C0092/999, Transcript of Proceedings [2003] AIRCTrans 1191 (2 April 2003)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER RAFFAELLI

C No 00929 of 1999
C No 00946 of 1999

OFFSHORE INDUSTRY (COMPENSATION FOR LOSS OF CERTIFICATE OF COMPETENCY) AGREEMENT 1983

Review under Item 51 Schedule 5 Transitional
WROLA Act 1996 re conditions of employment

THE MARITIME INDUSTRY SEAGOING AWARD 1981 COMPENSATION FOR LOSS OF CERTIFICATION OF COMPETENCY AGREEMENT

Review under Item 51 Part 2 Schedule 5
WROLA Act 1996 re conditions of employment

SYDNEY

9.40 AM, TUESDAY, 18 MARCH 2003

Continued from 4.12.02

PN62

THE COMMISSIONER: Yes, could I have the appearances please?

PN63

MR BYRNE: I appear for the Australian Institute of Marine and Power Engineers.

PN64

MR WYDELL: I appear for the Australian Maritime Officers Union.

PN65

THE COMMISSIONER: Thank you. There does not seem to be any employer representatives here today, but I'm satisfied that they have been notified. Both these matters are ones where the Commission and the parties have undergone a process of attempting to simplify the awards, or make them conform with the requirements of the Act, including the WROLA Act.

PN66

The Commission notes that at least insofar as the Maritime Industry Seagoing Award, compensation for loss of Certificate of competency, that an agreed position has been reached. The purpose of raising this, bringing this matter on, is that the Commission has noted the agreement of the parties and including that the correspondence from the AIMPE of 26 February 2003.

PN67

However, the Commission has listed this matter for the purposes of hearing submissions about whether the key part of the award, in fact the only relevant part of the award, is in fact, allowable or not. It might assist the parties if I tell them that in my view, I've had occasion to look at the decision in print, P1297, which is a decision of a Full Bench in relation to the Commonwealth Bank of Australia Officers Award 1990.

PN68

That decision, in dealing the word, "allowance", deals with - refers to a decision of the High Court, in particular, statements by Latham CJ at the time, and makes references - the quote from Latham CJ, seems to parallel the sort of description of allowances, or the sort of provisions for allowances, found in the wage fixing principles of the Commission, and that is, that there are essentially - or broadly, two sorts of allowances.

PN69

One is ones that reimburse employees for expenses of the employee, related to the employment, and the other one is the payment of allowances that recompense employees for various work, disabilities, or conditions. There are, and as identified by the Full Bench decision, there are of course, some other sorts of allowances which do not easily fit into those two broad aspects - broad - yes, I think aspects is probably the best word.

PN70

For example, they make reference to non-reduction allowance, higher duty allowance, wage maintenance and industry allowance. Ultimately, the matter before the Full Bench dealt with accident make-up pay, and the Commission came to the view that it was allowable - it was an allowance, and essentially because it was - had a sufficient connection with the employment for the entitlement to be an allowance.

PN71

In the matter before me, it is said that reliance is had on section 89A(2)(n), which is Notice of termination and I'm afraid I don't see how those payments referred to in clause 5 are in fact, Notice of terminations. They are payments that follow the termination occasioned by the loss of appropriate medical requirement. As to whether they are allowances, well, again, I don't think they fall into that broad area that I described and I think the make-up pay is probably the widest of the - of what an allowance could be.

PN72

But a payment in this instance is not made in accordance or, to use the word of the Full Bench:

PN73

It does not have a sufficient connection with the employment, in fact, it has a connection with the loss of employment.

PN74

It is a payment made after the termination as is clear in clause 5. The only thing that it is akin to, is redundancy pay or superannuation, but they are specific matters referred to in 89A. They are not the same as redundancy pay. They are not the same as superannuation, but they are two benefits that applied that are paid post employment. This is not one of them. Finally, I note that this was previously not called an allowance. It was just a payment, calling it an allowance, is not making an allowance.

PN75

Now, they are the broad thoughts of the Commission. If - and it would be at least from where I sit, my view is that the award provisions are either originally, or that as drafted, at least for one of the awards, does not meet the requirements of the Act and as a consequence of that, and given that it is the key part of the awards, it seems to me that the awards need to be set aside. But any way, that is my opening position, Mr Byrne, what do you wish to say?

PN76

MR BYRNE: Commissioner, this matter has dragged on somewhat and there have been numerous iterations of the revised document. An earlier version may well have brought the draft award within the scope of section 89A(n), in that it - I'm referring you now to the first and second drafts of the documentation that was circulated amongst the parties.

PN77

It did couch the provision that you refer to in terms of a notice provision with an additional subclause for payment in lieu of notice. I think a provision along those lines was considered that is a payment in lieu of notice provision. It was considered in the Liquor Trades case - the Hospitality Industry case, which I think, is print 7500.

PN78

However, that is not the - I concede that that is not the form of the draft that has been arrived at between the parties at this juncture. That is how I would have to concede that in its current form, the drafting process does not bring it within section 89A(n), contrary to the submission in writing that I put last month. Sir, the description of the payment of an allowance is perhaps at the outer edge of the concept.

PN79

The National Wage Case principles do have two different types, reimbursements and wage related allowances as you rightly described in making your preliminary observations to the parties. We would submit that there a number of factors that impinge upon the allowance being paid and they include, and are critical to the entitlement that the person is a permanent employee, a permanent officer of one of the respondent employers.

PN80

There is no entitlement unless the person is in that category, therefore there must be a pre-existing employment relationship. The person must have been employed as an officer and have sought but failed to be re-validated in their Certificate of competency. The re-validation process was introduced in the early 1980s by the Australian Transport Authorities in order to ensure a standard of fitness amongst officers at sea.

PN81

That in turn, is designed to ensure that there is a safe operation of Australian vessels. So it was arrived at between the Maritime Employers in Australia and the Officer Unions, that a person who is unable to meet those standards, those Government imposed standards which in turn derived from International Conventions, that they should receive an allowance - sorry, that they should be made a payment which has the characteristic of being a reducing level of payment.

PN82

The agreement operated - still operates in fact - both the agreements still operate, and they have operated for approximately 20 years, and provide a modest, but reducing level of payment to officers who fail to re-validate in accordance with the medical standards set out by what is now known as the Australian Maritime Safety Authority.

PN83

The cause of the failure to meet the standards is generally not a work related cause because if it were a work related cause, then there would be a payment which would be off-set against the entitlement under the existing agreements. So it is technically not a compensable payment. The entitlement is circumscribed by the exclusions that are contained in the relevant clauses - clause 7 and 8.

PN84

They have the effect that if an officer has received entitlements under other legislation that are referable to loss of earnings, then the value of that component shall be deducted from the amount payable. So they are not entitled to double dip. They are not entitled under this agreement to get a benefit which duplicates another benefit that they are entitled to in another area by another method.

PN85

This was designed to put a safety net under the whole of the employment system for officers in the Maritime industry, so that if they were not entitled to compensation or damages or other benefits, then there would be a payment made to them. That payment is as I say, a decreasing benefit. It decreases from 24 month's salary for persons under 30 years of age and it decreases down to a payment of 6 month's salary - a payment equal to 6 month's salary between 55 and 60.

PN86

There is no payment after the age of 60. The concept was designed to compensate those officers for the loss of the earnings that they would have received had they not failed their AMSA medical of the Department of Transport medical, as it was originally introduced, thereby depriving them of a livelihood in the Maritime industry.

PN87

Generally speaking, the people who seek the benefits of the agreement and who have received the benefits of the agreements in the past 20 years, have been people who have suffered from non work related illnesses or who have suffered injury as a result of non work related accidents and who do, thereby, fail to meet the medical standards set down, but who are not entitled to compensable payments under the other legislation which applies.

PN88

In those circumstances, we do see this as an unusual payment, but it is a payment that has those requisites. It does require that the person must have been engaged as a permanent employee; that they must have been a certificated officer; they must have sought and failed to have been granted re-validation of their Certificate by the Australian Maritime Safety Authority as it currently is known.

PN89

We concede that it may not be within the category of payments that have previously been described as allowances in other industries, but we do submit that it is a payment that could accurately be described as an allowance, given that it is a payment that is wage related. It is related to the individual officer's salary.

PN90

It is a one-off payment - a payment that is specifically described as not being susceptible to further payments and it is a payment that arises in a unique set of circumstances whereby the individual's earning capacity has been taken away from him. He has lost - he or she has lost their earning capacity because of an injury or an illness. The parties to the agreement as the Commission is aware, are not at odds over the making of an award. It really does come back to a question of whether it falls within section 89A and the Workplace Relations other legislation act. It can only be based on the provisions of the role of which provide that existing entitlements should not be undermined and further that allowances, 89A(j) are permitted as allowable matters in awards.

PN91

The question of whether it is an analogous to an accident make-up pay allowance arises. It is different in this respect. It is different in an accident make-up pay provision in general with the provision which relates to compensation for a work related injury. It has got to be conceded that that is different type of payment from this type of payment.

PN92

However, the situation of the re-validation requirements of the International Conventions that apply to the Maritime industry, particularly the - what is known as the STCW95 Convention, the Standards and Training Certification and Watch-keeping are such that sea-farers officers are not entitled to serve on Australian ships unless they comply with the national regulations implementing the International Convention.

PN93

Those national regulations are found in the Marine Orders issued by the Australian Maritime Safety Authority. Non-compliance with those regulations means that a person is not entitled to hold a Certificate of competency. Without a Certificate of competency or a Certificate of validity authorising the use of a Certificate of competency - without that Certificate of validity, an employee, an officer, does not have an entitlement to earn an income.

PN94

They are not able to earn an income on a ship operated by an Australian shipping employer or an Australian off-shore oil and gas industry employer. It is in that sense, analogous to the accident make-up pay in that the person has been prevented from earning their income and the allowance is by way of income replacement for a limited period of time. Generally speaking, accident make-up pay provisions have a limited period of time where they make up the pay of the individual.

PN95

Common ones that I'm aware of, for instance, make-up pay from the base legislative entitlement up to 100 per cent of the employee's earnings for a period of up to 12 months. This standard - the standard in the two draft awards before the Commission today, sets different levels at different ages and that is a reflection of the notion that at different ages, the individual has different lengths of time - lesser lengths of time as he or she grows older before normal retirement and therefore there has been a lesser impact in terms of loss of potential future earnings.

PN96

However, it is, as with accident make-up pay, it is a substitute for earnings that would otherwise have been able to be earned if the person had not suffered the illness or injury which led to the inability to re-validate. Therefore, there is a valid analogy between the accident make-up pay provision and the compensation for loss of Certificate of competency allowance as it is described in the two draft awards.

PN97

THE COMMISSIONER: Mr Byrne, could I just interrupt you? The two draft awards, I'm only - - -

PN98

MR BYRNE: Yes, I was about to come to that, sir. Having attempted to deal with the big picture, can I take the Commission to the micro matters, and obviously these - we are only proceeding to these areas, if the Commission is satisfied with the arguments that I've put. But I shall tender in any event, copies of the two draft documents which we now seek to proceed with.

PN99

One entitled the Offshore Oil Industry termination due to medical inability to re-validate certificate award, and the other, the Shipping Industry termination due to medical inability to re-validate certificate award. Sir, on the - - -

EXHIBIT #BYRNE1 OFFSHORE OIL INDUSTRY DRAFT TERMINATION DUE TO MEDICAL INABILITY TO RE-VALIDATE CERTIFICATE AWARD

EXHIBIT #BYRNE2 SHIPPING INDUSTRY DRAFT TERMINATION DUE TO MEDICAL INABILITY TO RE-VALIDATE CERTIFICATE AWARD

PN100

THE COMMISSIONER: Yes, Mr Byrne.

PN101

MR BYRNE: Sir, if I can go to exhibit Byrne 1 firstly. On the last occasion these matters were before you was a teleconference in December 2002, Mr Caccamo for the Australian Mines and Metals Association made a number of comments. He made comments in relation to the definitions of the Offshore Oil and Gas Industry employers, pointing out that some of the respondents were not Mines and Metals members and that some of them - in fact, I think he indicated, did not exist.

PN102

Further discussions between Mr Caccamo and Mr Olson of our West Australian office, have led to modification of the definitions clause insofar as it relates to Offshore and Gas Industry employers, and I think that deals with the observations of Mr Caccamo on the last occasion. Mr Caccamo also complained about a provision that appeared in a previous version in clause 5, and so that has now been altered so that after the table of allowances, there is now the sentence:

PN103

The allowance will be calculated on the basis of the officer's graded rate.

PN104

This means that the allowance may be less than what the officer was actually earning at the time of the failure to re-validate, however, that was the existing standard in the old award - the old agreement as it was styled, and therefore we have taken the cautious approach and not sought to modify the document or the entitlement so that it reflected actual rate of pay. Instead, we have simply relied on the notion of graded rate of pay.

PN105

In addition, on the last occasion, Mr Caccamo indicated a concern about the Board of Administrators Operation. He was concerned that there shouldn't be meetings of the Board if they were not necessary and the wording of clause 6 has been altered so that it now reads, in part, interalia there:

PN106

The Board shall decide in each case where there is disagreement, the application of this loss of Certificate of competency scheme.

PN107

So it is only where there is disagreement about a matter, and those were the words that Mr Caccamo suggested. It is only where there is disagreement about the matter that the Board would be required to meet. That would - deals with Mr Caccamo's concern that there may be meetings - the clause may have required a physical meeting, even where there was agreement that the payment should be made.

PN108

I didn't see that as a necessary interpretation, the previous wording, but I've modified the wording in the draft to meet Mr Caccamo's concerns. I have forwarded the revised document - and of course, Mr Caccamo also indicated to the Commission that the parties that he represented did seek to have a continuation of separate agreement.

PN109

Mr Green also said, on behalf of ASO that his constituent members - the people that he represents, wanted a separate award for their sector. So the awards - there are two of them - and they do reflect those concerns raised on the teleconference hearing of 4 December. As I indicated, those have been circulated to the other parties and certainly, in relation to exhibit Byrne 2, the Shipping Industry Award, I can indicate that - I think you have, indeed, a communication from the Australian Ship Owner's Association indicating their consent to that award. The AIMPE obviously consent to the award and Mr Wydell will confirm the AMOUs position likewise.

PN110

In relation to exhibit Byrne 1, I do not have any return communication from Mr Caccamo about the position of the Mines and Metals Association or the parties that he represents. But again, AIMPE consents, and Mr Wydell will be in a position to advise the Commission of the AMOUs position likewise. If it please the Commission.

PN111

THE COMMISSIONER: Mr Byrne, I'm not - we will hear what Mr Wydell has got to say. I'm still not convinced, but I have actually foraged through the files and found your original draft - well, an earlier draft. I've marked it 22 October. I think it may be O1 rather and 02, and it goes to that question of notice.

PN112

MR BYRNE: Yes.

PN113

THE COMMISSIONER: I must say, if that is what the draft - or the proposed award now said, I would have no hesitation in making the award, because I've just had a look of course, the Act itself provides for notice in cases of - notice of termination, and it provides for payments in lieu. Now, that is not a matter that is at all feasible of gaining some agreement with at least, one, if not both, of the employer groups?

PN114

MR BYRNE: Sir, that may very well be a matter which would be acceptable to the ASA.

PN115

THE COMMISSIONER: Anyway, I will keep that in mind. The only observation I make is that if in fact that was a goer, clause 5 - the issue of the off-setting of other benefits etcetera, needs to be perhaps re-looked at, because we are talking of off-setting of notice periods and payments in lieu. Do you get my drift?

PN116

MR BYRNE: Yes.

PN117

THE COMMISSIONER: I don't think it changes the thing. Are the off-sets normally - well, when someone - it says there - you off-set certain benefits that you might get from other avenues, perhaps workers comp; perhaps some other matters, is - are those benefits always known by the time that the termination occurs and the - currently the payment is made, or is a payment made and then somehow money taken back? I'm not quite sure how it currently works.

PN118

MR BYRNE: I think that the mechanism that the employers use to ensure that they don't get caught, is that they tend to delay payments under this agreement so that they can see whether there is any other payment referable to loss of earnings, because that is the key part of that provision, whether there is a component in any other benefits that is referable to loss of earnings, and if there is, then they assert that that is the off-set. That is an area - to be very candid, where there have been matters of disagreement.

PN119

THE COMMISSIONER: Yes.

PN120

MR BYRNE: Because there are obviously a number of entitlements, and at different times, different parties have different views as to whether they come within that rubric of loss of earnings. The clause then goes on to say:

PN121

The Board shall not take into account resignation benefits, benefits for total and permanent incapacity, benefits for retirement on age ground, including early retirement. All benefits covering the foregoing concepts, however defined, under any superannuation, pension or like scheme.

PN122

So there is plenty of area for debate about whether particular benefits under any of those headings do come within the other exclusions. So where there have been arguments in the past - I'm not talking about thousands, but I'm talking about probably single digit number of arguments - cases that have been contested. That is where the contest has focused - what is a component referable to earnings which can be off-set.

PN123

THE COMMISSIONER: Yes.

PN124

MR BYRNE: But the parties are somewhat in the Commission's hands. The Commission has given us a clear indicate of its views this morning. The matter was listed for hearing today. We can certainly undertake to re-revise the drafting in the light of the proceedings today and propose a revised draft, more akin to what I have in my file as re-draft 2.

PN125

THE COMMISSIONER: Yes, that is what it is called. Yes, you are right.

PN126

MR BYRNE: Foot noted?

PN127

THE COMMISSIONER: Yes.

PN128

MR BYRNE: Yes.

PN129

THE COMMISSIONER: Okay, yes. Thank you, Mr Byrne.

PN130

MR BYRNE: If that is the Commission's wish.

PN131

THE COMMISSIONER: Yes. Yes, Mr Wydell.

PN132

MR WYDELL: Yes, thank you, Mr Commissioner. I note your - how shall we say - pre-disposition to believing that - let us just re-use the word, "entitlement to compensation" at the moment, is not in the form of an allowance. I note that you have a favour with a preliminary draft that was around prior to this being re-draft 2.

PN133

So I guess what I'm putting to you is that my research on this matter has taken me to what has come to be known as the Commonwealth Bank Officer's case. Also, the Liquor Trades one, which was P7500, and also the revision of the Plumbing Award. Now, if the Commission is of the mind that this is not in the form of an allowance, then perhaps it is not worth me addressing you on the question of an allowance.

PN134

Rather, take the alternative road which would be to re-draft the document and to bring it back in a form - how shall we say - more friendly to - - -

PN135

THE COMMISSIONER: Yes.

PN136

MR WYDELL: I think now, I certainly don't mind doing it, mind you, I would have to get an adjournment at about quarter past 11 for half a hour, because I've got to appear in another matter downstairs, but I don't know whether it would go on that long. But as I say, I'm in your hands. If you want me to talk to you about allowances, or you think that perhaps it is probably not a goer, then we can just I guess, wrap the matter up a bit earlier.

PN137

THE COMMISSIONER: Yes.

PN138

MR WYDELL: I'm in your hands. I'm happy to talk to you about allowances. If you think there is an easier method through all of this, then - - -

PN139

THE COMMISSIONER: Well, I think Mr Wydell, I don't know if you are going to achieve consent on the alternative position, and as I said, how the other provisions that hang off clause 5 like clause 6, in particular, can be drafted when we are talking of a notice, including payment in lieu of notice. I'm still not sure, but I'm sure you and Mr Byrne have got ideas in that regard.

PN140

I think that that is - if that is a possibility - that is it is possible that there is consent and that those necessary changes to clause 6, for example, could be effected, then I'm indicating that clause 5 is probably allowable, because it is clearly a notice of termination. As I'm talking, I'm also noticing that may be clause 4 needs to be attended to. But clause 5 says, subject to clause:

PN141

An officer who in clause 1, applies, shall be entitled to receive notice of a termination of his employment under this award.

PN142

Well, yes, perhaps it should read, "Notice of the termination of employment in circumstances referred to in clause 4". But anyway, we will get to that, but it is still notice of termination. The Act does not differentiate. If that was the case, then I would have thought I would be fairly confident that the Commission would vary the award accordingly.

PN143

If it turns out that is not possible, Mr Wydell, then either by a formal hearing or certainly by written advice, you would be able to put your position - particularly make references to those three decisions that you have made mention of. I've already written them down, so I will certainly consider them.

PN144

So if in fact, the alternative, the notice of termination is not a goer, then I will certainly consider what you - well, the references you have made, but also what else you may wish to put - whether you want to have a formal hearing about it or whether we - because Mr Byrne has told me his side of it. The employers aren't here to defend the position.

PN145

But I certainly would give you the opportunity to put in writing any position, or make reference to these matters, so that you perhaps could try to sway my view. That is, if in fact the notice of termination option is not achievable. So the short answer, Mr Wydell, is possibly you need not take me to those decisions or to those comprehensive submissions at this stage, but we may get to it in due course.

PN146

MR WYDELL: Do you mind if I just have a moment with Mr Byrne?

PN147

THE COMMISSIONER: Yes, yes.

PN148

MR WYDELL: At the moment, I have to say that I'm leaning towards addressing you on the question of allowances rather than the other option.

PN149

THE COMMISSIONER: Okay. Well, go ahead, Mr Wydell. Now, you may go ahead. It probably is easier, then you will have told me what your side of it is and if it all falls apart, well, then I will have it.

PN150

MR WYDELL: Yes, thank you, Mr Commissioner.

PN151

THE COMMISSIONER: And you will hear - I suppose that is right, it saves you.

PN152

MR WYDELL: Not surprisingly, the AMOU would submit that the entitlement to compensation under the form of loss of Certificate of competency agreement 1983, now, we presented to you in the forms of the Shipping Industry termination due to medical inability to re-validate Certificate award 2002, and I believe that is exhibit Byrne 2 and exhibit Byrne 1, is the Offshore - sorry, I don't have them in front of me, but along the same lines.

PN153

THE COMMISSIONER: Yes.

PN154

MR WYDELL: The Offshore - Offshore Oil Industry termination due to medical inability to re-validate certificate award 2002. It would be our submission that those draft awards are in a form that the entitlement to compensation within those documents should be characterised as an allowance within the concept of allowances contained in section 89A(2)(j).

PN155

In Commonwealth Bank of Australia officer's award, 1990, which you have already mentioned - you have had reference to, the Full Bench in that matter, when dealing with the question of the approach to the construction of section 89A, had this to say - if you like I can hand you a copy up, or I - - -

PN156

THE COMMISSIONER: I've got a copy of that one.

PN157

MR WYDELL: Okay. They had this to say - I think Mr Byrne has got a copy beside me. They say:

PN158

The list of allowable award matters is comprised of concepts, the particular kinds of award benefits and conditions and employment. The construction ...(reads)... use of the concept - - -

PN159

THE COMMISSIONER: Where are you reading from?

PN160

MR WYDELL: Sorry, sir, I'm on page - my page 9.

PN161

THE COMMISSIONER: Okay.

PN162

MR WYDELL: Mine is an internet copy, I'm sorry, it is not an authorised version of the judgment. But if you like I can hand you up one of mine and - - -

PN163

THE COMMISSIONER: Yes, it might be best.

PN164

MR WYDELL: - - - you will be on the same page. Yes, so if you turn to page 9 of that document and if we were to go down until about point 5, down the page?

PN165

THE COMMISSIONER: Yes.

PN166

MR WYDELL: And I'm picking it up in about the end of the third line:

PN167

In its context, section 89A is not a provision for which there is a need for either a restrictive or a generous construction. The terms in it ...(reads)... drafting skills.

PN168

And I think that is what you were indicating earlier. Continuing on:

PN169

Conceivably, some conditions of employment could be formulated in sufficiently various ways to bring the ...(reads)... within the category at all.

PN170

So that was the approach the Full Bench took when dealing with the question of 89A and of course, the relevant section of 89A being 89A(2)(j) which just says the word, "allowances". So if we take the Full Bench's approach, and there is no need for either restrictive or a generous construction. So I guess what we are saying is that apply the concepts as you would within the accepted uses of the term of within the Industrial Relations regimes, both state and federal in Australia.

PN171

The word, "allowance" was considered in - on a stated case in the High Court in Mutual Acceptance Company Limited v Federal Commissioner of Taxation, [1944] HCA 34; (1944-45) 69 CLR 389. At pages, 396, 398, Latham CJ held that:

PN172

The payment was an allowance.

PN173

And this is what we were talking about in respect to the payment, the subject of that matter, and he went on to talk about the meaning of the word "allowance". He said:

PN174

Allowance in the relevant sense is defined in the standard dictionary as meaning - that which is allowed, a portion ...(reads)... allowance of bread.

PN175

He went on, and he said:

PN176

When the word is used in connection with the relation of the employer and employee, it means in my opinion, a grant of something additional to ordinary wages ...(reads)... conditions of that service.

PN177

And there we have the two limbs. One being the requirement connected with a service rendered, so I guess you could say, in the form of a type of reimbursement there, or as compensation for conditions of that service. And he goes on to provide examples of the relevant two limbs he discussed being:

PN178

Expense allowances, travelling allowances, entertainment allowances, a payment additional to ordinary wages ...(reads)... of a service.

PN179

And then we have the types of allowances:

PN180

Tropical allowances, overtime allowances and extra pay by way of dirt money allowances as compensation for unusual conditions of service.

PN181

I guess what I'm putting to you there, is that although they were considering a concept of allowances in the terms of payroll tax dispute back then, we are now considering the concept of the word allowances used in the Workplace Relations Act. The Full Bench went on, just down the page - and I think a word about point 4 now, where they said:

PN182

Essentially, the elements of an allowance -

PN183

and I'm just picking up some of the key words there -

PN184

an entitlement in the employee to a payment notionally distinct from the wage for a purpose connected with the employment relationship, and particularly ...(reads)... related to the work.

PN185

And they go on to say:

PN186

The statutory context does not contain any detail that points to a construction that only allowances for reimbursable expenses or for compensatory payment for work conditions or disabilities are allowable award matters.

PN187

So I guess what he is saying there is, that he is commenting on the definition of allowance as provided by the Chief Justice as being those two limbs. The Full Bench, in their ratio in the Commonwealth Bank case, are saying that - well, on my reading of it anyway - that as:

PN188

The statutory context does not contain any detail that points to a construction that only allowances for reimbursable expenses or for compensatory payment conditions or disabilities are allowable award matters.

PN189

So obviously, when considering the question of allowances in respect of section 89A(2)(j), I would suggest to you that the concept of an allowance is wider than indicated by Latham CJ in the High Court case of Mutual Acceptance Company Limited v Federal Commissioner of Tax. Just down at about point 8, there is one line there that says:

PN190

Nor does the fact that the employee is not actively engaged in duty, preclude the existence of an allowance.

PN191

So if - just to take as an example, let us suppose that a deck officer or an engineering officer are not engaged in their duty because they are unable to re-validate, then there does not seem to be a problem on the reading of this case with the person being entitled to the allowance.

PN192

THE COMMISSIONER: The difference is that the accident payment is one paid while the contract of employment, or the employment relationship, is continuing.

PN193

MR WYDELL: Right.

PN194

THE COMMISSIONER: This payment is made after it has ended. That is the difference anyway. I just make that observation.

PN195

MR WYDELL: As I say, I did intend to comment on that observation, but there is nothing in the draft award there that says the payment can only be made on termination. It is conceivable - - -

PN196

THE COMMISSIONER: Yes it does. Clause 5.

PN197

MR WYDELL: Right, sorry. I stand corrected.

PN198

THE COMMISSIONER: Yes. See, that is the point. They don't make - there is no provision for the payment. If it had been paid during employment, then I agree. It puts it squarely with the accident make-up pay because the only difference being one associated with employment injury and the other one not, but that, I don't think, would be relevant. But it is paid after termination and the Board of directors meet and say yea or nay.

PN199

MR WYDELL: Well, let us just go back and consider that again, because that is certainly one reading of clause 5:

PN200

Shall be entitled to receive on termination that payment.

PN201

The entitlements of that payment arises immediately the person is unable to re-validate. That is when the entitlement for the payment arises. As soon as - if the person - as soon as the person cannot re-validate their Certificate under Marine Orders, whichever part it is. I can't remember - part 9 of Marine Orders issued by the AMSA.

PN202

As soon as that person is unable to re-validate, the entitlement accrues in that person. Because it is conceivable though unlikely, I would have thought, that the employer could actually keep the person on, even though the person is unable to go on the ship. It is conceivable that the employer is able to keep that person on in employment whilst still being entitled to this entitlement and the trigger for the entitlement is the "unable to re-validate".

PN203

It is not the termination that is the trigger for this entitlement. So I think we just need to be a bit clear on what actually gives rise to the entitlement in the person to obtain this allowance. In our submission, I would put it to you that the entitlement is at the point where the person is unable to medically re-validate. Because assuming that the employer did decide to keep the person on, then at that point in time he is still being paid, so there is no real need for the allowance at that point in time.

PN204

The trigger to the actual handing over of the payment - not the entitlement - the handing over, is when one of the parties seeks to sever the relationship, and generally in this circumstance, I think it is safe to accept that it will be the employer who will be terminating the employment of the deck officer or the engineering officer, rather than the other way around.

PN205

So as unlikely as it is, the person wouldn't be entitled to - although they are entitled to their payment and the entitlement accrues at the time they are unable to re-validate, the employer does not have to make that payment up until the employer terminates the person. So if I could just sort of, go back and talk about the industry peculiarity, if you like, that gives rise to the need for this allowance.

PN206

Deck and engineering officers employed on ships are unusual in that to hold or maintain the relevant Certificate of competency, they must re-validate as per the prescribed periods determined by Marine Orders issued by AMSA. Part of the re-validation process, as I understand it, is a medical. Now, of course, this is peculiar to the shipping industry, and I would imagine looking for a similar industry, I would imagine it is peculiar to the airline industry.

PN207

I can understand officers aboard ships, officers aboard aeroplanes, would certainly need a medical - would be the primary part of their on-going qualification, whereas of course, solicitors, barristers, accountants, and for some parts, even your local GP, may not require a Certificate of medical fitness in order to hold their qualifications.

PN208

Certainly, in order to hold a practising certificate, I don't need to go and get a medical every year. The position of course, is very different with respect to the deck officers aboard ships, and engineering officers, and I would assume that likewise, pilots of aircraft and engineering officers on planes as well.

PN209

So I guess in light of all that I've put to you, for those reasons - and I think, you know - I think the ratio of the Full Bench decision is where they say there at about point 4, point 5 on the page:

PN210

Essentially the elements of an allowance are those identified ...(reads)... Latham CJ.

PN211

And the Full Bench here say:

PN212

Entitling the employee to a payment notionally distinct from the wage for a purpose connected with the employment relationship ...(reads)... of or related to the work.

PN213

Now, it is certainly a condition of employment that deck and engineering officers maintain a Certificate of competency otherwise I would suggest to you, sir, that again, it is, you know, the employer would terminate the services of that person if they can't be gainfully used. Though it is conceivable the employer might keep them on. I don't know. A stint of gardening leave, or something perhaps. So I think because the qualification is essential to getting on a ship, then without that qualification, the contract of employment is - what is the point of it?

PN214

The person can't be gainfully employed, so I would put to you that the industry is peculiar and this is peculiar in that as part of an on-going qualification, they need these medicals and as part of the contract of employment, persons - well, the employer would not enter into a contract of employment with a person who did not have a Certificate of competency, otherwise why would you employ them as a deck or engineering officer, if you can't use them.

PN215

So in our submission, I think that it does - that the allowance does fit within the concept of allowances used in the broader Industrial Relations regime in Australia, both at a state level or a federal level, whichever you like, and on that basis, the AMOU would submit that the awards are an allowable matter. Unless the Commission has any further questions of me, I will take my seat?

PN216

THE COMMISSIONER: Yes. The - I'm aware of the P7500. What was the plumbing award that you mentioned?

PN217

MR WYDELL: I'm sorry, sir, I don't have a print - - -

PN218

THE COMMISSIONER: Okay. Well, I will find a print.

PN219

MR WYDELL: - - - number for that one. I was looking at the Plumbing award, merely in the context of a redundancy.

PN220

THE COMMISSIONER: I see.

PN221

MR WYDELL: Because if the Commission, of course, wasn't favourable to our submissions today, then if I needed to find an additional head, if you like, under 89A(2) in which to carefully craft or draft, as the Full Bench indicated in the Commonwealth Bank Officer's case, it is conceivable that it could either fit under the redundancy or it could fit within the notice of termination, because the notice of termination involves either the periods of notice or payments upon termination.

PN222

They discuss that in Liquor Hospitality, P7500, if I remember correctly, where I think they were actually referring - it should be in brackets - because they are referring to the Full Bench's quote in the Commonwealth Bank Officer's case, from memory. So I guess, there is not a lot more I can help you with.

PN223

THE COMMISSIONER: Yes, Mr Wydell. I notice what you have said about notice of termination. I'm not sure it is redundancy though, it is? It is not? It is the inability of the employee to perform the job, not the - - -

PN224

MR WYDELL: I would rather that was the last port of call, if - - -

PN225

THE COMMISSIONER: Yes, yes. Okay. Thank you, Mr Wydell. Yes, what I propose to do, is to consider what both advocates have put this morning. I have already indicate that if, in fact, the parties are able to draft the award so that it hinges upon notice of termination, then it is likely that the matter will cause me no great difficulty.

PN226

What I propose to do, is to adjourn and give the parties 1 month - that is, until Thursday 17 April, for a period to provide the Commission alternative drafts - agreed drafts in terms that have been suggested. If there is no agreement along those lines, then the Commission will determine the issue on the basis of what is an exhibit, Byrne 1 and exhibit Byrne 2, and in that regard - in doing so, I will consider what has been put this morning.

PN227

I also need up to and prior to that time, an indication from AMSA and this transcript will be provided to them, as to what their attitude is to exhibit Byrne 1. Now, obviously, if they - the parties are happy to move to an alternative agreed position, it does not matter, but if that is not the case, I certainly need their advice as to whether they agree with Byrne 1.

PN228

If they don't, then I guess all that I've got before me, is the original award. Of course, there was also the other alternative, and that is that the parties are unable to agree, and somehow wish to put alternative positions and competing positions to the Commission, that I would have thought is a bit of a messy way of doing it. In other words, the unions might say: well, we want to have an award that is about notice of termination, and the employers might be opposed to that.

PN229

It seems to me that gets very much to - gets us in a certain amount of difficulty, so if in fact, the matter can be agreed on an alternate basis, that will be what I thought, a positive outcome. If that is unable to be achieved, then the Commission will make its decision on what is before it and rely on what has been put. Yes, Mr Wydell?

PN230

MR WYDELL: Excuse me, Mr Commissioner, look, perhaps if there is a problem in doing this in 1 month, you might allow us to write to you or contact you and let you know that there is a problem. Not that I'm saying any side is dragging its heels, but I notice the other two sides were notified and didn't turn up today, so if that is - you know, I'm not suggesting it is.

PN231

If that is an indication of the importance they put on this and if we are to be disadvantaged by them dragging their heels, perhaps you might allow us an opportunity to write to you and say: well, look, we are having trouble with the other side, or: we can't get an agreement out of them, for whatever reason and another, rather than the arbitrary cut off. I don't know. What do you think?

PN232

THE COMMISSIONER: I will consider any such request, but I must say, this thing has been dragging along and I'm not - - -

PN233

MR WYDELL: Yes, it has and it needs to come to a conclusion.

PN234

THE COMMISSIONER: - - - blaming the unions who seem to have done all the drafting, but nonetheless, I don't think it can go on much longer. But anyway, I've noted what your comments are, Mr Wydell.

PN235

MR WYDELL: All right.

PN236

THE COMMISSIONER: I will adjourn accordingly. Thank you.

ADJOURNED ACCORDINGLY [10.52am]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #BYRNE1 OFFSHORE OIL INDUSTRY DRAFT TERMINATION DUE TO MEDICAL INABILITY TO RE-VALIDATE CERTIFICATE AWARD PN100
EXHIBIT #BYRNE2 SHIPPING INDUSTRY DRAFT TERMINATION DUE TO MEDICAL INABILITY TO RE-VALIDATE CERTIFICATE AWARD PN100