacated. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.