Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd ACN 075 483 644 [2013] HCATrans 150 (20 June 2013)

Last Updated: 21 June 2013

[2013] HCATrans 150

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P26 of 2013

B e t w e e n -

CONSTRUCTION FORESTRY MINING & ENERGY UNION

Appellant

and

MAMMOET AUSTRALIA PTY LTD
ACN 075 483 644

Respondent

CRENNAN J
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 20 JUNE 2013, AT 10.03 AM

Copyright in the High Court of Australia

MR J.K. KIRK, SC: May it please the Court, I appear with my learned friend, MR T.J. DIXON, for the appellant. (instructed by Construction Forestry Mining & Energy Union)

MR S.J. WOOD, SC: May it please the Court, I appear with my learned friend, MR C.O.H. PARKINSON, for the respondent. (instructed by Lander & Rogers Lawyers)

CRENNAN J: Yes, Mr Kirk.

MR KIRK: Your Honours, I propose to start with the facts and outline them very briefly – I know, of course, your Honours will be familiar with them – then turn to the key terms of the statute, then broaden it out a little into related terms of the statute and then seek to put the reasons we give in support of the construction of section 470(1) of the Fair Work Act that we put.

If I can take your Honours directly to the facts? As your Honours appreciate, the case was brought by the appellant with respect to four employees employed by the respondent. They were crane operators employed at a remote location on Burrup Peninsula which is in north-western Western Australia. They were employed on a fly in/fly out basis.

The employment relationship was governed by a greenfields agreement made under the Workplace Relations Act 1996, which was then in place, and it commences at page 45 of the appeal book. Can I take your Honours directly to some of the key terms, starting at page 56 of the appeal book? At page 56 your Honours will find section 3 headed “Income” and it sets out relevant provisions relating to income starting with wage rates and various other allowances, fares and travel, superannuation, meal allowances and so forth. I will not dwell on any of that now.

If I could then take your Honours to page 62? In section 4 of the greenfields agreement your Honours will find the “Project Working Hours”, and I just wanted to draw your Honours’ attention to subclauses (2) and following of the hours of the work which provided that:

Employees shall work standard Project Working Hours of ten (10) hours per day, Monday to Saturday inclusive -

In other words, it was a six day week, 10 hours per day. If I could then take your Honours to page 83, clause 42? There is numbers at the top and the bottom of the page; I am working from the numbers at the top which are the appeal book references. Clause 42, down at the bottom of page 83 relates to distant workers and provides that such workers “shall be entitled to the conditions contained at Appendix 7”. Before I go to appendix 7 could I take your Honours to the dictionary which commences at page 86, appendix 1 of the agreement, and draw your Honours’ attention on page 87 first to the definition of “Distant Worker”, it is the second entry at the top there? Your Honours will see that it is a worker:

engaged or selected or advised by the Company to proceed from their Usual Place of Residence within Australia to construction work on the Burrup Peninsula and the Employee does so and that work is at such a distance that the Employee cannot return to their Usual Place of Residence each night.

So it is a defining feature of distant workers and the relevant employees here were all distant workers. First, that they have another place of residence, second, that that is their usual place of residence, and third, that that is such a distance away that they cannot travel back there at night at the end of a day’s work.

On the same page if your Honours note the definition of “Local Worker” four rows from the bottom, that is simply someone who is not a distant worker. Then finally in the definitions, page 89, the third last entry, “Usual Place of Residence”, which does not take things terribly much further. If I could then take your Honours to appendix 7 which commences at page 101 of the appeal book, and this relates to distant work provisions, as your Honours can see in the heading and is given effect to, as I showed, by clause 42. Clause (6) of appendix 7 around line 30:

The Company shall have the choice of providing each Distant Worker with either suitable board and lodging or paying the Living Away from Home Allowance set out in this Appendix.

So that is the foundation of the entitlement and, indeed, the duty of the company to provide suitable board and lodging or, alternatively, the allowance. If one then turns over the page, page 102, to clause (10), your Honours will find what the allowance was and at the relevant time, which was 28 April 2010, it was $490 per week. I should note here that the relevant employees were not paid the allowance; they were all provided with accommodation. In other words, the company had made the election some time previously that for these workers it would provide them suitable board and lodging rather than paying them the monetary allowance.

CRENNAN J: I think that the third party was the owner of the lodging.

MR KIRK: That is right, the proponent of the project up in Burrup was a Woodside company and it was Woodside or one of its entities which owned the relevant accommodation and it was providing the accommodation to, in effect, the respondent which was then providing it in turn to the relevant employees. There are some terms of that contract between Woodside and the respondent in the appeal book but I do not think anything turns on them for the purposes of this appeal.

Your Honours will find at clauses (13) through to (23) of appendix 7 provisions relating to travel expenses, and to simplify it down, in essence, clauses (13) to (15) on mobilisation – that is to say, when first employed - the company would pay reasonable travel expenses to get up to the peninsula. On demobilisation, clauses (16) to (17) – and that is defined in the glossary as being following termination of employment - there was a similar entitlement to have expenses to return them to the place from whence they came, to put it simply.

Then clauses (18) through to (23) relate to rest and recreation leave. Now, to explain that, the way the work arrangements operated was that workers worked either four, five or six weeks on and then had one week off. As to whether they worked four, five or six weeks, that was at their election and that is provided for in clauses (24) and (25) at page 105, so they could opt to do four, five or six weeks. There was some incentive to do six weeks. They then had a week off, and for that week, called rest and recreation leave but, in fact, dealt with through a complex range of leave entitlements, again there was travel provided back to, in general, Perth but there were also some allowances made if they came from other places in Western Australia, and that is dealt with through to clause (23).

If I could take your Honours then to appendix 8 which starts at page 107 of the appeal book? This is headed “Local Work Provisions” and deals with local workers. The only point I seek to make of this is if your Honours note clause (2) “Local Living Subsidy”, those who were living locally also got some subsidy but it was at an amount $100 per week less than the living away from home allowance which was paid to distant workers where the company had elected to provide them the allowance rather than particular accommodation.

To jump back briefly to the particular facts of what occurred here, in April 2010 the relevant employees, amongst others, a small group, resolved to take industrial action commencing from the start of the shift on 28 April 2010. They did so following a ballot which went through all the necessary and proper procedures and the industrial action was thus protected, industrial action under the Fair Work Act. The respondent was notified a week in advance of this. On the day before the strike was due to begin, the respondent notified the relevant employees and the other employees that they were required to vacate their accommodation by 6.30 am the next day.

The company also declined to pay travel expenses home. That fact is not clearly referred to in the judgments but it is implicit in the two affidavits of the two workers which your Honours will find in the appeal book, if I can just give your Honours references, appeal book 39 and appeal book 121.

KEANE J: But it is not said in your case that the failure to pay the travel allowance was adverse action?

MR KIRK: No. What was complained of was the failure to provide board and lodging; I am simply filling in the facts. Just in relation to that point, it was also not in dispute that there had been a failure to pay travel expenses home, but as your Honour says we do not particularly rely on that fact. The appellant commenced proceedings to the effect that the action taken of not providing accommodation was a breach first of the agreement and that it was also a contravention of the Act by taking adverse action because of exercise of a workplace right, picking up on sections 340 to 342 of the Fair Work Act.

The application was dismissed by Federal Magistrate Lucev in the Federal Magistrates Court then by Justice Gilmour on appeal following a no case submission made by the respondent. It was dismissed on the basis that the provision of the suitable board and lodging was part of the workers’ payment within the meaning of subsection (1) of section 470 of the Act and that the employer was thus forbidden to provide the accommodation, and if it was forbidden to provide the accommodation then it could not be a relevant breach of the agreement nor could it be adverse action within the terms of section 340 to 342.

The issue before the Court on the appeal, therefore, is what does “payment” in section 470(1) encompass, and specifically does it encompass the provision of accommodation – that is to say, suitable board and lodging – to the four relevant employees here? There are two competing constructions before the Court, although we have a slight variation within the one we proffer.

The position apparently adopted by his Honour Justice Gilmour and supported by the respondent is that payment in section 470(1) includes payment in money and kind and seemingly extends to provision of any type of thing or benefit, including accommodation, provided to enable the employees to be in a position to perform their employment and earn their pay. If I could take your Honours to page 204 of the appeal book in his Honour Justice Gilmour’s judgment, if your Honours turn to paragraph 48, and I can draw your attention particularly to the last five lines of paragraph 48 just under line 30:

The Accommodation was provided to enable the employees to be in a position to perform their employment and earn their pay, not for their use whilst on strike.

That seems to encompass a very broad view of what could be a payment. Could I also draw your Honours’ attention back at page 202 to paragraph 43 where his Honour considered and dismissed the relevance of the use of the word “pay” in other provisions, but can I particularly draw attention to about halfway down towards the end of the line it says:

If Parliament had intended that in s 470 the prohibition be solely to the payment of “wages” or an amount “payable to the employee in relation to the performance of work” as is found, for example, in s 323(1) then it could have employed that language or language to that effect.

His Honour thus implicitly appears to reject any suggestion that payment in section 470 involves a notion of payable to the employee in relation to the performance of work. That in a sense is the heart of the dispute. In our respectful submission, what payment in section 470(1) does involve is an element of quid pro quo. One can call that remuneration if one will; one can call it reward for services provided.

CRENNAN J: What about your argument in this Court about the statutory and historical context which gives your first construction the narrowest of all, that payment means strike pay? Was that put to his Honour in the same terms in which it is put here and, if yes, does his Honour deal with it?

MR KIRK: The history was certainly put to his Honour and the arguments were put, inevitably not quite in the same words, but in substance was the argument put, then yes, it was.

CRENNAN J: But your first construction was that payment meant strike pay?

MR KIRK: That is right, that was picking up on the history and, in particular, as this very paragraph illustrates, quite a bit of emphasis was given in argument below in both courts to the broader statutory context which then fits into that argument your Honour Justice Crennan has just referred to about payment in money. To be frank, we have perhaps pulled it out a little bit more precisely, as inevitably happens when one comes to this Court, in that previously I think perhaps the two constructions, which are really just two variations, were a little bit more blurred, to be honest.

CRENNAN J: I think possibly the emphasis was more on the debate about remuneration, your second order argument, and that probably flowed from the earlier decisions.

MR KIRK: With respect, I think that is fair. In any event, greater focus has now been provided and we seek to pull it out a bit. To expand a little on how those two constructions we put interact, in essence it is really just a variation on the theme in that for both constructions, in our submission, at the heart of the notion is remuneration quid pro quo reward. It is just that for the first variation we say – and if one looks at the particular statutory context, one can actually find a relatively clear practical line here which is payment in money, which links also to the history about strike pay, but I will come to that shortly if I may.

Can I then turn directly to the text of section 470(1)? The version of the Act I hope your Honours have is as at 28 April 2010 and I am using the common law printout prepared on 7 June 2010 which encompasses the relevant period. It looks like your Honours may have services. I will not give page numbers, I will just give sections. Can I take your Honours to section 470? I will come back, incidentally, Justice Crennan, to the history shortly.

Looking at the text of section 470(1), the first thing to note is the key hinge here is the notion of payment which is a term defined nowhere in the Act although it or equivalent words are used regularly throughout the Act. In relation to protected industrial action, your Honours would appreciate that relates back to section 408 and surrounding sections of the Act, that it was protected industrial action is not in issue here. Your Honours will note it is a civil remedy provision. The relevant penalty was 60 penalty units, your Honours will find that in the table at section 539.

The text of 470(1) has this notion of “industrial action . . . on a day” and then “payment . . . in relation to the total duration of the industrial action on that day”. Now, in our respectful submission, what that phrase presupposes is that there is a rate type relationship between the work done or not done and the payment made, such that one can relatively clearly and easily ascertain, well, if you did not work for this portion of the day, having regard to the total duration of industrial action on that day, applying the rate of payment, that leads to a non-payment of a certain identifiable amount.

Now, to take a broader view of payment as was taken in the courts below creates difficulties for a range of incidents or things provided in the employment relationship which are not simply attributable to performance of work on a particular day. Now, accommodation is obviously what we are focused on here but it could be provision of a car or a mobile phone or a disability aid or perhaps workplace childcare or something as minor as free car parking. They vary in terms of the strength of the argument here, but all of them do not have some simple rate type relationship between work done and reward given, that is to say, payment made.

As to board and lodging or accommodation, your Honours would appreciate that is supplied not uncommonly in a wide range of circumstances, not just mine workers, but managers of boarding houses or guest houses, live-in housekeepers, carers for the young or the elderly or the infirm, farm workers, farm managers, some school teachers. For some of them, to pre-empt something I will come to, it will plainly be part of the remuneration package that they are provided board and lodging; for others it will not and I will develop that.

For some it will displace the need for other accommodation; for others it will not. Again, I will come back to that. Justice Gilmour’s construction captures the provision of shelter or transport and food. It does not take much imagination, in our respectful submission, to see the difficulties that a broad view of this prohibition might create, particularly in remote communities, if industrial action is commenced. The sorts of places that this issue can arise are often company towns, if there is a town at all, so to withdraw, for example – to be required to withdraw, it is not an option – to be obliged by the Act to withdraw accommodation in a company town where there is no other accommodation self-evidently could create real difficulties.

The accommodation here, accepting we are construing an Act, but this situation here throws up a particular situation of importance in understanding the Act, the accommodation here was provided in order to put the employees in a particular place and time such that they could provide their services. It was not tied in a simple rate type way to doing their job. For example, they could stay on Sundays, so they worked a six day week. They were not then kicked out of their accommodation on Sundays.

It is also significant here, in our respectful submission, that industrial action of course does not have to be for a whole day, it can be for a very short period. That creates a problem if there is not a rate type relationship. For example, if an employee refuses to attend work for half the day and it is said that the accommodation is part of his or her payment for that day, what is to be done in relation to that accommodation? Are they to be denied accommodation for half the night or denied half their meal, denied half the use of their car on the way home?

KEANE J: But if payment equals provision, what this prohibits is the provision of accommodation in relation to the duration of the action, so, in other words, during working hours they cannot be accommodated. What does it say about after working hours? Is that not just one of the difficulties of trying to treat payment as the equivalent of provision? It just does not fit.

MR KIRK: Yes, so far as I am aware, that thought has never been articulated before in the previous discussions and it certainly would not support the decisions below because it was not that they wanted to stay from 6.30 on, they wanted accommodation overnight. That was obviously the heart of it. A textual response that might be made to what your Honour has put to me is it does say in relation to the total duration, it does not say during.

KEANE J: Quite, but then the relationship is what? What is the relationship? You are on strike for two hours, therefore, you do not get two hours’ sleep?

MR KIRK: Yes, precisely. It is not workable, in our respectful submission. It comes back to the point - - -

KEANE J: Is there not something a bit more fundamental, and it is probably a question for your opponent rather than you, but if the employer, the respondent, chose, as it was perfectly entitled to do, to provide accommodation to meet its contractual obligation by providing accommodation which it owned rather than which it paid for, would this question arise at all?

MR KIRK: On Justice Gilmour’s construction it would, because Justice Gilmour’s construction appears to encompass any thing or instant or benefit of any kind provided to the employee.

KEANE J: Even though there is no payment to a third party?

MR KIRK: Yes, which picks up incidentally - - -

KEANE J: So there is a payment where there is really no payment at all by anybody to anybody?

MR KIRK: Yes, that is true. It also picks up on the point, incidentally, that the phrase here is “payment to an employee”. Now, insofar as money was paid, the money that was paid here was from the respondent to Woodside, no doubt as part of some broader economic arrangement by which the respondent was providing services to Woodside as part of the Burrup development, but the money that was paid did not involve the relevant employees here. The only way it can be said to involve the relevant employees, if one does take this very broad view of payment that Justice Gilmour appears to take, such that it encompasses all these things - every kind of thing, incident or benefit.

KEANE J: So in a situation where there is no payment by anyone to anyone, there can nevertheless be a payment to an employee?

MR KIRK: Yes. So part of the difficulty we raise is the absence of a rate type relationship. There is the further difficulty of then applying it in practice to withdrawal of accommodation or cars or childcare or whatever.

KIEFEL J: If the employer had chosen to pay a living away from home allowance, would that be caught by section 470?

MR KIRK: No, in our respectful submission. It would be a monetary payment so it would satisfy that part of the construction I am going to come to. It would not be remuneration, that is to say part of the quid pro quo, but can I seek to develop that argument a little later?

CRENNAN J: A similar point would arise, would it not, in relation to the local workers getting what I think you pointed out was a rent subsidy.

MR KIRK: Yes, that is right, which is $100 less than the living away - - -

CRENNAN J: What would be the position in relation to that?

MR KIRK: Yes, can I come back to that if I may? One further point, just dealing with section 470(1), is the difficulty of calculation, not only the arbitrariness but the difficulty of calculation. For accommodation you can get into some calculation of hours they cannot stay, but in relation to provision of a car or a mobile phone, for example, it becomes very difficult to figure out what proportion are they to be denied. Even for accommodation, incidentally, given that the workers were there for seven days a week and they were only working six, even that complicates the maths as to if you do not work two hours you lose two hours sleep, it might be more one hour 45 or more because you have got to take account of the fact that they are getting it for the seventh day.

The Court said in Director of Public Prosecutions v Keating – I will not take your Honours to it – [2013] 297 ALR 394 at paragraph 48 of a criminal provision:

that the criminal law should be certain and its reach ascertainable by those who are subject to it.

In our respectful submission, a very similar principle should apply in relation to civil penalty or civil remedy provisions which militates in favour of our money construction. One other important thing to note, your Honours, is that what is prohibited is a payment, not the monetary equivalent of a payment. So taking Justice Gilmour’s construction, what it must mean is not that the monetary equivalent of the accommodation is denied or the monetary equivalent of the car or the phone, but the thing itself, the payment itself must be denied.

So for the relevant employees here, even though they needed the accommodation to be in that place to do that work – and let us say it was only stopped for half a day, they had to be there for that half of the day, they would still nominally have half their accommodation withdrawn or whatever it was, and that in a circumstance that they were still bearing accommodation expenses back at their usual place of residence.

Can I take your Honours briefly to section 471 as part of the context, I will not get bogged in the detail, but payments relating to partial work bans are dealt with slightly differently. There is no direct prohibition on payment in relation to partial work bans, but the employer has an option. I should note to explain a consistency with my earlier argument, stopping work for part of the day is not a partial work ban in the terms provided. It is more something like attending work and then refusing to actually do any work for an hour or so.

But one of the practical problems with applying a broad definition of payment in section 471 is that it still involves this notion of a reduction in payments, and the reduction is made first by the employer and if the employees are unhappy with that they can go to the Fair Work Commission to complain about the allocation. But to speak about reduction in payments still involves a mathematical type process which is not readily capable of application to something such as accommodation, cars, childcare or the like. Can I take your Honours then through relevant sections? Section 472 is the powers of Fair Work Australia in relation to a partial reduction. Section 473 of the Act extends the prohibition to employees first, so subsection (1):

An employee must not:

(a) accept a payment . . . or

(b) ask the employer to make such a payment.

Again that, in our respectful submission, creates surprising results unlikely to have been intended if a very broad view of payment is taken. So, for example, if the relevant employees here had said, look actually, I do not have anywhere to stay tonight, can I stay another night, that would be a contravention of this, and subject to a 60 penalty unit penalty. Subsection (2) deals with a union making a similar request.

Section 474 applies to industrial action that is not protected industrial action. It makes similar provisions save that the minimum docking of pay is in relation to four hours of the day. In other words, if you have a 15 minute stop work you are penalised as though you had stopped for four hours of the day and it is a deterrent to engaging in industrial action that is not protected.

KIEFEL J: Just returning to the facts for the moment, here there is a decision to stop work for 28 days, did the employees stay for 28 days?

MR KIRK: No, your Honour, and that is an important point, with respect. The primary issue before the Court is construction of section 470 and the prohibition on payment. There is then an issue as to how long they were entitled to stay and that issue falls to be resolved not by the statute but by the agreement and any relevant contractual terms. Of course, within the context of the statute, but the primary issue is just what does the statute prohibit. It would obviously be an indefensible argument to say under the agreement they could stay for 28 days, and that issue is raised by the notice of contention as to quite how it works, but it does not go directly to the statutory construction issue.

KEANE J: There would be a point at which the employer would be entitled to say, I am terminating you.

MR KIRK: Yes, of course.

KEANE J: That did not happen here?

MR KIRK: No, there was no termination of employment.

KEANE J: So there is no question about the contract of employment being terminated?

MR KIRK: No, correct. In fact, I think they resumed employment. Yes, they went back to work.

KEANE J: So under their contract of employment, having been directed to go there and having gone there, they were distant workers with entitlements?

MR KIRK: Yes.

KEANE J: The contract that gave them that continued to subsist?

MR KIRK: Yes, and the greenfields agreement also governing their relationship. If I can move back to section 474, I was just making a point about the four hours of the day. Again, that illustrates the presupposition in these provisions that there is a simple numerical rate related type of relationship. Section 475 is equivalent to 473 about the employee not making a request but dealing again with industrial action that is not protected.

In our submission, to summarise where I have got to so far, section 471 presupposes, in our submission, that payments are applied on a rate type basis, presupposes that payments can be reduced. To treat it as encompassing things such as accommodation creates practical difficulties and uncertainties in calculation and in a manner which may be very harsh on employees, and also on employers who take a flexible approach and say, all right, you can stay an extra night. That would be a breach of section 470 on the construction put by the respondent.

That then leads me to the historical context which I said I would come to. If I could take your Honours just by way of reminder to our written submissions at paragraph 30 where we commence discussion of the history, the first variant of anything like this, as we note in paragraph 30 on page 5 of our submissions, was section 124 of the 1988 Act which provided:

the Commission is not empowered to deal with a claim for the making of a payment to employees in relation to a period –

So there is that key word “payment” which has been in every iteration since. But it was not a prohibition on the employer paying it, it was just saying once you have been on strike, you cannot go to the Commission and ask the Commission then to deal with the secondary issue of the strike which is who pays the strike pay during the strike. Your Honours will recall that often you had the two-stage part of a strike. You had the strike itself and then you had the dispute as to who paid the strike pay whilst they had been on strike, and that was an answer to it. The evolution then was to section 187AA of the original Workplace Relations Act which provided that:

An employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages, in industrial action –

If your Honours still have our written submissions, at paragraph 34 we refer to Mr Reith’s second reading speech in relation to that provision where the Minister referred to the payment of strike pay. So it was broadening out to be a prohibition on the payment of strike pay, but there still is this notion of dealing with that impediment to getting people back to work, namely, who pays the strike pay?

In practical terms, one could still make the argument about whether it extended to accommodation and so forth, but in practical terms the problem was who was going to pay the wages. That is what was always the secondary aspect of the dispute, who pays our wages for the two weeks we have just been on strike? The first step was to say, well, you cannot go to the Commission, the second step was actually you have got to bear the cost yourself.

That leads to an understanding of what the purpose of these provisions was, and his Honour Justice Gilmour refers to earlier decisions dealing with that in terms with which we do not disagree at page 200 of the appeal book. Most notably his Honour quotes Justice Lander at paragraph 33, page 200, a case called Ponzio. If your Honours note, the first sentence quoted:

The policy of the Act is to discourage industrial action as it is defined –

Then paragraph [84] -

Industrial action is discouraged by putting the cost of that industrial action upon the employee rather than the employer.

KIEFEL J: Is that strictly correct? That does not really accord with what Justice Ryan is saying in the other case. Justice Ryan seems to be saying that it works on the basis that the employee loses remuneration and the employer loses production. It is not put just upon the employee.

MR KIRK: Yes, that is fair, with respect, your Honour, because if one takes a broad view of the costs of the industrial action, there will be the costs of loss of production - - -

KIEFEL J: Both lose.

MR KIRK: That is right.

KIEFEL J: So that is the disincentive.

MR KIRK: Yes, that is right.

KIEFEL J: That is what is intended to bring them to the bargaining table.

MR KIRK: Yes, indeed, your Honour. If one looks then at page 201, paragraph 38 of his Honour’s judgment, in the second sentence, end of the second line, his Honour said:

I agree with the respondent’s submission that the appellant’s construction would enable the purpose and object of these provisions to be readily thwarted.

That is reiterated, in effect, at paragraphs 44 and 45 of his Honour’s judgment. We respectfully would submit not so, because if one is denied payment in an ordinary practical sense, the wages, that is a very significant disincentive to industrial action. Now, it may be that it is not every conceivable disincentive. It may be that the Parliament meant to really be draconian, but it is not likely for the reasons I have sought to outline and it is not necessary to give effect, practical effect to the purpose of the provision, in our respectful submission.

That leads to - as I said I would come to - a consideration of the slightly broader statutory context in which the issue arises. I have already referred to the fact that this was protected industrial action. As such, there was a substantial immunity from suit for the employees engaged in it in relation to most legal actions under section 415 of the Act – I need not take your Honours to it – and also section 460 of the Act. It was an exercise of the rights of collective bargaining and that in a sense puts slightly in context what Justice Lander said, that although it is true in a sense the industrial scheme is intended to deter industrial action, it is not deterring it at all costs. It is not saying this is not a legitimate form of behaviour within a certain very confined parameter now. It is a legitimate form of behaviour as an exercise of collective bargaining rights. Furthermore, as we - - -

KEANE J: Well, in particular, it is not deemed to be a breach of contract.

MR KIRK: No, indeed. Furthermore, there is every indication in the Act, reflecting obvious policy, that protected industrial action is not meant to lead to a break or fracturing of the employment relationship, and that is reflected, for example, in section 416A which provides – it is actually in the context of section 416. Section 416 says, if I might paraphrase, if there has been industrial action by an employee, the employer can take what is called “employer response action”, which is explained in section 411, and during that period “the employer may refuse to make payments”.

To put it in simple colloquial terms, if workers go on strike for 28 days, as they were planning to do here, the employer can then lock them out for a further 28 days, as they indicated they were going to do here, and during that period they may refuse to make payments. But 416A then says if that occurs it:

does not affect the continuity of employment –

and that is just one illustration of the underlying policy, that it is not meant to fracture the employment relationship. Now, how is that relevant here because, in our submission, things which are likely to cause a real breach of trust and goodwill in relation to the continuation of the employment relationship – such as being kicked out of the accommodation with immediate effect and, although it is not part of our complaint here, not flying you home again – is not consistent with that type of policy of the Act.

It is one thing to say, you strike, then no pay, no wages. It is another thing to say, every aspect of everything we give you, including accommodation, food and travel home, is prohibited and must cease. Can I then take your Honours to section 524 of the Act? This is the stand down provision. If your Honours look at subsection (1):

An employer may . . . stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances -

the first of which is “industrial action”, but your Honours will note it is not industrial action just by the employee. It could be by other employees or by employees at another company -

(b) a breakdown . . .

(c) a stoppage of work . . . for which the employer cannot reasonably be held responsible -

Then subsection (3) -

If an employer stands down an employee . . . the employer is not required to make payments to the employee for that period.

Now, it is the same word “payment” still not defined. One would naturally construe it in the same way as section 571, and what that means, if the respondent is right, that if the machinery breaks down or if someone else goes on strike and that leads to employees being stood down, even then the employer is entitled to deny all entitlements including accommodation, phone, car - - -

KEANE J: Well, obliged; it is not entitled, obliged.

MR KIRK: No, not quite obliged, your Honour, because it is only if the employee him or herself was taking industrial action that section 471 kicks in. This is an empowerment provision, but one would construe it in the same way.

KEANE J: I see.

MR KIRK: Then if I can take your Honours to section 323 which deals with methods of payment. Starting with subsection (1):

An employer must pay an employee amounts payable to the employee in relation to the performance of work:

(a) in full (except as provided by section 324); and

(b) in money . . . and

(c) at least monthly.

Now, just pulling out a few aspects of that, where it says “amounts payable”, that cannot just mean money because one of the very points of the provision is to require payment in money, so it must be meant to be broader than that.

GAGELER J: Well, is that right? Does section 323 have the effect of preventing an employer and an employee bargaining for the employee to receive from the employer a non-monetary benefit, to use an expression found elsewhere in the Act?

MR KIRK: There are two points there, your Honour. The answer to your Honour’s question is no, it does not, because of section 324. Section 324 is the deduction provision. An employer may deduct an amount if, to simplify it, it is agreed in writing by the employee either specifically or in an agreement or an award or an order or so forth. So if there was bargaining of the kind your Honour postulated, which is not uncommon, of course, that would be dealt with in that way. I said there were two points. That does not answer the point I sought to make, with respect, about amounts payable including things beyond money, because the starting point is section 323 to which 324 is an exception.

KIEFEL J: I am sorry, I do not quite follow how section 324 negates the purpose that Justice Gageler referred to.

MR KIRK: Because, as I sought to put, your Honour, the starting point in 323(1) is that “amounts payable . . . in relation to the performance of work” must be paid - I am emphasising – “in money”, but that does not mean you cannot bargain to be provided with something else, for example, a phone or a car or accommodation or a range of things. But if so, that is treated as a permitted deduction, and part of the policy of the - - -

KIEFEL J: The key phrase then is “in relation to the performance of work”, is it not? This is limited to moneys payable in relation to the performance of work, not other entitlements such as accommodation which allows you to be present for the performance of work.

MR KIRK: We would respectfully adopt that, your Honour. That leads to, in our respectful submission, a critical point here. In the respondent’s written submissions at paragraph 18, the respondent indicates that the accommodation here was not an amount payable within section 323. Now, the respondent does not articulate why. One can surmise two reasons. One is that they might say it is not an amount payable because it is not money, and I have sought to answer that already, because 323 goes beyond money. The likely reason the respondent concedes that is that it was not an amount payable to the employee in relation to the performance of work for the reasons your Honour Justice Kiefel has just given.

That leads to this critical question, in our respectful submission. If it is not an amount payable in relation to the performance of work, why does section 470 require it not to be given for the total duration of the work not done? Section 470(1) is all about the non-performance of work you are supposed to do on that particular day and you are not allowed to be paid in relation to the total duration of the industrial action on that day. But if accommodation is not in relation to the performance of work, what conceivable purpose could the Parliament have in saying it cannot be given in relation to the total duration of the industrial action on the day? It just becomes a fundamental disconnect as to what the Parliament is seeking to do in section 470(1).

GAGELER J: Just so I understand precisely what you say about section 323, if you look at clause (6) of appendix 7 that appears at page 101 of the appeal book, clause (6) has got two limbs. One is the living away from home allowance and the other is the provision of board and lodging. If you just look at the living away from allowance limb for a moment, does section 323 say anything about that?

MR KIRK: That brings me back to the point your Honour Justice Kiefel raised with me. It is obviously a payment in money, but is it remuneration and is it in relation to the performance of work? No, in our respectful submission, for the reason your Honour Justice Kiefel put to me a minute or two ago. The point of the payment is to get them there and then.

KIEFEL J: Well, then I suppose it might be more nuanced, might it not? Then you have to take account of “in relation to” which only requires a connection. It is not a payment for the performance of work; it is a payment so the provision of accommodation to enable the performance of work might be “in relation to”.

MR KIRK: It is true, your Honour, obviously, that the words “in relation to” are generally construed broadly, but as the cases say about those words, you must always construe them in their particular context. They always take colour from their context and, in our submission, in relation to the performance of work here does have - - -

KIEFEL J: Why would not a living away from home allowance be in relation to the performance of work?

MR KIRK: We would submit not. In essence, this is on a little sidearm of my argument, it is not fundamental to my argument.

KIEFEL J: But it is a fundamental way of testing the proposition that it is not a payment in kind, is it not, that the provision of accommodation is not the same thing?

MR KIRK: There is no doubt it is connected to the performance of work in some sense, for the obvious reason; it is to get them there to be able to do the work. But what that phrase means, in our submission, and more importantly what the notion of payment encompasses in section 471 which is an overlapping but distinct question, is the notion of, in our submission, quid pro quo of, is this part of the reward given for doing the job? Again, I will seek to develop that a little by reference to the facts, but that is our core submission. It is about reward given, the incentive given for doing the job, and there is one aspect of a couple of cases I would wish to bring out to illustrate that point a bit.

KIEFEL J: So the distinction you draw is between entitlements or payments which are enabling a worker to work, as distinct from a payment which encourages work?

MR KIRK: Yes, and to pre-empt what I am going to say, picking up on something President Winneke said, a relevant question is whether provision of the thing – entitlement, benefit – has the tendency to depress the wage, but I will come back to that. It is a kind of economic way of looking at it in a sense.

CRENNAN J: Is that a slightly different point from what I am understanding to be your anterior characterisation of the living away from home allowance?

MR KIRK: Yes, that goes in a sense to this broad quid pro quo remuneration point. The main reason we employ section 323 is it is not directly relevant but it is part of the scheme of the Act. It is part of the scheme of payments and it is very focused on this issue in relation to the performance of work, and we use that to say a consistent and harmonious construction is that the notion of payment is focused on not something as your Honour Justice Kiefel caught well, with respect, that is about simply getting you there or putting you in a position to perform work, but something that rewards you for the work you are doing. It is part of your pay in an ordinary sense. It is why you do the job.

GAGELER J: So to change the factual scenario here just slightly, if there were instead of a withholding of board and lodging a withholding of the living away from home allowance, then in the terms of section 470 you would say the employer is not making a payment, but that would not be in relation to the industrial action, is that your point?

MR KIRK: Yes, it is not a payment in the relevant sense. Now, I accept, incidentally, that the notion – the word “payment” commonly does encompass payments in kind, so in my broader argument, leave aside my statutory argument about payment in money, my broader argument – I accept that, of course, you can paid in kind, and again leaving aside 323, our point is that you have to construe that word in context, and even if you are paid in kind the core of the notion of payment is quid pro quo, remuneration, reward, what you are doing the job for.

KIEFEL J: But if the purpose of section 470(1) is to provide disincentives, the loss of entitlements, as you would put it, such as living away from home allowance would be a disincentive to distant workers.

MR KIRK: It would, and the point we seek to make and that is, in effect, the point Justice Gilmour was making. So yes, does it achieve the purpose, yes, but in a way that has effects which are harsh, surprising, difficult to calculate, and where the purpose is sufficiently and meaningfully achieved - - -

KIEFEL J: Difficult but not impossible to calculate.

MR KIRK: Well, it becomes very difficult even dealing with accommodation. Let us say there had just been a half day stoppage. How much of the accommodation is to be deprived, taking account of the fact that they can have the accommodation on Sunday, or how do you apply that to food or a car or a phone? It is difficult to apply. So the error Justice Gilmour made, in our respectful submission, about purpose is one of the kind Chief Justice Gleeson referred to in Carr v State of Western Australia, and we have given the citation in our written submissions.

It is a common error of construction to say, well, here is the purpose and this achieves the purpose, therefore this must be right. One has to see that in the context of the scheme. Parliament, where it is balancing competing interests and imperatives, does not necessarily mean to achieve its purpose at all costs regardless of all other considerations.

KIEFEL J: Is there anything to prevent the company in the terms of clause (7) and appendix 7 from deciding to pay a living away from home allowance rather than the provision of accommodation in the event of a strike? That would deal with the question of quantification.

MR KIRK: That would raise an issue about construction of the agreement. Clause (6) refers to the company having “the choice of providing each Distant Worker with either suitable board and lodging”.

KIEFEL J: The question is whether the choice is there at any time.

MR KIRK: That is right.

KIEFEL J: Whether or not you make an election and you are stuck with it. It is hard to see that there is some sort of final election made when you provide accommodation.

MR KIRK: The provision is likely to be some intermediate election because, after all, these workers are sort of four to six weeks on, one week off, and it would obviously be reasonable that on your next rotation you might be treated somehow differently.

KIEFEL J: I suppose in reasonable, practical terms if strike action is taken it is taken in the context of what is occurring between the employer and the employee.

MR KIRK: Yes, and there has to be an element of practicality here, that to say on the spur of the moment that there can be an election, we are not going to provide you with accommodation anymore in this one company town but we are going to provide your allowance, but by the way we are not providing the allowance anymore would not be consistent with a reasonable construction of the agreement. Over the page at page 102, it notes that, for example, where a distant worker is paid the allowance and their employment is terminated they are entitled to receive one week’s further payment of allowance.

Furthermore, one difference between provision of accommodation and provision of the allowance is that the allowance is payable even on leave, with the exception I think of parental leave. All other leaves you get the allowance. Your Honours might ask why that is so. Well, the implicit presupposition, we think, is because you are renting somewhere. So you get the allowance, you rent somewhere up in the Burrup Peninsula or Karratha, you have still got your home in Perth or Adelaide, and so you rent somewhere. But that illustrates that one could not reasonably construe this as allowing an election on the spur of the moment saying, all right, we are kicking you out of the hotel this morning, you have got until tonight to go and rent somewhere.

One more point, if I might, about the Act. If your Honours turn to section 332, there is a definition of “earnings”, and let me briefly indicate what significance that has, what work does that notion do. It applies particularly in relation to identifying high income employees. So under section – I will just give your Honours the references – section 328 there is a guarantee of annual earnings for relevant high income employees. Under 47(2) applicable modern awards do not apply to high income employees and under section 382(b)(iii) the unfair dismissal regime does not apply to high income employees where that notion turns on earnings.

GAGELER J: But section 323 does apply to those employees, does it?

MR KIRK: Yes.

GAGELER J: So how, in your submission, can you have a non-monetary benefit as defined by section 332(3) consistently with section 323?

MR KIRK: The starting point at subsection (1) of 332 is:

An employee’s earnings include -

and your Honours will recall this is just for identifying what, in essence, a high income employee is. The starting point is it includes wages and –

amounts applied or dealt with in any way on the employee’s behalf or as the employee directs -

There the usage of “amounts” does appear to be a monetary one because of the notion of “employee’s behalf or as the employee directs”, but then (c) is -

the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

Now, (c) then takes you to subsection (3) which are -

benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer -

Now, it is not quite the same language as section 323, but it is very similar in return for the performance of work and in relation to the performance of work and it indicates there has to be agreement as to monetary value which incidentally presupposes agreement that this benefit will be provided, which fits back into the notion of deduction in section 324, the precondition of which is that there is agreement of the employee either specifically or through an industrial agreement or the like.

GAGELER J: So your submission is that you can only have a non-monetary benefit if it is provided through a permitted deduction in section 324?

MR KIRK: Yes. Incidentally, I did not quite get to the point I wanted to make earlier about that. Part of the policy behind the Act there is spelt out in the provisions which follow 323, relevantly 326, that even, for example, if an award or an enterprise agreement provides that there are to be non-monetary benefits, that has no effect to the extent that 326(1)(c):

(c) the deduction or payment is:

(i) directly or indirectly for the benefit of the employer, or a party related to the employer; and

(ii) unreasonable in the circumstances –

or there is also an age aspect. So part of the policy of the Act is to indicate that payments must generally be in money unless you agree, and if agreement is forced upon you by an industrial agreement, there is still some fail-safe mechanism as to what is reasonable in all the circumstances. Can I make one point also about 323 in response to the respondent’s written submissions? The respondent points out correctly that 323 and the related provisions were only introduced federally in the Fair Work Act in 2009. They were not in the predecessor legislation.

They were, however, dealt with by State and Territory legislation prior to that going back to the end of the 19th century, at least in some jurisdictions. It is often referred to as trucking Act provisions. So although this was introduced later than the predecessors of section 470, it was still in a context where it was part of the landscape and, in any event, it being here, one seeks to construe the Act harmoniously and, in any event, this point is in a sense just an illustration of what we say is manifest in section 471 anyway. This is not in a sense a necessary or critical building block in our argument; it is more a manifestation or illustration of what we say is the same basic approach to payment.

GAGELER J: If you are right, the only payments - - -

MR KIRK: Sorry, your Honour, I missed the first part.

GAGELER J: If you are right about section 323, then the only payment that could be made in relation to work is a monetary payment.

MR KIRK: No, because of 324. Sorry, I withdraw that. No, we agree.

GAGELER J: The only payment that could be made to an employee is a monetary payment?

MR KIRK: Yes, and, indeed, that is part of – sorry, I am in furious agreement with your Honour, with respect. Yes, because a deduction is not a monetary payment and that is - - -

GAGELER J: Well, it is not a payment to the employee.

MR KIRK: That is right, and that is part of the very point. I put it badly, but that is part of the very point we seek to invoke. That gives a foundation for our monetary argument, it is part of the foundation for our monetary argument to illustrate that the Act has already drawn a distinction between monetary payments and other things, and other things are not payments because of 323 and 324, and the other foundational part of the rest of the foundation, of course, is what I have already put about the fact that section 470 presupposes a rate and all the practical difficulties that I have gone over and will not repeat.

Indeed, just to summarise the monetary version of our argument, the core reasons in the end are, first, it provides a degree of certainty which is consistent with the fact that section 471 is a civil remedy provision; it avoids the sorts of effects that I have articulated that can arise for a range of employees provided with things such as accommodation; it still achieves the policy objective in the way I have sought to articulate to a perfectly sensible and reasonable extent; it does so in a way that does not cause effects likely to fracture or undermine the employment relationship where that would be contrary to the policy of the Act; and it is consistent with a history of aiming to prohibit strike pay.

KIEFEL J: Your construction, of course, might encourage employers to focus upon monetary payments rather than providing other benefits and entitlements. That may not bear upon the construction, but this is legislation which is intended to give employers and employees bargaining across the board rather than skewing it in one direction, is it not?

MR KIRK: Yes. To answer your Honour’s point as best I can, perhaps but only in a very small way would it give such an incentive, in that an employer would have to say, all right, in figuring out how I am going to set up the salary packages for my employees, I am going to work on a presupposition that at some stage our relationship is going to break down, there is going to be industrial action, I am going to want to dock their payments and I want to make them really hurt when I do so, and if I give them a car - - -

KIEFEL J: I want to make my bargaining position as strong as possible.

MR KIRK: That is right. That is what I meant by hurt, I want to give them a big disincentive.

KIEFEL J: It sounded slightly emotive.

MR KIRK: Sorry, I did not mean to be emotive. I mean to give a significant economic disincentive for them to do it, so I am not going to give them a car as part of their package, or a phone or accommodation. It is unlikely to make much practical difference because it is a fairly convoluted line of reasoning, in our respectful submission, for the employer to go through.

KIEFEL J: It depends a bit on the history of strikes with the employees that you have.

MR KIRK: It may do, but it would only significantly undermine the deterrent effect if the bulk of the package was non-monetary and there would be very, very few occasions where that would occur in practical terms. I mean, if the bulk of the package was monetary there would still be the significant economic disincentive to engage in industrial action, whether protected or unprotected.

Can I then turn to the broader remuneration points or the quid pro quo point which I have already touched upon? Can I start with the ordinary definition and can I take your Honours to what his Honour Justice Gilmour said at appeal book pages 202 to 203 where his Honour at the bottom of page 202 referred to the online edition of the Oxford English Dictionary defining:

“payment” as “a sum of money (or equivalent) paid or payable ...”.

But his Honour did not give the full quote and if I could take your Honours to our written submissions where we have given the full quote at paragraphs 74 to 75 which are on page 13 of our written submissions. At paragraph 74 we have quoted the online version of the OED:

“a sum of money (or equivalent) paid or payable, esp in return for goods or services or in discharge of a debt; wages, pay” –

so there this notion of return for goods or services. In paragraph 75, we note that Federal Magistrate Lucev had quoted the 1989 2nd edition of the OED which is slightly different -

“The action, or an act, of paying; the remuneration of a person with money or its equivalent; the giving of money, etc in return for something or in discharge of a debt” –

As to remuneration, we have quoted what Justice Blackburn said in an English case in 1876 -

“[t]he word ‘remuneration’ is a wider term –

than salary, which is what his Honour was comparing it to –

and means a quid pro quo. If a man gives his services, whatever consideration he gets for giving his services seems to me a remuneration for them...”.

So the key elements we seek to draw out are it is a sum in return for something, a quid pro quo; it encompasses remuneration, which is much the same idea. This notion of remuneration, it is not that we are seeking to substitute one word for another; it is just a matter of trying to give meaning to what payment says in section 470(1). The respondent has noted in its written submissions that the word “remuneration” is employed in the Act in various sections - see paragraph 37 of the respondent’s submissions - but, in our respectful submission, those usages are not such as to suggest that Parliament meant to draw some very fine distinction between pay and remuneration.

If I could give your Honours one example, in section 302 and related provisions of the Act in Part 2-7, there is set out provisions relating to the principle of “equal remuneration for work of equal or comparable value”. Now, that language appears to reflect, for example, Article 7 of the International Covenant on Economic, Social and Cultural Rights which speaks about equal remuneration for work of equal value. That that particular phrase or word is used does not suggest, in our submission, some fine drawing of a distinction between the notion of pay and the notion of remuneration. But even if the Parliament had meant to draw such a distinction, we still have to figure out what “payment” means and, in our respectful submission, at the heart of it is this notion of reward or quid pro quo. Now, the issue of when things - - -

GAGELER J: Mr Kirk, do you need to load it into the word “payment”? Is not the connection between the payment and the industrial action, as defined in section 19 of the Act, given by the words “in relation to” – I am just wondering about your focus on the word “payment” here. It is the words “in relation to”, the same language in section 323, that you focus on, as I understand, to limit the scope of section 323 to monetary payments as a quid pro quo for work done.

MR KIRK: Yes, your Honour is drawing attention to the words “in relation to” in 470(1), inter alia?

GAGELER J: Which are the same words in section 323 and the words “performance of work” in section 323 are the words that are used to define – are words that are the building blocks to define “industrial action” in section 19 that you then see used in section 470.

MR KIRK: With respect, I think that is another way of putting it, yes. It picks up on what I have already put, which is not to claim ownership of the idea, but it picks up on what I have already put in relation to what I have called the presupposition of a rate type relationship. That presupposition gives – that practical presupposition gives content to the words “in relation to” such that - and consistent with what we have said about section 323, such that if it is not in relation to the performance of work, it is not equally in relation to the total duration of industrial action on the day. To put it simply, yes, that is another way of approaching it. As it happens, it is a different textual foundation in the provision but it is very much the same idea.

GAGELER J: It is the same idea, yes.

MR KIRK: Yes, but it is a different and perhaps additional textual foundation. Can I also indicate to your Honours that, as you know, this type of issue about what is encompassed in remuneration or wages or earnings or pay has arisen over the course of more than a century in a range of cases often involving the assessment of compensation, often in workers’ compensation schemes. Sometimes in cases applying thresholds where, if there is a threshold, if you are above it, you get or do not get a benefit and if you are below it, you get or do not get a benefit.

Now, to state the obvious, each case turns on its own legislation and facts but can I take your Honours just to one case as a typical example which is Paterson v Stanmorr Pty Ltd (2002) 2 VR 460? This was a case about the Victorian Accident Compensation Act 1985 and I do not propose to get bogged in the detail of the statutory construction. Could I take your Honours to Justice Phillips’ judgment at paragraph 43 on page 479 just to identify the key issue? In paragraph 43, third line, Justice Phillips indicated:

the real dispute on this appeal, which is whether the reference in s 5A to a “rate of pay” . . . includes or does not include rewards which were received in kind, not in cash.

Now, the facts of this case were that a worker was employed as a guest house manager. She received free food and lodging and was paid a certain monetary amount and she lived there full-time, and to cut to the chase the Court of Appeal held that it was part of her earnings, part of her rate of pay that she receive the board and lodging for a reason I will come to. As to the previous line of long cases, if your Honours turn to page 481, paragraph 46, after examining the cases or some of them or lots of them, Justice Phillips said in the first line:

Thus it can, I think, be said that historically the word “earnings” included all rewards for labour, both in cash and in kind –

and so forth, and we would emphasise the notion of rewards for labour. To put it simply, why does the worker give his or her service to the employer for the rewards? Similarly, President Winneke at paragraph 19 on page 469, and just going to the end of the page to begin with, last five lines his Honour said:

it nevertheless remains true that the word “earnings” has always been broadly interpreted over the years to mean the reward which the employer agrees, by contract or otherwise, to pay the worker for his or her services.

Now, can I then take your Honours back in paragraph 19 to the first long sentence? I will not read it out, it goes for six lines. That is what I pre-empted earlier and it fills out, in our respectful submission, the concept of reward, remuneration, pay, whatever one seeks to call it. It is part of the reward in that if you are getting this payment in kind it is the sort of thing the worker is prepared to take a salary cut for. That is to say, it has a tendency to depress the amount of monetary wages.

Lord Justice Cozens-Hardy made a similar point. If your Honours turn to the top of page 471, and this is a quote from a case called Great Northern Railway Co v Dawson [1905]. It is much the same point as President Winneke made. So in that case, Paterson, it was part of the applicant’s pay because it did have a tendency to depress what she otherwise would have been paid because she was provided with full-time board and lodging. Now, what that means is it is going to be a case by case analysis on the particular facts as to whether it is or whether it is not.

On that point, incidentally, that, in our respectful submission, is where Federal Magistrate Lucev erred because his Honour’s approach was to refer to cases such as that and say, well, that shows accommodation has been held to be remuneration, end of story. That was the wrong stopping point, one needed to look at the underlying principle to see whether this accommodation was remuneration or reward as part of the payment or as part of being in relation to the performance of work.

On the facts here there were two critical points, in our respectful submission. First, the defining feature of distant workers, the relevant employees, is that their usual place of residence was elsewhere, that they had a house elsewhere, that they were necessarily bearing accommodation expenses elsewhere, and so I accept it might have saved them some food money, but it was not saving them their substantial expense of provision of accommodation, a roof over one’s head. That is distinct from Paterson or other such cases.

Secondly, that local workers were not provided board and lodging. Now, true they were provided a living subsidy, as your Honour Justice Crennan mentioned to me earlier, but it was a rental subsidy at a lower amount, it was $100 less than the living away from home allowance which stands as a kind of proxy for the value of the accommodation. So in that context it cannot be said that the value of the benefit of accommodation or the living away from home allowance depressed, at least to the full extent, the amount of the monetary wages paid, because the basic income dealt with in, I think, section 3 of the agreement was the same regardless of whether you were distant or local.

It was these incidental subsidies, or the allowances, which differed depending on where you lived. Not depending on how well you did your job or how senior you were or how many hours you had worked, nothing to do with reward, but depending simply on the fact of where you lived.

BELL J: Even with the local worker, the point of a rent subsidy is a recognition that the distant location is a disincentive which the employer needs to overcome. It is not quite the same as the provision of accommodation as part of a teacher’s overall remuneration.

MR KIRK: Yes, and I do not want to stray too far from the facts but it would be open to infer too, although I accept this is somewhat speculative, that it may reflect consistently with what your Honour said what was happening to property and rental prices in towns such as Karratha in the context of the mining boom and, indeed, to keep workers in those locations in a context where suddenly there is this enormous population coming in may well require something such as a rental allowance.

Now, the respondent seems to concede or at least come close to conceding that the accommodation here was not a reward for the services provided, first because it makes the argument in its written submissions there was no need for a quid pro quo and, second, as I have already sought to point out in its apparent argument that section 323 was not applicable. Can I take your Honours finally really on this issue back to the judgment of his Honour Justice Gilmour where I started, at page 204? I have already taken your Honours to this. At paragraph 48, the last four lines:

The Accommodation was provided to enable the employees to be in a position to perform their employment and earn their pay, not for their use whilst on strike.

Leaving aside the last seven words, we respectfully say precisely. It was provided to enable them to perform their employment and then and there to earn their pay. It was not their pay. There are two final matters I need briefly to touch upon. First, in relation to the notice of contention raised by the respondent, I propose to deal with that in substance in reply, but can I make these brief points? The issues raised in the notice of contention which raise the issue about the construction of the agreement and what that says about how long the employees could stay, and an associated issue about construction of sections 340 to 342 of the Act, an application here, that issue or issues have not been addressed by either court below because it focused on the statutory argument.

It raises issues of fact and application. It does not raise any issue of general principle, we do not think. It requires close analysis of the agreement and, furthermore, because the respondent made a no case submission, if your Honours got to the notice of contention, considered the arguments, rejected them, the respondent would still seek a second bite at the cherry of going back to the Federal Circuit Court, going into evidence which it has not yet done, it was not put to the election, and having another go at making all the arguments. That is quite a significant reason, in our respectful submission, why this Court should not have the first bite of the cherry but leave the cherry biting just to the Federal Circuit Court.

Finally, in relation to costs, it has come to our attention since writing our written submissions that section 570 of the Fair Work Act was amended temporarily after this Court’s decision in Board of Bendigo v Barclay (No 2) [2012] HCA 42; (2012) 291 ALR 665. I will not bore your Honour with the details. Suffice to say, the amendment extends, in fact re-extends – goes back to the

old principle that the no cost principle for these sorts of cases applies to appeals. We have discussed this issue with our learned friends who, in fact, to be fair, drew it to our attention. We have agreed with our learned friends, without troubling your Honours with it, that the effect of the amendment is that there should be no order as to costs in this Court regardless of result, nor any order as to costs in the proceedings below. May it please the Court.

CRENNAN J: Yes, Mr Wood.

MR WOOD: If it pleases the Court, we say that the real issue is the one identified by his Honour Justice Gageler, that the real question is not what “payment” means but whether or not the payment was “in relation to” the total duration of the industrial action on that day. That point was conceded below at appeal book 198, paragraph 21 in Justice Gilmour’s decision. It was said that:

No point is taken by the appellant on the appeal regarding the period of the payment for the industrial action, the payment’s relation to the industrial action or that if s 470 of the FW Act applied, that the removal of the Accommodation was not “authorised” -

We could not say that we would be disadvantaged by the Court deciding the case on the meaning of the phrase “in relation to the total duration of the industrial action on that day”, notwithstanding the concession below. There is no additional evidence that we would have sought to lead or cross-examine in. But we do say that is the central point in the question before the Court, not what “payment” means. I think, as Justice Gageler observed, one gets to a similar outcome or similar arguments can be deployed in relation to the phrase “in relation to the total duration of the industrial action on that day” and those arguments have a better textual foundation in the statute but, nevertheless, we still say that the payment was in relation to the total duration of the industrial action on that day.

Before I make that submission more fully, can I just set out some of the background to these provisions in the Act which the Court is called upon to construe? The 12 employees who took protected industrial action for 28 days from 28 April until 25 May 2010 were attempting to win an enterprise agreement. Section 470 sits in Part 3-3 of the Act headed “Industrial action”, but the agreements they were attempting to win are found in Part 2-4 of the Act headed “Enterprise agreements”. Can I just take the Court briefly to some essential aspects of the process that the employees were engaged in?

Section 171 of the Act indicates that the object is to provide a “framework that enables collective bargaining in good faith”, which is what these 12 employees were engaged in, “particularly at the enterprise level”, that is, against the respondent “for enterprise agreements that deliver productivity benefits”. Then section 172(1):

An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part –

and those permitted matters are matters that relate to the employment.

GAGELER J: Well, section 172(1)(a) refers to “matters pertaining to the relationship between an employer . . . and that employer’s employees”. Is that an expression that is wider than relating to – I am sorry, I am just trying to pick up the language of section 323 - for example, in relation to the performance of work?

MR WOOD: It is a time honoured phrase. It was last construed by this Court, I think, in the Alcan Case. I can dig up the citation after lunch. It may be slightly broader than 323. I do not think the point has ever arisen. I will come to 323 in a moment though, your Honour, to say what we need to say about the phrase “in relation to the performance of work”, but there is nothing that I want to say about section 172 or anything in Part 2-4 that would alter what would be the normal meaning of that phrase in section 323.

GAGELER J: All right. So we have got clause (6) of appendix 7 which we find in a greenfields agreement which is a form of enterprise agreement.

MR WOOD: Under the old Act, yes.

GAGELER J: So it covers a matter pertaining to the relationship between employer and employees.

MR WOOD: I would have to check the provision under the old Act because the matters that could be included under the old Act were more narrow than the matters under the new Act. What I am talking about at this point is not referring to section 172 to aid in the construction of the agreement, but merely to explain what the employees were taking the industrial action for.

KIEFEL J: How does that help us construe the provisions we are concerned with?

MR WOOD: Well, the short point is that the purpose of these provisions reflected in the objects - and perhaps I can just summarise it in this way and then go straight to Part 3-3 – is that the outcome of the process is that the employees get an enterprise agreement that provides better conditions than the underlying award in the national employment standards and the employer gets a period of time where lawful industrial action cannot be taken. That is the essential bargain that both parties are trying to win, better terms and conditions for the employees and a period where the employer is not vexed by lawful industrial action for the term of that agreement. That is perhaps all I need to say about Part 2-4.

BELL J: In seeking to secure that argument, industrial action is protected industrial action?

MR WOOD: Indeed, and Part 3-3 refers to both protected industrial action, that is, protected industrial action and unprotected industrial action, and it treats the industrial action, whether it is protected or unprotected and whether it is employer response action or employee claim action, in a relevantly identical manner. I want to take the Court to those provisions to make good that point.

If one goes to section 409, one can see that this action was a type of protected industrial action referred to in section 408. Section 408 refers to three types of protected industrial action, “employee claim action”, “employee response action” and “employer response action”. In this case, there were two types of protected industrial action – the employee claim action, which occurred from 28 April to 25 May 2010, and the employer response action, notice of which was given on 27 April to take effect from 25 May 2010. The Act then defines “employee claim action” in section 409, and it says that this action is action that:

is organised or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are only about, or are reasonably believed to only be about, permitted matters –

which takes us back to section 172. Section 409(2) indicates that one cannot take so-called protected industrial action unless there has been “a protected action ballot”, and there was such a ballot that was conducted from March to April. Eight out of the 12 employees voted, and the eight voted unanimously. Section 413 then indicates that there are certain requirements that must be in place for protected industrial action to be taken. One of them, in subsection (3), is that parties must be attempting to win an agreement, and the second one in subsection (4) is that:

The notice requirements set out in section 414 must have been met –

Now, remembering that the notice of the protected industrial action was given on 21 April, a Wednesday, for 28 April the following Wednesday, and section 414(1) says:

Before a person –

that is, each of the 12 employees –

engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee –

relevantly, the CFMEU in this case –

who will be covered by the agreement must give written notice of the action to the employer of the employee.

That notice was given a week early -

The period of notice must be at least:

(a) 3 working days –

and as it turned out, it was three working days, though a week in time because a working day does not include a Saturday, a Sunday or a public holiday and Anzac Day fell in the middle. Then if one turns to section 415 which my learned friend referred to, if those requirements are made out there is immunity from any action that:

lies under any law . . . in force in a State or Territory in relation to any industrial action that is protected industrial action –

and I think Justice Keane observed in argument that that would mean that there would be no ability to bring a breach of contract claim against the employees by the employer. Then can I now go to section 470 and say that we say payment has its ordinary meaning? It includes both a payment in money and a payment in kind. It includes payments made both directly and indirectly and it involves no notion of a quid pro quo but, of course, the phrase “in relation to the total duration of the industrial action on that day” may in some circumstances involve such a notion.

As I indicated when we commenced our oral argument, the real work to be done in terms of limiting the operation of this provision is not in the word “payment” but in the phrase “in relation to the total duration of the industrial action on that day”. The words “in relation to” require the existence of a connection between the two subject matters which the phrase links and, of course, the degree of that connection will depend upon the context of the provision, the subject matter of the inquiry and the facts of the case.

But if there is a sufficient nexus between the payment and the total duration of the industrial action on that day, then that payment is prohibited; different to the stand down provision which is merely permissive, as are the provisions dealing with employer response action.

BELL J: Just dealing with the stand down permissive provisions of section 524, in sub (3) where it is said that in the circumstances “the employer is not required to make payments to the employee for that period” are we to understand “payments” has the same meaning as in 471?

MR WOOD: Indeed, and to give a very simple example, if there was a cyclone at an iron ore production facility somewhere in the Pilbara and the facility could not be operated for three months, the employer would be able to, not required to but able to, stand down the workforce which would include not making any payments to them, including not accommodating them for the period it took to fix up after the cyclone.

BELL J: To take Mr Kirk’s example, in the event of a machinery breakdown it would be open to the employer to refuse to pay the day’s accommodation under the arrangements in the greenfields agreement, representing the day when the employee was unable to work because of the machinery breakdown; that is the effect of it, is it?

MR WOOD: Not quite, your Honour. It may or may not be because that really turns upon the question of the total duration of the industrial action and the payment and the relationship of the payment to the total duration of the industrial action, and when the period is shorter it is going to be harder to say, to use my learned friend’s point, that a non-rate based form of payment relates to the total duration of the industrial action where that period is short, and I will develop that point in a moment.

But leaving aside the caveat I have provided to your answer, that is, it depends upon the application of that phrase to the facts, we maintain what we say in relation to the longer period of time because there the relationship is clear, and that is an important fact in our case. If this was not a 28 day period of industrial action then it would be much more difficult for us to say that the payment of accommodation related to the total duration of industrial action on that day or those days. I will develop that in a moment.

CRENNAN J: Both the nexus and the 28 days, that is critical.

MR WOOD: Indeed, the nature of the payment, because if the payment is rate based and it is going to be much easier to show the nexus on a shorter period of time. If the payment is in kind, then one is going to need a longer period of time before one can show the relevant nexus. But I will show how the nexus is made out in this case in relation to this period of industrial action, which then takes us, as I think Justice Gageler observed, to section 19 which is the definition of industrial action.

Industrial action can mean both bans upon the full performance of duties and those types of bans that are referred to in paragraphs (a) and (b) of the definition in subsection (1). It can refer to employer response action, which is paragraph (d), but for our case what we are talking about is industrial action described in paragraph (c), and that industrial action was the “refusal by employees to attend for work”.

That is, you heard my learned friend say in opening that their shift started at 6.30 am on 28 April and they refused to attend for work - and the evidence is clear below - on that day and indicated that they would not attend for work for any day of the remaining 27 days thereafter. Therefore, the relevant connection one must show if one goes back to section 470 in the facts of this case - and the facts of other cases will be different – but in the facts of this case the relevant connection is whether the payment of accommodation on each of those days relates to the refusal to attend for work on those days, that is, is there a relevant connection?

That then takes one to the agreement to see how the agreement operates. When one goes to the agreement one can see that the agreement makes clear that accommodation is provided so that employees can attend work each day because by definition they cannot get home each night. That is why they are distant workers; one of the lived on the Gold Coast, one of them in Adelaide. My learned friend took you to the definition of “Distant Worker” at appeal book 87 and the plea was made and admitted that each of these employees were:

engaged or selected or advised by the Company to proceed from their Usual Place of Residence within Australia to construction work on the Burrup Peninsula and the Employee does so and that work is at such a distance that the Employee cannot return to their Usual Place of Residence each night.

The “Usual Place of Residence” is defined at appeal book 89 and it is somewhat circular, but my learned friend did not refer to it but it has got an important aspect:

The Employee’s place of residence at which they would usually reside and to which they cannot return to each night because they have proceeded to work on the Project at the direction of the Company.

Now, the project is again a defined term and the project is defined by reference to clause 4 of the agreement which is at appeal book 49 and it means the Pluto Project located on the Burrup Peninsula. Clause 4 says:

This Agreement shall apply to the on-site construction work for the Woodside Burrup Pty Ltd Pluto Project (the Project) at the Burrup Peninsula –

Each of these individuals were distant workers who could not return home each night and were then accommodated in accordance with clause 6, and the evidence is clear, in Karratha. Not at the Burrup Peninsula, not at the site but in Karratha, and the provision of that accommodation in Karratha for work each day during the 28 day period was to enable each employee to attend for work each day of that 28 days.

Now, I know that is a rather self-evident proposition and perhaps explains why the point was conceded below, but once that is understood that the point of the accommodation was to enable the employees who would otherwise be unable to be in a position to get to work at 6.30 each morning, one can see that the accommodation relates to the industrial action that was taken, because the purpose of the accommodation was to enable the employees to attend for work each day.

We do not have to go as far as Justice Gilmour did. Justice Gilmour said that the accommodation was provided so the employees would be in a position to perform their employment and earn their pay. We do not have to go that far. We merely say on a proper construction of the agreement that the accommodation was provided to enable the employees to attend for work each day and, dealing with a question that Justice Keane had about the night of the 28th, each of these employees worked 6.30 till 5 pm. That proposition can be made good by reference to appendix 10 of the agreement at appeal book 111 and clause 21 of the agreement and I will come to those in a moment.

So from 6.30 am till 5 pm on 28 April the accommodation was provided for them to attend work and they would have otherwise been at work but they were not at work. From 5 pm till 6.30 on 29 April, it was provided either for them to attend for work on 29 April or perhaps to recover from the work the previous day on 28 April. That is a construction that might be put. But either way, that accommodation provided from 5 pm on the 28th until 6.30 the next day relates to the total duration of the industrial action on those days, 28 April and 29 April. Then you do the same analysis for each shift and each day for the 28 days. In that way you can see that the payment relates to the total duration of the industrial action in a way it would not relate if there were merely work bans that were imposed for, say, two hours between 10 and 12 on the 28th.

It could not be said that the accommodation relates to that type of industrial action, that is, a ban, because it does not have a sufficient connection. It may not relate – that is, removal of the accommodation on the evening, that is after 5 o’clock on the 28th - may not relate to industrial action constituted by strike for the full day on the 28th. It might be said that that accommodation provided overnight was provided to allow the employees to attend on the 29th, so any attempt to remove the accommodation in relation to a full one day strike on the 28th on the night of the 28th would not relate to the total duration of industrial action on that day.

That is why I answered your question, Justice Bell, in the sort of caveated way I did because you really have to answer that question by reference to the facts of each case, which includes the question of what the payment is and the question of what the industrial action is; is it a partial ban or a full ban on the performance of work, and then by reference to the duration of that industrial action. Unless you isolate each of those three factors, you cannot make an assessment as to whether or not the payment is “in relation to the total duration of the industrial action on that day”.

BELL J: Would that be a reason for perhaps not favouring that construction, Mr Wood, just bearing in mind that this is a civil penalty provision and that both the employer and the employee are at risk of penalty if they get it wrong? On this it is a fine judgment call in any instance. Why would one favour that construction?

MR WOOD: Well, because there will always be cases at the margin. The most simple case is a case of wages, which is rate based and you can directly relate to the hours worked. This case is one step further on, but it still falls within the description of the phrase “in relation to the total duration of the industrial action”.

BELL J: For my own part, I do not overlook the significance of “payment” in context in section 470. The appellant’s arguments in that respect, for my own part, I would not suggest you should overlook, Mr Wood. It might not all be packed into “in relation to”.

MR WOOD: It may not be, but I will come to those in a moment, but that is the primary submission that we make in relation to the construction of section 470. Can I just add one other - - -

CRENNAN J: It is the answer, is it, at least partly to the construction point made by Mr Kirk which was based on the idea that this presupposes a rate of some kind? You are saying, well, in some circumstances there would not be a justification for withdrawing accommodation, for example, a partial work ban, but you are putting all the weight, for your purposes, on the fact that it was 28 days, full working day was not to be worked for each of the 28 days.

MR WOOD: And the very close connection between the provision of accommodation and attendance for work each day because the employee cannot go home at night. Without those facts the result may well be different and we would not want to say that accommodation could be removed in circumstances of much shorter periods of industrial action or, indeed, partial work bans. In fact, we would say that it would not relate to industrial action constituted by partial work ban, at least on these facts.

Can I just deal with one other factual matter to make good that submission, and that is in clause 21 of the agreement at appeal book 62 my learned friend took you to that and indicated that the employees work 60 hours per week, 10 hours per day, those hours are paid partly as ordinary time hours, partly as overtime hours and partly go to accrue an RDO under clause 22, so that every four week period, to take Mr Landgren as an example, someone would work 240 hours, that is, the 60 project hours for four weeks, would accrue two RDOs in that period and then would become entitled to the so-called R&R leave which is set out in appendix 7. My learned friend took you to clauses (13) through to (23) of appendix 7 and the R&R leave accrues, one can see, in clause 18:

Where the Distant Worker has completed two-hundred and forty (240) Project Working Hours –

that is, has done four weeks of 60 hours a week. He is then entitled to a week off and for the first swing two days are paid of that week off and for the second swing one day is paid in accordance with clause (18) and he or she can top up those seven days of unpaid leave when on R&R with other leave payments in other parts of the agreement, so can use annual leave, can use this thing called Pluto special leave which is important and I will come to, and can use RDOs. So, in effect, when one can use annual leave, Pluto special leave and RDOs, the leave period is paid also.

The flights that my learned friend talked about are of two types – perhaps three types. One is when you mobilise, under clauses (13) to (15). That is when one proceeds to construction work at the Burrup Peninsula under clause (13). There is another right to a flight when you are terminated or the project finishes, under clauses (16) to (17), provided you have done a minimal amount of work on the project; you have not just gone up there for a week for a holiday, you have actually completed 480 project working hours and you have not misconducted yourself, dismissed for incompetence.

The third type of flight is referred to in clauses (18) through (23) and those are the flights that you are entitled to because you work for four weeks, 240 project hours. That is, there is no entitlement to be given a flight home, nor is there entitlement to leave until one actually performs work for the four weeks, and my learned friend said the travel for these employees was refused when accommodation was removed. There is no evidence of that. It is merely that there was none to which they were entitled because there was no evidence that they had not performed the four weeks’ work after they had last had their leave to justify another week’s leave.

Can I finish dealing with the factual aspects of the agreement by reference to this thing called the Pluto special leave which is at appeal book 73 to 77? This is a form of leave which one can see when looking at appeal book 77 at clause (9), that is a quasi-payment, quasi form of paid leave, that once the entitlement to this Pluto special leave has been accrued the worker can receive the payment of Pluto special leave whilst taking R&R, so on those otherwise unpaid days when they are back at the Gold Coast or in Adelaide, or cash it in at the end of the job. So not take it at all for the whole period of the job and then cash it in and get a very substantial payment.

What the Pluto special leave is designed to do, and one can see, is reward attendance. That is, if the employee attends for all the days of the swing, then the employee gets – let us take Mr Landgren as an example who was on a four week on, one week off arrangement – at subclause (4) of clause (34) says:

Where an Employee qualifies for PSL at the end of their Work Cycle –

that is, at the end of the 240 hours –

they shall accrue PSL as shown in the table below -

four weeks, and the amount is 32 hours. So the agreement speaks to the need for employees to be near work to be able to attend work and also rewards for constant attendance at work on top of the normal incidents of employment that you see throughout this agreement.

GAGELER J: Mr Wood, can I ask a really basic question about the nature of the agreement? It is an enterprise agreement. What is the relationship between an enterprise agreement and the contract of employment that exists between the employer and each individual employee?

MR WOOD: The contract cannot derogate from the enterprise agreement but it can provide additional benefits to those in the enterprise agreement.

GAGELER J: Is it automatically incorporated into the agreement between the employer and the employee?

MR WOOD: Is the enterprise agreement incorporated into the contract?

GAGELER J: Yes.

MR WOOD: No, this Court in the case of Byrne v Frew (1995) CLR 185 said that in relation to an award – and enterprise agreement would be relevantly identical in terms of analysis – that an award is not incorporated into the contract of employment and you cannot sue for breach of the award via the contract of employment. The same analysis has been applied - and I can dig up the cases after lunch – to enterprise agreements; that is, it is a separate stream of rights enforceable separately from the contract, from the underlying award and from the underlying national employment standards.

Having dealt with employee claim action, can I now move to employer response action and go to section 411? Employer response action is action that:

is organised or engaged in as a response to industrial action by:

(i) a bargaining representative of an employee who will be covered by the agreement –

Employee response action in this case was at least threatened, in the nature of a 28 day lockout commencing 25 May. Can I then go to section 416 and this, like the stand down section in 524, is a permissive – it gives an employer a right but does not mandate that the employer exercises that right and, consistently with 524, we say it should be read in the same way as section 470. The important aspect of 416 is that 416A makes clear that payments that might otherwise fall within section 416 that would otherwise affect the continuity of employment are not affected.

Now, the types of payments that one is talking about here in a long period of industrial action are payments like a payment for annual leave or a payment for personal leave, that is, a non-monetary benefit. So that, but for 416A, if an employee struck for a long period of time, say a year, 416 would mean, absent 416A, that that employee would not be entitled to the benefit that would otherwise have accrued because of that service for a year. There are examples throughout the agreement and I can go to them, but a simple example is annual leave, another example is personal leave. Annual leave is paid, personal leave is unpaid. Personal leave perhaps is a better example because there is clearly no monetary aspect to it.

So, but for 416A, those payments of accrued non-monetary benefits would be affected and could not be made – sorry, I should not say that, the employee would be entitled not to make them. The relevant regulation which gives effect to 416A is regulation 3.09, and 3.09 makes clear that continuity of employment, relevantly continuity of service, is not affected for all the entitlements under the National Employment Standards and there are 10 such entitlements, six of which would be relevant to section 416A and they include such things as personal leave and annual leave and perhaps I will go to just one of them – perhaps I will go to the National Employment Standards themselves.

At section 59, Part 2-2 identifies the National Employment Standards and section 61 indicates that the minimum standards are as set out in subsection (2) and the relevant minimum standards for the purposes of section 416A would be (c), (d), (e), (f), (g) and (i), that is parental leave, annual leave, personal leave, community service leave, long service leave and notice of termination and redundancy pay.

Can I then go to unprotected industrial action which is also regulated by Part 3-3? It is unlawful and not immunised, but unprotected industrial action is regulated in the same way that section 470 regulates protected industrial action. Can I start with section 417 which says:

Industrial action must not be organised or engaged in before nominal expiry date of enterprise agreement etc.

That is, one of the benefits the employer gets from the enterprise agreement is a period of - - -

CRENNAN J: Peace.

MR WOOD: - - - of peace, indeed, your Honour. This agreement, that is, the greenfields agreement made under the Work Choices Act, had passed its normal expiry date in September 2009 and because of the operation of the transitional provisions the employees were free to take protected industrial action to try and win a new one and if they had have won a new one, and I think they did, the section 417 would then apply to make clear that during that period they could not take any industrial action.

Section 418 provides the Fair Work Australia then, Fair Work Commission now, with the power to order that industrial action stop if it is not protected industrial action and the Federal Magistrates Court can grant an injunction to restrain unprotected industrial action under section 421. Then one goes to 474 which is the mirror provision to section 470 and you can see that, leaving aside the question of a period of less than four hours, that the test is relevantly the same, that:

If an employee engaged, or engages, in industrial action that is not protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to:

(a) . . . the total duration of the industrial action on that day –

So we say 416, 470, 474 and 524 all use that phrase “payments” in the same way and there is no basis to read down the meaning of “payment” by reference to each of those other provisions. They all treat employee claim action, employer response action, unprotected industrial action and stand downs in the same way, and the predecessor provision, that is the provision that was the provision that governed employer response action, previously used the word “remuneration”, and it was changed so that the employer may not make a payment rather than the employer may not pay remuneration. I will take the Court to that provision.

In footnote 38 of our submissions, we indicate that what was section 416 of the Fair Work Act, that is the permissive section allowing an employer not to make payments, was under the old Act section 435(4) and that provision used the word “remuneration” instead of the word “payment” and it said:

If the employer engages in industrial action against employees in accordance with subsection (3), the employer is entitled to refuse to pay any remuneration to the employees in respect of the period of the industrial action –

and that what is now 416A was found in section 435(5) of the previous Act. So the history of the provision seems to confirm that the Parliament is not talking about remuneration when it has chosen to use the word “payment” in 470, in 416 and in 474 and 524.

CRENNAN J: Deliberately.

MR WOOD: Deliberately, indeed, and that proposition is made good, as we have said in our written submissions, that the word “remuneration” – and this is at footnote 42 of our written submissions – that remuneration is used relatively widely in the Act in other places. My learned friend took you to one other place in which it was used, and it was actually used in the predecessor provisions to this current scheme. So there is a deliberate choice not to use the word “remuneration”.

That of course does not mean that some concept of a quid pro quo is not bound up in the phrase “in relation to the total duration of the industrial action on that day” in some circumstances. All it means is you do not read some quid pro quo into the word “remuneration” because you should substitute – or you are asked to substitute the word “remuneration” for the word “payment”.

KIEFEL J: You mean the quid pro quo may just occur as a question of fact or the application of the agreement?

MR WOOD: Indeed.

KIEFEL J: But it is not to be used as a question of construction?

MR WOOD: Indeed, and Federal Magistrate Lucev considered whether accommodation fell within the term “remuneration” because that is what he was asked to do. It was said to him you should construe payment as if it was remuneration, and he said I do not agree with that but in any event here it is, and accommodation is oftentimes considered to be part of remuneration. In fact, the cases that our friends rely upon to say that you should substitute the word “remuneration” for the word “payment” all almost uniformly find that accommodation is part of remuneration.

Now, I know that is somewhat of a jury point because our substantial point is you do not substitute the word “remuneration” for the word “payment”, but even if you did, there is plenty of authority to suggest that accommodation is part of remuneration, including authority they have referred to.

GAGELER J: Had the word “remuneration” in the previous provision been the subject of judicial interpretation?

MR WOOD: Could I answer that question after lunch, your Honour?

GAGELER J: Yes.

MR WOOD: I will perhaps take that on notice.

BELL J: I am sorry, Mr Wood, but your submission respecting the word “payment” in 470 is what?

MR WOOD: Is that it should be given its normal meaning, that is, it includes a payment in kind, it includes payments directly and indirectly to an employee and does not of itself import any notion of a quid pro quo.

GAGELER J: As I understand your submission, you go so far as to say that it includes time off, it includes leave, is that right?

MR WOOD: It may, it may include that type of non-monetary benefit, that is, the provision of leave, and it at least includes accommodation, and it will include a whole lot of other payments in kind which I will come to in dealing with the section 323 point made by my learned friend, but yes.

CRENNAN J: In relation to Mr Kirk’s argument that you can look at antecedent provisions and look at cognate provisions and form a view that strike pay was really what was intended to be covered, so his first argument is read payments narrowly as strike pay, a purely monetary idea. In the light of what you have just said about a predecessor provision and had the specific word “remuneration” rather than “payment”, is it your position that even if at some point in the development of these provisions a cognate was confined to strike pay, some point and some time before section 470 that had gone?

MR WOOD: That is a point we make and we also make the anterior point that there was no basis to say that just because the phrase “make a payment” was normally in the predecessor legislation applied to facts involving strike pay that it thereby took a different meaning to its ordinary meaning. It does not have a restricted meaning just because it was applied oftentimes in restricted factual situations. But even if that was the case, it has definitely changed now by reference to the changes that have been made from the Work Choices Act to the Fair Work Act.

Can I support the point that we make about the normal ordinary meaning of payment by reference to the legislative purpose that my learned friend has gone to? We do adopt what Justice Gilmour said, adopting the observations of Justice Ryan and Justice Lander in the Canonical Administrators Case and the Ponzio Case. We, of course, say that does not provide the answer to the question of construction, but it certainly does not suggest a limited, narrow meaning of the word “payment”.

It confirms the ordinary meaning of the word “payment” and the textual clues that one finds in the Act to try to read down the word “payment”, and relevantly they are what I might call the quasi-Truck Act provisions in section 323 and following, and the earnings definition for high income earners in section 328 do not assist my learned friend in trying to narrow the meaning of the word “payment”.

KEANE J: Mr Wood, could I just pause you for a moment before you go on. You refer to what Justices Lander and Ryan said. I notice that at page 199, paragraph 32, section 187AA(1) of the Workplace Relations Act 1996 is referred to and its text is there set out, “[a]n employer must not make a payment” et cetera, not remuneration but must not make a payment, and in the passage from Justice Ryan that is set out at paragraph 34 of Justice Gilmour’s judgment, Justice Ryan speaks about the consequence being loss of remuneration:

s 187AA is framed to ensure that the loss of remuneration is not recouped –

His Honour seems to have regarded it as a natural reading of the reference to payment that it was in this context talking about remuneration.

MR WOOD: I am not sure that that would be a fair characterisation. That case involved a number of teachers in Catholic schools refusing to perform all their duties and it was a part performance case where they would refuse to go to a meeting here and there, refuse to meet with parents after school. So what Justice Ryan was talking about was the attempt to recover those wages withheld for those periods that the employees refused to perform all their duties.

KEANE J: I appreciate that it was a case concerned with remuneration, but his Honour seems to regard the reference to payment or the prohibition on payment as to be coextensive with remuneration, and that is the natural way to speak of it.

MR WOOD: Well, I think that might be reading a little bit too much into his Honour’s reasons, your Honour, because that issue just did not – the very issue that has confronted two courts below and this Court was not an issue in that case. There was no argument in that case as to the difference, if any, between the word “payment” and the word “remuneration” because we were talking about wages, and on any view wages were remuneration and wages were also a payment. It did not arise. He used an expression that did not find voice in section 187AA, but that is no basis to, in effect, substitute his Honour’s use of the word “remuneration” for the Parliament’s use of the word “payment”.

CRENNAN J: That is the provision, is it not, where we were taken to in an extrinsic reference to strike pay – 187AA?

MR WOOD: Yes, I think so. Yes, that is right, 187AA was the provision that was introduced in the 1996 Act and I think my learned friend took you to the explanatory memorandum and it uses the word - - -

CRENNAN J: Second reading speech I think.

MR WOOD: The second reading speech, I beg your pardon, which uses the phrase “make a payment”. That phrase has been used consistently since that time and also previously since the 1970s.

GAGELER J: I think I have got the legislative chronology quite confused. Is it set out chronologically somewhere?

MR WOOD: It is in a footnote to our submissions, your Honour.

GAGELER J: Which one?

MR WOOD: I will tell you in a moment. The history is set out in paragraph 11, where the appellant in their submissions had said that the relevant history goes back to 1996. We pointed out that there was a period before 1996 where the same phrase had been used but it was used in a slightly different context; that is, it prohibited the federal industrial tribunal from dealing with a claim for a making of a payment in relation to a period of industrial action, and that phrase was then picked up in the current scheme which has been around since 1996, the current scheme prohibiting not merely the Tribunal from dealing with a claim for the making of a payment, but prohibiting a union from making a claim for a payment and prohibiting an employer from making such a payment, and that scheme has been in place since 1996.

GAGELER J: At what point in the chronology do we see the word “remuneration” being replaced by the word “payment”?

MR WOOD: That is in footnote 38 which traces from 1996 – in fact, it traces it from the Act before the 1996 Act, the Industrial Relations Reform Act 1993 which operated from 30 March 1994 to 30 December 1996 and that is the relevant history to section 416 which is the provision dealing with employer response action now called and the section that section 416 replaced was section 435(4) of the Work Choices Act which used the word “remuneration”.

GAGELER J: Give me a date.

MR WOOD: For the?

GAGELER J: The change from the word “remuneration” to “payment”.

MR WOOD: 30 June 2009.

KEANE J: The change was not to the equivalent of section 470.

MR WOOD: No, your Honour, it was not, but we make the point that you have to read the phrase make payments under the stand down provision, “make a payment” in section 470, “make a payment” in section 474 in relation to unprotected industrial action and may not make a payment in section 416 as referring to the same concept. What happened was that in relation to employer response action the phrase used was “remuneration” but it was changed to bring it in line with the phrase that had been used for many years in relation to what is now called employee claim action.

BELL J: Just looking at the language of this Act as it now is, when one takes into account that Division 1 of Part 2-9 deals with the frequency and methods of payment to employees in relation to the performance of work and that industrial action is a concept concerned with the performance of work and that the methods of payment that the employer may employ under 323 involves monetary payment or deductions under 324, I am having some difficulty understanding why you contend that “payment” in its statutory context in 470(1) is to be understood in its ordinary sense as importing payments in kind.

MR WOOD: Because section 323 does not have the meaning for which my learned friend contends. That is, section 323 does not express itself in the way that the old Truck Acts expressed themselves, which was to say you may not pay an employee in anything but cash or, sorry, in money, subject to certain exceptions, and there were oftentimes a list of them – unless you provide tools which are reasonable and there is a reasonable deduction, provide accommodation, there were a whole series of deductions. But the starting proposition under the Truck Act provisions before dawn of industrial arbitration was that your ability to contract with your employees was restricted. That is, you were not allowed to contract with them in a way that the consideration was other than money, subject to a whole range of exceptions.

Those provisions were modified during the course of last century, so that those provisions tended then only to operate in relation to a pre-existing arrangement which required the payment of money. That is, this provision, like the more modern versions of the Truck Act, accepts that there are a whole lot of things that might be afforded to an employee in relation to the performance of work that are non-monetary benefits; gym facilities, crèche facilities, car, laptop, uniform, gift card, laundering services, medical examinations, training courses, mobile phones, shares, options, memberships.

I can go on and on, but those incidents of the employment – wherever they come from, the contract, the enterprise agreement, the award, perhaps from a statute – are not captured by section 323. Section 323 operates where the right – where the amount payable in relation to the performance of work is a monetary amount. It only operates in relation to that category, that type of consideration. It does not say that as of 31 July 2009 when this Act came into operation that every employee in Australia can now only be paid in money, subject to the provisions in 324, 5, 6 and 7.

It takes note of the fact that there are some benefits that are not amounts payable to the employee in relation to the performance of work, and they sit outside the scheme. But once you are in the scheme, that is, once there is an amount payable to the employee, then the employee cannot be, in effect, chiselled. The employee can only not be paid the monetary amounts that are otherwise payable if the deductions are authorised in writing, therefore the employees benefit, they are authorised by an enterprise agreement, the deductions are authorised by the modern award or Fair Work Australia or authorised by a law of the Commonwealth. When one looks at the whole text of Division 2 of Part 2-9 and one looks at section 324, 325, 326 and 327, one can see that the starting proposition for 323 is that we are dealing with things that are payable in money in relation to the performance of work. If you look at 324:

An employer may deduct an amount from an amount payable –

That is, it implies that the amount payable in 323 is money. In 325:

An employer must not directly or indirectly require an employee to spend any part of an amount payable –

It is talking about money there. In 326(1):

A term of a modern award . . . has no effect –

if it –

(a) permits, or has the effect of permitting, an employer to deduct an amount from an amount that is payable –

GAGELER J: That does not take you very far, does it, if you give 323(1)(b) operation before you read those provisions? Of course, the amount has to be in money.

MR WOOD: Sorry, your Honour?

GAGELER J: The amount has to be paid in money. I am just not sure that those later provisions take you - - -

MR WOOD: Perhaps they do not but - - -

CRENNAN J: It is the real point for present purposes, whether or not a non-monetary payment must always be a permitted deduction, which I think was Mr Kirk’s position.

MR WOOD: It misunderstands the operation of this division. This division does not attempt to touch non-monetary benefits that are otherwise payable, whether or not they are in relation to the performance of work. All it does is attach itself to those monetary payments that are payable in relation to the performance of work and say that these cannot be compromised other than in the way that is set out in sections 324, 325, 326 and 327.

GAGELER J: I can see how you say that textually, you say you first find an amount payable and then section 323(1) applies. What about the context? You referred to the evolution of the Truck Acts in the States, is that something that we should look at?

MR WOOD: We do not think it is necessary to do so, but you could look at it, your Honour, and one would have to look at – we have looked at the Western Australian Truck Acts because they seem to us to be the most appropriate, but one would have to, if one was to be exhaustive, look at each of the State Truck Acts to make good the proposition that I am advancing. Then one would then have to ask oneself what exactly was the Parliament intending when it, in effect, nationalised those various State Acts, and one is then drawn to the text of 323.

So some of the history is relevant, obviously, but when one looks at the text of 323(1), one can see that one is talking about a monetary amount that is payable, particularly when one looks at it in the context of the rest of Division 2. To the extent it is relevant, the explanatory memorandum to this division makes that clear – this is at footnote 25. Footnote 25 indicates that there was a patchwork of obligations for employers. It says that:

The payment of wages provisions in this Division draw upon the protections that exist in State and Territory legislation to provide a simple, national scheme.

At footnote 24, which we have not replicated in the full text of the explanatory memorandum at paragraph 1274, there is some support – and perhaps I can draw the Court’s attention to that after lunch – for the proposition that we advance, that this provision was not intended to operate in relation to non-monetary benefits, only in relation to amounts payable.

BELL J: Is there some part of the explanatory memorandum that you are directing our attention to?

MR WOOD: Footnote 24, paragraph 1279.

BELL J: Paragraph 1279, thank you.

CRENNAN J: That might be a convenient time, Mr Wood.

MR WOOD: Thank you, your Honour.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

CRENNAN J: Yes, Mr Wood.

MR WOOD: Thank you, your Honour. I think there were four things I had to deal with that arose before lunch. The first was a question from Justice Gageler about the cases which have considered the provision which now appears in section 172(1)(a), and this Court has considered the equivalent to those provisions in two cases, Alcan [1994] HCA 34; (1994) 181 CLR 96 and Electrolux [2004] HCA 40; (2005) 221 CLR 309. Those cases explain why section 172(1)(b) was introduced, but they really say nothing about the meaning to be given to the phrase “in relation to the performance of work” in section 323.

Secondly, Justice Gageler asked about the enforceability or the relationship between a contract of employment and an enterprise agreement. The case that deals with the relationship between an award and a contract is the case of Byrne v Frew (1995) 185 CLR 410. That case was applied to certified agreements by this Court in the case of Visscher v Giudice [2009] HCA 34; (2009) 239 CLR 361 at 386 where the majority said at paragraph 71:

in Byrne it was said that the contract of employment cannot derogate from the terms and conditions of an award, which operates with statutory force. The same may be said of a certified agreement.

Thirdly, we were asked to look at - - -

GAGELER J: We are concerned here with an enterprise agreement, but you just say the same principle applies?

MR WOOD: Relevantly identical for those purposes, your Honour. The third question was whether there were any cases which considered the meaning of the word “remuneration” in section 435 of the Work Choices Act or section 170ML of the Reith/Kernot Act or indeed 170PG of the Brereton Act. We have not found any cases which have considered the meaning of the word “remuneration”, though there are cases which have considered those provisions.

Fourthly, dealing with the meaning to be given to section 323, we referred just before lunch to the explanatory memorandum, in particular to paragraphs 1277 and 1278. We provided a copy of that to each member of the Court and would ask the Court to look at the top of the third page, paragraph 1283:

The legislative note after this subclause makes clear that the payment rule covers a wide range of payments, where they fall due during a relevant payment period . . . However, the amounts referred to in this subclause would not include superannuation contributions or non-monetary benefits.

In the footnote to our submissions at footnote 25 we refer to the Truck Act 1899 (WA), and the modern iteration of that Act, the so-called Minimum Conditions of Employment Act 1993. The Truck Act made it clear in section 3 that:

IN every contract hereafter to be made with any workman, the wages of such workman shall be made payable in money only, and not otherwise –

Wages was given a very broad definition, and then subject to exceptions. Whereas in the 1993 Act the provision was in section 17C:

To the extent that an employee receives his or her pay in money the employee is entitled to be paid in full –

So it only engages in relation to payments in money and we say that 323, having regard to the explanatory memorandum, has the same effect. That is - - -

BELL J: I am sorry.

MR WOOD: Sorry, your Honour.

BELL J: No, have you completed what you - - -

MR WOOD: Yes, your Honour.

BELL J: I just wanted to take up with you while on the topic of the explanatory memorandum the treatment in the regulatory analysis under the heading “Strike pay”. At 269 there is discussion of the change to the four hour rule and in this context it is said:

the breadth of the industrial action definition means the provisions technically require the docking of four hours pay where employees return to work slightly late after a meeting during an unpaid period –

and so forth. If one reads the paragraphs under the heading “Strike pay” it is rather suggestive that what is in contemplation is a monetary payment, and again, so it seemed to me, when one goes to the explanatory memorandum for clause 470 of the Bill, again reference to strike pay in a context which is apt to suggest that what is in mind is a monetary payment.

MR WOOD: It is, of course, possible that the word “payment” only means a payment in money. That construction is possible, and it would often only apply to circumstances where the relevant payment was in money or something that sounded in money.

CRENNAN J: But is the term “strike pay” almost a term of art which always means “excludes payments in kind”?

MR WOOD: No, your Honour, we would say not. That reference in the explanatory memorandum cannot alter what we would say the ordinary meaning of the word “payment” is, and the ordinary meaning of the word “payment” must include a payment in kind, otherwise the provision would be very easy to avoid.

BELL J: What provision would be easy to avoid?

MR WOOD: Section 470. If 470 only spoke to money, then in relation to a strike, a payment in kind could be made and not caught by section 470, that is, the provision of a car, the provision of tools, the provision of a holiday, provision of a whole range of things.

BELL J: At a practical level, when one is precluded by law during a period of protected industrial action from paying the employee’s wage for the duration of the industrial action, what is the practical difficulty if the employee still has the use of the car or the mobile phone or some other benefit from the long list you read out earlier?

MR WOOD: There may be no practical problem. It is just a question of construing how far this prohibition runs, that is, what it attempts to do is to ensure that in relation to any period of industrial action, that no payments are made in relation to the total duration of the period of the industrial action on each day. In those circumstances, having regard to the context, one would not read “payment” down to include only a payment in money, particularly where elsewhere in the Act, there are references – including 323 – to payments that are in money, and the phrase is used elsewhere in the Act. It is referred to in footnotes 40, 41 and 42 – the actual phrase “payment of money” is used. Reference to “wages” is used, “remuneration” is used, and - - -

BELL J: Is there somewhere in the Act where one finds a payment by an employer to an employee other than in money?

MR WOOD: Well, in, for example, the provisions that deal with the exclusion of high-income earners from the scope of modern awards and from the unfair dismissal regime, there are references to non-monetary benefits, that is, if one looks at 332, this is a definition that the Parliament has adopted, an arbitrary definition to exclude persons who might be regarded as being able to look after themselves because they earn more than I think the current number is about $130,000, so they are therefore excluded from the protection of the unfair dismissal regime, and excluded from coverage by modern awards.

In working out whether or not the employee’s so-called earnings get over roughly 130,000, one has a look at in paragraph (1)(c) “the agreed money value of non-monetary benefits”. That is, one takes into account the non-monetary benefits that the employee receives, that is, not money.

BELL J: Under 324, is it, one understands there is the concept of deductions that may be agreed or otherwise permitted under the terms of the provision. The matter I am taking up with you is the expression “payment to an employee”.

MR WOOD: What is the precise question, your Honour? I am sorry, I am obviously - - -

BELL J: The precise question is where in the Act does one find an instance of a payment to an employee embracing something other than a monetary payment, accepting that there may be non-monetary benefits being as defined in 332(3)?

MR WOOD: There is a reference – in our written submissions we have referred to the fact that there are many other phrases used. In this particular section we say, on a proper construction, section 470 contemplates a payment to an employee of a non-monetary kind. We say that 323, read in context, contemplates the existence of other payments to an employee of a non-monetary kind, as does 328. That is, it is not a concept that is foreign to the Act that there are payments from an employer to an employee that are of a non-monetary kind.

BELL J: Coming back to 332(3), a non-monetary benefit is expressed to be a benefit “other than an entitlement to a payment of money”.

MR WOOD: That is right.

BELL J: What I am raising with you, Mr Wood, is the circumstances when one has regard to this legislation of the significance of the expression “a payment to an employee”. One sees instances in the legislation where clearly that contemplates the notion of a monetary payment. It is tolerably clear from reference to the extrinsic material that that is what was in mind with respect to the clause that became section 470.

MR WOOD: Well, we would say that that proposition, although it is obviously a proposition that my learned friend advances, is not consistent with the rest of the text of the statute in circumstances where the Parliament could have used a phrase like payment of money, could have used remuneration, could have used wages, but chose to use the unadorned phrase “payment to”, which would not ordinarily be restricted to a payment of money. That is the relevant context, that is, that the opportunity was available to use a more narrow phrase but a broad phrase was used.

KEANE J: On the other hand, they did not use the phrase shall not meet any obligations to the employee.

MR WOOD: No, they did not, they used the - - -

KEANE J: Is that not the effect of his Honour’s construction of the provision?

MR WOOD: Well, in a sense, because the question of whether the payment was in relation to the total duration of industrial action on that day was conceded, the real question, that is, whether the payment did so relate, did not come up for decision and his Honour determined the question by reference to the arguments that were put to him about a narrow meaning to be given to the word “payment”. His Honour found, as you have identified, your Honour, that the accommodation – this is at appeal book 204 at paragraph 48:

The Accommodation was provided to enable the employees to be in a position to perform their employment and earn their pay, not for their use whilst on strike.

We do not say you have to go that far, that is, we say you do not have to find that the accommodation was provided in order that the employees earn their pay. It was provided in order that they be able to attend work the next day. So in one sense, it does not, for our purposes, really matter whether one adopts his Honour’s characterisation of the rationale for the provision of the accommodation or not, so long as one accepts that it was provided for the purpose, each day or each night, of allowing the employees to be able to attend for work the next day.

KIEFEL J: One of the matters that concerned his Honour – and I think this appears at paragraph 45 – was that if the appellant’s construction was correct there would be a differential operation for section 470. That is to say, depending upon whether the employer chose to pay by way of the living away from home allowance or provided accommodation. If the payment was made then section 470 would apply, if accommodation was provided it would not apply. His Honour approached it on the basis that it was a payment of wages. Would the payment of an allowance be regarded as part of wages?

MR WOOD: It would normally, but - - -

KIEFEL J: Mr Kirk’s answer I think to this question of differential operation was that that is overcome if you limit the notion of payment to what is paid for the work not performed because of the strike. That way you avoid the differential operation.

MR WOOD: There is no differential operation in our view. In our view, the provision of the living away from home allowance was provided for the same purpose as the accommodation, to enable the employees to attend for work the next day because by definition they were unable to go home to their usual place of occupation each night. In fact, it is stronger in relation to the living away from home allowance, because the living away from home allowance is clearly a payment in money. So there is no differential application and on the evidence both the living away from home allowance and the accommodation was removed. That is why there was no discrimination in relation to the class of 12 employees.

Can I return then – before lunch we dealt with three reasons as to why payment should be given its ordinary meaning. One was that the word “payment” is used consistently in section 416, 470, 474 and 524. The second argument was the reference to section 416A which qualified the operation of section 416. The third was the reason that we have just discussed, which is that the Parliament was well able to use a more confined word, including “wages”, “earnings” or “remuneration”, and had previously done so in relation to remuneration and in other parts of the Act uses the word “wages” or “earnings”. Fourthly, it makes no sense for payment to have within it the concept of a quid pro quo. The concept of a quid pro quo is built in to an extent to the phrase “in relation to the total duration of the industrial action on that day”.

If “payment” has within it some concept of a quid pro quo, then a gift would not be caught. Even though the gift is a payment, it could be a payment in money to the employees in relation to the total duration of the industrial action on that day.

So if the job was complete and some bonus was paid – let us call it a “completion bonus” and it was paid on a basis that was said to, on the facts, be referable to the industrial action that might have occurred during the construction of the project, then that would be a payment in relation to the total duration of industrial action on those days. That is, in fact, the rationale for the historical provision, that is, claims being made after the event by unions to recover strike pay, that is, an amount that is referable to the period of industrial action that had previously been taken by the employees.

Now, such a payment might be in relation to the total duration of industrial action on those days, or it might be a Christmas bonus, or it might be a completion bonus. You have to look at the facts to tell what the payment was, but if it was such a payment, that is, it was referable in some way to the strike that had occurred, it would be a payment that was prohibited, notwithstanding that it is not remuneration, not wages, and is a mere gift.

That position is not altered if that payment is made in kind. If it is a provision of tools, or a gift card, or payment of a membership, or a car, or a holiday, that is still a payment which relates to, or is in relation to, the total duration of industrial action on those days. It would be odd if the word “payment” was construed narrowly to include only a payment in money because those types of payments in kind would then be allowed, and it would be also odd if the payment had to have bound up within it some concept of a quid pro quo, that is, a gift could be given even though it relates to the total duration of industrial action on that day.

CRENNAN J: Your point being you can subvert the policy of the Act as expressed in these sections by a whole range of payments, and it does not assist to import this notion of a quid pro quo, in terms of facing a construction task here.

MR WOOD: Indeed, because context is everything for a word like “payment”. “Payment” can have a narrow meaning or a broad meaning depending on the context, and this context suggests that the broad meaning should be preferred because if a narrow meaning is given to the word “payment”, then the purpose can be subverted. The word can be narrowed in two ways. You can take out payment in kind, or you can insist that the payment must have an element of a quid pro quo. If either of those things are done, then the policy and purpose of the provision is subverted.

GAGELER J: Let us just take the case of a mobile phone, so the employee is given by the employer a mobile phone to be used for work purposes. The employee goes on strike for three hours. Now, will both the employer and the employee be breaching the Act if the employee holds onto the mobile phone during those hours of strike?

MR WOOD: One has to then go to section 19, your Honour, and work out what it is, what is the industrial action one is talking about.

GAGELER J: Withholding labour for three hours.

MR WOOD: But it is then a ban on the performance of work by the employee, that is, for a period of time the employee ceases to do their normal duties, and then the question becomes does the provision of the mobile phone relate to that cessation of duties for three hours? In most circumstances, the answer to that would be no. It does not have a sufficient relationship, in the same way that the accommodation provided for the night is not sufficiently related to a ban for, say, four hours on a particular day because the accommodation is provided on this agreement, on these facts, to enable the employee to attend for work.

Unless one adopts Justice Gilmour’s view and say that the accommodation was provided for a further purpose, that is, not only to attend, but to earn your pay, then one cannot say that the accommodation in relation to a partial work ban relates to that industrial action because there is just not a sufficient connection. Many of the payments in kind will not have a sufficient relationship to a partial work ban to engage the section. That is just the function of the three elements that are at play: the nature of the payment, the duration of the industrial action and the nature of the industrial action, and if each of those things varies the result will vary.

It is just in our case it is a – extreme might be too strong a word, but it is a much more obvious case, our case of a 28-day period of industrial action which is continuous, continues for 24 hours a day and the particular accommodation in this case relates to the industrial action which is a refusal to attend. We, in effect, accept one of the points that is made by our learned friends in their submissions where they say, but surely a partial work ban for a short period could not be said to mandate that the payment of accommodation be not made, and we agree with them, but that is not the case we are fighting. Is that an answer to your question, your Honour?

GAGELER J: It is an answer to my question, thank you.

MR WOOD: Can I say next that, dealing with your proposition before lunch, Justice Bell, that one needs certainty, certainty is created when you treat the word “payment” as not involving remuneration, because once you treat it as involving remuneration of quid pro quo, you make what is certain – that is, it is either a payment in kind or a payment in money – less certain. There is some uncertainty in the section because it comes from the use of the phrase “in relation to the total duration of industrial action on that day”, but it does not assist to make more certain a somewhat uncertain section by introducing uncertainty by inserting the requirement for a quid pro quo into the concept of a payment. That is not to say that certainty would not assist on the construction of “payment” meaning a payment in money - - -

BELL J: It often assists when there is a prohibition and a penalty attached, Mr Wood.

MR WOOD: Indeed, it does assist in that regard. If your Honour is saying that certainty assists in construing “payment” as involving a payment in money, it does. It is certainly a better construction from a certainty point of view than insisting that “payment” means remuneration, but it is no less certain to say a payment includes a payment in kind. They are equally certain concepts for the purpose of the section, and to construe a payment as including a payment in kind allows the purpose of the section not to be subverted.

KEANE J: If one understands the section to mean an employer must not make a payment to an employee in relation to work not performed on a day by reason of industrial action.

MR WOOD: That is one way in which the relevant relationship between the payment and the duration of industrial action on that day is made out. That is one way.

KEANE J: Do you accept that that is a fair rendering of the sense of what is said?

MR WOOD: It is a fair rendering of one of the senses in which the relationship can be demonstrated. My learned friends say that is the only way it can be demonstrated, but it is a fair way of showing one of the ways in which it can be demonstrated.

KEANE J: Why would we read the section as being intended to do other than to prohibit the making of a payment by an employer to an employee in relation to work that has not been performed by reason of the industrial action?

MR WOOD: I think we would accept that way you have just put it, your Honour, but the way - - -

KEANE J: Well, if you accept that is the way to put it, this accommodation – even if you say the provision of the accommodation is a payment, it is not a payment in relation to work that has not been performed. It is just an entitlement that they had under the agreement.

MR WOOD: That is one of the ways in which it might relate. What our learned friends say is that you must construe “payment” as meaning the payment that the employee would have received had he or she provided service pursuant to the employment agreement. You have phrased it as if the employee had have worked – the same concept, is it not?

KEANE J: A payment in relation to work not performed by reason of the industrial action.

MR WOOD: So, in that circumstance, the gift example is excluded because the gift does not - - -

KEANE J: No, depending on the facts, the gift could be seen as being in relation to work not performed, “You are not entitled to your wages, but here is a lump of money so that you don’t give us any more grief”.

MR WOOD: Well, if the position is that one looks at a payment, including gifts, then one looks at them by reference to the words of the section, that is, are they in relation to the total duration of industrial action on that day?

KEANE J: If looking at the facts attending the payment you can say as a matter of fact that this is a payment in relation to the work that was not performed because they were taking industrial action, then the section has been breached.

MR WOOD: That is one way. If you can say that, had work been performed, these amounts would have been paid, either in money or in kind, then a sufficient relationship would be established.

KEANE J: Or even another amount, not precisely the amount that would have been earned, but just an amount that is paid with an eye to the fact that they are not entitled to wages, but here is something to mollify the workers so they do not give the employer any more grief. Now, that would be a payment in relation to the work not performed.

MR WOOD: The gift, whether in money or in kind, indeed. But that is not the limit of the phrase “in relation to”.

KEANE J: But why is it not? Why does it not exhaust the – why does it not meet the mischief at which the section is directed?

MR WOOD: Because there are other ways in which a payment may relate to the total duration of industrial action, even if that payment does not derive from service or willingness to serve, but derives from the relationship created, and this is an example. This is accommodation that may be said to be contingent upon service. It may be said to be contingent upon readiness to serve, or it may be said to be provided so that the employee can attend for work each day, and if it is in the last category it still relates.

KEANE J: Why is not the accommodation an entitlement that arises when the employee accepts the direction to go to the remote location and is there? So there is a contractual entitlement that, on conventional contractual analysis, arises because they are a distant worker having acted upon the direction to go there, and so long as the contract subsists and so long as they are not in breach of their contract, that entitlement has accrued.

MR WOOD: That is one construction of - - -

KEANE J: That entitlement, seen in that way, has no relationship at all with work not performed.

MR WOOD: But your Honour, you have just airbrushed out the purpose of the entitlement. The purpose of the entitlement is to have the employees there each day after they mobilise so that they can attend down the road for each shift. Once you ignore that purpose, then there is no relationship, on that view.

KEANE J: That purpose probably informs the charter of rights and obligations that each side sign up to, but when one looks at the text of that charter, the text of the charter says distant workers are workers who are directed to go there, they go there, and distant workers, being distant workers because they have acted on the direction, are entitled under the agreement to be accommodated. Now, that is a contractual entitlement they have got. I do not know that we need to worry about why the parties have made the bargain they made. That is the bargain they made, and the bargain subsists, as we understand it. No one suggests that the contract has been breached, much less terminated, so a contractual right has arisen.

MR WOOD: Are you talking about the contract of employment or the enterprise agreement?

KEANE J: The contract of employment.

MR WOOD: Yes.

KEANE J: The contract of employment, in relation to which this agreement supplies certain incidence, that is the orthodox Byrne and Frew - - -

MR WOOD: Indeed. There are two answers to the proposition you put, your Honour. The first is the construction of the certified agreement may not be as one-sided, I might say, as that. It might be that for each day after mobilisation, the employees have to serve or at least demonstrate a readiness, willingness and ability to serve in order to be entitled to accommodation that day or that night. That is just a construction of the agreement point that is raised on our notice of contention. The proposition you advance assumes that that construction of that agreement in the way I have just put it is wrong, and that the agreement operates, in effect, like the award in the Gapes Case, to provide accommodation to these employees irrespective at Karratha next to the job, irrespective of whether they work and irrespective of whether they are ready, willing and able to work.

We say – I will come to this in relation to the notice of contention – for a range of factors, that construction that you put is wrong. But let us say it is right. The provision of accommodation still relates to the total duration of the industrial action on each of the 28 days for the reasons I said before lunch. That is, when one looks at the rationale or purpose for the accommodation from the text of the agreement and one asks, why are these employees here in the camp in Karratha, and the answer is because they cannot get home to Adelaide and the Gold Coast each night.

They are being accommodated in order that they can attend at the construction site that day or the next day. Now, if one ignores that purpose or rationale, then of course there is no relationship between the payment and the total duration of industrial action on that day, assuming of course the construction of the agreement is as you have identified.

KEANE J: But this obligation to provide accommodation, it has not been assumed by reference to or in relation to the period of strike action. It exists before that. It is not the provision of a benefit in respect of the period where work has not been performed. It is an obligation that the employer has assumed entirely independently of that.

MR WOOD: One might ask to what end? What is the – I am rather repeating myself, but what were the 12 employees doing at Karratha in the accommodation on the evening of 27 April or if they had been in accommodation on 28 April? They were there pursuant to the agreement so that they could get to work by 6.30 in the morning. That is the reason for the accommodation, because otherwise they could not get there by 6.30. Therefore, had they worked, they would have been accommodated because the accommodation was there to enable them to work. They are linked hand-in-glove. It was not, in effect, a holiday camp.

KEANE J: So the relationship is the negative of the duration of industrial action? The relationship is to a state of affairs that is the opposite of that? The relationship is that they work?

MR WOOD: That is the proposition that you advanced originally, your Honour, was it not?

KEANE J: Because this relationship, the relationship that is contemplated by 470 is, we will not worry about what “payment” means, it is the provision of a benefit in relation to work not performed. This obligation to provide accommodation just is not that. It is not agreed to be provided so that they do not work or in return for not working or as some sort of emollient for them not getting their wages.

MR WOOD: I think that is really the difference between us, your Honour. That is the essence of it. We say the agreement on its proper construction does not entitle the employees to stay on strike for any period of time and therefore be unwilling to serve - - -

KEANE J: But we are not talking about a breach of an agreement, are we?

MR WOOD: I am dealing with your question, your Honour, that you said one measures the relationship by reference to the payments the employees would have received had they worked, or to put it the way my learned friend says, the payments that the employees would have received had they provided service. We say that there is a connection between service and accommodation in the way we have articulated in our notice of contention that, unless the employees each day demonstrate at least a readiness, willingness and ability to serve on a proper construction of the agreement, they are not entitled to stay in the accommodation in Karratha because they are there to work on the construction site. Secondly, we say even if that is wrong - - -

KEANE J: So they are in breach of that implied obligation?

MR WOOD: They are in breach of that implied obligation, but there is no issue with that because of the immunity under section 415. They are in breach of a whole range of obligations – tort, contract, statute – but they are protected from it because of the immunity provision. But even if we are wrong about that, for the purpose of section 470 there is still a sufficient relationship between the accommodation each day and the work that would have been performed because they are only in the camp to work, otherwise they would not be there. That is really the difference between us on the construction point.

CRENNAN J: Now you have merged into some of the argument in relation to the notice of contention.

MR WOOD: I have, your Honour. Can I come back and finish on the argument proper?

CRENNAN J: The response.

MR WOOD: It is said against us that the word “payment” takes some of its context from section 328 through to 333, that somehow you have to read “payment” down to mean “earnings” because of the provisions contained in section 328 through to 333. We say there is no substance in that point. This is a stand-alone division which uses arbitrary measures to determine who is in and who is out. That is, it is of no assistance in trying to work out what “payment” means in section 470 to note that the Parliament chose to include some things in working out whether someone reaches the high income threshold and did not include other things.

It is just an entirely arbitrary calculation for working out where the line ought be drawn in terms of whether someone is entitled to bring an unfair dismissal application or prosecute for breach of a modern award, and it does not speak to section 470 at all, except of course in the way that section 332 contemplates the possibility that certain payments may be made to employees of a non-monetary nature.

BELL J: Distinguishing those from a payment of money?

MR WOOD: Distinguishing those from a payment of money, but you would not need section 332 to make that point. The Court could take judicial notice of the fact that there are many payments that are made to employees of a non-monetary nature, and I ran through a few of them before lunch, that is, gym facilities, crèche, share options, gym memberships, et cetera.

GAGELER J: Is that normally done by way of salary sacrificing?

MR WOOD: Sometimes it is and sometimes it is not. It just depends on the nature of the contract. Sometimes it will be a deduction from the salary. Sometimes it will just be another benefit which the employer then has to pay fringe benefits tax on. It just depends how the contract is set up. Lastly, on the question of payment, can we observe that section 324(1)(a), the capacity to deduct would enable, if used, the purpose of the section to be subverted – and this deals with the question of what (2) means, which perhaps has not arisen orally from my learned friends’ submissions, but is embodied in his written submissions, that the facility under 324 would enable an employer to, for example, discharge a debt, pay a gym membership, allow an employee to put all their salary into a voluntary superannuation contribution, if (2) was read as meaning only directly to an employee.

Now, that point may not arise on this appeal because we have not been asked to answer orally the point that the payment to Woodside in relation to the accommodation is a payment to the employee, if we are wrong about our construction of the provision of accommodation because “payment” does not include a payment in kind.

BELL J: I must say I rather thought it was in Mr Kirk’s submissions.

MR WOOD: Then I am responding to it, your Honour, and responding to it in this way, that if the Court is against us and says that “payment” does not include a payment in kind and that we are forced to rely upon the payment to Woodside for the accommodation, we would say that that payment to Woodside would be a payment that is caught by section 470.

KEANE J: That is because?

MR WOOD: Because (2) in this section includes both a payment directly or indirectly to an employee - - -

KEANE J: But why is it indirectly? It is not even on behalf of them.

MR WOOD: I beg your pardon, your Honour?

KEANE J: It is not even on behalf of the employees.

MR WOOD: Well, it is certainly for the employees’ benefit, in the sense that we were discussing earlier.

KEANE J: Yes, you could say that. On the other hand, you could say it is a payment that the employer agrees to make because it is part of establishing its operation.

MR WOOD: It agrees to make – to provide accommodation to the employee for the purpose of the employee coming to work each day and we would say, if the Court is against us on the question of payment including a payment in kind, that that payment would also be caught - - -

CRENNAN J: As a benefit to the employee.

MR WOOD: - - - because it is benefit to the employee.

KIEFEL J: Do you draw upon the fact that it is paid in lieu of away from home allowance?

MR WOOD: That is the main point we make in relation to our notice of contention, your Honour, that the main reason we say that there are preconditions to the provision of accommodation under the agreement is because of the relationship between the accommodation and the living away from home allowance. Can I then move to the notice of contention point? In the debate that has just been had between Bar and Bench involving Justice Keane and myself, I think we have articulated what we say about the meaning of the agreement on the notice of contention point.

We say, first of all, one cannot ignore the industrial context. This agreement was created in circumstances of a contract between the respondent and Woodside to perform heavy lift and transportation of modules for the construction of an LNG facility. It was a $12 billion construction project and we are very far removed from the circumstances of cases like Gapes and Csomore which involve bank employees in rural communities 30 years ago or, in the case of Csomore, a clerk in the Wagga Magistrates Court. The context of this agreement is important and the context is that this is a construction job where the work will finish at some time. It is far removed from public sector employment and that is an important factor to bear in mind when construing the agreement.

KIEFEL J: It is a pity then that this context and the importance of the agreement in this regard was put to one side when the no-case argument was put.

MR WOOD: Sorry, was put to one side?

KIEFEL J: When the no-case argument was put, because now we are left with it being raised by way of notice of contention and not having been determined below.

MR WOOD: There was a range of arguments put on the no-case submission. This was one of them. Federal Magistrate Lucev decided not to deal with this point.

KIEFEL J: You mean it was not put to one side for the purposes of the argument?

MR WOOD: It was not put to one side. It was argued but - - -

KIEFEL J: I have misunderstood then.

MR WOOD: A notice of contention to uphold Federal Magistrate Lucev’s decision on this ground was before Justice Gilmour and again he did not decide the issue, he decided to just determine it on the question of section 470. You will find the relevant pleading is paragraphs 26 and 26A of the defence which sets out the two arguments, one that was decided, one that was not.

KIEFEL J: Thank you.

MR WOOD: The second point we wish to make about the agreement is that the general context of employment law is that wages are not payable but for service, and that an award or an agreement can displace that general proposition, but the general proposition is the starting proposition, if one might express it in that way. In one of the cases we have referred to at footnote 54 on page 13 of our submissions – this is Coal & Allied v MacPherson [2010] FCAFC 83; (2010) 185 FCR 383 at paragraphs 88, 93 and 105. Justice Buchanan refers to a decision of Justice Ryan where he says:

. . . a statute or award is not to be construed as taking away the employer’s right acknowledged by the common law to withhold payment of wages for periods of non-performance of duty unless the language of the award or other statutory instrument intractably compels such a construction.

Thirdly, we have gone to the agreement before lunch and we say that the agreement makes it quite clear, right up to the point of clause 42, that the benefits there provided are provided for service, for work. There might be an argument about the accommodation benefit under appendix 7, but at least up to the point of clause 42 of the agreement, it is very clear that the benefits are linked to service.

Fourthly – and this is the answer to your question, Justice Kiefel, about the equivalence between the living away from home allowance and the accommodation – there is such equivalence in appendix 7 and 8 of the agreement. The employer has the option to pay the living away from home allowance, or to provide the accommodation. Similarly, in relation to the so-called local living subsidy, there is a relevant equivalence between the local living subsidy and the living away from home allowance, and that equivalence is found in clause (11) of appendix 7 and clause (2)(b) of appendix 8, that is:

Where a Distant Worker is absent with respect to any unauthorised absence, the Company shall deduct one seventh (1/7th) of the Living Away from Home Allowance for each day or part thereof that the Distant Worker is not ready, willing and available for work.

A similar provision applies to the local living subsidy, that is, that those subsidies are not payable if the employee refuses to come to work. By reason of the equivalence, we say the same condition should be understood to apply to the provision of accommodation. Fifthly, we say that if our construction is not preferred it would lead to quite odd results that the distant worker would be entitled to free accommodation for the whole duration of the industrial action which could be lengthy.

BELL J: I do not think Mr Kirk wants to fight you on that ground, Mr Wood.

MR WOOD: I am sure he does not, your Honour.

BELL J: So just looking at what we are dealing with, it is an application for orders respecting the allegation that your client engaged in adverse action?

MR WOOD: Indeed.

BELL J: How do you meet the argument that, even if contractually you were entitled to withdraw accommodation, you might nonetheless be engaging in adverse action on the facts which, having regard to the way the matter has been conducted, had not been determined? I just do not quite understand how you meet that.

MR WOOD: We would say if there was no entitlement to the provision of accommodation because the employees by their own actions disentitled themselves to the accommodation because they demonstrated that they were not ready, willing and able to serve, that such conduct by an employee where the employee has not met an essential condition to obtain a legal entitlement under that instrument does not constitute adverse action by the employer merely because the employer does not choose to provide that entitlement on an ex gratia basis. That is, there has been no action by the employer that is adverse. The thing that has changed is that the employee has disentitled themselves from the benefit of the agreement.

BELL J: By the taking of the protected industrial action in circumstances that do not alter the employment relationship, there has been the provision of accommodation up to the point, and in the exercise of that lawful right the suspension of the accommodation by the employer is not capable of answering the description of adverse action. Is that the argument?

MR WOOD: Indeed, only if we are right and the construction put by Justice Keane is not favoured. If our construction is right, that you must be ready, willing and able to serve in order to obtain accommodation, then there can be no adverse action. If the construction put by Justice Keane is right, then it will be adverse action because the accommodation is payable irrespective of service or willingness to serve, and the removal of that accommodation would be an action of the employer which would be adverse.

CRENNAN J: There is no intermediate position in relation to the immediacy of the effect of the withdrawal?

MR WOOD: No, it all turns on the question of whether or not there is a precondition to the entitlement to accommodation on each day and if there is no precondition, as there was not in Gapes, then it will be adverse action, subject to the relevant official of the employer getting into the witness box and explaining what their reasons for so acting were.

But can I just add to that point, your Honour? My learned friend might not want to deal with the argument on this basis, that is, that the conclusion of his construction would be that the distant worker would be entitled to stay in camp for as long as the industrial action occurred or for the length of the project, whichever finished earlier. That is the consequence of his construction. Justice Keane before lunch said that would not happen - in effect, asked the question whether it would happen because he said, well, the employees could be terminated - if there is a long strike the employees could be terminated.

Having regard to the fact this agreement has to be read in context of the Act, that is almost an impossibility because of the protections given by the adverse action provisions to employees who take strike action. That is, you cannot do anything to them, alter their position, injure them in employment, including not terminate them, for reasons that include that they are engaging in protected industrial action. In the circumstances of a long strike where one terminated a group of striking employees, it is almost inevitable that one would engage the adverse action provisions and that is a fact or a factor that must be borne in mind when construing this agreement.

BELL J: What we are looking at at the moment is the correctness or otherwise of the proposition that 470 prohibits the supply of the accommodation with consequences of a civil penalty. Now, that seems to me to be very different to a consideration of what might be the respective

rights in relation to continued supply of accommodation, let us say the strike goes for a year.

MR WOOD: It is, your Honour. But for our notice of contention, it probably would not be a relevant consideration. It is only a relevant consideration because the consequence of my learned friend’s construction of the agreement is that the employees were allowed to go on strike and stay in camp for as long as the strike continues because, on his construction, there is no necessary precondition to the receipt of accommodation.

BELL J: But the point I am raising with you is he is not seeking to make that argument.

MR WOOD: Well, he was a bit brief in his submissions about our notice of contention point orally, but that argument seems to be made out in - - -

BELL J: He has reserved his position really.

MR WOOD: It seems to be in his written submissions. The construction my learned friend argues for is the construction that Justice Keane put and that would have the consequence that I have identified.

KEANE J: If the workers are demobilised and are transported home or make their own way home, they will not have an entitlement to accommodation unless they accept a direction from your client to go back up there.

MR WOOD: Demobilisation is something that happens at the end of the job or on termination.

KEANE J: What happens at the end of the rostered swing?

MR WOOD: That is just R&R. That is the leave provision operating. So mobilisation occurs at the start of the job, demobilisation at the end of the job or if you are terminated before the end of the job, and the leave provisions operate every five weeks, or every six or seven depending on the length of the swing. Unless there is anything else, those are our submissions.

CRENNAN J: Thank you, Mr Wood. Yes, Mr Kirk.

MR KIRK: Your Honours, I will seek to deal with the points raised by my learned friend essentially in the order they were raised. First, in relation to the issue of “in relation to” in section 470, my learned friend referred to paragraph 21 of Justice Gilmour’s judgment at page 198, and referred to that as a concession. With respect, that is not a fair characterisation. Rather, as his Honour noted, no point is taken in relation to certain matters including in relation to the industrial action. That simply meant it was not argued. There were not concessions on the point, and that is the significant part because attention on the appeal before Justice Gilmour was directed to the errors, as it was put, in Federal Magistrate Lucev’s decision.

Turning more directly to the issue of the construction of “in relation to” put by my learned friend, as we understand it, the respondent says this imports some kind of factorial approach, referring in particular to first the nature of the payment including whether in kind or not; secondly, the nature of the industrial action including its length on a particular day; third, the duration of the industrial action; and although not enumerated, perhaps also whether the benefit in kind, if it is a benefit in kind, is closely linked to the performance of work, because that seemed to be part of my friend’s analysis this morning.

There are a series of difficulties with that construction, in our respectful submission. First, that sort of factorial approach is very impressionist, subjective and uncertain. Applying it to this sort of case, how many days would be enough on strike to trigger the section 470 prohibition? Seemingly not one, according to my learned friends; perhaps two because there is a night in between; perhaps something that goes past a Sunday because that is a non-work day, but it is very difficult to say.

Furthermore, it appears to depend upon a very close reading of any relevant industrial instrument. My friend’s submissions on this part of his argument “in relation to” depended very much on his construction of the agreement and, indeed, all of the terms of the agreement to seek to gather what the obligations are from that agreement. That itself greatly increases subjectivity and uncertainty. The construction does not, with respect, address the arguments we put, at least not completely, in relation to what I call the presupposition of rates, in that, even on my friend’s approach, it may still lead to calculation difficulties in particular instances.

It still leads to the potential results which are unlikely to have been intended, such as to lead to a deprivation of accommodation, for example, in this sort of case, which may have the potential adverse effects on the employment relationship which the Parliament is not likely to have intended. It also may lead to other sorts of odd results in that, as I understood my friend’s submission, he sought to link in the context of this agreement the position of distant workers who are put in this time and place in order to perform work.

It seems to be a consequence of that part of the argument that a distant worker, or that type of worker, is more likely to fall foul of the section 470 prohibition than a local worker, which is an odd result that distant workers plucked up from elsewhere in Australia and put in this remote location should be more likely than the relevant local workers, because they have not been plucked up and put there in order to be ready to work, should fall foul of the section 470 prohibition. That would be the reverse of what we would suggest is likely.

The argument does not, in any event, of course address our further arguments in relation to the meaning of payments. As to the entitlement to stay for 28 days or whatever, and I will come to the agreement in one moment, insofar as that is a concern, it can be dealt with in the industrial instrument. There still may be issues about adverse action, I accept that, but that is because the statute would override any industrial instrument, so that is not an answer.

But insofar as there is a concern about the entitlements, rather than my friend seeking to rely on hints and nuances from a reading of the whole industrial agreement, it could have been dealt with directly, and one of the problems with industrial agreement here, as I will seek to show in a minute, is that it engages in no way with the notion of protected industrial action. In fact, it is really inconsistent with it, and I will seek to show that in a moment.

In relation to the certainty point, my learned friend put – and this was also raised a bit by your Honour Justice Kiefel referring to what Justice Gilmour said at paragraph 45 about the differential operation. The certainty point, I accept, cuts a bit both ways, in a sense. My friend’s version of the argument is to say remuneration is somewhat uncertain, so we should go for a hard, broad construction which encompasses essentially everything. We say uncertainty is a concern, and that cuts the other way, and that leads to a focus on monetary payments which is clear, simple, applicable, and fits in with the rate analysis that I have already put.

As to how our second limb of argument, remuneration, fits in there, I accept there is a degree of uncertainty with remuneration. It is not, however, of the same degree, in our respectful submission, as that factorial analysis of the “in relation to” construction that my friend has just put. The remuneration argument raises the sorts of issue which has been addressed in cases back over more than a century in the range of contexts that I referred to, where the courts have found it possible – yes, there are borderline instances – but quite possible to make determinations without having to engage in, for example, that very nuanced construction of any relevant industrial agreement as part of the assessment of whether section 470 applies.

Can I turn then to construction of the agreement both because it fits into the “in relation to” argument and also with respect to the notice of contention? The relevant issue, in our respectful submission, is what, if anything, the agreement says in relation to the termination of accommodation where there are employees on site there. The starting position is self-evidently clause (6) of appendix 7 which is the entitlement to accommodation or the allowance, and as I think my friends accept, insofar as accommodation is provided, that is not qualified by reference to, for example, having no unauthorised absences, but I will come back to that phrase shortly.

One of the difficulties here, as I said a moment ago, is that there is, in fact, no attempt to engage with the issue of protected industrial action in the agreement. Now, part of what my learned friend put was to take your Honours to the definition of “Usual Place of Residence” in the glossary which is found at page 89 of the appeal book. My learned friend referred this morning to the words “proceeded to work”.

We would call that in aid in that what the words refer to is in identifying the usual place of residence that they cannot return to that place because they have proceeded to work on the project at the direction of the company. What that is referring to is a temporal and a physical issue. They have at some time moved physically to the place of work, they have proceeded to work, and they have done so in reliance upon the agreement and the contract and the expectation of work.

That does not cut against us, we respectfully say, to indicate in some way that that means accommodation can rapidly be cut off. So the starting point is that the right in clause (6) of appendix 7, it is not qualified. The question then becomes, is there any implication and, if so, what implication, as to the limit on the entitlement? Now, there is no express provision, but if there is to be an implication in circumstances where it is not perhaps necessary – could have been addressed but they have not addressed it – but if there is to be an implication, the natural implication would not be that there could be a sudden cut off of accommodation in this remote location. The more natural implication would be something such as accommodation would be provided at least until transport home or otherwise reasonable notice had been provided.

Now, some support for that is found in appendix 7, clauses (16) to (23), which deal with that issue of transport and payment of transport, including on R&R leave, including on demobilisation. If the worker gets sacked or terminated – and leave aside issues of misbehaviour – he or she is entitled to demobilisation expenses. It would be surprising then if upon a complete fracture of the employment relationship they were entitled to be sent home, that they should not have any entitlement to be looked after if they are not sacked but take protected industrial action.

Now, appendix 7, clause (12) at page 102 of the appeal book – and I think I referred to this this morning – also indicates that for distant workers who are receiving the allowance, if they are terminated they are still entitled to one week’s living away from home allowance. That, too, is indicative, insofar as one is looking for implications, of a reasonable approach to how one looks after distant workers who have relied on the company by going up to the Burrup Peninsula in order to provide their services.

The respondent’s argument comes down to these points, as we understand it. First, the respondent is not obliged to provide accommodation if the employee is not ready, willing and available for work, and in any case there is this kind of equivalence between accommodation and the allowance, and it is not obliged to provide the allowance, so it cannot be obliged to provide the accommodation. In its written submissions on this point, the respondent invokes the no work, no wage principle, but that involves a quid pro quo idea, and as I put in relation to payment this morning, there is no quid pro quo in relation to accommodation here.

My learned friends invoke in writing clause 38(6) of the agreement, which is the stand down clause, and that is found at appeal book 80. But for reasons much the same as I put in relation to section 524, that proves too much. The fact that the company can stand down a worker for reasons unconnected to any fault of the worker do not support any implication that accommodation can immediately be switched off. My learned friends in writing referred at page 81 of the appeal book to subclauses (12) and (13) of clause 38, but that uses the notion of pay, about which I have already made submissions. My learned friends also refer in writing to the fact that all provisions relating to leave, except parental leave, provide for the payment of the allowance except if there is an unauthorised absence. Your Honours will find that at page 102 at clause (11) of appendix 7:

Where a Distant Worker is absent with respect to any unauthorised absence, the Company shall deduct one seventh (1/7th) of the Living Away from Home Allowance –

My learned friends invoked that, at least in writing, to say and that shows that if the worker is taking protected industrial action, that is an unauthorised absence. They would not get the allowance, so they should not get accommodation. But taking protected industrial action cannot be an unauthorised absence. Can I seek to show why? If your Honours turn back to page 81, clause 38, subclause (16), that cannot encompass the taking of protected industrial action because if it did it would directly be in breach of the Act. So it must be construed consistently with the Act, or with the past Workplace Relations Act, because there was the same notion there of protected industrial action, to mean something other than the taking of protected industrial action. Similarly, my learned friends refer in writing to appendix 4, page 93, which is about issue resolution procedure and they refer to clause (1)(e):

It is a fundamental condition of this Agreement and the Employee’s Contract of Employment that no industrial action shall occur during the term of this Agreement.

First, it is ambiguous as to whether “term” means the initial term of one year or the ongoing term. But if it meant the latter, that must be again construed consistently with the right, if the procedures are complied with, to take protected industrial action. All of this illustrates that this agreement does not grapple with the taking of protected industrial action. It could have done, but it has not.

CRENNAN J: Well, to that extent you seem to be contending that one has to imply some term into the agreement to deal with the context of protected industrial action. I am not sure in a practical sense I have got a purchase on exactly how the implied term would work. What is the next step in the argument? Is it for a reasonable period of some sort?

MR KIRK: There are two levels of argument. My more courageous submission is it just does not deal with it. They could have dealt with it and they did not, tough luck. That would still lead to a practical result because in practice - - -

CRENNAN J: But then that is close to the argument, is it not, of Mr Woods that simply no requirement to provide the accommodation?

MR KIRK: No, for the reasons I have sought to put. It is inconsistent with provisions I have sought to take your Honours to to indicate that there could be this immediate cessation of accommodation. So that is why I say my more courageous - - -

CRENNAN J: But even accepting that, you wish to imply a term, do you not?

MR KIRK: No, I am having two levels of argument in the alternative. The more courageous one is to say it just does not deal with it. The employer could still deal with it by saying, all right, you are not working, go home, here is your ticket, get out. That would be a practical response, and as your Honour Justice Keane indicated you could not then come back into the accommodation until you were called up and accepted the call-up to come back, yes, you were ready, willing and available to give work.

In the alternative we say if that is too unattractive, too uncertain, then if there is an implied term it would be something like accommodation is to be provided until transport home is provided by the employer or otherwise reasonable notice is provided, but not extending to immediate termination less than 24 hours before as occurred here, it occurred after smoko which was 10.30 in the morning the day before.

CRENNAN J: There is a three day notice that has already been governing this situation, is there not?

MR KIRK: We had to give three working days’ notice – in fact, seven actual days’ notice was given. We did that on 21 April. The employer decided on 23 April that they were going to cease providing accommodation and notified Woodside of that, but they did not tell the workers until the day after smoko, and that is illustrated, for what it is worth, at page 123 of the appeal book. There is a letter from the respondent to Woodside indicating, we are going to cease providing accommodation, but we are not going to tell them about it until:

after the morning smoko break at 10:30 Tuesday morning 27th April 2010 –

and the evidence is consistent with that being what occurred. In relation to the equivalence point between living away from home allowance and the accommodation, I touched a bit on the issue of election this morning. Where the respondent has chosen to provide accommodation, it cannot, in our respectful submission, immediately change its crystallised choice – maybe on the next swing, but not with immediate effect. One thing I should have pointed out is if your Honours note clause (9) of appendix 7, which is at page 101 - within the context of dealing with this, right at the bottom of page 101, subclause (9) – it uses the language of:

Where the Company elects to provide a Distant Worker –

and then there is a particular entitlement if they do not have an ensuite. The other point in relation to the fact that one cannot simply equate the allowance and the accommodation is that, as I put this morning I think, the implicit premise of providing the allowance is that the worker is going to rent somewhere and that is why they get a bit of grace after they have been terminated. That implies in turn that they have somewhere to go. A person in rental accommodation provided by the company does not have somewhere to go. That means that one cannot simply say, well, it is all just equivalent and because they could cut off the allowance they can cut off the accommodation without any period of notice.

That is all I want to say about the agreement. I will come back to deal with one other issue in relation to the notice of contention, but can I deal with some of the other issues about the main construction point? My learned friend referred to section 416A and, as we understood it, my friend said that this indicated that payments that might otherwise fall within section 416 which relates to the employer refusing to make payments as part of employer response action, that those payments might not be affected. That is how we understood it.

Now, that is not right. What 416A deals with is not payments but continuity of employment. Employer response action for a proposed enterprise agreement does not affect the continuity of employment. It does not say anything about payment of super or anything else. It just says that insofar as those things depend on time, so for example, insofar as your promotion depends on having served two years as category X, that period does not count. So it does not assist my friend there.

The other point my friend sought to make about 416A is that its predecessor used the word “remuneration”. Now, it was only the predecessor to 416A, not the predecessors, as your Honour Justice Keane picked up, to section 470 or any of the other relevant provisions. But we actually seek to turn my friend’s argument on its head. It is true it used to say “remuneration” in the predecessor to 416A, but even when it did, it is the same idea as was in payment as was in the predecessors to 470. So the Act used to use “payment” in predecessor to one and “remuneration” in the predecessor to the other, where it is the same idea.

So one would construe them consistently; as my learned friend says this morning, one should construe these sections consistently. That actually indicates that although they brought the language into line, it was always the same idea. As to the meaning of “payment”, my learned friend said a number of times that the respondent sought to give the ordinary meaning to “payment”. No, they do not. They seek to give the ordinary meaning to encompass payment in kind, and I accept that is part of the ordinary meaning, I accepted that this morning. But they stopped there.

Another part of the ordinary meaning is that it is about reward or remuneration or quid pro quo about paying a benefit in money or in kind for something. My learned friends seek to stop at that point. So they are not seeking to give effect to the ordinary meaning, they are seeking to give effect to half the ordinary meaning. My learned friend also conceded a couple of times, as we understood it, that the notion of quid pro quo may have some work to do in relation to argument. Well, if it has some work to do there, why is it so important to exclude it with respect to payment?

Incidentally, insofar as my friend attacks our argument for uncertainty, as I referred to earlier, if there is uncertainty because of quid pro quo or remuneration or reward – call it what you will – it arises on my friend’s submission because he appears to concede that some aspect of that feeds into “in relation to”. My friend suggested that if section 470 only spoke to money, it would be easy to avoid; not so, in practice. Unless my friend suggests that crane operators or other employees are going to accept payment only in cars and phones and gym memberships in order to be able to avoid being docked strike pay, then this concern about it being easy to avoid does not arise.

Now, my friend made a further point then about circumvention of the prohibition by gifts and we accept that such circumvention would be and must be encompassed because otherwise it would be easy to avoid if you just say, well, we are not going to pay you wages but here is a few thousand dollars as a mark of goodwill. Of course, that could be a circumvention. But it could be a circumvention both because it was in relation to the performance of work, which is part of the premise of my friend’s argument, but if it was in relation to the performance of work it would almost certainly be because it bore some relationship, not necessarily a full one, but some relationship to what they otherwise would have got, or as some solatium for not having got it. If so, it is quite consistent with the notion of it being part of the reward for what they otherwise would have got, they did not get because they did not get the work, but we will give it to you to make the dispute go away.

The circumvention problem does not arise on any part of the construction, we would put. It is, as your Honour Justice Keane indicates, going to be a messy factual evidence, but whichever construction one adopts, one will have to look at the facts to see was this payment made to the striking workers a month or so later with no apparent explanation as to why, save that it was somehow connected to the end of the industrial dispute, was that a payment? Was it in relation to the work not done? Was it a reward for the work that might have been done, but was not? Of course it could be, but it is just an issue of fact to be assessed.

In relation to section 323, we respectfully disagree with our friends that it does not require payment in money. If I could take your Honours briefly back to the section, my friend’s submission, with respect, is just contrary to what it provides – and I will come back to the EM in a second – but it is a simple remedy provision, one requirement of which is that there be:

amounts payable . . . in relation to the performance of work:

. . .

(b) in money by one, or a combination, of the methods referred to –

EFT, and so forth. It does not say if paid in money, then it must be by one of the methods below, which is effectively what my friend says. It says - - -

GAGELER J: He says you first have to find an amount in respect of which there is an obligation to pay in money, and then looking at the heading of the section, he says that this section is all about the method and frequency of fulfilling that obligation. What is your response to that?

MR KIRK: It does not answer the point I have just made, because if all the work is done by amount, it becomes tortologous, or put another way, the obligation in (1)(b) does not do anything except to refer you to the method of payment.

Amounts payable – if that means money payable, why would the Parliament say an employee must pay a money amount payable in money, which is the effect of my friend’s construction. It does not make sense.

CRENNAN J: How are you going for time, Mr Kirk?

MR KIRK: I will finish in six minutes – no, I might go a little bit past that but I will seek to be very brief. I recognise - - -

CRENNAN J: As long as we have got a consensus about what “little” means.

MR KIRK: I will seek to finish as quickly as I may. In relation to construing this section, one does have to take account of the origins, including in the Truck Act. My learned friend also said something this morning about the point of the provision being to prevent employers chiselling out payments. We do not see how that could be done if it is construed in the way that my friend puts it.

As to non-monetary benefits, as I put this morning, they may be deductions or in other cases they may not be in relation to the performance of work. To get a free gym membership is not likely to be characterised as in relation to the performance of work, so would fall outside it. As to the explanatory memorandum, I accept 1283 cuts against my construction. On the other hand, paragraph 1279 cuts the other way. It is a very poorly drafted explanatory memorandum because it refers to:

Subclause 323(1) requires employers to pay employees any amounts payable to the employees in relation to the performance of work . . . in money (i.e. not ‘in kind’) –

which is consistent with the construction we have put.

GAGELER J: What do we make of the note at section 324?

MR KIRK: I was afraid your Honours would ask me that. As to the relevance of it under the Acts Interpretation Act, I think it can be taken into account as part of the context. I cannot remember the provision, I apologise for that. Otherwise, I do note that those five things, (a) to (e), pick up the elements of the full rate of pay which is the notion from section 18 of the Act. As to how it assists, I am not sure it provides a great deal of assistance one way or tother, to be honest. Not a lot, I think is the answer to your Honour’s question.

In relation to the notice of contention, I accept it was argued before Federal Magistrate Lucev, and to be fair there was also a notice of contention before Justice Gilmour, it is just that neither of them felt necessary to address it so it leaves your Honours without assistance. Without taking your Honours to it, can I also refer your Honours to what Federal Magistrate Lucev said, at paragraph 18, ab 148, and paragraph 23(b), ab 150, where part of his Honour’s reasoning in relation to not putting the respondent to the election was that the payment issue was very much an issue of law? Now, the agreement issue is not, it is much more complicated.

In relation to adverse action, I think there are just a couple of things I need to say and I will be no more than four minutes. There are two elements to what my friend has put about the notice of contention. The first element is the construction of the agreement, and I have sought to address that. The second element is a construction or application of section 340 and related provisions of the Act dealing with adverse action.

The first problem at the Act level – so assume against myself at this point of the argument that the agreement did not require the respondent to provide accommodation if the worker was not ready, willing and available for work, and that is the construction put, as your Honours will find, in the notice of contention. The agreement did not require the respondent to provide accommodation.

Now, that is different from saying the agreement obliged the termination of accommodation. It is different even from saying it authorised the termination of employment; just that it was no longer required. That indicates that it is still a positive choice by the employer which is required. It has to choose to say, “We are now going to turn off your accommodation”. That brings it back into the operation of section 340, save for this. My friend did not refer to it but I need to draw it to your Honours’ attention, I think. Section 342(3) of the Act said:

Adverse action does not include action that is authorised by or under:

(a) this Act or any other law of the Commonwealth –

Now, “authorised by or under” probably extends to any industrial instrument. “Under” would pick up the industrial instrument; I think there are cases to that effect. On the surface on a simple reading that might be just said to say, well, if it was permitted by the agreement made under a law of the Commonwealth, then it cannot be adverse action, but we have two answers to that.

As I said, my friend did not raise it, but it is part of the statutory context which cannot be ignored. First, “authorised”, in our respectful submission, means more than just that you are not required to do something. We would say it goes further. It must mean you are only authorised to do something if the industrial instrument or the Act says, “If X, then you may do Y”, and this does not say that.

But secondly, and perhaps a bit less controversially, in our submission – and we are not aware of any cases dealing with this – where it says “Adverse action does not include action that is authorised”, that must be read as adverse action does not include, if I can paraphrase, the type of action that would be adverse action. Let me give a couple of examples to explain why – I recognise that is putting not an insignificant gloss on it, but it must be so for this reason.

If, for example, the instrument said in X circumstances, you can make workers redundant – so there is a clear authorisation, if X, then you may make redundant – and the employer when making redundant chose to make redundant those who had been on strike last year. Now, is it authorised by the instrument? Yes, but in our submission, the section could not have been meant to say just because you can do something, you can do it in such a way which would be adverse action. But the point is made more clearly when one takes account of the fact that other sections in this part use the same notion of adverse action, including 351, the anti-discrimination provision.

CRENNAN J: You have made these points in your written reply.

MR KIRK: I am not sure we actually made this point because, to be honest, we only picked it up last night. In the same redundancy example, an

employer authorised to make them redundant in X circumstances could not choose the people of a particular sex, or particular race, or particular sexual preference, et cetera, as being the ones they make redundant. That would not be consistent with the scheme of the Act.

It would only be if the agreement said – and this would no doubt breach a whole range of other things – in making people redundant, you can do so in a way that would otherwise be adverse action because of section 351, could that be encompassed. So for that further reason, 342(3) is not an answer. May it please the Court.

CRENNAN J: Thank you, Mr Kirk. We are grateful for counsel’s assistance. We will reserve our decision. Adjourn the Court to 11 am tomorrow in Melbourne.

AT 4.02 PM THE MATTER WAS ADJOURNED