2026 WAIRC 00896
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2026 WAIRC 00896



CORAM
:
INDUSTRIAL MAGISTRATE T. KUCERA



HEARD
:
ON THE PAPERS



DELIVERED
:
29 SEPTEMBER 2026



FILE NO.
:
M 108 OF 2025



BETWEEN
:
WILLIAM JOHN MANSFIELD


CLAIMANT





AND





WA COUNCIL ON ADDICTIONS INC


RESPONDENT

CatchWords : Payout of annual leave on termination – Construction of enterprise agreement – application of ss 90(1) and 90(2) of the Fair Work Act 2009 – whether penalties and sleep disturbance allowance are to be included in payout of accrued annual leave on termination – whether s90(2) overrides the term of an enterprise agreement
Legislation : Fair Work Act 2009 (WA)

Instrument : Cyrenian House Agreement 2025-2028

Case(s) referred
to in reasons: : Target Australia Pty Ltd v Shop Distributive and Allied Employees’ Association [2023] FCAFC 66; (2023) 324 IR 304
WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536
Martin Fedec v The Minister for Corrective Services [2017] WAIRC 00828; 97 WAIG 1595
Shop, Distributive and Allied Employees Association v Woolworths South Australia Pty Ltd [2021] FWC 617
Centennial Northern Mining Servicers Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100; (2015) 231 FCR 298
Result : Entitlement established: quantum to be determined
Representation:
Claimant : Self-represented
Respondent : Ms C. Lewin (of counsel)



REASONS FOR DECISION
Introduction
1 This matter involves a dispute over the amount an employee was paid on termination for his untaken annual leave.
2 On 25 June 2025, William John Mansfield (claimant) who worked for the WA Council on Addictions Inc trading as Cyrenian House (respondent) as a ‘Residential Supervisor – Sleep Shift’ (Residential Supervisor), resigned from his employment.
3 As at the date of his resignation, the claimant had accumulated 124.1 hours of annual leave, which the respondent paid out at the claimant’s ordinary rate of pay.
4 The claimant’s employment was covered by the terms of the Cyrenian House Agreement 20252028 (2025 Agreement), which was made under the provisions of the Fair Work Act 2009 (WA) (FW Act).
5 In his role as Residential Supervisor, the claimant, under cl 69 of the 2025 Agreement, was entitled to be paid a Sleep and Disturbance Allowance of $120 (Sleep and Disturbance Allowance) for each ‘sleep shift’, which is a term that is defined in the 2025 Agreement. Cyrenian House Agreement 2025-2028 [2025] FWCA 1049 cl 15.

6 On 28 August 2025, the claimant lodged a small claims proceeding under s 548(1)(c) of the FW Act, alleging that the respondent had contravened s 90(2) of the FW Act. The claimant alleged that the amount he was paid for untaken annual leave, should have included applicable penalty rates for night shifts and work on weekends (penalties) and the Sleep and Disturbance Allowance, which the claimant was paid for work on his usual roster.
7 The claimant contended that cl 344 of the 2025 Agreement, which the respondent says excludes the payment of penalties and the Sleep and Disturbance Allowance from what is to be paid on termination for untaken annual leave, is because of ss 55(1) and 90(2) of the FW Act, has no force and effect.
8 As a result, the claimant says that penalties and the Sleep and Disturbance Allowance should have been included in the payment made for untaken annual leave on termination. Accordingly, the claimant seeks an order requiring the respondent to pay the difference between what he says he should have received for his untaken leave on termination and the amount the respondent actually paid him (claim).
9 The respondent denies the claim and says that it has paid the claimant correctly, in accordance with the 2025 Agreement. In its response, the respondent contended the claimant was not entitled to be paid for penalties and the Sleep and Disturbance Allowance in the payout for untaken annual leave because these payments only apply where an employee is rostered to work.
10 The respondent contended payment for penalties and the Sleep and Disturbance Allowance cannot apply to annual leave that is paid out following termination because an employee is no longer rostered.
Relevant facts
11 The evidentiary material in this matter was provided in the following:
i. Statement of Agreed Facts (SOAF); Form 29 – Statement of Agreed Facts and Bundle of Agreed Documents lodged 10 December 2025.
and
ii. The witness statement from the respondent’s Chief Operating Officer - Simon James Hunter (Hunter statement). Form 29 – Witness Statement of Simon James Hunter lodged 4 March 2026.

12 Like the SOAF, the Hunter statement was accepted into evidence by agreement between the parties. From these documents, I have extracted the facts that are relevant to describing the factual context in which the claim was made.
13 Relevantly, the respondent is a notforprofit nongovernment Alcohol and Other Drug (AOD) Treatment Service, which operates the Serenity Lodge Therapeutic Community and Withdrawal Unit in Rockingham (Serenity Lodge).
14 Serenity Lodge is a residential AOD treatment, care and withdrawal facility that provides onsite medical support services. In providing these services, there is a requirement for staff to be onsite 24 hours a day for seven days a week. The Residential Supervisor is one of the staff members required to be at the premises and to sleep there overnight.
15 The claimant, who commenced employment with the respondent on 26 February 2021, was originally employed as a ‘Night Weekend Supervisor’ on a casual basis. By 13 October 2022, the claimant was employed in this role on a full-time basis. Form 29 – Statement of Agreed Facts and Bundle of Agreed Documents lodged 10 December 2025 [2] – [5].
During his employment, the claimant was required to perform shiftwork for which he was paid the applicable penalty rates.
16 After the 2025 Agreement was made, the fulltime role in which the claimant was employed was abolished and the terms on which he was employed were varied. From 3 April 2025, the claimant moved into a Residential Supervisor’s role which was a permanent part-time position. Form 29 – Statement of Agreed Facts and Bundle of Agreed Documents lodged 10 December 2025 [11] – [13].

Enterprise agreement
17 The 2025 Agreement, to which the claim relates, was approved by the Fair Work Commission (FWC) in a decision that issued on 27 March 2025. Cyrenian House Agreement 2025-2028 [2025] FWCA 1049.

18 Under cl 69 of the 2025 Agreement, an employee who is rostered on a ‘sleep shift’ to sleepover, which includes a ‘Residential Supervisor’ who is required to stay overnight at Serenity Lodge, is paid a ‘Sleep and Disturbance Allowance’
19 A Residential Supervisor is a defined term under cl 15 as follows;
Residential Supervisor – Sleep Shifts means an employee working in a Therapeutic Centre with a fortnightly roster involving active rostered hours adjoining a Sleep Shift (weekdays and weekends) inclusive of paid meal breaks.
20 Extracted below are the other provisions from the 2025 Agreement that are relevant to the claim;
Shift Worker
54. A shift worker:
1. Is required to work over a roster cycle that includes any of the 7 days of the week; and
2. Is regularly rostered to work Weekends and Public Holidays, and
3. Works in a Cyrenian House service where shifts are continuously rostered 24 hours a day for seven days a week.
Rosters
55. A roster or working hours will be issued to each worker at least fourteen (14) day before it comes into operation. The CEO will consult with employees before implementing any significant roster changes.
56. Unless Cyrenian House agrees, an employee desiring a roster change will give 14 days’ notice except where the employee is ill or in an emergency.
Shift commencing and ceasing times
57. Day shift means any shift that commences after 6.00am and finishes at or before 8.00pm.
58. Afternoon or Evening shift means any shift which finishes after 8.00pm and at or before 12.00 midnight.
59. A Night shift is any shift which finishes after 12.00 midnight or commences before 6.00am, which requires the employee to be awake and active the entire period of the shift. This includes shifts worked by employees who are rostered to work immediately prior to a rostered sleep shift as defined in the Definitions and immediately following a sleep shift.
60. Sleep shift means a shift which has a sleep period provided between 10.00pm and 6.00am.
…
Shift Allowances, Penalty Rates and Leave Entitlements
66. Penalties
1. An employee who works an Afternoon or Evening shift, will be paid a loading of 12.5% of the standard ordinary rate of pay for the whole of such shift.
2. An employee who works a Night Shift, will be paid a loading of 15% of the standard ordinary rate of pay for the whole of such shift.
3. An employee, who works a Public Holiday shift, will be paid a loading of 150% of the standard ordinary rate of pay for that part of such shift which is on the public holiday.
4. An employee who is a Residential Supervisor – Sleep Shift is entitled to a Night Shift Allowance of 15% on the standard ordinary rate of pay for all rostered active hours, which are rostered immediately prior to, and after a sleepover on a weekday except Friday, when a Saturday penalty rate will apply in accordance with Clause 75 and Clause 76 below.
5. A Residential Supervisor – Sleep Shift who works a Day shift within the span of hours, which exceeds 10 hours will be paid overtime rates for the hours worked in excess of 10 hours, or the penalty rate in accordance with 83 below, whichever is highest.
6. Where a Residential Supervisor – Sleep Shift is rostered to work active hours, for which any hours fall on a Saturday, Sunday or Public Holiday.
67. Leave
1. A full time Shift worker (see clause 54) is entitled to one additional week of annual leave. Part time Shift workers will be entitled to the extra leave entitlements on a pro-rata basis.
…
Sleep Shift – Sleep and Disturbance Allowance
69. An employee who is rostered on a Sleep shift to sleepover, shall be paid a Sleep and Disturbance Allowance of $120 to sleep at the place of work, inclusive of one hour at overtime rates (time and a half) for attendance to any disturbances during the night involving consumers or the property.
70. The Sleep and Disturbance Allowance shall be increased annual in accordance with the percentage increase to apply to salaries annually in this agreement.
71. A sleep shift is defined as a shift commencing at 10.00pm and finishing at 6.00am.
72. A sleep shift means when an employee is required to sleep overnight on the employer’s premises.
73. The span for a sleep shift will be a continuous period of eight hours.
74. Employees will be provided with a separate room with a bed, use of staff facilities and free accommodation for each night when the employee sleeps over.
...
Part F – Leave and public holidays
Annual leave
105. Full-time employees are entitled to annual leave of 152 hours (equivalent to 4 weeks or 20 working days) for each year of service. Annual leave will accrue daily and credit daily. Annual leave for part-time employees accrues on a pro rata basis. Unless otherwise specified in this agreement, Annual leave does not accrue in relation to any period of leave which is unpaid.
…
107. Employees who are Shift workers as defined in clause 54 are entitled to one additional week of annual leave (5 days or pro rata for part-time employees) for each year of service. The following will also apply:
108. There will be no reduction of rostered penalty payments for Shift Workers while on Annual Leave.
109. For Residential Supervisors – Sleep Shift, the Sleep and Disturbance Allowance will be paid during Annual Leave according to their standard roster, subject to a minimum of one full shift taken when applying for Annual Leave.
…
114. Employees will receive payment in lieu of any untaken annual leave upon termination from Cyrenian House.
Part L – Separation
344. An employee who ceases employment with Cyrenian House will be paid for unused annual leave credits. Payments include allowances in the nature of salary which are paid during periods of annual leave and on a regular basis, excluding monetary allowances such as Sleep and Disturbance Allowance and allowances which are a reimbursement for expenses incurred.
The relevant statutory provisions
21 The provisions of the FW Act that are relevant to the claim appear in ‘Division 3 – Interaction between the National Employment Standards [(NES)], modern awards and enterprise agreements’.
22 In order, s 55 of the FW Act appears under the following heading:
Subdivision A – Interaction between the National Employment Standards and a modern award or an enterprise agreement
55 Interaction between the National Employment Standards and a modern award or enterprise agreement
National Employment Standards must not be excluded
(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.
Terms expressly permitted by Part 2-2 or regulations may be included
(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:
(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or
(b) by regulations made for the purposes of section 127.
Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain term must be taken into account.
(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).
Note: See also the note to section 63 (which deals with the effect of averaging arrangements).
Ancillary and supplementary terms may be included
(4) A modern award or enterprise agreement may also include the following kinds of terms:
(a) terms that are ancillary to or incidental to the operation of an entitlement of an employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.
….
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).
….
Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards
(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).
Effect of terms that give an employee the same entitlement as under the National Employment Standards
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.
Terms permitted by subsection (4) or (5) do not contravene subsection (1)
(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).
Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has not effect to the extent that it contravenes this section (see section 56).
23 Section 56 of the FW Act provides:
56 Terms of a modern award or enterprise agreement contravening section 55 have no effect
A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.
24 Regarding an employee’s entitlement to paid annual leave, s 90 of the FW Act states:
90 Payment for annual leave
(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
Alleged underpayment
25 On termination, the claimant was paid the sum of $5,040.17 for his untaken annual leave being 124.1 accumulated annual leave hours at the ordinary hourly rate of $40.62. Form 29 – Statement of Agreed Facts and Bundle of Agreed Documents lodged 10 December 2025, 195 – 198.

26 The claimant alleged that he should have been paid the sum of $9,832.01 which is for 129 hours of accrued annual leave, paid at a rate which includes penalties and Sleep and Disturbance Allowance. Form 1.1 – Originating Claim lodged 28 August 2025 – attached Statement of Claim
It appears 7.5 hours of the 129 hours total was for the payment of time in lieu of overtime, rather than for accumulated annual leave Form 29 – Statement of Agreed Facts and Bundle of Agreed Documents lodged 10 December 2025, 195.
.
27 The rate at which the respondent also paid out the claimant’s time in lieu was his ordinary hourly rate of $40.62. The total amount the claimant alleged he had been underpaid is the sum of $4,592.03, being the difference between the total amount claimed ($9,832.01) and payment for 129 hours accumulated leave at the rate of $40.62 per hour ($5,239.98) Form 1.1 – Originating Claim lodged 28 August 2025 – attached Statement of Claim
.
Issues to be decided
28 In determining this matter, it is necessary to reach a view on what an employee is entitled to receive under cls 105–116 of the 2025 Agreement when the employee goes on annual leave.
29 The second issue involves determining what an employee is entitled to receive on termination under cl 344 of the 2025 Agreement for untaken annual leave.
30 Thirdly, and even if I find the claimant, because of cl 344 of the 2025 Agreement, is not entitled to receive payment for either or both, penalties and a Sleep and Disturbance Allowance for untaken annual leave on termination, does ss 55, 56 and 90(2) of the FW Act operate to require payment of these entitlements?
31 In other words, does an employee’s entitlement under s 90(2) of the FW Act override a lesser entitlement for the payout of untaken annual leave that might otherwise apply under an enterprise agreement?
Principles to be applied
32 Resolving each of the issues I have referred to involves the application of different principles. A resolution of the first two, turns on the application of the principles that are relevant to the interpretation of industrial agreements.
33 The principles to apply when interpreting industrial agreements were summarised by a Full Court of the Federal Court of Australia in Target Australia Pty Ltd v Shop Distributive and Allied Employees’ Association [2023] FCAFC 66; 324 IR 304 per Bromberg J at [8].
34 Referring to WorkPac Pty Ltd v Skene (2018) 264 FCR 536 at [197]; his Honour Bromberg J set out these principles as follows:
The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 (Holmes) at 378 (French J). The interpretation ‘turns on the language of the particular agreement, understood in the light of its industrial context and purpose’: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (Amcor) at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378  379, citing George A Bond & Company Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a ‘practical bend of mind’ and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Madgwick J); Shop, Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).
35 Also relevant is the decision of the Full Bench of the Western Australian Industrial Relations Commission in Martin Fedec v The Minister for Corrective Services [2017] WAIRC 00828, 97 WAIG 1595 at [21] – [23].
36 In summary (omitting citations), the Full Bench stated:
The general principles that apply to the construction of contracts and other instruments also apply to the construction of an industrial agreement:
(a) the primary duty of the court in construing an instrument is to endeavour to discover the intention of the parties as embodied in the words they have used in the instrument;
(b) it is the objectively ascertained intention of the parties, as it is expressed in the instrument, which matters; not the parties’ subjective intentions. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean;
(c) the objectively ascertained purpose and objective of the transaction that is the subject of a commercial instrument may be taken into account in construing that instrument. This may invite attention to the genesis of the transaction, its background and context;
(d) the apparent purpose or object of the relevant transaction can be inferred from the express and implied terms of the instrument, and from any admissible evidence of surrounding circumstances;
(e) an instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience. However, it must be borne in mind that business commonsense may be a topic on which minds may differ;
(f) an instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed as to have some operation; and
(g) industrial agreements are usually not drafted with careful attention to form by persons who are experienced in drafting documents that have legal effect.
37 The resolution of the third issue involves the application of principles of statutory interpretation and a consideration of how ss 55, 56 and 90(2) of the FW Act have been construed in a comparable context.
Claimant’s submissions
38 The claimant submitted that immediately prior to the cessation of his employment, he was required to work a stable and repeating roster which included:
· weekend shifts attracting penalty rates; and
· sleep shifts attracting payment for the Sleep and Disturbance Allowance.
39 It was submitted that his roster, which comprised of the features described in the preceding paragraph, was used to calculate wages and to accrue annual leave. Form 29 – Claimant’s Submission lodged 5 January 2026 (Claimant’s Submissions) part 4.

40 The claimant submitted the words used in cls 108 and 109 of the 2025 Agreement are unambiguous and determine what is to be paid to a Residential Supervisor – Sleep Shift during their annual leave.
41 He noted that cl 108 of the 2025 Agreement states there would be no reduction of rostered penalty payments while an employee is on annual leave. The claimant also submitted that cl 109 requires that Residential Supervisors who are rostered on a sleep shift, would be paid a Sleep and Disturbance Allowance during annual leave.
42 The claimant submitted that cl 344 of the 2025 Agreement cannot be interpreted to produce a lower payout for untaken annual leave than what an employee receives who takes their annual leave during their employment. It was submitted that this result would be inconsistent with s 90(2) of the FW Act. Claimant’s Submissions part 3.

43 The claimant contended the argument that he was not entitled to payment for penalties on his untaken annual leave because he was, following his resignation, no longer assigned to an actual roster, misunderstands s 90(2) of the FW Act.
44 It was submitted that the application of s 90(2) of the FW Act, requires a hypothetical assessment to be made on ‘what would have been paid had the leave been taken?’.
45 The claimant argued that the respondent’s characterisation; that penalties on the payment of untaken annual leave do not only apply post termination because the claimant is ‘no longer rostered’, ignores the purpose and effect of cls 108 and 109 of the 2025 Agreement.
46 It was submitted that these clauses expressly require that payment for these penalties is made when an employee takes leave, with the result that the FW Act requires the same payment on termination. Claimant’s Submissions part 5.

47 The claimant in effect submitted s 90(2) of the FW Act requires these payments also be made when an employee is paid out for untaken leave, even though cl 344 of the 2025 Agreement might say otherwise.
48 It was submitted cl 344 the 2025 Agreement cannot override s 90(2) of the FW Act and that it should not be applied to reduce the entitlement the claimant submitted he would otherwise be entitled to receive as payment for untaken annual leave under the NES. Claimant’s Submissions part 6.

Respondent’s submissions
49 The respondent submitted that due to its need for staff to work unsociable hours and the varied nature of their roles, the 2025 Agreement provides for the payment of a large number of loadings, allowances and penalty rates.
50 It was submitted that while the 2025 Agreement provides for payment during annual leave at a rate higher than the claimant’s base rate, it also provides specific guidance on which of the many available loadings, penalty rates and allowances are to be included when paying an employee for accrued and unused annual leave on termination.
51 The respondent contended that in this way, the claimant’s case is distinguishable from situations in which an industrial agreement provides for a higher rate of pay on annual leave but is silent on what is to happen after the termination of an employment relationship.
52 The respondent submitted that specific guidance is contained within cl 344, which was considered by the FWC when the 2025 Agreement was submitted for approval, and found to meet the requirements in ss 186, 187 and 188 of the FW Act. It was submitted the 2025 Agreement has therefore been found to neither contravene s 55 of the FW Act nor fail the ‘better off overall’ test. Form 29 -Respondent’s Outline of Submissions in opposition of claim lodged 17 December 2026 (Respondent’s Submissions) [36] - [38].

What clause 344 excludes
53 The respondent noted that cl 344 explicitly states that the Sleep and Disturbance Allowance is not payable on accrued and unused annual leave that is to be paid on termination. It was submitted that the respondent was therefore permitted to follow cl 344. Respondent’s Submissions [39] – [40].

What clause 344 includes on payment upon termination
54 The respondent submitted that cl 344 explicitly states that payment for, ‘allowances in the nature of salary which are paid during period of annual leave and on a regular basis’, should be included in payments for unused annual leave upon termination of employment.
55 However, the respondent argued that ‘allowances in the nature of salary’ are distinct from the penalties and loadings detailed in cl 66 of the 2025 Agreement and the overtime rates detailed in cls 75 and 83. Instead, the respondent submitted that ‘allowances in the nature of salary’, is a reference to payment for other allowances in the agreement. These include the Higher Duties allowance, Studies Assistance and Training Allowance, Remote Location Allowance and Prisons Allowance. Respondent’s Submissions [41] – [42].

Context of the agreement
56 The respondent submitted that when negotiating and drafting the agreement, it was the parties’ intention to ensure the then-Night Weekend Supervisors (the role which became the Residential Supervisor) did not suffer a loss of pay ‘when annual leave is taken’. That is, Residential Supervisors were to be paid according to the roster as if worked, which would include payment of the Sleep and Disturbance Allowance.
57 The respondent submitted that this was in part to encourage the Residential Supervisors to take their annual leave while employed, as this is a group (when called Night Weekend Supervisors) which had historically accrued a significant amount of unused annual leave.
58 It was submitted that this is because their rosters left several days in the week free, which meant these employees were less reliant on annual leave for time off, and their large annual leave balances had become a liability for the respondent.
59 The respondent submitted the purpose of cl 344 was to encourage Residential Supervisors to take their annual leave while employed. It was in effect submitted this group of employees would be more likely to take their annual leave while employed, if they are paid at a higher rate for taking their leave than if they are paid out at the same rate for accrued annual leave on termination. Respondent’s Submissions [43] – [45].

Interpretation of clause 344
60 The respondent submitted that its interpretation of cl 344 (that it requires payment of allowances on unused annual leave, but not penalty rates or loadings) is permissible under the FW Act because the 2025 Agreement can include terms that supplement the NES and their effect, is not detrimental to an employee when compared to the NES.
61 It was submitted the 2025 Agreement supplements the NES and provides something more than is provided for in the NES, as it provides that the claimant was to be paid his rostered penalty payments and Sleep and Disturbance Allowance when taking annual leave.
62 The respondent also argued an enterprise agreement can add something to the NES entitlement (which in this case to incentivises an employee using their accrued annual leave), without increasing the entitlement under the NES in every circumstance. Respondent’s Submissions [46] – [47].

Entitlements claimed
63 Regarding the entitlements that the claimant said he was entitled to receive, the respondent submitted the claimant was contracted to work 49 hours per fortnight. It was argued his annual leave accrual of 124.1 hours equates to 2.53 fortnights of contracted hours.
64 The respondent submitted that it was therefore not possible for the respondent to say (with enough certainty to calculate penalty rates and overtime etc) what shifts the claimant would definitely have worked, for these 124.1 hours.
65 It was submitted that the ‘claimed weekly roster pattern’ did not correspond to what the claimant actually worked as a Residential Supervisor. The respondent submitted that the amount the claimant was paid varied each fortnight, as evidenced by the gross payments that appear on his payslips.
66 It was further submitted that the claimant’s roster was subject to change and so it is not possible to say with certainty what hours (and therefore what penalty rates) the claimant would have been rostered for and/or worked had he remained employed. Respondent’s Submissions [49] – [55].

Consideration – payment when an employee takes annual leave
67 I accept that from the words used in cls 108 and 109 that the parties clearly intended there would be no reduction in ‘rostered’ penalty payments for employees who are engaged as shift workers under the 2025 Agreement who take their annual leave during their employment.
68 It is also clear that a shift worker’s entitlement to payment for penalties when that employee goes on annual leave is however dependent upon determining what an employee’s ‘standard’ roster is before their leave is approved.
69 The ordinary and natural meaning of the word ‘standard’ includes ‘normal’. Macquarie Dictionary (9th ed, 2023), 1499.
I therefore accept that when viewed in the context of the agreement as a whole, the parties intended with their use of the word ‘standard’ to mean an employee’s normal roster.
70 Guidance for what is to be paid on an employee’s standard shift roster is provided by other provisions within the 2025 Agreement, including by what is set out in cl 54 (Shift worker) and cl 55 (Rosters). It is reasonable to find the types of penalties that would continue to be paid when a shift worker takes annual leave would include penalties that apply for their work on weekends, on public holidays and at night.
71 Similarly, it would follow that the rostered penalty payments the respondent would need to pay would include those which would apply on the roster that is issued to a shift worker in accordance with cl 55; that is the roster the respondent is required to issue to a shift worker at least 14 days prior to the date on which it comes into operation.
72 This construction of the 2025 Agreement in so far as it provides an entitlement to payment that does not result in shift workers (which includes Residential Supervisors) suffering a reduction in pay when they go on annual leave, is readily discernible from the 2025 Agreement.
73 I accept that cl 109 is specifically directed to ensure that Residential Supervisors do not suffer a reduction in pay, by not receiving Sleep and Disturbance Allowances, when they go on annual leave. That said, it is my view that the roster a Residential Supervisor is on immediately prior to their leave, is what would determine the penalties that would be payable for the period of annual leave to be taken and the quantum of the Sleep and Disturbance Allowance to be paid.
Payment for annual leave on termination
74 From the words that are used cl 344, it is clear that the parties intended the payout of annual leave on termination would be treated differently. I accept that one of the purposes of cl 344 was to exclude the payment of the Sleep and Disturbance Allowance to Residential Supervisors on the payout of annual leave on termination.
75 I also accept that there are other allowances in addition to the Sleep and Disturbance Allowance that would not be included in payout of annual leave on termination, none of which are relevant for the purposes of this claim.
76 That said, cl 344 also provides that some allowances will be included in the payout of accrued annual leave on termination, which are ‘in the nature of salary which are paid during periods of annual leave and on a regular basis’.
77 The question that then arises is whether penalty payments for employees who are engaged as shift workers are ‘allowances in the nature of salary’.
Allowances in the nature of salary
78 While penalty payments under the 2025 Agreement are paid on a regular basis under a shift worker’s roster and because of cl 108, are paid during periods of annual leave, I have difficulty in accepting that penalty payments, are allowances in the nature of an employee’s salary.
79 I have reached this finding for several reasons. Firstly, and as noted in the respondent’s submissions, it is well established that a penalty is not an allowance. Whereas penalty rates have been described as higher pay rates that employees must be paid for working particular hours or days, Stewart A, Stewart’s Guide to Employment Law (7th Ed, 2021) [11.7].
allowances are extra payments made to employees for performing particular tasks, who use a particular skill set, are exposed to particular environmental factors or incur an expense for doing their job. Shop, Distributive and Allied Employees Association v Woolworths South Australia Pty Ltd [2021] FWC 617 [98].

80 Secondly, although the claimant was involved in the negotiations for the 2025 Agreement, I have noted he did not offer any explanation on why this term was included in cl 344.
81 I have also noted the respondent similarly did not provide any evidence on whether penalties were allowances ‘in the nature of salary’ to be paid to shift workers that would be included in the payout of annual leave on termination either.
82 While the Court must be cautious in accepting evidence of the parties’ negotiations as an aide to interpret the agreement, there is no evidence to conclude the parties in negotiations for the 2025 Agreement had intended the term ‘allowances in the nature of salary which are paid during periods of annual leave and on a regular basis to mean that penalties would be included in the payment to be made for untaken annual leave.
83 Thirdly, there is also the unchallenged evidence from Mr Hunter , that the respondent had wanted a mechanism by which Residential Supervisors would be ‘encouraged’ to take their annual leave entitlement. Whether viewed as an incentive or a penalty, this construction of cl 344 having regard to the words used in the provision, is at least consistent with the contextual explanation the respondent has offered.
84 Fourthly, and more significantly, if the parties had intended the penalties paid to shift workers would be included in the payout of annual leave on termination the words ‘penalty payments’ could have been easily used when drafting the agreement.
85 The fact that words specifically including penalties for shiftwork in a payout for untaken annual leave are not contained in cl 344, when weighed together with the matters I have set out in the preceding paragraphs [78]–[85], strongly suggests the parties to the 2025 Agreement had intended they would be excluded.
Conclusion on what the agreement requires
86 There is little doubt, having regard to the words used in the 2025 Agreement, that the parties intended the payment to be made to shift workers when they take annual leave (including Residential Supervisors), would be different to the payment they receive for untaken annual leave on termination.
87 While this interpretation of the 2025 Agreement might be correct, the question of whether the payment of annual leave on termination that excludes the Sleep and Disturbance Allowance and penalties to Residential Supervisors complies with the FW Act, is however, a whole other matter.
The application of s 90 of the FW Act
88 Despite what the 2025 Agreement provides, it is the application and interpretation of s 90 of the FW Act that ultimately decides the outcome of the matter in the present case.
89 The operation of s 90 in determining what an employee is entitled to receive in a payout of accumulated annual leave entitlements was considered in a unanimous decision of a Full Court of the Federal Court in Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100; (2015) 231 FCR 298 (Centennial).
90 The facts giving rise to the decision, that was the subject of the appeal referred to the Full Court in Centennial, are like those at issue in the present case. The conclusions the Full Court reached are therefore both relevant and applicable.
91 In Centennial the term of the enterprise agreement regarding payment for annual leave was in the following terms:
19. ANNUAL LEAVE
…
19.5 On termination of employment an employee is paid for accrued but untaken annual leave at their hourly rate of pay applicable to their ordinary weekly rate of pay as prescribed in Clause 13.1 plus average bonus.
Payment for Annual Leave
19.6 An employee taking annual leave must be paid the greater of:-
(a) the employee’s ordinary weekly rate of pay plus a loading of 20% of that rate; or
(b) the employee’s ordinary weekly rate of pay plus rostered overtime, shift allowance, weekend penalty rates and bonus. Centennial Northern Mining Services Enterprise Agreement 2011

92 Like cls 108, 109 and 344 of the 2025 Agreement, cl 19 of the enterprise agreement in Centennial made provision for employees to receive payment at one rate when taking annual leave while they were employed, but at a lower rate for the payout of accumulated annual leave on termination, that did not include payment for components including shift and weekend penalty rates.
93 At first instance, the presiding Judge held that s 90(2) of the FW Act required payment of the actual amount of annual leave that would have been payable under cl 19.6 if the employee had taken the leave, even though the cl 19.5 of the enterprise agreement permitted the employee to be paid out their accumulated annual leave on termination at a lower rate.
94 In relation to s 90 the Full Court at [4] and [5] made the following observations:
The legislation
4. As the primary judge observed, s 90 appears in Pt 2-2 of Ch 2 of the FW Act. Part 2-2 contains the National Employment Standards, which are ‘minimum standards’ of employment, providing a safety net for employees. Although they may be supplemented or enhanced in a modern award or enterprise agreement containing terms substantially to the same effect: FW Act, s 61(1). An enterprise agreement must not exclude any provision of the National Employment Standards (FW Act, s 55) and, to the extent that it does, a term of an enterprise agreement has no effect (FW Act, s 56).
5. The National Employment Standards relate to a range of matters, including hours of work, notice of termination, payment on redundancy, public holidays and various types of leave, among them annual leave. Division 6 of Pt 2-2 contains the terms relating to annual leave, of which s 90 is one.
95 Also relevant is what Full Court noted at [14] - [17];
14. In this case the primary judge observed that construction to the effect of s 90(2) protects the whole entitlement to annual leave could certainty not be excluded. His Honour then turned for assistance to the Explanatory Memorandum to the Fair Work Bill 2008 (Cth), which states:
Clause 90 – Payment for annual leave
370. Subclause 90(1) entitles an employee to be paid at their base rate of pay (as defined in clause 16) for the employee’s ordinary hours of work for the period of their absence on leave.
(The meaning of ordinary hours of work and base rate of pay are outlined at the beginning of this Part.)
371. This is a minimum entitlement and would not prevent an employer and employee from agreeing to, or an award or enterprise agreement providing for, more generous payment terms.
372. Subclause 90(2) provides that, on termination of employment, an employee is entitled to receive a payment in respect of any untaken paid annual leave. The payment will be equivalent to the amount that the employee would have been paid if the employee had taken the annual leave.
(Emphasis and italics added)
15. His Honour said that ‘this lends support to the argument that s 90(2) (unlike s 90(1)) is not confined to a statement of a minimum obligation, but it is a statement to the effect that an employee should not suffer a reduction in the value of unpaid annual leave if employment comes to an end while paid annual leave remains untaken’.
16. He therefore rejected the construction for which Centennial was contending, saying that he was ‘not prepared, in effect, to read down s 90(2) in the face of the expectation stated in the explanatory Memorandum when that construction is plainly open on the terms of s 90(2) itself.’
17. On his Honour’s construction, clause 19.5 purports to confer an entitlement that is less than the minimum entitlement for which s 90(2) of the FW Act provides. He stated that ‘cl 19.5 [operates] on its face (‘an employee is paid’) in a way which excludes the operation of s 90(2)’. Having regard to the terms of s 55(1) of the FW Act, which, it will be recalled, prohibits an enterprise agreement from excluding any provision of the National Employment Standards, his Honour held, that clause 19.5 had no effect.
96 One of the grounds of appeal in Centennial was that the primary judge had erred by finding s 90(2) of the FW Act is not confined to a statement of minimum obligation to the effect that an employee should not suffer a reduction in the value of unpaid annual leave if his or her employment comes to an end while annual leave remains untaken. Centennial Northern Mining Servicers Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100, [18].

97 At [38] the Full Court in Centennial held;
It is undoubtedly true that the National Employment Standards are minimum standards. Centennial was also right when it argued that s 90 must be read as a whole and in the context of the National Employment Standards. But there is no reason to conclude that the primary judge did not do this. Nor does it necessarily advance Centennial’s case to read the section in this way. Section 90(1) creates the minimum standard: payment at the base rate for ordinary hours worked. The effect of s 90(2) is that if that is the rate at which the employee is paid when he or she takes annual leave, then that is the minimum amount that must be paid for any accrued untaken annual leave. If, on the other hand, there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then s 90(2) stipulates that that is the rate which is payable where annual leave has accrued but has not been taken. This is the natural way to read the section and there is nothing in the legislative context which would require a different interpretation.
98 Having regard to the passages I have extracted from the decision in Centennial, I am not persuaded the circumstances in the present case are in any way distinguishable.
99 It is clear from the decision in Centennial that the purpose of s 90(1) of the FW Act is to provide a minimum standard on what is to be paid to an employee during a period of annual leave. It is also clear that the terms of a modern award or enterprise agreement can make provision for ‘supplementary terms’ to increase what an employee receives when taking annual leave.
100 However, once the entitlement an employee is to receive for annual leave is clarified, either by operation of s 90(1) or under the terms of a modern award or industrial agreement, the function of s 90(2) is to ensure an employee receives the same by way of an entitlement for untaken annual leave on termination as they would for taking their annual leave when employed.
101 I am satisfied that notwithstanding cl 344 of the 2025 Agreement; the amount the claimant should have been paid on termination should have included payments for penalties and the Sleep and Disturbance Allowance that would have applied on the claimant’s ‘standard’ roster’.
102 In other words, it is my view, having regard to the decision in Centennial that because of s 55 of the FW Act, s 90(2) overrides cl 344 of the 2025 agreement.
Effect of clause 344
103 I do not accept the respondent’s submission that the FWC’s approval the 2025 Agreement permitted the practice on the payout of annual leave on termination that was enshrined in cl 344. As I have noted, the Full Court in Centennial was also required to consider the terms of an enterprise agreement on the payment of annual leave that was also in conflict with s 90(2) of the FW Act.
104 While enterprise agreements under s 55(4) of the FW Act can be used as a means to improve some but not necessarily all of the minimum entitlements that apply under the NES, the combined effect of s 56 and s 90(2) of the FW Act ensures that payment at an agreed rate above the minimum standard prescribed in the NES, also applies to what is to be paid on termination.
105 In other words, it does not matter what cl 344 of the 2025 Agreement says, an employee is entitled to the same payment for accumulated leave on termination as they would for annual leave taken during their employment.
Relief sought and the entitlements claimed
106 Although I am satisfied that penalties and the Sleep and Disturbance Allowance should be included in the payment to be made to the claimant for untaken annual leave upon termination, I am at this stage not prepared to make an order for the amount being claimed.
107 This is because I was not provided with sufficient evidence on the standard roster the claimant would have been required to work in his role as a Residential Supervisor. As extracted in the preceding paragraph 20 above, cl 55 of the 2025 Agreement states that the respondent is to issue a roster to each worker at least 14 days before it comes into operation.
108 However, this is not to say I have accepted the respondent’s argument that it is not possible to say with certainty what hours (and therefore what penalty rates) the claimant would have been rostered for and/or worked had he remained employed.
109 A similar argument was both made and rejected by the Full Court in Centennial, who at [42] stated:
Centennial also submitted, in effect, that the construction preferred by the primary judge is unlikely to be correct because it would give rise to uncertainty. It argued that the words ‘would have been payable’ refer to a liability for a future event and, if the liability is to include such matters as rostered overtime, shift allowances, weekend penalty rates and bonuses, these will vary from time to time. Centennial maintained that only its construction offers certainty because it ignores all these variable components. In our view, this argument is a furphy. The intention of the legislation is that untaken annual leave is payable at the rate at which it would have been paid had the employee taken it at the time the employee was eligible for it. If the intention were to require untaken annual leave to be paid at the base rate, then, as we have observed, in the light of the legislative history one would expect a statement to this effect in the subsection.
Conclusion
110 Having now determined what should have been included in the payment the claimant received for untaken annual leave on termination, I intend to hear from the parties on the days/nights the claimant would have been rostered as a Residential Supervisor, his start and finish times and the penalties and allowances that would have been payable under his standard roster.
111 I also want to hear from the parties on the correct number of annual leave hours that need to be paid out on termination, whether it is 129 as is being asserted by the claimant or if it is 124.1. I raise this because the rate that is to be paid for time off in lieu is covered by a separate clause in the 2025 Agreement.
112 To this end, I intend to relist the matter for a short hearing on the issue of quantum. Relevant to any orders that I may decide to make, will be evidence of the roster the claimant had been issued on the date he submitted his resignation on 25 June 2025.



T. KUCERA
INDUSTRIAL MAGISTRATE