Industrial Relations Commission of New South Wales CITATION: Australian Workers Union v. Moorings Developments Limited [2010] NSWIRComm 1017 This decision has been amended. Please see the end of the judgment for a list of the amendments. APPLICANT Australian Workers Union PARTIES: RESPONDENT The Moorings Developments Limited FILE NUMBER(S): IRC 1059 of 2009 CORAM: Connor C CATCHWORDS: industrial dispute - motel industry - allegations of underpayment of entitlements to an employee - annual leave - annual leave loading - pro-rata long service leave - notice period for termination of employment - small claim - respondent's failure to appear - ex parte proceedings - issues of jurisdiction - order made Annual Leave Act 1944 Industrial Relations Act 1996 Long Service Act 1955 LEGISLATION CITED: Long Service Leave (Metalliferous Mining Industry Act 1963 Federal Fair Work Act 2009 Federal Fair Work Amendment (State Referrals and Other Measures) Act 2010 Federal Workplace Relations (Work Choices) Act 2005 A J Mills and Sons Pty Limited v. Transport Workers' Union of New South Wales (2009) 187 IR 56 General Pants (Trading) Company Pty Limited v. Marie - unreported CASES CITED: Grimshaw v. Dunbar (1953) 1 All ER 350 State of New South Wales v. Commonwealth of Australia (2006) 156 IR 1 Transport Workers' Union of New South Wales v. Chand's Transport Services [2010] NSWIRComm 1009 HEARING DATES: 06/04/2010 EXTEMPORE JUDGMENT DATE : 6 April 2010 APPLICANT Wayne Phillips Australian Workers Union LEGAL REPRESENTATIVES: RESPONDENT No appearance DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Tuesday, 6 April, 2010 Matter No IRC 1059 of 2010 Australian Workers Union and The Moorings Developments Limited Notification under S.130 of the Industrial Relations Act, 1996 re alleged underpayments of entitlements to an employee DECISION [2010] NSWIRComm 1017 Introduction 1 Pursuant to the provisions of S.130 of the 1996 Industrial Relations Act, a notification of an industrial dispute has been lodged by the Australian Workers Union with The Moorings Developments Limited, alleging incorrect payments made to an employee. The matter was allocated to me. I set it down for a conference in the Commission's premises at 90 Crown Street, Wollongong on Friday, 24 July, 2009. I subsequently received correspondence from Moorings Developments seeking an adjournment of the proceedings and the AWU acceded to that request. I adjourned the matter for conferences on Tuesday, 11 August, 2009, Tuesday, 1 September, 2009, Monday, 14 September, 2009 and Monday, 21 September, 2009. On each occasion a teleconference was arranged for Moorings Developments. 2 The AWU claim with its S.130 notification concerns an alleged underpayment to its member, Mr Simon Fearn, who was employed by Moorings Developments as a greenkeeper in its resort at Tomakin under the terms of the Motel Accommodation and Resort (State) Award. Mr Fearn was initially employed on a permanent basis for eight years but his employment status was subsequently changed to a casual position. He is no longer employed by Moorings Developments. The AWU asserts that Mr Fearn did not receive correct payments when his employment was converted from permanent to casual employment - essentially outstanding annual leave, annual leave loading, outstanding pro-rata long service leave entitlements and compensation for notice on termination, viz: $ Annual leave 3,702.89 Annual leave loading 2,910.60 Pro-rata long service leave 2,286.00 Notice period 3,510.20 12,410.69 3 Moorings Developments has conceded in correspondence to the AWU on Monday, 7 September, 2009 Mr Fearn's entitlement to payment in lieu of notice. It has nevertheless not paid that amount, presumably awaiting the outcome of these proceedings. It has calculated all of the entitlements for Mr Fearn on the rates prescribed for the work in question in the Motel Accommodation Award and for annual leave and long service leave it has paid Mr Fearn the sums calculated on that basis - $13,714.51 and $4,644.00 respectively. The payment in lieu of notice (unpaid to date) it has calculated on the same basis at $1,680.69. The AWU claim for annual leave, annual leave loading, pro-rata long service leave and notice is based on Mr Fearn's actual wage during his period of employment with Moorings Developments. The AWU claim represents a "top up" for annual leave and long service leave and payment for unpaid annual leave loading and for the period of notice. 4 The AWU has mounted its claim on Mr Fearn's behalf as a small claim under Ss.379 and 380. In particular, S.380(1) provides as follows: "An industrial organisation may, during any proceedings before the Commission, make an application for an order under this Part and for the application to be dealt with under S.379 (small claims procedure)." The maximum amount of any order for a small claim is confined by S.379(3); it presently stands at $20,000.00 for each individual employee. 5 It has not been possible to settle the AWU claim in these S.130 proceedings by conciliation. I programmed the matter for arbitration, issuing the certificate of attempted conciliation required by S.135, lodging it in the prescribed manner. I set the matter down for a further mention for programming on Tuesday, 17 November, 2009, proceeding again by teleconference as far as Moorings Developments was concerned. Ultimately, the matter was scheduled for hearing on Tuesday, 6 April, 2010 (in Wollongong). 6 In the proceedings Mr Phillips represented the AWU and Mr Fearn. There was no appearance in the proceedings for and on behalf of Moorings Developments. Nor had I received any correspondence or telephone call from Moorings Developments prior to the time set for the hearing. I delayed the hearing for almost 30 minutes. In those circumstances, Mr Phillips urged me to proceed ex parte to bring the AWU claim on behalf of Mr Fearn to a conclusion. Notwithstanding the somewhat complex jurisdictional issues which at the present time apply to the AWU claims made in these proceedings, and which I will deal with later in this decision, I now propose to do so. 7 In proceeding ex parte, I must nevertheless be satisfied that Moorings Developments was aware that the AWU claim on behalf of Mr Fearn was set down for hearing. Moorings Developments remains entitled to have a matter heard in its presence and dispute the AWU's claim made on behalf of Mr Fearn, cross-examine any witnesses called by the AWU, call its own witnesses and give such other relevant evidence as it requires to present its arguments. If by some mischance or accident a party is shut out from the right to do so, any order made in his absence would constitute a denial of natural justice [Grimshaw v. Dunbar (1953) 1 All ER 350 at p.355]. 8 But, of course, Moorings Developments may not escape its responsibilities in these proceedings by simply failing to appear in them. I am satisfied that Moorings Developments was aware of the hearing of this matter on Tuesday, 6 April, 2010. Notice of the hearing was provided in the customary manner and forwarded by e-mail to its e-mail address. In that notice is the following unambiguous comment: "...If there is no attendance by you or your agent, counsel or solicitor on the date specified in this appointment or as notified to you subsequently, the proceedings may be heard and an order may be made in your absence..." This matter commenced before me with the S.130 notification by the AWU when it lodged the matter on Tuesday, 21 July, 2009. In my opinion, it is not appropriate that I delay the finalisation of the matter any longer. 9 However, Mr Phillips carries the onus of establishing to my satisfaction that I have jurisdiction to make the order he seeks and that Mr Fearn is owed the sum the AWU claims. That still remains the position in any ex parte proceedings - see, for instance, the unreported decision the Full Bench of the Commission (Fisher J - President, Schmidt J and Murphy CC) on Thursday, 8 September, 1994 in General Pants (Trading) Company Pty Limited v. Marie [Matter No. IRC 3123 of 1993 at p.18]]. I now turn to consider the complex jurisdiction for this claim. Jurisdiction 10 Much jurisdictional uncertainty actually surrounds the AWU claim in these proceedings at the present time which I have already explored to some extent in my unreported preliminary decision of Friday, 19 February, 2010 in Transport Workers' Union of New South Wales v. Chand's Transport Service [Matter No.IRC 1733 of 2009]. No doubt, Moorings Developments is a trading corporation within the meaning of S.51(xx) of the Commonwealth Constitution. Limitations have been placed on the jurisdiction of the State Commission in general for employment conditions in S.51(xx) corporations which flow from the 2005 Federal Workplace Relations (Work Choices) Act and the 2009 Federal Fair Work Act which has replaced it [State of New South Wales v. Commonwealth of Australia (2006) 156 IR 1]. The AWU claim on behalf of Mr Fearn in these S.130 proceedings must be considered in that context. 11 The Motel Accommodation Award which apparently governs Mr Fearn's employment was initially a State award but for S.51(xx) corporations it became a "notional agreement preserving a State award" [a NAPSA] with Work Choices and is now subject to the award modernisation processes under Fair Work Australia, ie it has been converted from a State instrument to a Federal instrument. That may possibly have fundamental implications for the AWU claim on behalf of Mr Fearn in these S.130 proceedings. 12 S.364(1)(b) provides that a member of the State Commission hearing a small claim under Ss.379 and 380 becomes an "industrial court" as defined to include: "…in the case of proceedings under S.380 (small claims during other Commission proceedings) - the Commission whether or not in Court Session…" And pursuant to S.365: "An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable." An "industrial instrument" is initially confined by S.8 to mean: "...an award, enterprise agreement, a public sector industrial agreement, a former industrial agreement, a contract determination or a contract agreement..." That is to say essentially a State instrument. By virtue of S.364(2) an "industrial instrument" also extends to entitlements flowing from permits under S.125 of the State IR Act (impaired workers) - S.364(2)(a) - and under the 1944 Annual Leave Act, the 1955 Long Service Leave Act or the 1963 Long Service Leave (Metalliferous Mining Industry Act - S.364(2)(b). But arguably not a NASPSA or a modern award. 13 The question arises in these S.130 proceedings whether the claim the AWU makes on behalf of Mr Fearn is over a State entitlement, which unarguably would be within jurisdiction, or a Federal entitlement, where there remains some doubts at present that the claim would be within jurisdiction for the State Commission under Ss.130, 379 and 380. Mr Fearn's annual leave and long service leave entitlements clearly remain State entitlements because they fall under State legislation recognised in S.364(2)(b). On the other hand the position with annual leave entitlements and notice period, flow directly from the Motel Accommodation Award and, as such are currently Federal entitlements. 14 Effective from Friday, 1 January, 2010 the Federal Fair Work Amendment (State Referrals and Other Measures) Act came into operation which, among other things confirmed the Industrial Court of New South Wales (including, by virtue of S.364(1)(b), a member of the State Commission hearing a small claim under Ss.379 and 380) as an "eligible State or Territory Court" [S.12(ca)]. However, as I indicated in Transport Workers' Union of New South Wales v. Chand (at p.7) it would appear to me that a complementary amendment to the State IR Act - in particular, to the definition of "industrial instrument" in either S.8 or S.364(2) - may still be necessary to confirm the Ss.379 and 380 small claims jurisdiction to extend to Federal instruments. I understood that to be the intention of both the Federal and State legislatures. 15 As I indicated earlier in this decision, the jurisdiction under Ss.379 and 380 extends to the Annual Leave Act and the Long Service Leave Act where, as I see the position, much of the AWU claim on behalf of Mr Fearn appears to fall. Mr Fearn is entitled to unpaid annual leave that has not been paid to him. And S.4(2)a)(iii) of the Long Service Leave Act, provides pro rata long service leave in the following circumstances: "...in the case of a worker who has completed with an employer at least five years service as an adult and whose services are terminated by the employer for any reason other than the worker's serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker..." 16 The conversion of Mr Fearn's employment from permanency to casual is to my mind such a fundamental change to his employment as to constitute a termination of his employment for the purposes of S.4(2)(a)(iii) of the Long Service Leave Act (and the Annual Leave Act): it represents the termination of one type of employment (which, among other things provided for long service leave) into another type of employment (which, among other things, did not attract long service leave). It was an unilateral and fundamental alteration to the terms under which Mr Fearn was engaged by Moorings Developments without his consent. Moorings Developments appears to have accepted that position by making payment to Mr Fearn for annual leave, pro-rata long service leave and notice period, albeit on a reduced rate. 17 A casual employee may still be entitled to long service leave if it can be established that the employee was a "regular casual", ie that he remained engaged on a regular basis over many years to the extent that it represented continuous employment for him [A J Mills and Sons Pty Limited v. Transport Workers' Union of New South Wales (2009) 187 IR 56 at pp.74 and 75]. But, as I understand the position, it does not appear to me that Mr Fearn's employment with Moorings Developments after Thursday, 28 April, 2006 had about it any level of permanency, regularity or continuity and certainly Mr Phillips has accepted that position in not pressing for long service leave for employment beyond Thursday, 28 April, 2006. 18 Mr Fearn's employment was converted from permanent to casual effective from Thursday, 28 April, 2006. Work Choices came into effect one month earlier - from Monday, 27 March, 2006. Therefore the substantial part of Mr Fearn's entitlements to annual leave loading would have arisen when the Motel Accommodation Award was a State instrument. Consequently, with the exception of a very limited period of time (which for present purposes I believe I am entitled to regard as sufficiently negligible to discount it) - the bulk of the AWU claim on Mr Fearn's behalf in that respect was unquestionably within jurisdiction under Ss.379 and 380. 19 However, arguably entitlements from the notice period for the termination of employment arise only at the actual point of termination of the employment and at that time the Motel Accommodation Award was a NAPSA, ie a Federal instrument. Moorings Developments has conceded a sum in payment in that respect (although not necessarily to the level that the AWU has now claimed). Nevertheless, there is some doubts in my mind whether or not that particular entitlement is enforceable before me in these proceedings under Ss.379 and 380 at the present time. 20 What practical benefit actually flows to either the AWU or Moorings Developments from such an argument? Not much, I would think, particularly having regard to the fact that Mooring Developments is apparently to make some payment in respect to the notice period at a lower level than the AWU is claiming. Bearing in mind that if such a right exists for payment in lieu of notice for Mr Fearn, it would still be recoverable before the local courts, whether or not it is actually enforceable or not under Ss.379 and 380. The purpose behind the small claims jurisdiction under Ss.379 and 380 is to provide parties with a speedy and cost effective way to resolve disputes of this kind and it is not in anybody's interests to frustrate that option to the parties. Conclusion 21 In any event, the argument between the AWU and Moorings Developments centres not on whether or not certain entitlements have accrued to Mr Fearns but the actual quantum of that entitlement. In the circumstances, I believe that the AWU 's calculations are the correct ones to adopt. The entitlements to annual leave, annual leave loading, long service leave and notice period are appropriately based on the actual rate of pay that Mr Fearn received and not the rate of pay prescribed in the Motel Accommodation Award. There is no justification to revert to the lesser rate of pay in the Motel Accommodation Award just for these particular issues when at all times it was the higher rate of pay that Mr Fearn received during his period of employment with Moorings Developments. 22 That having been said, whilst there may be some jurisdictional uncertainty concerning a modest sum as part of the AWU claim with respect to annual leave loading and the issue of payment in lieu of the notice period on termination, I do not believe that it is in anybody's interests to abandon the AWU claim in its entirety or discount those modest sums in the context of the AWU's claim before me and for the AWU to pursue that claim elsewhere before the local courts. To do so would simply cause greater expense to the AWU and Moorings Developments. 23 I therefore make the following order: ORDER 1. The Mooring Developments Limited shall pay to Mr Simon Fearn the sum of $12,410.69 within 21 days. 2. This order shall take effect on and from Tuesday, 6 April, 2010. P J CONNOR Commissioner 08/04/2010 - Change in title of decision - Paragraph(s) Not applicable 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.