Case: Ponzio v B &amp; P Caelli Constructions Pty Ltd [2007] FCAFC 65 ; (2007) 158 FCR 543
Outcome: cited
There were employees at the factory as at August 2006 and during the period of the overtime bans who did not engage in the overtime ban, but nevertheless received the sign on bonus. These included A Rico, F Bacosa, LJ Ferdinads; TL Pui; EF Gonzales; VD Wijeyeratne; SS Chan; SH Chan; M Yan; A Loh; VN Tran; G Caruso and S Reinink, V Plavlianic; AS Falken; M Kostur; TT Ta; NB Luong; RB Allen; KO Lau; P Dillon; GW Gapper; H Abbasszadeh; S Fernando; PE Forbes; DC Gardner; FC MA; J Gao; C Reinink; F Manuse; O Grah. FURTHER FACTS 5 It is necessary to refer to some further facts. 6 In respect of how overtime was worked at the factory, there were differences in the practices of different sections of the factory. Generally, overtime shifts lasted for approximately two hours, from 4.30 pm to 6.30 pm, and between one and 25 of the factory employees might work on any given evening. However, some sections regularly worked overtime and other sections worked overtime infrequently. The assembly workers generally worked minimal overtime, whilst the qualified fitters were called on frequently to perform overtime because of their specialised skills. It was also clear from the evidence of both Mr Ross, the General Manager of Heinemann, and Mr Aspinall, a Factory Manager of Heinemann, as well as from the employees, that there was not a practice of relying on overtime rosters. Instead, notice of overtime was commonly given to employees either on the day before or on the day that overtime was required. Employees then had an opportunity to accept or decline the extra hours. The evidence was that there was never any difficulty in finding employees to perform the additional work and that employees ordinarily accepted the work. It is also clear that employees could and did decline overtime work without ascribing any cause or reason. 7 There was no evidence of Heinemann's overtime requirements on the days in question. There was no evidence of whether any employees actually performed overtime that week. Heinemann did not have overtime records for 22, 23, 24, 28 and 29 August 2006. The handwritten notations on the questionnaires show which employees of those interviewed were and were not available for overtime over the life of the overtime ban, and a reason for not working overtime. However, they do not indicate whether Heinemann required overtime on any evening, and if so, how much overtime was required, whether requests were made of employees to perform overtime, or whether any employee performed any requested overtime on any evening. 8 Nevertheless, it was uncontested that the employees in Column 1 of the table engaged in the ban on overtime on the days in question, and that they were not paid wages referrable to these days. In addition, Heinemann also failed to pay Ms Maria Barros for the days in question on the basis that she too was implementing the ban on overtime. The applicant submits that Ms Barros was not in fact implementing the ban and should have been paid in full for those days irrespective of the operation of s 507. MS BARROS 9 It is convenient to first consider the position of Ms Barros. Ms Barros failed to answer any questions asked of her in the questionnaire. She was initially questioned by her manager, Mr Aspinall, and later by Mr Ross. Her questionnaire was annotated simply, 'Will not answer any questions. Do not understand'. Mr Ross wrote at the end of Ms Barros' questionnaire that he had explained to Ms Barros the position in detail. He was referring to informing those employees, who had confirmed that they were enforcing the ban that they would not be paid for the duration of the overtime ban or any industrial action. Mr Ross told the Court that he believed Ms Barros understood his explanation. Ms Barros told the Court that she did not understand. She said her failure to answer was because she did not know what overtime Mr Aspinall and Mr Ross were referring to (as she rarely performed overtime) and she did not want to answer before speaking with her union representative. 10 Ms Barros agreed that she participated in the strike of 25 August 2006 and participated in the six week strike which commenced on 30 August 2006. Heinemann submitted that Ms Barros' participation in the strikes goes some way to demonstrate that she also participated in the ban on overtime. This does not necessarily follow, although it is a factor to consider in the balance, as to the likelihood of the happening of events. Heinemann also contended that Ms Barros' evidence was unreliable because of the discrepancy in her affidavit evidence and the documentary evidence showing the amount of overtime she had in fact worked previously. 11 My own assessment of the evidence is this. Ms Barros cannot understand English very well; she deposed to this, and it was apparent from her cross-examination. She said she was very confused about the questions asked of her by Mr Aspinall and Mr Ross, and she appeared confused under cross-examination both as to what was being asked of her by Counsel and as to the overtime position. In my view, despite the belief of Mr Ross, she was confused. Ms Barros had little understanding of the matters being asked of her by Counsel, and I consider had little understanding of the matters put to her by Mr Aspinall and Mr Ross at the time of the questionnaire. 12 While I consider that Ms Barros was endeavouring to tell the truth, her recollection as to when her overtime was in fact taken was faulty. She did indicate that she would go to the Union for advice, which had implemented overtime bans. She did participate in the strike of 25 August 2006 and the six week strike commencing on 30 August 2006. In my view, it is more than likely that she did engage in the overtime bans by following the Union's approach. 13 In any event, in view of Ms Barros' obvious confusion, I cannot be satisfied on the balance of probabilities that it has been demonstrated by the applicant that Ms Barros was entitled to be paid in full irrespective of the operation of s 507. The onus rests on the applicant to demonstrate this element of the case, in respect of Ms Barros, on the balance of probabilities: see Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 as explained in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66 ; (1992) 110 ALR 449. 14 Therefore, in relation to Ms Barros, I place her in the same category as the other employees listed in Column 1 of the table. OPERATION OF SECTION 507 15 I now turn to the main issue in this proceeding, the operation of s 507 of the Act, which is in the following terms: Payments not to be made or accepted in relation to periods of industrial action (1) This section applies if an employee engaged, or engages, in industrial action (whether or not protected action) in relation to an employer on a day. (2) The employer must not make a payment to an employee in relation to: (a) if the total duration of the industrial action on that day is less than 4 hours--4 hours of that day; or (b) otherwise--the total duration of the industrial action on that day. (3) If: (a) the industrial action is during a shift (or other period of work); and (b) the shift (or other period of work) occurs partly on 1 day and partly on the next day; then, for the purposes of this section, the shift is taken to be a day and the remaining parts of the days are taken not to be part of that day. (4) For the purposes of subsection (3), overtime is taken not to be a separate shift. (5) An employee must not accept a payment from an employer if the employer would contravene subsection (2) by making the payment. ... 16 The definition of industrial action is found in s 420 of the Act. It provides the following: Meaning of industrial action (1) For the purposes of this Act, industrial action means any action of the following kinds: (a) the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work; (b) a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee; (c) a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work; (d) the lockout of employees from their employment by the employer of the employees; but does not include the following: (e) action by employees that is authorised or agreed to by the employer of the employees; (f) action by an employer that is authorised or agreed to by or on behalf of employees of the employer; (g) action by an employee if: (i) the action was based on a reasonable concern by the employee about an imminent risk to his or her health or safety; and (ii) the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform. (2) For the purposes of this Act: (a) conduct is capable of constituting industrial action even if the conduct relates to part only of the duties that employees are required to perform in the course of their employment; and (b) a reference to industrial action includes a reference to a course of conduct consisting of a series of industrial actions. 17 It is unnecessary here to consider the definition of industrial action in s 420 of the Act in much detail. It is uncontested between the parties that the employees engaged in industrial action within the meaning of s 420(1)(b) of the Act for the purposes of s 507. It is well accepted that part performance of work, or performance of work other than as directed, amounts to industrial action. An ongoing ban on the operation of a certain machine, or on performing certain tasks, while otherwise completing a full day's work, is industrial action. A lock-out from, or a ban on, performing overtime, where overtime is not required or expected under a contract of employment may constitute industrial action. 18 In Construction, Forestry, Mining and Energy Union v Master Builders' Association of Victoria [2000] FCA 169 ; (2000) 100 FCR 395 , Goldberg J considered the meaning of the expression 'preventing employees from performing work' for the purposes of the then s 170ML(4). His Honour was addressing the question of whether preventing employees from performing overtime work that they did not have a right to perform under their contracts of employment could constitute a lock-out under that provision. His Honour said at 409 (at [41]): The expression "preventing" in the context of s 170ML(4) involves the doing of an act which has the consequence that employees cannot perform work which, if performed, would be work performed under their contracts of employment. The concept of "preventing" in the context of s 170ML(4) is not limited to a situation of putting up a barrier or bar to something which is going to happen in the absence of some supervening event stopping it; it also covers a situation where something is stopped in circumstances where if it was allowed or granted it would occur in a particular way. 19 The same analysis can be applied in the circumstance here, where these employees imposed a ban on the performance of overtime even where there was no contractual obligation or right to perform it. Using the words of s 420(1)(b) of the Act, it was a ban 'on the acceptance of or offering for work'. 20 The main dispute in this proceeding between the parties was whether the overtime ban constituted ongoing industrial action commencing at the time specified in the notice advising of overtime bans, being the morning of 22 August 2006 and continuing until the ban was removed (after 29 August 2006), or whether there were a series of industrial actions in relation to overtime separated by days of ordinary work. 21 As I have indicated, Heinemann contended that it was prohibited by the operation of s 507 of the Act from paying the employees any wages for any of the days 22, 23, 24, 28 and 29 August 2006. It said that the notice of intention to take protected action (which included the overtime bans) served on Heinemann by the Union was in terms that imposed an ongoing ban on performing overtime, commencing on Tuesday, 22 August 2006 and continuing for 12 months or until agreement was reached on the terms of a new Union collective agreement. Heinemann also contended that the company enquired with the employees whether they intended to implement the ban and the employees advised Heinemann of their intention to do so. Heinemann contended that the ban was clearly in place, and was not lifted and reapplied on a daily basis and as such it constituted ongoing industrial action. 22 The applicant contended that the industrial action implemented by the employees was a series of bans either from 4.30 pm each day until the start of the shift the following day, or for a two hour period between 4.30 pm and 6.30 pm each day being the time that an ordinary overtime shift takes place at the factory. 23 In resolving the main dispute between the parties, it is important to understand and appreciate the purpose of s 507. There has been no judicial consideration of the legislative purpose of s 507, although some consideration has been given to its predecessor, s 187AA of the pre-reform Act. In Independent Education Union of Australia v Canonical Administrators (1998) 87 FCR 49 , Ryan J discussed the policy behind s 187AA of the pre-reform Act, which operated similarly to s 507 to prohibit the payment of 'strike pay'. His Honour said at 73-4: I consider that s 187AA in the context of Pt VIIIA of the WR Act evinces a policy that collective bargaining should occur in an environment where employer and employee are to appreciate and accept the detrimental consequences for themselves of industrial action used as part of the negotiating armoury. For the employee those consequences are normally loss of remuneration in respect of the period of the industrial action and for the employer they are the loss of production attendant on a lockout. Consistently with that policy, s 187AA is framed to ensure that the loss of remuneration is not recouped after the bargaining is over and necessarily applies to protected action. 24 Justice Lander also commented on the legislative purpose of s 187AA of the pre-reform Act in Ponzio v B &amp; P Caelli Constructions Pty Ltd [2007] FCAFC 65 ; (2007) 158 FCR 543. His Honour said at 557-58 (at [83] [84]): 83. The policy of the Act is to discourage industrial action as it is defined in s 4 of the Act. The purpose of Pt VIIIA of the Act, in which these provisions are contained, is to prevent an employer making a payment to the employer's employee in relation to any period during which the employee engages in industrial action. It is the intention of the Act to discourage employers and employees agreeing to the employer paying employees for that period of industrial action engaged in by the employee. To that end, s 187AA makes it a contravention for an employer to make a payment to an employee who has in relation to a period during which the employee engaged or engages in industrial action and at the same time makes it a contravention for the employee to accept a payment from an employer if by doing so the employer will contravene subs (1) by making that payment. The policy of the Act is that if an employee engages in industrial action then it must be at the employee's own expense. The purpose of s 187AB is to discourage unions and their officers from making claims for a payment or engaging in or threatening to engage in or organising industrial action for the purpose of coercing the employer to make a payment to an employee during a period of industrial action. That section has as its added purpose a protection to the employer in the event that a union or its members engage in that further industrial action. 84. Industrial action is discouraged by putting the cost of that industrial action upon the employee rather than the employer. No doubt it is thought that an employee will be less likely to take industrial action if the employee knows that it is a contravention for both the employer and the employee if the employer makes a payment for the period of industrial action. 25 Both Ryan and Lander JJ's considerations of the policy standing behind s 187AA suggest that the purpose of that provision was to make employees carry the expense of any industrial action engaged in by them. Neither Ryan or Lander JJ considered that the provision was intended to operate more broadly to punish the parties for engaging in protected industrial action beyond shouldering the burden of the actual economic loss resulting from the action. 26 Section 507 is in different terms to s 187AA, although basically the same purpose behind the provision is as set out by Ryan and Lander JJ in their consideration of its predecessor. 27 However, it is important to observe that s 507(2) sets out a calculation to assess how many hours' pay an employer must withhold from an employee who engages in industrial action on a day, depending on whether the employee engages in industrial action for a period less than four hours or four hours or more. The effect of the subsection is that an employee who engages in industrial action for any period less than four hours in a day, even if it is a period of five or ten minutes, must have four hours of pay withheld. Notably, an employee who engages in industrial action for four hours or more in a day must not be paid in relation to the period of industrial action on that day, but may be paid in relation to hours worked. For example, an employee who takes industrial action for five hours in a day but works the other 3.5 hours of an ordinary day must not be paid in relation to 5 hours of the day but is entitled to payment in relation to 3.5 hours. 28 It seems one purpose of the operation of s 507 is to deter industrial action for minor grievances. An employee will seriously consider stopping work for just five minutes if the consequence is losing a half day's pay. On the other hand, I do not consider the provision to be punitive. If it were, the provision would operate to deduct a full day's pay from an employee who engages in four hours or more industrial action on a day. Rather the intention seems to be to ensure that industrial action is not taken lightly and that the employee who engages in industrial action bears the economic consequences of that industrial action. 29 The Court must construe the words of s 507 in context. Part of the context of s 507 is that there is a right to take protected action. Another part of the context is that, because of other provisions of the Act, there is a right ordinarily to be paid for the work undertaken. Another part of the context is that the Act is trying to ensure that either employer or employee bears the financial consequence of loss of production; in the case of a lock-out, the employer, in the case of a strike, the employee. 30 Some assistance can be derived in determining the duration of the industrial action in the present case by comments by Jessup J in Ponzio [2007] FCAFC 65 ; 158 FCR 543 of how to define 'period' in the context of s 187AA, at 566-67 (at [136]): 136. ... Whether particular industrial action occurs during a single period, or during separate periods, will also be a question of fact. For my own part, I do not regard it as self-evident that every day upon which industrial action occurs should be regarded as a separate "period". In the present case, for example, I consider that an employee who stopped work on 5 August 2003 and did not resume work until 10.00 am on 6 August 2003 should be regarded as having engaged in industrial action during one period only. If that period were broken by a period during which the employee performed work normally, there would then have been two periods of industrial action. 31 It is important to note that Jessup J's comments were made in relation to s 187AA which did not require looking at industrial action 'on a day'. Section 187AA included the words 'in relation to a period in which'. An important feature of s 507, and the most salient distinction between s 507 and its predecessor s 187AA, is the focus on the industrial action 'on a day' and to calculate the duration of industrial action on a day by day basis. However, his Honour makes clear that the industrial action is not necessarily considered a continuing period of industrial action if it is broken by a period of ordinary work. 32 As I have said, the operation of s 507 has the consequence that employees are to bear the economic loss of their industrial action. In a case where the employees have contributed the benefit of a full day's work to their employer, it seems contrary to the intention of the provision to punish employees beyond the calculation allowed for in the provision. 33 It was agreed that on each of 22, 23, 24, 28 and 29 August 2006, the employees imposed a ban on overtime. On the facts of the case before me, I am satisfied that the ban constituted two hours of industrial action on each of those days.