WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2015 WAIRC 00411

DELIVERED : THURSDAY, 28 MAY 2015

FILE NO. : M 5 OF 2015

CLAIMANT

AND

PUBLIC TRANSPORT AUTHORITY OF WESTERN AUSTRALIA

RESPONDENT

Catchwords : Whether the Claimant was an employee for the purposes of the Long Service Leave Act 1958; Whether the Public Transport Authority Railway Employees (Transperth Train Operations) Industrial Agreement 2011 governed the Claimant’s long service leave entitlements; Whether the entitlement to long service leave under the Agreement is at least equivalent to the entitlement under the Long Service Leave Act 1958.

Legislation : Long Service Leave Act 1958

  Industrial Relations Legislation Amendment and Repeal Act 1995

  Labour Relations Legislation Amendment Act 2006

Instruments : Public Transport Authority Railway Employees (Transperth Train Operations) Industrial Agreement 2011

  Long Service Leave General Order [(1979) 59 WAIG 1]

Result : Claim proven

Representation:

Claimant :  Mr C. Fogliani (Counsel) instructed by W.G. McNally Jones Staff     Lawyers

Respondent : Mr D. Matthews (Counsel) instructed by the State Solicitor for Western Australia

REASONS FOR DECISION

Undisputed Facts

1          Ms Junghee Yoon (Ms Yoon) was employed by the Public Transport Authority of Western Australia (PTA) from 28 May 2007 until 26 July 2014. It follows that she was employed by the PTA continuously for more than seven years but less than 10 years.

2          Ms Yoon’s employment did not end because of misconduct or serious misconduct.  At the time that she resigned from her employment she was employed in the classification of Level 4 (Passenger Ticketing Assistant) under the Public Transport Authority Railway Employees (Transperth Train Operations) Industrial Agreement 2011 (the Agreement). The Agreement has since been replaced.  However, that is irrelevant for my purposes.

3          If it is proven that Ms Yoon was an employee for the purposes of the Long Service Leave Act 1958 (LSL Act), then she has an entitlement pursuant to section 8(3) of that Act to pro-rata long service leave of 6.17 weeks, valued at $6,108.82.

Contentions

4          Ms Yoon contends that on 26 July 2014, pursuant to sections 8(1) and 8(3) of the LSL Act, she became entitled to a pro-rata long service leave payment of $6,108.82.

5          The PTA denies that Ms Yoon is entitled to pro-rata long service leave. It says that Ms Yoon was not an employee for the purposes of the LSL Act and is therefore not entitled to the pro-rata long service leave she claims.

6          The PTA contends that an employee’s entitlement to long service leave under the Agreement is more beneficial than, or at least equivalent to, the entitlement to long service leave under the LSL Act.  It therefore submits that the Agreement applies to the exclusion of the LSL Act by virtue of section 4(3) of that Act.

7          It is agreed that the Agreement provides for pro-rata long service leave, but only in the limited circumstances contained in Clause 6.6.5. of the Agreement. 

Issue

8          The only issue that is in dispute between Ms Yoon and the PTA is whether Ms Yoon is an employee as defined in section 4 of the LSL Act.

Definition of Employee under the LSL Act

9          Section 4(1) of the LSL Act provides:

“…

employee means, subject to subsection (3) —

(a)          any person employed by an employer to do work for hire or reward including an apprentice;

(b)          any person whose usual status is that of an employee;

(c)          any person employed as a canvasser whose services are remunerated wholly or partly by commission or percentage reward; or

(d)          any person who is the lessee of any tools or other implements of production or of any vehicle used in the delivery of goods or who is the owner, whether wholly or partly, of any vehicle used in the transport of goods or passengers if the person is in all other respects an employee;

…”

10       It is not in dispute that Ms Yoon, while employed by the PTA, was a person whose usual status was that of an employee. It follows that she would have been an employee for the purposes of the LSL Act, so long as she was not ousted by section 4(3) of that Act.

11       Section 4(3) of the LSL Act provides:

“(3)  Where a person is, by virtue of —

(a)   an award or industrial agreement;

(b)   an employer-employee agreement under Part VID of the Industrial Relations

 Act 1979 or other agreement between the person and his employer; or

(c)   an enactment of the State, the Commonwealth or of another State or Territory,

entitled to, or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under this Act, that person is not within the definition of “employee” in subsection (1).”

12       The narrower issue to be determined is whether Ms Yoon, by virtue of the Agreement, was entitled to, or eligible to become entitled to, a long service leave entitlement which is at least equivalent to the entitlement to long service leave under the LSL Act.

13       The Agreement contained “pro-rata” long service leave provisions derived from Clause 11 of the Long Service Leave General Order (1979) 59 WAIG 1 (LSL General Order) which was repealed on 4 July 2006. The conditions of Clause 11 of the LSL General Order were largely replicated in Clause 6.6.5. of the Agreement which provides:

“6.6.5.  An employee will only be entitled to pro rata long service leave if his or her employment is terminated:

a)        by the Employer for other than disciplinary reasons; or

b)        due to the retirement of the employee on the grounds of ill health; or

c)        due to the death of the employee, in which case the payment would be made to the employee’s estate; or

d)        due to employee’s retirement at the age of 55 years or over, provided 12 months of continuous service has been completed prior to the day from which the retirement takes effect; or

e)        for the purpose of entering an Invitro Fertilisation Programme, provided the employee has completed three years service and produces written confirmation from an appropriate medical authority of the dates of involvement in the programme; or

f)          due to employees resignation for pregnancy, provided the employee has completed more than three years and produces certification of such pregnancy and the expected date of birth from a legally qualified medical practitioner.”

14       Relevantly section 8(3) of the LSL Act provides:

“(3) Where an employee has completed at least 7 years of such continuous employment since the commencement thereof, but less than 10 years, and the employment is terminated — 

(a)               by his death; or

(b)               for any reason other than serious misconduct,

 the amount of leave to which the employee is entitled shall be a proportionate amount on the basis of 8 2/3 weeks for 10 years of such continuous employment.”

15       The fact that Ms Yoon does not meet the criteria set out in Clause 6.6.5. of the Agreement is uncontroversial. Consequently, under the Agreement she has no long service leave entitlement but rather, has an entitlement of 6.17 weeks leave under the LSL Act if she is not ousted by section 4(3) of that Act.

Comparison of the LSL Provisions

16       The following table compares the long service leave provisions of the Agreement with those of the LSL Act:

17       I observe that Clause 6.7.2. of the Agreement allows an employee at his or her initiative and request, in certain circumstances, to receive payment in lieu of their unutilised accrued long service leave.  The LSL Act, however, does not provide for “cash in lieu” payments to employees.

18       Another difference is that section 10 of the LSL Act enables, by agreement and subject to certain conditions being met, an employee to take long service leave before his or her right thereto has accrued. There is no similar provision in the Agreement.

Ms Yoon’s Submissions

19       Ms Yoon contends that for her, the entitlement to long service leave under the Agreement is not at least equivalent to the entitlement under the LSL Act for the following reasons:

1. under the LSL Act she is entitled to $6,108.82 after having completed seven years of continuous service, whereas under the Agreement she has no entitlement; and

2. the entitlement to long service leave after completing seven years of service is not constrained by the restrictions imposed by Clause 6.6.5. of the Agreement, and in particular, the requirement that termination be at the employer’s initiative.

20       Ms Yoon submits that it was the intention of Parliament that pro-rata long service leave be available after completing seven years of continuous service. When the Labour Relations Legislation Amendment Act 2006 (2006 Act) came into force on 4 July 2006, it modified the entitlement to long service leave under the LSL Act by reducing the time it took for an employee to become entitled to long service leave.  The 2006 Act provided:

1.            8 2/3 weeks of long service leave in respect of 10 years continuous service; and  4 1/3  weeks for every five years thereafter; and

2.            pro-rata long service leave for continuous employment with the same employer for  between at least seven years but less than 10 years.

21       The Agreement avoids the 2006 Act reduction in the time an employee needed to work to become entitled to long service leave, and accordingly, is not at least equivalent to the entitlement contained in the LSL Act.

22       Further, before 16 January 1996, an employee would not be entitled to pro-rata long service leave under the LSL Act unless the employee’s employment was, amongst other things, terminated on the employer’s initiative.

23       On 16 January 1996, the Industrial Relations Legislation Amendment and Repeal Act 1995 (1995 Act) came into force. Section 49 of the 1995 Act deleted and replaced the former section 8(3)(b) of the LSL Act, thereby making an employee under the LSL Act entitled to pro-rata long service leave even if his or her employment was terminated on his or her initiative. Ms Yoon submits that Clause 6.6.5. of the Agreement attempts to usurp the effect of section 49 of the 1995 Act. In this regard, the pro-rata long service leave entitlement under the Agreement is repugnant to, and not at least equivalent to, the entitlement created under the LSL Act.

PTA’s Submissions

24       The PTA submits the following.

25       Ms Yoon is ousted as an employee for the purposes of the LSL Act by section 4(3) of that Act because the Agreement, which applied to her, made her entitled to or eligible to become entitled to, long service leave at least equivalent to the entitlement to long service leave under the LSL Act.

26       The Agreement and the LSL Act must be objectively compared to determine whether, on the whole, the Agreement is at least equivalent to the LSL Act. On the basis of such a comparison a person is either wholly within the Act or outside it.

27       There is no room for the mixing and matching of entitlements. The comparison cannot take into account a person’s individual circumstances. The subjective effect of the conclusion on an individual circumstance is irrelevant. If the analysis is a subjective one, taking into account a person’s circumstance, it would be completely unworkable.  That is because employers would be required to assess the situation in respect of their employees on a regular basis to determine whether, at a given point, an employee would be better off. Given that a breach of the Act or an industrial instrument may result in enforcement proceedings, Parliament could not have intended that an employer would have placed on it this “unwieldy and onerous duty” of a regular evaluation of an employee’s individual circumstances.

28       It is sufficient that an employer decides that, on the whole, the industrial instrument is at least equivalent to the LSL Act, and to apply that industrial instrument to its employees without further regard to the LSL Act.

29       The fixed point in time when the objective analysis is required is the time when an industrial instrument has application. Such is reinforced by the words “or eligible to become entitled to” in section 4(3) of the LSL Act.

30       The comparison does not require that any given person is actually entitled to a certain entitlement under the industrial instrument.  It is the presence of the entitlement in the industrial instrument that is relevant. What is required is a comparison between two documents standing in isolation, not a comparison of the two documents as they apply at any given time in relation to any given person’s individual circumstances.

31       The mixing and matching of entitlements under the Agreement and the LSL Act, in order to arrive at the best possible result for employees, is not intended or allowed.

32       An employee cannot be an employee for some purposes under the LSL Act, but not for others. There are two systems (either the Act or Agreement) and the employer is entitled to conclude that its employees are within one or the other for all purposes.

33       An employer cannot be obligated to arrive at a compendium of conditions drawing upon the LSL Act and an industrial instrument. This would be unworkable. In any event, the LSL Act has not enacted a series of “minimum conditions” that cannot be affected by an industrial instrument. If that was intended by the LSL Act, the Act would have expressly said so.

34       Section 4(3) of the LSL Act refers to an “entitlement” under an award or industrial agreement and an “entitlement” under the Act. The entitlement will have several conditions which form “the entitlement”. A comparison of the whole entitlement comprising the respective conditions produced by the Agreement and the LSL Act is necessary. The test being equivalency.

35       It follows that the Court must make an objective and holistic comparison of the entitlement to long service leave under the Agreement and the LSL Act.

36       When that is done it will be seen that the entitlement under the Agreement is at least equivalent to that provided by the LSL Act because it provides for longer periods of leave and it enables employees to “cash in” their long service leave entitlement.

37       Although on a line by line analysis the LSL Act is more favourable to Ms Yoon than the Agreement, any entitlement she may have is part of an entitlement which also has a condition that only 8 2/3 weeks of long service leave is granted after 10 years, instead of 13 weeks, as provided by the Agreement.

38       Section 8(3) of the LSL Act should be read in the context of the less beneficial entitlement contained in section 8(2)(a) of the LSL Act, which provides for only 8 2/3 weeks of long service leave after 10 years.

39       On an objective analysis, the biggest benefit of any long service leave entitlement will be the length of leave when the first and subsequent milestones are met. The ability to cash out leave is also a significant benefit.

40       Section 8(3) of the LSL Act in context, is not enough to disturb the conclusions that the leave entitlement in the Agreement is at least equivalent to the leave entitlement under the LSL Act.

Determination

41       An objective analysis of whether “on the whole”, the terms of the Agreement are at least equivalent to the LSL Act, is very difficult if not impossible to achieve.

42       The PTA submits that the biggest benefit of any long service leave entitlement will be the length of leave available upon reaching the first or subsequent milestones. However, that might not necessarily be the case.

43       The significance of the benefit provided by any particular provision will be dependent upon individual circumstances. For some it may be more important to reach the subsequent milestone in five years rather than seven years. Others may not want to cash out their long service leave entitlement and therefore such an entitlement is of no particular benefit. For others close to retirement age, reaching the pro-rata qualification will be of more importance than reaching the 10 year milestone which might be unachievable.

44       Each benefit must, in my view, be weighed against an employee’s personal circumstances. It follows that any attempt made to weigh up, as whole, the entitlement under the Agreement in comparison to the entitlement under the LSL Act will be enormously difficult because no singular measure can be used. On what basis can the benefit provided be evaluated?  The only practicable way equivalency can be determined is to weigh the competing applicable benefits relevant to the employee at the time that the milestone giving rise to the benefit is reached.  The requirement for equivalency in section 4(3) of the LSL Act is a beneficial provision which imports the setting of minimum standards for each particular benefit.

45       The only way in which a comparison can truly be made is if the condition is analysed and compared in the context of the individual’s circumstances.

46       The PTA suggests that such will be unworkable and uncertain.  However, I am not persuaded that will be so. The entitlement to long service leave is personal and is dependent upon individual circumstances.

47       A particular person’s entitlement will only crystalise once the applicable milestone is met.  On that event happening or in contemplation of that happening, an assessment has to be made as to whether the particular entitlement to long service leave, under the applicable industrial instrument, is at least equivalent to that provided by the LSL Act. It is only then that consideration must be given to whether a person is an employee for the purposes of the LSL Act or not.

48       Given that industrial instruments, particularly industrial agreements, may be finite it will be impossible for employers to determine whether a person is an employee for the purposes of the LSL Act until it is necessary to do so.  That is, on or about the time that the milestone is met. That process is neither unwieldy nor onerous. Indeed, the employer can only assess each person’s entitlement on a case-by-case basis. The entitlement is very much dependent upon personal milestones being reached.  An analysis or comparison at any other time will be practically impossible.

49       It follows that if an employer has two employees, one may be an employee within the meaning of the LSL Act and the other may not, dependent upon their circumstances. In the context of the Agreement, if a person worked for more than seven years but less than 10 years, that person will be an employee within the meaning of the LSL Act, whereas, if the person worked more than 10 years they will not be an employee within the meaning of the LSL Act. The entitlement long service leave is very much dependent upon their personal circumstances.

50       It was submitted that the pro-rata provision in section 8(3) of the LSL Act should be read in the context of the less beneficial provisions as to the quantum of leave in section 8(2)(a) of the LSL Act. With respect, I do not agree. The entitlement under section 8(3) of the LSL Act is a discrete benefit contextually different from section 8(2)(a) of the LSL Act. There is no dependency between one provision and the other. Indeed, there is no reason to consider the provisions together.

51       There are two systems (LSL Act or industrial instrument) and the employer is required to conclude that its employee is within one or the other. That determination can only be made once the milestone for the entitlement is met. It requires a separate consideration each time a milestone enabling the entitlement is reached.

Conclusion

52       Ms Yoon was not entitled, under the Agreement, to any pro-rata long service leave entitlement.  However, she was entitled to become eligible to pro-rata long service leave under the Agreement, provided that certain conditions were met. Those conditions under the Agreement were more onerous than the conditions provided for by the LSL Act.  It follows therefore, that the long service leave entitlement under the Agreement was not, in her case, at least equivalent to the long service leave entitlement contained in the LSL Act.

53       I agree with Ms Yoon’s submission that Clause 6.6.5. of the Agreement attempts to usurp the effect of section 49 of the 1995 Act. In this regard, the pro-rata long service leave entitlement under the Agreement is repugnant to, and not at least equivalent to, the entitlement created under the LSL Act.

54       I find therefore, that Ms Yoon was an employee for the purposes of the LSL Act.  She is eligible to receive a pro-rata long service leave entitlement of 6.17 weeks, valued at $6,108.82.

G. CICCHINI

INDUSTRIAL MAGISTRATE