Industrial Relations Commission of New South Wales CITATION: Barrier Industrial Council and Broken Hill Chamber of Commerce Inc [2005] NSWIRComm 249 NOTIFIER Barrier Industrial Council PARTIES: RESPONDENT Broken Hill Chamber of Commerce Inc FILE NUMBER(S): 1031 of 2005 CORAM: Sams DP Industrial dispute - terms of an Award - beneficial provision - long service leave - rate at which pro rata long service leave is accrued - s175 of the Act - principles of award interpretation. CATCHWORDS: Held, beneficial interpretation - intention of the parties - long history without any dispute - support for interpretation found in the relevant statute - accrual of beneficial entitlement applies to entire period of service - reliance on exclusion incorrect - parties directed to prepare draft clause. Industrial Relations Act 1996 Long Service Leave Act 1955 LEGISLATION CITED: AWARD Broken Hill Commerce and Industry Consent Award 2001 336 IG 885 Construction, Forestry, Mining and Energy Union (NSW Branch) v Delta Electricity [2003] NSWIRComm 135 Kingmill Australia Pty Ltd t/as Thrifty Car Rental v Federated Clerks Union of Australia (2001) 106 IR 217 State Rail Authority Firefighters Award 2001 [2002] NSWIRComm 159 CASES CITED: Zoological Parks Board of New South Wales and Australian Workers' Union New South Wales [2004] NSWIRComm 85 HEARING DATES: 06/01/2005; 06/22/2005; 07/06/2005 DATE OF JUDGMENT: 07/29/2005 NOTIFIER Mr D O'Connor, President Barrier Industrial Council LEGAL REPRESENTATIVES: RESPONDENT Mrs S Hocking, President Broken Hill Chamber of Commerce Inc JUDGMENT: - 14 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 29 July 2005 Matter No IRC05/1031 Notification under section 130 by Barrier Industrial Council of a dispute with the Broken Hill Chamber of Commerce re long service leave entitlement DECISION [2005] NSWIRComm 249 1 This decision arises from a dispute between the Barrier Industrial Council ('BIC') and the Broken Hill Chamber of Commerce Incorporated ('the Chamber') concerning the interpretation of the long service leave clause in the Broken Hill Commerce and Industry Consent Award 2001 336 IG 885 ('the Award'). The notification of dispute, pursuant to section 130 of the Industrial Relations Act 1996 ('the Act') was lodged by the BIC on 1 March 2005. 2 Attempts at resolving the dispute were made at conciliation conferences in Broken Hill on 20 April 2005. As this proved unsuccessful, I made a finding of attempted conciliation under section 135 of the Act. 3 Both the BIC and the Chamber sought the Commission's assistance in resolving the dispute through the Commission's powers of interpreting the relevant industrial instrument (the Award) under s175 of the Act. I shall return to the discrete provisions of s175 and the relevant authorities pertaining thereto shortly. THE ISSUE 4 The disputed clause is expressed as follows: 1.18 Long Service Leave (a) As per the Long Service Leave Act 1955 and any further amendments thereto, provided however, that thirteen (13) weeks long service leave will be granted at the end of ten (10) full complete years in lieu of fifteen (15) years as now set out in the Long Service Leave Act 1955. (b) This concession only commences to accrue on or after January 1, 1971. (c) All other provisions, conditions, durations, qualifying periods and etc of the Long Service Leave Act 1955 remain unaltered, and are not affected by the above concession of 13 weeks long service leave for ten years' service. (d) Part Time and Casual Employees shall be eligible for Pro Rata Long Service Leave as per part A. 5 The dispute between the parties is one of relatively limited compass. Essentially, the disagreement relates to how an employee's pro rata long service leave should be accrued after 10 years' service in circumstances where 13 weeks' long service leave is provided for after 10 years' service. 6 The BIC argues that the accrual should be at the rate of 1.3 weeks for each completed year of service for the entire period of employment. The Chamber believes that the rate should be 1.3 weeks for each completed year of service up to 10 years, and 0.867 of a week per completed year after 10 years' service based on the State Long Service Leave Act. 7 The concession of 13 weeks' long service leave after 10 years has applied in the Award since 1971; seemingly without any controversy until now. It is to be noted that there is no disagreement that the 1.3 weeks multiplier applies where pro rata long service leave is available up to 10 years' service. SUBMISSIONS 8 The parties addressed their respective cases through helpful written submissions to which I now turn. For the BIC 9 Mr D O'Connor referred to the provisions of the Long Service Leave Act 1955, in particular, the different circumstances which provide for pro rata long service leave after five years (a proportion of two months after 10 years' service) and after 10 years (a proportion of three months after 15 years). The calculation in both circumstances is made at the same rate - 0.867 weeks. He said that as the two periods are at the full entitlement under the Long Service Leave Act, the Award's entitlement for the two different periods (before and after 10 years) should also be the same, i.e. 1.3 weeks. 10 Mr O'Connor noted that the Long Service Leave Act does not provide for a reduction of the rate at which long service leave accrues after 10 years' service. He said that, while historically the award has more beneficial entitlements, it could not be right that the rate at which long service leave accrues after 10 years should be reduced. 11 Mr O'Connor submitted that the BIC was unaware of any industrial instrument which provides for such a reduction. He specifically referred to a number of other industrial instruments in Broken Hill which do not provide for such a reduction. These include Industrial Agreement 1964 and Schedule of Conditions of Work in the Broken Hill Mining Industry; the City of Broken Hill Industrial Agreement; the Broken Hill Water Board (Wages Division) Agreement; Industrial Agreement between the Broken Hill Registered Clubs Association, the Town Employees Union and the Barrier Industrial Council and Industrial Agreement 1971 and Schedule of Conditions of Work in the Broken Hill Town Industries. 12 It was said that the most compelling evidence in support of the BIC's view was that all parties to the Award, including the Chamber, had for many years intended, understood and applied the 1.3 weeks per year for all years of service. He highlighted a letter from a past President of the Chamber, Mr Rouse, in April 1996 to this effect. 13 Finally, Mr O'Connor said it would be a "nonsense" for employees to be disadvantaged after 10 years' service if their Award accrual was reduced. For the Chamber 14 Mrs S Hocking submitted that the express wording of subclause (c) of cl 1.18 makes it clear that all other provisions, conditions, durations and qualifying periods under the Long Service Leave Act remain unaltered and are not affected by the concession of 13 weeks after 10 years' service. 15 Mrs Hocking claimed that the Chamber's interpretation of the clause is reflected in a calculator it has available to assist businesses in identifying their employees' entitlements. This calculator has been in existence since the mid-1990s and advice about it had been obtained from the Department of Industrial Relations. Further confirmation had been received from a local solicitor. 16 Mrs Hocking said that the long service leave clause in public service awards and a number of other awards are not expressed in the same way as this Award. Mrs Hocking noted that while the BIC may have negotiated 1.3 weeks for all service in other local agreements, it had not sought to do so in the negotiations for this Award. She added that there had been no dispute about the interpretation of the provision until this case. 17 Mrs Hocking said that it is not the role of the Chamber to calculate or determine an employee's entitlements. She conceded that an employee of the Chamber had given out incorrect information. Reply submission 18 Mr O'Connor replied that the Chamber's calculator only demonstrated the correct interpretation of the Award for up to 10 years' service and how long service leave is calculated in the rest of the State after 10 years' service. This is not evidence of the Chamber's interpretation. Rather, it confirms that the Chamber did not believe the calculation changed after 10 years' service. 19 Mr O'Connor put that the Chamber's interpretation was Mrs Hocking's personal view and not that of the parties who entered into the agreement. A supporting solicitor's letter was irrelevant, as the solicitor was not a party to the proceedings and was paid for the advice. 20 The BIC acknowledged that it was mistaken as to the name of the past President of the Chamber. However, Mr Rouse had been an Executive member of the Chamber. CONSIDERATION Principles of Award Interpretation 21 The Commission's power to interpret the provisions of an industrial instrument is found at s175 of the Act: 175 Powers of Interpretation The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument). 22 The definition of an industrial instrument is to be found at s8 of the Act: In this Act, industrial instrument means an award, an enterprise agreement, a public sector industrial agreement, a former industrial agreement, a contract determination or a contract agreement. 23 The Full Bench decision in Kingmill Australia Pty Ltd t/as Thrifty Car Rental v Federated Clerks Union of Australia (2001) 106 IR 217 examined, in some detail, the principles of award construction and I quote the relevant passages: 63 The interpretation of awards are, in our view, to be approached in accordance with the principles authoritatively stated by the Full Bench of the Commission in Court Session in Bryce . Hungerford and Schmidt JJ stated there (at 452): In our view, in construing the true meaning of an industrial award, like any other instrument with legal force, the task requires an approach according to the actual words used and their plain, ordinary English meaning. As was said by Kelleher J in Re Dispute between Broken Hill Pty Co Ltd and the Federated Ship Painters and Dockers' Union of Australia, New South Wales Branch, Re Tank Tops [1961] AR (NSW) 312 at 314: "The meaning is to be ascertained primarily from a consideration of the words actually used and, while it is proper to pay regard to the surrounding circumstances and the purposes for which the provision was intended, this cannot justify a meaning being given to the words which they are not fairly capable of bearing. Particular words or expressions, having a special trade significance, however, may need to be construed in that light." 64 Their Honours approved the approach adopted by Olney J in Norwest Beef Industries Ltd v Australasian Meat Industries Employees Union of Workers (WA Branch) (1984) 12 IR 314 at 331 as follows: If it be the case that the correct approach to the interpretation of an industrial award is to read the document itself and give to the words used their ordinary commonsense English meaning (see Jackson J in United Furniture Trades Industrial Union v Dale Manufacturing Co Pty Ltd , 30 WAIG 539, at 540) then the first task in every case will be to determine whether the words used are capable in their ordinary sense of having an unambiguous meaning. If that question is answered in the affirmative then the further consideration of the expressed or supposed intention of the award making tribunal does not fall to be considered. The majority of the Full Bench in this case took that view when they said: "It is now trite law that when the meaning of language read in its ordinary and natural sense is obtained it is not necessary or indeed permissible to look to the intention of the parties." In my opinion the majority of the Full Bench has correctly stated the basic principle to be applied in the interpretation of industrial awards. Any other conclusion would lead to industrial anarchy. If the contrary were the case every employer, union official and indeed each employee would need to have available to him the expressed views of the award making tribunal whether they be expressed before or after the making of the award in order to determine the intention of the tribunal whilst the award itself would be rendered meaningless. 65 The principles stated in Bryce have been applied on a number of occasions by this Commission: see, for example, Kellogg (Aust.) Pty Limited v National Union of Workers, New South Wales Branch (1998) 89 IR 391 at 392 - 395; Re Hospital Employees Conditions of Employment (State) Award (1999) 96 IR 245 at 255 - 256 per Wright J, President and Schmidt J; ALHMWU v Manilla RSL & Ex-Servicemens' Club Limited [2000] NSWIRComm 122 at [40]-[42] per Boland J; Australian Workers' Union, New South Wales v New South Wales Technical and Further Education [2001] NSWIRComm 25 at [15] and [17 - 19] per Schmidt J. 66 We consider that Hungerford J was correct in observing, in Kellogg (at 395), that the passages cited by the majority in Bryce represented a "long-standing and settled approach" to the task of award interpretation. 67 The application of those principles, we think, should occur in conformity with general approaches to the construction of enactments and other instruments. In this respect, we note, with approval, the observations of Walton J, Vice-President, in Perisher Blue v Australian Workers' Union (1999) 91 IR 274 at 283 - 284: Speaking generally, awards should be interpreted in a similar fashion to other enactments: Geo A Bond & Co Ltd (in liq) v McKenzie [1929] 28 AR (NSW) 498 at 503 ; Short v F W Hercus Pty Limited (1993) 40 FCR 511 at 520. In the construction of the general order, and in conformity with general principles of award interpretation, the Commission should consider the wider context of the making of those provisions. Burchett J in Short v F W Hercus describes this approach to the interpretation of an award as follows: "The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is part, or to other documents with which there is an association. Context may also include, in other cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read." (at 518) (See also Western Newspapers Pty Limited & Another v Warren (1994) 56 IR 340 at 351). I note that a similar approach was adopted by the former Industrial Commission in re Butter, Cheese and Bacon Factories and Milk and Cream Condensories &c. (State) and Butter Cheese and Bacon Factories and Milk and Cream Condensories, &c. (Newcastle and Northern) Awards (1950) 49 AR (NSW) 62 at 64 where it was held that the meaning of words within an award (which are not expressed or precise) may be ascertained by "placing upon the words their ordinary meaning as applied to the subject matter with respect to which they are used". 68 The authorities set out in Bryce considered the circumstances in which it may be appropriate to apply the award-maker's intentions to the circumstances in which the award was made and to the practical effects of a particular construction. The decision in Perisher Blue indicated the desirability of considering the terms of an award in the context in which they appeared and emerged. Those principles apply with equal force to the circumstances in which it may be appropriate to have regard to other aids of construction such as the "major and substantial" or "principal purpose" tests. 69 Those principles apply to a clause which establishes the coverage of an award in the same way as they do to other clauses in the award. It is thus appropriate to consider the scope clause of the award in the context in which it appears and, in particular, by reference to the other provisions of the award. 70 It should be noted that the application of aids to construction, such as the "major and substantial" or "principal purpose" tests, should be approached with caution. The automatic adoption of such an approach may, depending on the terms of the award, have the potential for awards to be interpreted inconsistently with their plain words and, therefore, unnecessarily restrictively. This potential may be greatest when the scope of the award's coverage clause is expressed in broad and inclusive terms. See more recently the Full Bench decisions in Zoological Parks Board of New South Wales and Australian Workers' Union New South Wales [2004] NSWIRComm 85 and C onstruction, Forestry, Mining and Energy Union (NSW Branch) v Delta Electricity [2003] NSWIRComm 135. 24 It is pertinent for the purposes of this decision, to highlight another important principle of award construction - that is, the provisions of an award should be construed beneficially subject to the actual language used and what is fairly open on the words used. This principle was helpfully discussed in State Rail Authority Firefighters Award 2001 [2002] NSWIRComm 159: 22 .... An award or agreement is an instrument created to include and benefit employees and should be interpreted in accordance with that purpose. This was recognised by Macken J in San Remo (Southland) Pty Ltd v Farrell (1987) 22 IR 291 where his Honour stated (at 294 - 295): [I]ndustrial tribunals have always tended to lean toward construction of awards and employment circumstances which would preserve the operation of instruments of regulation such as awards rather than against their operation. In so stating, his Honour was doing no more than applying, in the specific industrial context, the well known and often applied approach to interpretation epitomised in the Latinism ut res magis valeat quam pereat. 23 Some judges and writers appear to treat this approach as part of the general purposive or beneficial approach to interpretation whilst others treat it as a separate rule stated as "interpretation to ensure validity and attainment of object of legislation [or instrument]" see for example Pearce and Geddes , Statutory Interpretation in Australia, 5th Ed 2001, pp 48 - 49; Gifford, Statutory Interpretation 1990 p 69; Odgers, Construction of Deeds and Statutes 5th Ed 1967, pp 32 - 33; Edgar, Craies on Statute Law, 7th Ed 1971, pp 95, 103ff; Nokes v Doncaster Amalgamated Collieries Limited [1940] AC 1014 at 1022 ( Viscount Simon LC); R v Portus; Ex parte City of Perth (1973) 129 CLR 312 at 317 - 318 ( McTiernan J); Martin v Scribal Pty Ltd (1954) 92 CLR 17 at 97 ( Taylor J), Wright v Gibbons (1948) 78 CLR 313 at 324 - 325 and Elconnex Pty Limited v Gerard Industries Pty Limited (1991) 105 ALR 247 at 268 ( Burchett J). Notwithstanding some subsequent judicial issue taken with Macken J's approach, we consider his Honour's approach as entirely unexceptional and, particularly so, when its pedigree and conceptual basis are properly understood. 24 Indeed the Full Bench in Nestle Australia Limited and Patatou (unreported, Fisher P, Cullen J and Connor CC, 16 July 1993), acknowledged the basis for the approach of Macken J when it was found at first instance that the respondent to the appeal was covered by the Clerks (State) Award. The decision at first instance was influenced by the approach of Macken J in San Remo set out above. The Full Bench characterised Macken J's statement in this way: The rationale in San Remo (Southland Pty Ltd) v Farrell was the adoption of a beneficial construction of awards and employment circumstances in order to preserve the operation of awards rather than against their operation. 25 I would summarise then the key principles to be applied when interpreting awards: 1) Interpretation of awards cannot be approached in exactly the same way as the interpretation of statutes. 2) The actual words used should be given their plain, ordinary English meaning. 3) If the words are unambiguous, it is not permissible to extend or limit their ordinary commonsense meaning. 4) A too literal interpretation of an award provision should be avoided. 5) It may be appropriate to consider the intention of the industrial parties who drafted the award. 6) The meaning of a particular clause may be ascertained in the context of the award as a whole. 7) The provisions of an award should be construed beneficially, subject to the actual language used and what is fairly open on the words used. CONCLUSIONS 26 From the outset, I should say I have serious doubts that, at the time of the introduction of the more beneficial long service leave entitlement in 1971, the parties (and most particularly the Unions) would have intended the provision to operate in the manner contended for by the Chamber. It would seem that the practical effect of the Chamber's interpretation is to treat an employee's entitlement to long service leave differently before and after 10 years' service. When I use the word 'differently', it is probably more correct to say that the effect is to reduce an employee's entitlements. 27 Another way of looking at it, is to say to a long serving employee that his or her service is of more value before 10 years' service than after. Just as a matter of justice and equity, I fail to see how the parties would have intended such an outcome. Further, I agree with Mr O'Connor that it would be a "nonsense" for an employee's long service leave entitlement to be calculated after 10 years' service such as to reduce the benefit. These conclusions seem to me, to be entirely in accord with the principle that the provisions of an award should be construed beneficially, see par 24 earlier. 28 It is to be stressed that there was no evidence from either party that, in over 30 years, there has been any dispute or argument about the interpretation of the disputed clause. Indeed, despite the confusion as to whether Mr Rouse was the Chamber's President, it would appear that even the Chamber's members have applied the Union's interpretation to the clause. 29 Many employees must have qualified for the benefit over this period. Of course no employee eligible for, and who was paid long service leave after 10 years may have noticed any discrepancy. However, I would think this scenario to be most unlikely. Either with the assistance of their Union or on their own initiative, most employees would have complained if the multiplier of 1.3 weeks had not been applied to the entire period of their employment. These observations, admittedly are purely speculative. However, they would tend to lend credence to the BIC view that individual employers have adopted the BIC's interpretation of the provision and it has become an accepted custom and practice. 30 Even if I be wrong about the parties' intentions and application of the benefit over the years, support for the BIC's interpretation can also be found in the manner in which the Long Service Leave Act itself applies the same pro rata calculation in various circumstances of qualification for long service leave. I accept Mr O'Connor's submission in this regard. In my opinion, an Award provision, albeit with an enhanced entitlement, should be read consistently with the principles applied in a directly related statute on the same subject matter. 31 The Chamber's primary argument, and perhaps its strongest, is that sub cl (c) of cl 1.18 isolates the 13 weeks' long service leave to the first 10 years of service from all the other provisions of the Long Service Leave Act. It is necessary for me to address some comments on this submission as, with respect, I do not agree with it. 32 In my opinion, the multiplier of 1.3 weeks derives exclusively from the discrete benefit of 13 weeks' leave after 10 years' service and must therefore be viewed entirely within that context. Put another way, without the enhanced benefit, the multiplier of 1.3 weeks simply wouldn't arise. In my view, the 1.3 weeks applied to the entire period of the employee's employment does not alter any other provisions, conditions, durations or qualifying periods found in the Long Service Leave Act. In applying this approach, I would conclude that the Chamber's reliance on the sub cl (c) is misplaced. 33 For the foregoing reasons, I determine pursuant to s175 of the Act, that cl 1.18 should be read as to apply the multiplier of 1.3 weeks for the purposes of long service leave for an employee's entire length of service before and after 10 years' service. 34 The parties are directed to confer as to the drafting of an appropriate award provision giving effect to this decision. Any disagreement shall be referred to the Commission for final settlement. These proceedings are otherwise concluded. Peter J Sams, AM Deputy President DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.