Hayward v Mitsui O.S.K. Lines (Australia) Pty Limited [1996] IRCA 445

DECISION NO: 445/96 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NI 1692 of 1996 ERIC LESLIE HAYWARD Applicant MITSUI O.S.K. LINES (AUSTRALIA) PTY LIMITED (A.C.N. 066 747 028) Respondent Coram: Judicial Registrar Linkenbagh Place: Sydney Date: 25 September 1996 REASONS FOR JUDGMENT This is an application pursuant to the provisions of Section 170 EA of the Industrial Relations Act, 1988. The applicant also makes claims against the respondent which are set out in a Statement of Claim filed in the proceedings and he asks the Court to exercise its jurisdiction under Section 430 of the Act to hear those claims. The Court has determined that the proceedings should proceed with a hearing as separate questions: A. Whether Division 3 of Part VI(A) of the Act does not apply to the termination of the employment of the applicant because of the operation of Section 170 CD of the Act; and B. If the Division does not apply to the termination of employment of the applicant, should the Court hear the claims in the associated or accrued jurisdiction of the Court in exercise of the jurisdiction conferred by Section 430 of the Act. The Question A is answered in the negative with the result that the applicant is not excluded by the provisions of Section 170 CD from making his application under Section 170 EA of the Act. Question B consequentially requires no direct answer. The Court confirms that it shall exercise its discretion in favour of permitting a hearing and determination of the claims in the associated jurisdiction of the Court at the same time as it hears the claim under Section 170 EA of the Act. The hearing proceeded on the basis of agreed facts and submissions from Counsel for both parties. The relevant facts are that the applicant was employed from November of 1993 until 1 March 1995 by Union Bulkships Pty Limited. From 1 March 1995 Mitsui O.S.K. Lines (Australia) Pty Limited, a subsidiary of Mitsui O.S.K. Lines Limited took over the business formerly conducted by Union Bulkships Pty Limited and from that date the applicant was employed by Mitsui O.S.K. Lines (Australia) Pty Limited. The terms of the employment are set out in two letters which are Exhibits "A" and "B". Exhibit "A" is dated 7 February 1995 and sets out the terms on which the respondent invited the applicant to join the company as "Trade Manager for South American Services". The letter provides for a salary of $63,000 per annum and other benefits and there is attached to it a document which reads as follows: JOB DESCRIPTION Position : Trade Manager - South American Services Reporting to : General Manager Responsibility: Maximise revenues Seek necessary information from interstate offices on subjects affecting their area. Liaise with other Lines. Have regular contact with clients so as to expand our cargo base. Ensure vessels space/DWT is maximised Ensure that costs are kept to a minimum with regular reviews of rates and performance of contractors. Ensure reports required by Principals are produced in an accurate and timely manner. Have regular contact with other operators as appropriate. Prepare budgets and report on performance on a monthly basis To obtain knowledge of our Singapore and Japan services. Promote the movement of cabotage cargo. There was an additional responsibility, that of supervising the assistant to the Trade Manager. There are two further pages which form part of Exhibit "A" and they are headed "Letter of Appointment". They set out further conditions of the employment, one of which reads: "a job description will be agreed in due course, but it is understood that your duties may vary significantly to these guidelines, because of decisions of management." Exhibit "B" is a letter dated 10 February 1995. It refers to the Letter of Offer which is Exhibit "A" and provides what is described as "additional information". It includes provision for payment of all accrued entitlements to annual leave in the employment with Unions Bulkships Pty Limited, preserves the period of service with that Company for Long Service Leave purposes, and provides that continuity will be maintained. It contains additional provisions in relation to leave entitlements and obligations and it also reads in a paragraph numbered 6: "The Company has agreed to be roped in as a respondent to the Shipping Officers (Consolidated) Award 1989 and will observe all Award conditions and obligations which are applicable to your employment." The employment came to an end on 11 April 1996 when the applicant received a letter, a copy of which is attached to the Notice of Employer's Appearance. It includes the following terms: "As you are aware the South American service has been severely curtailed with a reduction from six vessels to three with a consequent reduction in profitability. This has, of necessity, resulted in a need to re-organise our activities and, accordingly, I regret to advise that your current position is no longer available and your services are terminated with effect from today. We are paying your current month's salary due on 15th April plus an additional month's pay, which will be in lieu of notice and this will have the effect of giving you in excess of six weeks' pay from today's date." The applicant commenced these proceedings with the filing of an application for relief in the Australian Industrial Relations Commission on 17 May 1996. The application was not lodged with the Commission within the period allowed by Section 170 EA (3) of the Act. The Commission permitted the lodging of the application and referred the application to the Court pursuant to the provisions of Section 170 ED (1) of the Act and it must therefore be presumed that the Commission allowed the necessary further period for the lodging of the application pursuant to the provisions of Section 170 EA (3)(b). The relevant parts of Section 170 CD are as follows: "170CD(1) [Employee not employed under Award conditions] The following Subdivisions do not apply to a termination of employment of an employee who is not employed under Award conditions if: (a) in respect of an employee who was continuously employed by the employer during the period of 12 months immediately before the termination day - on the termination day the employee's relevant wages exceeded the applicable amount; or ............ 170CD(2) [Amount] The applicable amount for the purpose of subsection (1) is: (a) subject to paragraph (b), $60,000; or (b) if regulations made in accordance with Subdivision CA prescribe a formula for the annual indexation of the amount referred to in paragraph (a) - the amount worked out using that formula as it applies form time to time. 170CD(3) [Non-Award employee] For the purposes of this Section, an employee is taken not to be employed under Award conditions if wages and conditions of employment of the employee are not regulated by one or more relevant Awards that bind the employer of the employee. 170CD(4) [Terms defined]................ "relevant Award" means an Award or a State Award: "relevant wages" in relation to an employee, means the total amount of the wages that the employee received, or was entitled to receive, from the employer in respect of: (a) if paragraph (1)(a) applies to the employee - the period of 12 months referred to in that paragraph.............. "termination day" means the day on which the employer terminated the employee's employment.............. The combined effect of Section 170 EI and Regulation 30DA of the Industrial Relations Regulations is that the applicable amount at the relevant termination day was $62,200. The parties agreed that if any Award applied to the employment of the applicant by the respondent, that Award is the Shipping Officers (Consolidated) Award, 1989 which is a Federal Award. Union Bulkships Pty Limited and Mitsui O.S.K. Lines Limited are respondents to that Award. The respondent in these proceedings agreed with the submission put by Mr. Moore of Counsel for the applicant that Mitsui O.S.K. Lines (Australia) Pty Limited is a successor to those companies in terms of the shipping agency operation formerly carried out by Union Bulkships Pty Limited and that Mitsui O.S.K. Lines (Australia) Pty Limited is bound by the terms of that Award by the operation of Section 149 (1)(d) of the Act. The test set out in Section 170 CD (3) of the Act was explained by Chief Justice Wilcox in Christie -v- Qantas Airways Limited [1995] 60 IR 17 at page 26 as: "In framing the test set out in Section 170 CD (3), Parliament employed a double negative: "an employee is taken not to be employed under Award conditions if wages and conditions of employment of the employee are not regulated" by one or more Awards. As counsel for the respondents point out, the words "wages and conditions" are conjunctive, not disjunctive. Wages and conditions means both wages and conditions; not either wages or conditions. But because Parliament used the negative "not regulated", the effect of this is that the stipulated test is satisfied only if both wages and conditions are not regulated by an Award or Awards If an employee's conditions are regulated by an Award, this is enough to prevent satisfaction of the negative test. Clause 11 of the Award provides for graded rates of salary and a range applies within each of the grades. The salary to which the applicant was entitled by the terms of Exhibit "A" is not a salary calculated or fixed by reference to the scheme as set out in the Award. His wages were not therefore regulated by the Award and the applicant must therefore establish that the conditions of his employment were regulated by the Award if he is to prevent satisfaction of the negative test set out in Section 170 CD (3). The applicant argues that the Award applied to this employment first, because of the paragraph numbered 6 of Exhibit "B" and secondly, because the Award, properly construed, is binding in respect of an employee employed in the same capacity as the applicant and performing the duties which the applicant performed. Counsel for the respondent argued that Exhibit "B" was a form letter and that the inclusion of paragraph 6 was an error, and that the Award was not intended to apply to the applicant's employment because the terms of the Award are inappropriate to the status and duties of the applicant. In any event, the wording of paragraph 6 of Exhibit "B" begs the question. It reads, in effect: "The company will observe all Award conditions and obligations which are applicable to your employment." There is no evidence that the question of an error having been made in including paragraph 6 in the letter addressed to the applicant was raised at any time before the hearing of this application. It is therefore necessary for the Court to consider whether or not the Award applies. An Award is a statutory instrument and should be interpreted according to the rules of statutory interpretation and bearing in mind the provisions of Section 155 of the Act. Those rules are well known and are summarised by Justice French in City Of Wanneroo -v- Holmes [1989] 30 IR 362 at pages 378 and 379. The Court should first consider the natural and ordinary meaning of the words, which are to be read as a whole, and in context. If there is ambiguity then regard may be had to extrinsic evidence, but care must be taken not to assign a meaning in order that the Award may provide what the Court thinks is appropriate. The Court must give the words their true meaning, even if that may result in a failure to carry out the intention of the Award making authority. There is authority for the view that Awards should be construed generously rather than literally and that where there is ambiguity, weight may be given to industrial realities in determining which of competing meanings should be preferred - Geo A Bond & Co. Ltd. (In Liq.) -v- McKenzie [1929] 28 AR 499 and Re Crown Employees (Overtime) Award [1969] 69 AR(NSW) 60 It is not apparent, on the face of the Award, that the applicant's position or duties are covered by the Award. Clause 3 provides that the Award shall be binding "in respect of each and every employee as defined in this Award". Clause 6 defines some words used in the Award and it defines "employee" as follows: "(b) "Employee" shall mean any weekly or salaried shore employee of a shipping company, ship owner, shipping agency, ship charterer, shipping and/or chartering agency, non-vessel operating common carrier, non-vessel operating common carrier agency, cargo consolidator, shipping conference, classification society, marine consultant, service organisation, travel agency or shipping department or travel department of an employer party to this Award, who is engaged in work of an administrative, executive or supervisory nature, or is engaged in clerical work and shall include stenographers, typists, bookkeeping machinists, comptometrists, telex operators, switchboard attendants, VDU operators, computer staff involved in the operation, programming and maintenance of computer systems (including positions of data processing operator, data processing supervisor, computer operator and computer systems officer) and employees who may be required to perform duties of receiving, delivering, tallying, manifesting, time-keeping, allocating and freighting on wharves or in wharf offices Where an employer has business interests other than those connected with its business as a shipping company, ship owner, ship charterer, shipping and/or chartering agency, non-vessel operating common carrier, non-vessel operating common carrier agency, cargo consolidator, shipping conference, classification society, marine consultant, service organisation, travel agency or shipping department or travel department, the terms of this Award shall only apply to employees in the shipping or travel department. The applicant was certainly a salaried shore employee of a shipping agency, but was he a person "who is engaged in work of an administrative, executive or supervisory nature or is engaged in clerical work"? The meaning of the expression "engaging in any clerical capacity" in an Award was considered by the New South Wales Industrial Relations Commission in In re Federated Clerks Union of Australia New South Wales Branch -v- Australia Workers Union [1971] AR 419. The Court said at 421: "It is impossible, and in any event, would be undesirable, to attempt to devise a code, as to what in the setting of industry today, can fairly be regarded as clerical work. But too fine a toothcomb should not be used in solving this question in particular cases Obviously all employees in an office are not engaged in a clerical capacity. It is clear that professional employees are not nor are those who are truly and basically executive officers" The applicant is described as "Trade Manager - South American Services" and reports to the General Manager. The responsibilities which are set out in the job description which is part of Exhibit "A" do not support the view that the applicant could be said to have been engaged in clerical work. The meaning of the words "administrative" and "executive" was considered in The Wool Selling Brokers Officers Association of Australia -v- The Employers Association of Wool Selling Brokers & ors [1949] 67 CAR 224. At 227, Kelly C.J. says "executive" means: "fitted or responsible for, or pertaining to , the execution or carrying into effect, in the directory sense, of laws, decisions or policy"/ Later on the same page, the Chief Justice says "administrative" means: "universally acknowledged to mean simply and exhaustively: of or pertaining to administration, that is to say, to the management or conduct, or the performance of the executive duties, of an institution or establishment." The responsibilities of the applicant with regard to revenue, liaising with other Shipping Lines, costs and reviewing of rates and performance of contractors, producing reports required by Principals, preparing budgets, reporting on performance, and promoting the movement of cabotage cargo are all duties to which the terms "administrative" or "executive" can in their ordinary meaning be applied. The responsibility of the supervision of the assistant to the Trade Manager is a responsibility of a supervisory nature and, whilst there is no evidence before the Court with regard to the number of persons who worked with the applicant, it stands to reason that he would have exercised a supervisory role over those other members of the staff who, of necessity, would assist him in the discharge of his responsibilities Exhibit "C" is a copy of the organisation structure of the respondent at the date of hearing. The parties agreed that the applicant's position on the equivalent structure at the time of termination of his employment was at the level immediately below the General Manager. Further, the applicant's position was described as Trade Manager - South American Services. Those factors further support the conclusion that the applicant was involved in work of an administrative, executive or supervisory nature. The words following the words "and shall include" after the words "clerical work" in Clause 6(b) of the Award, describe some of the kinds of employees who are covered by the Award. The words used do not purport to describe an exclusive list of persons covered by the Award, but rather describe some of the persons who fall within the definition. The Award is entitled Shipping Officers (Consolidated) Award, 1989. The title to the Award cannot be of assistance in interpreting the terms of the Award and is, in any event, of no assistance given the wide ranging list of persons who are expressly included in the definition of "employee" in Clause 6(b) of the Award. Counsel for the respondent argues that the word "manager" does not appear in Clause 6(b) and that because the applicant's position was described as "Trade Manager - South American Services" the position does not fall within the definition. That submission is not soundly based. The definition is in terms of the nature of the work in which the employee is engaged, rather than the title which is attributed to the particular position held by the employee. It is necessary to consider, as the Court has done, the nature of the work as set out in the job description for the "Trade Manager - South American Services" in order to test whether or not the employee fulfilling that role is an employee within the definition as set out in Clause 6(b) of the Award. Clause 10 of the Award provides: "Notwithstanding any other provisions of this Clause ........... an employer, within in a reasonable period of time, will grade each position in accordance with subclause (b) of this Clause." Paragraph 10(b) provides: .............."An adult employee shall be graded in accordance with the nature of the job being performed into one of"...... four grades which are then described. The nature of the duties performed in a particular position govern the level at which the particular position is graded. The requirements for grades three and four are as follows: "Grade 3: Shall mean an employee who performs duties which, according to the requirements of the position: (i) regularly require the exercise of initiative and decision making; (ii) may involve supervision of staff; (iii) may require the application of formal qualifications or a reasonable degree of knowledge in a specialised field, and may involve an employee having attained substantial knowledge and expertise in an appropriate area of the employer's operation where the employee is required to utilise such knowledge or expertise in performing his or her duties. Grade 4: Shall mean an employee who performs duties over and above: (i) duties required of a grade 3 employee; or (ii) duties previously performed as a grade A employee prior to the insertion of this clause into the Award; and which, according to the requirements of the position: (1) are primarily of a supervisory nature; (2) involve administrative responsibility and decision making at a an appropriate level of the employer's enterprise. There is no evidence that the applicant was ever graded according to the provisions of Clause 10. The failure by the employer to formally grade the position does not assist this Court in determining whether or not the applicant's employment was covered by the Award. It is open to the Court to conclude that the responsibilities and duties of the applicant's position qualified him for grading at the Grade 4 level had the employer carried out its obligation to grade the position. The failure of the employer to carry out that obligation does not affect the overall coverage of the employment by the Award, given that the applicant falls within the definition of "employee" in the opinion of this Court, as provided in Clause 6(b) of the Award. Clause 11 of the Award provides for salaries. The maximum salary payable for a Grade 4 employee is $34,146. That salary is considerably less than the salary to which the applicant was entitled which was $63,000. Counsel for the Respondent argued that the Award is in the terms that coverage is by reference to wage rates and that, the applicant's salary being so high, it could not be said that he was covered by the Award, on the basis of his wage. Counsel for the applicant argues that Clause 11 establishes the Award as a minimum rates Award and that subclauses (c) and (d) of Clause 11 allow for the concept of over-Award salaries, consistent with the concept of minimum rates. Clauses 16, 28 and 29 restrict entitlement to overtime, higher duties allowance and on-call and contact officers allowances to: "an employee who is in receipt of a salary which is not greater than the maximum rate prescribed in Clause 11(b) for a Grade 3 employee". Those Clauses recognise that there may be employees who earn above that rate and there is no limit expressed or implied on the maximum salary which an employee covered by the Award may earn. Clause 46 of the Award provides for "Occupational Superannuation". Sub-paragraphs (g) and (h) of that Clause expressly recognise that "executive staff" are included amongst the persons to whom Clause 46 applies. The Court finds that, bearing in mind the detail of the job description for the position of "Trade Manger - South American Services", on the ordinary meaning of the relevant terms in the Award, the conditions of the applicant's employment were regulated by the Award, and that the applicant cannot be taken not to be employed under Award conditions within the meaning of Section 170 CD (3) of the Act. That view is confirmed by the terms of paragraph 6 of Exhibit "B" and the applicant is entitled to make an application under Section 170 EA of the Act. The Claim In the Associated Jurisdiction Under Section 430 of the Act The finding that the applicant is entitled to make his application under Section 170 EA of the Act has the consequences that the Court need not consider all of the detailed arguments which were put by Counsel for both parties in relation to Question B which was for determination at this stage of the proceedings. Both Counsel made very well framed submissions as to the question of whether the Court would have been able to hear the claim in the associated jurisdiction if the applicant's claim under Section 170 EA had been defeated at this stage of the proceedings. The claims as pleaded in the Statement of Claim relate to issues arising from the termination of the employment of the applicant. There is sufficient material before the Court at this stage to support the contention that the facts in respect of which evidence will be led to prove those claims are substantially common to both claims and that it is appropriate for the substance of both claims to be heard together. I propose to fix the substantial applications for further hearing before me at the earliest possible date. I certify that this and the preceding 12 pages are a true copy of the Reasons for Judgment of Judicial Registrar Linkenbagh Associate: Renee Cauchi Date: 25 September 1996 Counsel for the Applicant: Mr R Moore Solicitors for the Applicant: Murphy & Moloney Counsel for the Respondent: Mr J Loty Solicitors for the Respondent: Norton Smith & Co Date of hearing: 9 September 1996