WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES WAYNE HANCOCK

CLAIMANT

-v-

Nu-Tech Engineering Pty Ltd

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE W.G. TARR

HEARD Friday, 30 June 2006, Tuesday, 20 December 2005, Wednesday, 21 June 2006

DELIVERED Friday, 30 June 2006

CLAIM NO. M 132 OF 2005

CITATION NO. 2006 WAIRC 05239

CatchWords Breach of award; Alleged failure to pay accrued annual leave, sick leave and public holidays; hourly rate in excess of award entitlement.

Legislation Industrial Relations Act 1979

Minimum Condition of Employment Act 1993

Metal Trades (General) Award 1966

Cases referred to

in decision James Turner Roofing Pty Ltd v Peters 83 WAIG 427

Result Claim dismissed

Representation 

Claimant Mr G McCorry of Labourline – Industrial and Workplace Relations Consulting appeard as agent for the Claimant

Respondent Mr B R Jackson (of Counsel) instructed by Gadens Lawyers appeared for the Respondent

REASONS FOR DECISION

The Claim

1         The claim in these proceedings is brought pursuant to the provisions of section 83 of the Industrial Relations Act 1979 and alleges that the Respondent has failed to comply with the provisions of the Metal Trades (General) Award 1966 (the Award) or, in the alternative, the Minimum Conditions of Employment Act 1993 (the MCEA).

2         In particular the allegation is that the Claimant was not paid his annual leave entitlements following the cessation of his employment and was underpaid sick leave and public holiday entitlements.  The period covered in the claim is from the 1 July 2002 to the 8 April 2005.

The Parties

3         The Respondent is an incorporated company which carries on business as a manufacturer and repairer of generally heavy engineering equipment for the mining industry in the State of Western Australia.

4         The Claimant is a sheet metal worker by trade and was employed by the Respondent as an engineering tradesperson performing welding duties.  He commenced employment with the Respondent’s business some time in 1996 or 1997 through a labour hire company and worked for six to twelve months on that basis before leaving.  He was later offered employment by the Respondent, or more correctly the Respondent’s predecessor, and according to Mr Paul Rakich, a director of the Respondent, on a subcontract basis.  In 1999, after some concerns with the bone fides of the subcontract arrangement with the Respondent’s employees, it was decided to introduce workplace agreements and on 1 January 2000 the Respondent and Claimant signed a workplace agreement.  The agreement was made pursuant to the provisions of the Workplace Agreements Act 1994 (now repealed) but was not lodged for registration under the Act.

The Agreement

5         The workplace agreement in clause 3 provided for “Rate and Hours of Work” as follows:

The ordinary hours shall be the first 8 hours worked per day Monday to Friday

Ordinary rate of pay will incorporate three items

Base Rate $15.00 p/h

Holiday Rate $1.25 p/h

Performance Bonus $1.75 p/h

Rate of pay for ordinary hours shall be paid at the rate of $18 per hour.

Hours worked in excess of the ordinary hours above shall be paid at the rate of $26 per hour.

These hourly rates may be changed at any time during the course of the agreement but only by mutual consent.  Because of economic factors the rates may be altered up or down by (sic) at no time may they be lowered below the award hourly rate.  Changes made to these rates shall in no way change the meaning or intention of the remainder of the agreement.

6         Clause 4 dealt with annual leave and provided:

A total of 160 hours at award rate has been added to the annual earnings based on a 40 hour week times 48 weeks.  Then divide the total by 1920 hours (40 hours × 48 weeks) to arrive at the flat rate for ordinary hours payment.

This means the employee is being paid holiday pay while working and therefore no other claim can be made against Nu-Tech for failure to cover the above entitlement.

7         The agreement provided for public holidays and sick leave to be paid at eight hours per day at a rate of $15.00 per hour.

8         With the demise of State workplace agreements, the Respondent prepared an Australian Workplace Agreement (AWA) for each of its employees pursuant to the provisions of the Workplace Relations Act 1996 (the WRA) and the Claimant signed the agreement on 2 September 2004 (exhibit C).

9         There was a suggestion in the Claimant’s evidence and in his submissions that he signed both agreements under duress.  I do not accept that to be the case.  The Claimant had been earlier employed as a subcontractor at $20.00 per hour and averaged about $1000.00 per week.  I accept the evidence of the Respondent that the rates of pay in the agreement were calculated so employees would not be worse off.  I also accept the Respondent’s evidence that he was not trying to exploit his employees and that he wanted to be fair to them and, in any event, needed to pay fair and reasonable rates to keep his workforce in a competitive industry.

10      As with the State workplace agreement the AWA was not certified under the then provisions of the WRA and no application was made to have the AWA certified.

11      It has been argued that because the agreements were not registered or certified they are null and void and cannot be relied upon.  The effect of non registration or certification can only be that they are unable to be enforced or used in any way contemplated by the relevant workplace agreement legislation.  Both agreements may be used as evidence as to the terms of the contract of employment between the parties.  It is common in employer and employee relationships for there to be contracts of employment even where they are bound by an award.  Where there is inconsistency in the contract with an award provision, the award provision applies.  For example clause 6 of the Award contemplates a contract of service and sets out the period of notice to be given when the contract is terminated.

12      Sub clause 6(1) allows for parties to a contract giving a greater period of notice but requires notice as set out hereunder.

13      The provision of one days notice in clause 2 of the workplace agreement signed 1 January 2000 is not in accordance with the provisions of the Award and unenforceable by the employer who, notwithstanding that clause in the agreement, is bound by the Award.

14      Likewise there is nothing in the Award which prevents an employer and employee from agreeing to over-award payments.

15      The Award provides for the minimum amount an employee must be paid in relation to ordinary hours, overtime and the other monitory entitlements depending on the employee’s classification.

16      I find that the workplace agreement and the AWA set out the terms of the employment contract between the Claimant and the Respondent from the date they were signed.

17      There is evidence that the Respondent changed entities sometime in 2002, however I find that the business continued to be run in effect by Mr Rakich who was a director of both companies and was effectively unchanged.  The change from Nu-Tech Engineering (Australia) Pty Ltd to Nu-Tech Engineering Pty Ltd, was to preserve assets after the failing of a business customer and apparently went unnoticed by the Claimant who continued to work under the same conditions.

18      I find that the terms of employment agreed continued notwithstanding the change in the entity of the employer.

19      It has been agreed that the parties herein are bound by the Award and I understand the Respondent is not disputing that the Claimant had not taken the 420.92 hours of annual leave at the time of his resignation, and that the Claimant was absent on sick leave or public holidays for 160 hours during the period of the claim.

20      It is in dispute that the Claimant was not paid for those hours of annual leave and that he was underpaid for sick leave and public holidays.  The Respondent argues that by agreement with the Claimant he was paid in advance for his annual leave by an increased and quantified amount in his hourly rate.  James Turner Roofing Pty Ltd v Peters (2003) 83 WAIG 427 is the most recent authoritative case which has considered the issue of a breach of an award where underpayment has been alleged.  In that case His Honour Anderson J said:

For myself, I can see no basis upon which the amount due upon enforcement of an award can be calculated by reference to any hourly rate which is not the rate prescribed in the award.  This is not to say that an employer and an employee may not enter into an over-award agreement, ie an agreement, express or implied, most of the content of which is supplied by the terms of the award but with agreed additions.  There is no reason why parties cannot contract by reference to the terms and conditions of an award.  So for example, an employer might offer employment expressly or impliedly on the basis that the employee is to receive all of the benefits of the award save that instead of the ordinary hourly base rate prescribed by the award, a higher base rate will be paid.  But then the employee who complains of a breach of the obligation to pay at the higher rate is not seeking to enforce the award but is seeking to enforce the agreement: Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 per Evatt J at 434 and Dixon J at 431.  See also (1940) 62 CLR 451 (Privy Council) per Lord Russell at 455.  The failure to pay at the agreed rate would be a breach of the agreement, not a breach of the award.

21      In relation to annual leave, the Award provides in clause 23 for any employee to be allowed four consecutive weeks leave with payment annually.  By agreement the leave may be taken in shorter periods.  The clause provides in (3)(b)(i) that:

An employee before going on leave shall be paid the wages the employee would have received in respect of the ordinary time the employee would have worked had the employee not been on leave during the relevant period.

22      Clause 13 provides that ordinary hours:

shall be an average of 38 hours with a work cycle not exceeding seven consecutive days.

23      Subclause (6)(a) creates an entitlement to an employee whose employment is terminated before he has taken leave due to him, to be paid in accordance with subclause (3)(i) in lieu of so much leave as has not been taken.

24      The MCEA provides for paid annual leave consistent with that provided for in the Award.  Section 24 allows for payment before the period of leave commences, provided any request by an employee is in writing.

25      In this case, in regards to annual leave, the parties entered into an agreement which provided for an hourly rate which included a component to cover annual leave.  That arrangement was accepted by the Claimant who was not paid when he took leave during his employment with the Respondent.  I accept the Respondent’s evidence that the arrangement was put in place at the Claimant’s request so that he could continue to receive a weekly amount similar to that paid when he was employed through a labour hire company and when he was later employed as a “subcontractor”.

26      I have not heard evidence as to the rates payable under the Award beyond the rates shown in the consolidated Award dated 6 January 1997.  Using those rates and the formula set out in the State workplace agreement, it was demonstrated that the amount paid to the Claimant for annual leave was well in excess of the amount payable under the Award as was the ordinary hour’s rate and the overtime rate.

27      Following James Turner Roofing v Peters (supra), in any claim alleging a breach of an award, any calculation required to determine any underpayment must be done using the Award rates and not the over award rate set out in any agreement, as the Claimant has used in his Particulars of Claim.

28      In any event on the evidence before me I find that the Claimant was paid for the accrued annual leave and he was paid for the sick leave and public holidays at a rate which is prima facie above the award rate.

29      The claim will therefore be dismissed.

WG Tarr

Industrial Magistrate