Mondelez Australia Pty Ltd; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) & Ors [2020] HCATrans 97 (7 July 2020)

Last Updated: 8 July 2020

[2020] HCATrans 097

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M160 of 2019

B e t w e e n -

MONDELEZ AUSTRALIA PTY LTD

Appellant

and

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS UNION (AMWU)

First Respondent

NATASHA TRIFFITT

Second Respondent

BRENDON McCORMACK

Third Respondent

MINISTER FOR JOBS AND INDUSTRIAL RELATIONS

Fourth Respondent

Office of the Registry
Melbourne No M165 of 2019

B e t w e e n -

MINISTER FOR JOBS AND INDUSTRIAL RELATIONS

Appellant

and

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS UNION (AMWU)

First Respondent

NATASHA TRIFFITT

Second Respondent

BRENDON McCORMACK

Third Respondent

MONDELEZ AUSTRALIA PTY LTD

Fourth Respondent

KIEFEL CJ
GAGELER J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS
FROM CANBERRA BY VIDEOLINK
TO MELBOURNE AND BRISBANE

ON TUESDAY, 7 JULY 2020, AT 10.00 AM

Copyright in the High Court of Australia

____________________

MR S.J. WOOD, QC: If it pleases the Court, I appear with my learned friend, MR D. TERNOVSKI, for the appellant in the first matter, M160, and for the fourth respondent in the second matter, M165. (instructed by Ai Group Workplace Lawyers)

MR T.M. HOWE, QC: May it please the Court, I appear with my learned friend, MS I.M. SEKLER, for the Minister for Jobs and Industrial Relations, the fourth respondent in the first matter, and the appellant in the second matter. (instructed by the Australian Government Solicitor)

MR I. TAYLOR, SC: If it please the Court, I appear with my learned friends, MS C.G. WINNETT and MS L. SAUNDERS, for the first to third respondents in both appeals. (instructed by Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU))

KIEFEL CJ: As the parties would be aware, Justice Gageler and I are sitting in Canberra, Justices Nettle and Gordon in Melbourne, and Justice Edelman in Brisbane. I should say that, whilst I appreciate that the time estimates are always at the point of commencement of argument provisional, they do seem somewhat luxurious in the sense that we seem to be going to take a day and a half to argue about the word “day”. Perhaps you could revise the need for such extensive argument as we go on, I think, as it is obvious that the Court is ‑ on the message of your arguments you might be able to be somewhat more efficient about them. And we, of course, do not need to have equal hearing time. It is not a requirement of this Court. Yes, Mr Wood.

MR WOOD: Thank you, your Honour. Your Honours have our outline of argument, which we provided by email at 8.30 this morning.

KIEFEL CJ: Yes, we have it; thank you.

MR WOOD: Noting what the Chief Justice has just said, we will not develop these points at the length that we were intending to but rather just pick on the points that we think are of some utility.

Dealing then with point 1, the feature of the type of leave with which these appeals are concerned – or the features – are fourfold and make this type of leave, together with annual leave, unique amongst the 12 forms of leave contained in the national employment standards. This form of leave is paid. It accrues progressively. It accumulates from year to year and it may be cashed out if the industrial instrument permits. Only annual leave has those four features.

Turning then to point 2 of our oral argument, there are two competing constructions for the meaning of a day within Subdivision A of Division 7, Part 2‑2 that are before the Court. The Minister’s construction arrives at the same outcome as our construction. Originally, there were two other constructions advanced by what I might call the “union” parties – the so‑called “calendar day” construction and the “24‑hour period” construction. Both of those were dropped.

KIEFEL CJ: Yes, I think your written submissions indicate how they have evolved.

MR WOOD: Thank you, your Honour. And we are then down to two constructions for this Court, the majority construction and the average day construction. The majority construction was the construction that was advanced by the majority in the court below, it was not argued for by the Union parties, but the Union parties adopted and pressed for it in this Court. The effect of the two constructions in terms of the payment obligation under section 99 is the same, but the two constructions give very different results in terms of accrual.

On the facts of this case, what I might call the shift workers ‑ that is the workers who work three 12‑hour shifts per week, compressed hours ‑ are entitled to the equivalent of 120 hours of paid leave after a year of service on the construction of the majority below. On our construction, those shift workers are entitled to 72 hours paid leave after a year of service. On our construction, in relation to a part‑time employee, say one of those shift workers only worked one day of one 12‑hour shift per week, on our construction that employee would be entitled to a third of the three day a week shift worker, on the majority construction that worker is entitled to the equivalent of 120 hours of paid leave.

On the construction we advance, whether an employee works compressed hours or not, the amount of leave that they accrue after a year is the same as long as they work the same ordinary hours, that is because although you have to convert into hours at some point for the purposes of payment at the time of taking the leave, the majority construction construes a day as an absence whereas we construe a day as the average daily hours of work.

Now, it is our submission that both those constructions are open on the text. We give three reasons as to why our construction is open. The first is the chameleon‑like character of the word “day” which is notorious for taking its meaning from the context in which it finds itself. The second is that there are a number of natural or ordinary meanings of the word “day”, three have been advanced already in these proceedings ‑ calendar day, 24‑hour period and working day ‑ and the third is that section 106E in Part 2‑2 rebuts the presumption that might otherwise arise that the word “day” is used consistently throughout Part 2‑2.

EDELMAN J: Well, section 106E came in after section 96, did it not?

MR WOOD: That is true, your Honour, but we make what we think is the orthodox point, that when it comes to construing an Act you look at all parts of the Act to determine the meaning of the Act. We do not use the introduction of section 106E to try to cast light on the meaning pre‑amendment, merely that, at this point, and at the point of the decision before the court below, 106E was part of the Act and you have to construe the Act as a whole.

We do not say this is a determinative textual indicator, but together with the fact that “day” has a chameleon‑like character, that there is no single ordinary and natural meaning of “day”, 106E helps suggest that our construction is open. The real question, we say, that arises before the Court is what type of working day are we concerned with – that is, what type of working day does section 96 give voice to? And the important thing to note here is, of course, section 96(2), that is, although the entitlement is expressed as 10 days of paid personal carers leave, the accrual which accrues progressively during a year of service is according to the employee’s ordinary hours of work. So there must be some way, we say, of marrying up the entitlement expressed in days and the accrual which is according to the ordinary hours of work.

KIEFEL CJ: Just before you go on with the reference to ordinary hours of work, returning to section 96(1), is it of any importance that it is not just the word “day” that it is necessary to construe, but the words “day of service”. Do they bear any – the fact that it is for each day of service, not for each day.

MR WOOD: For each year of service you mean, your Honour?

KIEFEL CJ: Each year, yes.

MR WOOD: We do say that is important because the accrual occurs during that year of service ‑ ‑ ‑

KIEFEL CJ: Yes.

MR WOOD: ‑ ‑ ‑ and accrues according to the ordinary hours of work. Now, the way in which we say this ‑ ‑ ‑

KIEFEL CJ: I suppose what I am really focusing on is the word “service”. Does that tell us anything? What is meant by service within the period of a year?

MR WOOD: It tells you, we would say, that like many other forms of leave, that the entitlement to leave does not exist at the commencement of the employment, but is earned during the period of service. That is, it accrues progressively because of service, according to ordinary hours of work.

The submission we make ‑ and this is developed at points 4, 5 and 6 of our argument ‑ is that our construction, which attempts to marry up the accrual in section 96(2) with the entitlement in subsection (1), is the one that works in the most fair manner; it works in the least capricious manner; it gives work to do to all seven sections within the subdivision and, importantly, though not determinatively, it is wholly consistent with the explanatory memorandum.

It is those facts that our construction makes the provisions workable, gives all the sections something to do, and is consistent with the EM which leads us to submit that the construction we argue for should be preferred.

KIEFEL CJ: I have interrupted you. You were looking at the textual indicators in section 96(2).

MR WOOD: I was.

KIEFEL CJ: I think in your written submissions and those of the Minister, the textual indicators that you principally rely upon are sections 96(2), 99 and 147.

MR WOOD: That is correct, your Honour. The last thing that we referred to – as part of our argument that our construction is open – is that this Act must be understood as being an Act that provides for employee entitlements that assumes as a basal right a standard five‑day working week.

Now, our learned friends say in response, somewhat quizzically, where do you find that in the Act? We say the Act assumes, and has assumed for 70 years a standard five‑day working week. This is the basis upon which the Act is made and the Act refers to, in various places, the need to recognise that standard five‑day working week. Once that is understood, as an exercise in construction, everything works. The sections work fairly. They work harmoniously and totally consistently with the EM.

GAGELER J: You started by drawing attention to the similarity between personal leave and annual leave.

MR WOOD: Yes, your Honour.

GAGELER J: Do the arguments that you are making about personal leave translate to Division 6 which deals with annual leave? Is there a consistency in the way in which those two sorts of leave are actually dealt with?

MR WOOD: There is, your Honour, in our submission, yes. Can I then move to what we say the purpose of the entitlement is? You will see, your Honours – you will note that I have skipped over 3.6 in the outline because the history is to be covered by the Minister to a significant extent and, having regard to the observations of the Chief Justice, that point 3.6 is covered by the fourth point of the Minister’s outline. Can I then move to the purpose?

EDELMAN J: At a very high level of generality, do you accept that when one looks at purpose, the Act, on your construction, has the effect that a shift worker who is sick on, say, 10 of the shift worker’s working days, will be in a different position from an ordinary worker who is sick on 10 of the ordinary worker’s working days in that the shift worker will not have been entitled to take 10 of the shift worker’s working days as leave?

MR WOOD: It depends exactly what you mean by “working day”, your Honour. The way we put the position is that it should be assumed that Parliament intended this scheme to work rationally and that this limited insurance against loss of pay, in the event of inability to work due to illness or injury or caring responsibility, should work equitably across all classes of employees - part‑time employees, shift workers, full‑time employees working what might be called normal five‑day weeks - that is, the assumption we make is that Parliament would have intended that there be a fair and rational allocation of cover.

Now, the proposition we advance, and we advance this, and I am trying to answer your question, Justice Edelman - the proposition we proffered in the court below was that the level of protection against sickness differs according to the two constructions because of, or on the criteria of the rostering arrangements.

So to put it in the language of the question, assuming the shift workers, in our case, who work three times 12‑hour shifts, 36 ordinary hours per week, compare those to what we might call colloquially “day workers”, who work five 7.2‑hour shifts per week to get to 36 ordinary hours per week, both of them work 36 ordinary hours per week. One group of employees works compressed hours three days a week, the other what we might call more normal hours five days per week.

We assume that, say there is a need for employees to take two weeks’ sick leave, that is, both classes of employees are sick for two weeks. They are - and this works whether the sickness occurs continuously or is distributed randomly throughout the year. If those employees are affected by sickness for two weeks a year, for 14 days, the shift worker will only need six absences from work, the worker who works five days a week needs 10 absences from work.

On our construction, both employees get that level of cover, that is, protection against being sick for a fortnight without loss of pay. Both of them are treated equally because assuming that fortnight of sickness both of them are able to be sick without loss of wages in the same amount for a fortnight.

KIEFEL CJ: When you say “treated equally” you mean having regard to the hours worked?

MR WOOD: Having regard to the hours worked, of course, your Honour. Hours worked is a relevant, that is a statutorily relevant, basis upon which to discriminate on the basis of level of cover but a roster arrangement is not. It makes no sense to give employees who happen to work compressed hours a much higher level of cover and the example is even worse when it comes to a part‑time worker. Imagine one of the shift workers works one shift a week of 12 hours as opposed to three shifts a week of 12 hours. On the majority construction, that shift worker is entitled to 10 absences; that is, they can be sick for 10 weeks. They have 10 weeks of cover, even though they are an employee who works only one day a week.

Now, it does not make sense to us to construe this Act in a way that the level of cover depends upon the roster. Our learned friends really have no answer to that in terms of the purpose of the legislation; they simply say our construction is not available on the text. They do not deal with, and the majority judgment below did not deal with, the problems at this level of purpose in terms of the level of protection, and relatedly, to the level of protection, that is, the question of how long can you be sick without loss of wages, is the level of cover, that is, the value of the accrual. On the facts we have set out, an employee working five days a week, a day worker, 7.2‑hour shift, has a level of cover equivalent to 72 hours per year on both constructions.

On the majority construction, the level of cover given to an employee working three shifts of 12 is 120 hours of cover and, similarly, to a part‑time worker working one shift of 12 hours is 120 hours of cover. On our construction, they all get the same proportionate level of cover, that is, if you work the same ordinary hours of work a week, on our example 36 hours, you get 72 hours of cover and one‑third as much if you are a part‑timer because you are working one‑third the number of hours.

Now, that is, we say, a very powerful reason to prefer our construction to our learned friends’, and if I can then move to the explanatory memorandum, the explanatory memorandum supports our construction in whole. The explanatory memorandum is found at page 1871 in volume 7. Does the Court see at the top of 187:

The concept of an employee’s ordinary hours of work is central to the paid personal/carer’s leave entitlement as it determines the rate at which the entitlement accrues and also the entitlement to payment when leave is taken.

I hope I gave the right ‑ ‑ ‑

GAGELER J: I am not sure I have the right document. I have the joint book of authorities ‑ ‑ ‑

MR WOOD: Volume 7, your Honour?

GAGELER J: ‑ ‑ ‑ volume 7. Page what?

MR WOOD: 1871.

GAGELER J: 1871, thank you.

MR WOOD: You can see there that the concept of the employee’s ordinary hours of work is central to the entitlement. That is completely consistent with our construction and completely inconsistent with the majority construction because, on the majority construction, you get 10 over 52 absences per week worked – i.e. point two of an absence per week worked, no matter what the weekly hours are. It does not matter what the weekly hours are.

Going to the next part of the explanatory memorandum under “General principles” you will see:

Leave accrues according to an employee’s ordinary hours of work (which may be set out in a modern award or enterprise agreement, or are calculated in the manner set out in clause 20).

Now section 20:

Such hours are often expressed as a number of hours per week. In effect, therefore, the Bill ensures an employee will accrue the equivalent of two weeks’ paid personal/carer’s leave over the course of a year of service.

This is exactly the result our construction gives, but on the majority construction ‑ ‑ ‑

KIEFEL CJ: When you say it is the same, two weeks there, on your argument, is 10 days?

MR WOOD: Yes, your Honour.

KIEFEL CJ: Which is confirmed by what follows?

MR WOOD: That is correct. And that is the point I was going to come to next that, although this is expressed as an entitlement to 10 days, reflecting a standard five‑day work pattern, by relying on an employee’s ordinary hours of work the Bill ensures that the amount of leave accrued over a period is not affected by differences in the actual spread of an employee’s ordinary hours of work in a week.

That is exactly the construction we contend for. Days are converted to hours, based on a standard five‑day working week, and the result does not depend upon the spread of hours. You do not get an irrational and capricious level of coverage and you do not get an irrational or capricious level of protection. It is inconsistent with the majority construction. For them, the five‑day working week is irrelevant and the amount of leave does depend on the actual spread of an employee’s ordinary hours of work, and that is why this case was brought, because on their construction the employees, who are the subject of this proceeding, are entitled to 120 hours or the equivalent of 120 hours of paid leave per year. Then going to the next part of the explanatory memorandum:

Therefore, a full‑time employee who works 38 hours a week over five days (Monday to Friday) will accrue the same amount of leave as a full‑time employee who works 38 ordinary hours over four days per week. Over a year of service both employees would accrue 76 hours of paid personal/carer’s leave.

That is irreconcilable with the majority construction. It is correct, on our construction, but remember on the majority construction a four‑day worker who is working 38 ordinary hours over four days is working nine and a half hours per day and is entitled to 95 hours of paid personal carer’s leave.

And then moving to the next page – I have only got four to go, so I am sorry about taking time on this – there are three examples and then a conclusion. The first example is Tulah. Tulah is a full‑time employee whose ordinary hours of work are 38 per week. On average, she also works an additional two hours of overtime per week. Tulah will accrue 10 days’ personal leave, based on her ordinary hours of work, 76 hours over a year of service. If she takes a week’s personal carer’s leave because she is sick, to care for a member, she will be entitled to be paid for 38 ordinary hours at a base rate of pay.

That example is correct, on our construction, and wrong on the majority construction because it depends how Tulah works those 38 hours per week. If she works them on a three‑day or four‑day basis, then she will get 95 hours per week or something in excess of 120 hours – sorry, 95 hours per annum or something in excess of 120 hours per annum, depending on the roster. It all depends on the roster.

GAGELER J: But if you assume a standard five‑day work week, the example is correct on either construction, is it not?

MR WOOD: That is correct, your Honour.

GAGELER J: Is that so for the next two as well?

MR WOOD: For the next one it is true, but the last one makes the very point we make. So perhaps I will skip over Brendan, because that proposition is correct, your Honour, and go to Sudhakar:

Sudhakar is a full time employee who has entered into a permissible averaging arrangement under the NES and works an average of 152 hours every four weeks -

You see you cannot make the assumption that was just being made, your Honour:

(based on 38 ordinary hours per week). The number of ordinary hours that Sudhakar works on any given day may vary according to the averaging arrangement. However, over a year he accrues ten days (76 hours) of paid personal/carer’s leave. If he is sick and takes leave for a day, he will be entitled to be paid for the number of ordinary hours he was rostered to work on that day (but not for any additional overtime hours that he was to work).

So on this example Sudhakar is supposed to get 76 hours, despite working different hours on different days. Now, that is correct on our construction, but wrong on the majority construction because on the majority construction, if he works say 10 hours on a Monday and say six on the Tuesday, there is 10 days equivalent if the leave is taken on Mondays, and 60 hours equivalent if taken on Tuesdays. That then leads to the last example:

If an employee changes the basis of their employment (e.g., if the employee changes from a full‑time employee or part‑time employee), they would not lose accrued leave, although the future rate of accrual would be different (based on the employee’s new ordinary hours of work).

That is correct, on our construction. Suppose a worker works for a year without taking any leave and they accrue 72 hours on the 36‑hour weeks – 76 hours on a 38‑hour week. But assume they go part‑time and work three 6‑hour shifts. On our construction, the accrued balance remains the same because the accrued balance is in hours, because a day is shorthand for a number of hours.

The rate of accrual goes down because they are working less hours, completely consistently with the example in the EM. But on the majority construction, that shift worker has accrued 10 absences while working full‑time. Switching to part‑time, the rate of accrual stays the same, that is, 0.2 absences per week. But the accrued balance is now two‑thirds or a half what it was previously because it has to be judged by the roster going forward. That is contrary, not only to the EM, but to common sense.

Without wanting to make this proposition dismissively or rhetorically, this is one of those rare cases where the explanatory memorandum, together with an understanding of the context – the purpose given by context – where the explanatory memorandum is squarely on point and really does help give the answer which is why the minority judgment was only four pages and could deal with issue very quickly.

Moving then to point 6 of our outline, which is the question of cashing out, the cashing‑out problem is hinted at in the last example that I took the Court to in the explanatory memorandum, that is, imagine if you change from full‑time to part‑time, because when you cash out you have to convert to hours and dollars. It is easy for the average‑day construction, because you cash out two hours, you are paid for two hours and two hours is deducted, but it is a problem for the majority construction.

First of all, for the reason that we have just discussed in relation to the last example in the EM, that is, the value of the accrual is volatile, it depends upon your roster, but it gets worse for people that work variable hours during a week. It becomes effectively unworkable because you cannot ascertain with any ease the hourly equivalent and dollar value to enable cashing out.

Now, the answer given by the court below was do not worry about that, maybe those employees are not entitled to cash out. So for a class of employees, in legislation that is designed to enhance workplace flexibility, a class of employees is denied the cashing‑out facility. That seems unlikely.

The second answer was that you pay the employees on the most generous basis, so when you come to cash out, if someone is working, say, a 36‑hour week, four lots of eight hours and then four hours on Friday, you cash out on the most generous basis, on the eight hours. That leads to the same inequity between classes of employees that we have talked ‑ or similar inequity to the one we have discussed earlier about the level of protection and the value of the cover.

Why should someone who is working the same number of ordinary hours of work per week, 36 hours on our example, working 7.2 hours a week, have a cash‑out value that is lower than someone who works four lots of eight hours and four hours on Friday? It does not make any sense to treat those two classes of employees differently for the purposes of cashing out, but that is what the impact of the majority construction is.

EDELMAN J: You are not talking about section 101(1), are you, because section 101(1) will depend upon the particular terms of the award or enterprise agreement?

MR WOOD: No, your Honour, we are talking about section 101(2)(c), that:

the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

EDELMAN J: Yes.

MR WOOD: Now, it is fundamental to the system set up by the Fair Work Act that any award or agreement, enterprise agreement, that is made or agreed, cannot have an effect which is inconsistent with the terms of the NES, that is, the NES is a basal floor of rights. So whatever the conditions that are found in the modern award or enterprise agreement, they must meet the requirement in 101(2)(c), which means you:

must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

On the majority construction, there is no way of working that out in relation to employees who work a variable number of hours per week other than by assuming, as the majority did, that you pay out the full amount on the basis of the most generous construction - generous day for that employee. But that ignores the inequity that that approach creates, and these inequities disappear under our construction.

Moving then to the last anomalies and inequities under point 7, these inequities are even worse when it comes to part‑time employees with multiple jobs. If you imagine a part‑time employee working one day a week at one employer, and another day a week at another employer, compared to an employee working two days a week at one employer, that employee who works two days a week in multiple jobs, working the same number of hours and the same shift pattern, gets twice the level of protection and twice the level of cover that an employee working two days a week in one job does. There is no rational reason for that, and it does not occur on our construction, only on the majority construction. The last anomaly ‑ ‑ ‑

KIEFEL CJ: Would you mind just expanding on that, Mr Wood? How does that play out with the worker working one day a week at two different employers?

MR WOOD: If you assume, your Honour - let us assume an 8‑hour shift - assume any number - 12, 10, 8 does not matter, it is all the same - let us assume an 8‑hour shift. If, on our construction, someone working two days a week, eight hours a day is entitled to the number of ordinary hours they work per week that is a fortnightly equivalent of the ordinary hours they work per week which would be 32 hours after a year, on our construction, and that does not matter whether you are working for one employer or working the same ordinary hours for two employers. On our construction, you are either entitled to 32 hours paid leave per year working for one employer, or two lots of 16 hours of paid leave per year. You get the same level of cover and you have the same protection against illness.

On the majority construction, because it works in terms of absences, you are entitled to 10 absences per year, and on that basis the employee working for employer one is entitled to 10 absences, i.e. 80 hours – sorry, 10 absences - that works out to be, yes, 80, that is right, I am sorry, it is 80 hours per – the number seemed so stark I just thought I might not have had the maths right - works out you are entitled to 80 hours per year, and working for the second employer is also entitled to 80 hours paid leave per year – 10 absences per year with each employer.

So that employee is entitled to the equivalent of 160 hours per year, whereas the employee who works the same hours, on our construction, does not matter whether they work for both employer A and employer B or just for one employer, is entitled to 32 hours.

Now, it is a stark example of the problem with the majority construction and the – as we understand it there is no real answer to it from our learned friends. Even on their example, of course, on their own construction if you work with one employer you are entitled to 10 absences, that is, on their construction working two days per week they are entitled to 10 absences. Working one day a week you are entitled to 10 absences.

The problem is most stark when you are dealing with part‑time employees with multiple jobs, but it is very obvious at more normal examples when you are dealing with compressed hours or just part‑time work with one employer.

Now, the reason that we say – and this will be dealt with by the Minister when the Minister deals with some of the history – the reason we think this occurred is that before Work Choices, sick leave was largely regulated by awards. In the approximately 100‑year history of sick leave as an employee entitlement, because it was largely regulated by awards, awards were able to tailor expression of the entitlement to roster type, and when you are converting that entitlement that is found in specific awards to national legislation, that has to cover a range of roster types. You either do one of two things: you become very prescriptive, the way in which the Workplace Relations Act worked ‑ and my learned friend Mr Howe will take the Court to that history – or you approach it on a more simple basis, the way the Fair Work Act has approached things.

But having regard to that history, the way in which sick leave was described was always in days or in hours interchangeably, so that the entitlement to sick leave started at six days, equivalent to one working week, became by the mid‑70s one, one and a half weeks of sick leave, and by the time, just before the Workplace Relations Act, two weeks of sick leave, expressed sometimes in days, sometimes in hours, but embodying the concept that is expressed in the explanatory memorandum and the concept that we say is preferred on the text.

GAGELER J: Mr Wood, this question is really going back to an earlier question I asked, which was really prompted by your opening, and that is
the parallel that you drew between personal/carer’s leave and annual leave. If you go back to section 87 of the Act ‑ ‑ ‑

MR WOOD: Yes, your Honour.

GAGELER J: ‑ ‑ ‑ the structure of which seems to be the same as the structure of section 96, do we read the reference there to:

4 weeks of paid annual leave –

consistently with the way you would have us read the reference to:

10 days of paid personal/carer’s leave.

MR WOOD: That is right, one week’s ordinary hours of work, yes.

GAGELER J: Thank you.

MR WOOD: That is what we say it means.

GAGELER J: Thank you.

MR WOOD: I have got through my two and a quarter hours in 50 minutes, Chief Justice.

KIEFEL CJ: Well done, Mr Wood.

MR WOOD: Thank you, your Honour. If there is nothing else I can assist the Court with?

KIEFEL CJ: Thank you.

MR WOOD: Thank you.

KIEFEL CJ: Yes, Mr Howe.

MR HOWE: I apologise, your Honours, I should have been a little readier out of the blocks than I was. Your Honours also have the Minister’s oral outline of argument.

KIEFEL CJ: Yes, we do, thank you.

MR HOWE: As with my learned friend, Mr Wood, I would propose to abbreviate the matters to be addressed in the course of the Minister’s oral submissions and pass over some of the points in the oral outline which, really, are just summations of matters put more extensively in the written submissions in‑ chief and also in reply. The Minister does commend his reply, in particular, to the Court as consisting of a five‑page distillation as opposed to a 20‑page distillation of the Minister’s case with respect to the issue of construction.

Before adopting the framework set out in the oral submissions, can I just briefly address a couple of matters that have fallen from your Honours this morning in the course of Mr Wood’s oral submissions? Firstly, your Honour the Chief Justice inquired as to whether or not the reference to “service” had particular work to do in section 96. We rather think the answer to that question is no, although we can understand why your Honour asked. “Service” is actually defined, your Honour, in section 22 of the Fair Work Act.

We had wondered, at one point, whether or not, for instance, a 50 per cent part‑time employee’s year of service might, in effect, require two years – two calendar years – to accrue a year of service. But, with respect, we rather think that is not the position and that the calibration of the rate of accrual – and, therefore, the volume of hours accrued at any one point in time – is to be found by reference to the statute’s incorporation of ordinary hours of work, not really by reference to some adjustment of the notion of service which we do think does seem to be expressed by reference to a calendar year of continuous service.

Of course, the explanatory memorandum, to which my learned friend has taken the Court, does not attach significance at all to the concept of “service” as such in working out the rate of accrual and the number of accrued hours or what the upfront entitlement is of 10 days, and so on.

The second point we would note is that there have been many references by Mr Wood – and sometimes by your Honours – to this notion of entitlement. We did just want to emphasise an obvious point that what we are talking about here in connection with paid personal/carer’s leave and the other national employment standards, is a suite of provisions that are designed to provide a safety net of minimum entitlements to apply across the board to all national employees. So, we need to constantly keep in mind that when one is talking about statutory entitlement, it is an entitlement expressed as a bare minimum which can be adjusted upward, of course, in an award or an enterprise agreement.

In relation to the interaction between paid personal/carer’s leave and annual leave which was raised by your Honour Justice Gageler, we would say that they do align exactly, save that the upfront conferral of the leave is different, whereas in respect of paid personal/carer’s leave it is 10 days, which on the Minister’s construction is proxy for two weeks of paid personal/carer’s leave accruing per annum; of course, in respect of annual leave it is four weeks of annual leave. So, the rule of thumb able to be readily applied – and as we understand it, often was, for instance – was that paid personal/carer’s leave accrues at half the rate of annual leave and the per annum entitlement is half the number of ordinary hours of work.

Otherwise, the two regimes work exactly the same in terms of progressive accrual, in terms of concentration on ordinary hours as being the method for adjustment of the number of hours that is, in fact, the minimum entitlement for an employee by reference to their ordinary hours and the entitlement to payment when an hour of that accrued leave, whether it be annual leave or paid personal/carer’s leave, is taken.

The point we would also make in relation to a question which fell from your Honour Justice Nettle by reference to an employee, for instance, working three 12‑hour shifts that at the end of their year of service, if it was their first year, they would be confined to 6 of their 12‑hour shifts under the Minister’s construction and also that of Mondelez and so could not be absent in that first year on a seventh, eighth, ninth or tenth of their working days because they are 12‑hour days.

Of course, the position would be different in year two if there is an accrual that covers those additional days of absence in the second year. So, for instance, if all the leave was not expended in the first year then that employee, if he or she had a balance which covered 10 days of absence on paid personal/carer’s leave in that second, third or fourth year, then they could certainly take it and that is the necessary result of the accumulation of the leave year after year.

Could I just deal with the matter put in our oral outline at paragraph 1.1, which is directed to the idea that the concept of “day” and indeed the concept of “a working day” has no fixed non‑variable meaning at all and, in particular, it does not have a usual or ordinary meaning. In fact, the expression “working day” is defined in section 12 of the Fair Work Act as, in effect, comprehending a five‑day week because a – I am sorry, a working week excludes Saturdays, Sundays and any public holiday. That is to be found in the definition section, section 12, which is to be found on page 91, volume 1, Part A. There is a definition:

working day means a day that is not a Saturday, a Sunday or a public holiday.

Now, it is quite clear when one has regard to that statutory conception of a “working day” that the Fair Work Act is predicated in a default sense on this notion of a five‑day working week and, on that basis, the reference to 10 days in section 96 can be readily equated with two weeks of paid personal/carer’s leave per annum.

But the point we wish to make is that the working day construction adopted by the majority is not itself amenable to a plain, ordinary or usual meaning and, indeed, the majority recognised this. If your Honours go to the core appeal book, at page 53, your Honours will see in paragraph 199(1) that their Honours summarise their principal conclusions and it is described in these terms:

A “day” in s 96(1) of the FW Act refers to the portion of a 24 hour period that would otherwise be allotted to work (a “working day”).

Now, for a start that is, in effect, putting a label that is itself a defined term in the Fair Work Act and defined in a quite different way. But, secondly ‑ ‑ ‑

KIEFEL CJ: Is it also something that is taken away from a working day?

MR HOWE: Exactly. The other difficulty is that of course it is a nuanced concept that directs attention to what would happen in a 24‑hour period by way of what would have been allotted to an individual employee to work on that day, so it is a very employee‑centric notion and, of course, if an employee works in a particular pattern of work – 10 hours one day, 4 hours the next day and so on, then the amount allotted to work in terms of their accrual cannot readily be known.

Does one accrue by reference to the 12‑hour days or the four‑hour days, and the majority recognised that and so suggested that in relation to those workers they would accrue their paid personal/carer’s leave in a range that would be from four to 100 hours per annum.

EDELMAN J: Can you set out concisely what you mean, or what you say “day” means?

MR HOWE: Well, we say one does not just concentrate on days – one looks at the expression that is to be found in section 96 which is 10 days, and we say 10 days in section 96 means two weeks’ worth of an employee’s ordinary hours in that period. So, if an employee’s ordinary hours are 38 hours per week, whether they work them evenly over five days or in three 12‑hour shifts, their per annum entitlement is two weeks’ worth of those 38 hours per week, which is 76 hours.

NETTLE J: Mr Howe, it is really 1/26th of the ordinary working hours for the year, is it not?

MR HOWE: It is.

NETTLE J: Which equates to the old workplace relations equivalence of 1/26th for the fortnight.

MR HOWE: That is so, your Honour.

NETTLE J: And squares with section 99’s determination that annual leave accrue annually according to annual hours of ordinary work.

MR HOWE: Precisely so. Now, could I pass to this question of cashing out to make one point supplementary to that which my learned friend made? The approach of the majority to this issue of cashing out in circumstances where the accrued entitlement can only be expressed by reference to a wide range, the other difficulty presented by section 101(2)(c), is that the approach of the majority does not fit conformably with the statutory language, which requires payment for the amount of leave which has in fact been forgone, so if that amount of leave can only be expressed in terms of perhaps a very, very, wide accrued range then the amount of the payment is incapable of conforming to the statutory mandate. I am sorry, your Honour, it is not a COVID‑19 cough. It is a background asthma cough.

KIEFEL CJ: It is a “need some water” cough, I think.

MR HOWE: Your Honours, could I ask you to go to some passages in the explanatory memorandum and I can indicate that I will not be asking your Honours to trawl over the exact same passages that my learned friend took the Court to. There are just some additional passages in the explanatory memorandum. Again, it is to be found in part E of volume 7.

We would just ask your Honours to note that on page (i) of the EM, under the heading “Outline” - this is on page 1849 of the book of authorities, there is a reference there to, in the first bullet dot point, the Bill establishing:

a simple and stable safety net comprising -

and the first is minimum weekly hours of work. So, again, this concept of ordinary hours of work being a weekly concept comes to the fore, and that is quite consistent with section 20 and also section 62, which defines the maximum ordinary hours of work as being 38 per week unless any additional hours are reasonable, and then we have the fifth sub‑dot point being:

personal/carer’s leave and compassionate leave -

and there is a reference in the second dash point on that page to:

modern awards, which provide flexibility and stability for . . . their employees ‑

Then on the next page, the first hard bullet dot point, there is a reference to the bill promoting:

productivity and fairness through enterprise agreements that are tailored to suit the needs of businesses and the needs of employees ‑

So these provisions, clearly enough, strike a balance in terms of their purpose, and then, if your Honours go to page 1852 of the book of authorities, your Honours will see that the regulatory analysis commences on that page, and under the heading “Introduction” there is paragraph r.3.:

The current legislative provisions contained in the Workplace Relations Act 1996 ‑

This is the predecessor legislation:

are complex and amount to some 1,500 pages in length. This compares with the simpler provisions of this Bill which amount to fewer than 600 pages.

So that, clearly enough, indicates that this new legislation is an exercise in so‑called simplification of detailed provisions and their replacement with provisions that are intended, at least, to be more simply expressed. Then there is reference at the bottom of that page to a key element being:

a strong safety net of 10 legislated National Employment Standards ‑

Then over the page on page 1853, at the bottom of the page, paragraph numbered r.11 – again, there is a reference to the provision in the third line of that paragraph 2 of:

flexible working arrangements and simplify the rules by which the entitlements of employees are accrued.

Then on the next page, 1854, at the top of that page, we would ask your Honours to note the final sentence as to what it was that the simplified rules were designed to achieve, namely a benefit for employers and employees, no suggestion in any of this of some radical transformation of the pre‑existing regime of 126 as the basic entitlement.

Then if your Honours could go to page 1857 of the book of authorities, in paragraph r.22, the fourth dot point, your Honours will see there an employee is described as being:

entitled to ten days of paid personal leave per annum after 12 months of service for an employee who works 38 hours per week.

Then there is a reference to that being “pro-rated”. Then over the page, 1859, the first hard bullet point on that page your Honours will, just as it were, note that. Again, it is an indication that the complex safety net provisions were being replaced by a single simple rule for taking leave. Then there is a reference also to provisions for cashing out.

Now, that takes one then to the two pages that my learned friend, Mr Wood, concentrated on and the only thing we would ask your Honours to note is that the illustrative examples on page 1872 of the book of authorities are examples which illustrate the operation of the general principles described on the preceding page.

If your Honours in particular go to the third‑last paragraph and the second‑last paragraph under the heading “General Principles”, when one bears in mind what is stated there and is being illustrated in these examples, to the extent the EM sheds interpretative light and, we say, that is to a considerable extent, it is completely and totally opposed to the construction arrived at by the majority below and embraced by the Union here.

So it could not be clearer that patterns of work, three 12‑hour shifts per week of 36 hours on the one hand or five 7.2‑hour shifts on the other hand each equates to 38 hours of ordinary hours per week and results in an upfront per annum entitlement in each case, in each case of 72 hours per annum. Those general principles are what is illustrated on the next page and we say that they leave no room for the adoption of the majority’s approach.

Very quickly, could I ask your Honours to go to the legislative history as well, and in particular to provisions of the Act which the Fair Work Act replaced, being the Workplace Relations Act, and I am now at the fifth point in the outline with not very far to go, your Honours. That is to be found at volume 4, tab 3. It commences at page 1092.

Now, this is a consolidation. If I could just explain to your Honours that the actual Act which introduced the paid personal/carer’s leave provisions is to be found behind the next tab, that is the Workplace Relations Amendment Act 2005. If your Honours go to that Act, your Honours will see that it includes nearly every one of the provisions which I will take your Honours to in a consolidated reprint behind tab 3.

It is just that after the Amendment Act took effect there was a radical renumbering, your Honours, and that is why the provisions found in the Act behind tab 4 are in almost identical terms – but they are dramatically different section numbers. That is the reason that absolutely nothing turns on it.

So, could I ask your Honours to go the consolidation behind tab 3 and your Honours will see that section 226 states a guarantee with respect to the maximum number of ordinary hours of work and, of course, that conception of ordinary hours of work is expressed as a weekly concept. Then, if your Honours go over the page to page 1113 and just note section 241 which deals with the meaning of nominal hours worked.

Now, that basically corresponded to the ordinary hours worked but was capable of some adjustment. Your Honours will see in subsection (2) again there is a provision that is emblematic of the general conception of ordinary hours a week – ordinary hours of work being a weekly concept. Your Honours will just note the definition of “personal/carer’s leave” in section 244 of the old Workplace Relations Act and that was largely picked up in the new Fair Work Act.

KIEFEL CJ: That might be a convenient time, Mr Howe.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.30 AM:

MR HOWE: Your Honours, I can be very brief. If your Honours could go to section 246 of the predecessor Act on page 1118 of the court book, your Honours will see in subsection (2) the question of accrual under the Workplace Relations Act was dealt with. The substantive section picked up the 1/26th formulation.

But in particular we ask your Honours to note what is described in the example, whereby that 1/26th is explained in terms which actually use the expression “10 days”, which is the expression picked up. By way of an exercise in so‑called simple drafting, in section 96 of the replacement Act, one sees another example to similar effect over the page in section 247A(1) and this deals with the:

Entitlement to leave for all nominal hours in a day also extends to other hours –

that might have been worked, although they are not paid. But, in particular, your Honours will see again the example appended to the foot of subsection (1). There is also an explication which is consistent with the approach for which Mondelez and the Minister contend. There is again a reference to “10 full 8 hour days” or “10 days”, which clearly enough is a reference to two weeks’ worth of the ordinary hours of work in a week.

Then, finally, section 249, which deals with what was an annual limit under the previous legislation and, in particular, your Honours will see in subsection (2) there is again a reference to the “1/26th” regime, and an example again is expressed by reference to the ordinary working hours in a week. What is said there, of course, cannot be regarded as alterable by reference to working patterns. It does not matter whether the 38 hours were worked five days a week or three days a week. Again, there is an explicit reference in the example to “10 days” being the expression picked up and applied in section 96 ‑ ‑ ‑

GORDON J: Mr Howe, can I ask a question about a worker who works three weeks on and one week off. You need the 1/26th formulation, do you not, to make this section work on your construction?

MR HOWE: Well, you would, subject to this. In the case of those workers, the Act itself contains provisions which do permit what is called averaging.

GORDON J: That is why you need the 1/26th?

MR HOWE: That is right. The averaging happens in an award or an enterprise agreement so that the entitlement conferred and expressed as 10 days – being two weeks on the Minister’s approach – can be readily ascertained by resort to the averaging.

The final point we wish to make appears in paragraph 6 of our outline and I will be very brief with respect to this. We refer in paragraph 6 to a case which was not addressed in our written submissions. It is Re Parental Leave Test Case (2005) 143 IR 245. In paragraph 6, we have given the Court references to particular passages in that report. What those passages indicate, your Honours, is that even prior to the workplace relations regime of personal/carer’s leave being introduced, awards and enterprise agreements often expressed the conferral of an entitlement to sick leave or carer’s leave by reference to five days or 10 days, which were understood to comprehend one week or two weeks of an employee’s ordinary hours of work.

So that is part of the context for the enactment of the Workplace Relations Act. It also indicates that the approach for which the Minister contends of treating 10 days as, in effect, a reference to two weeks’ worth of ordinary hours per week, is something which was part of the industrial landscape in Australia going back, according to this decision, to the mid‑90s. May it please, those are the matters that the Minister wishes to raise.

KIEFEL CJ: Thank you. Yes, Mr Taylor.

MR TAYLOR: I understand that the outline of argument for the first to third respondents has been provided to the Court ‑ ‑ ‑

KIEFEL CJ: Yes, thank you, Mr Taylor.

MR TAYLOR: ‑ ‑ ‑ over the course of the morning tea break and I hope that the Judges interstate have been able to receive that as well.

KIEFEL CJ: Yes, I think technology has made that possible.

MR TAYLOR: We do want to start with the text but before we do can I just address one issue at the outset? That is, this notion that there is something anomalous, unreasonable – I think Mr Wood referred to “irrational and capricious” ‑ with the approach for which we contend. That is, to give the expression “10 days of leave” a natural and ordinary meaning of 10 24‑hour periods during which a person can take paid leave. We say there is nothing unreasonable, or likely to have been unintended, in two employees who have different shift lengths both being entitled to be off work for 10 days if they are ill or injured or if they are caring for a family member.

Take our second respondent, Ms Triffitt, who works 12‑hour shifts on average three days a week and compare her, as the enterprise agreement acknowledges, to another employee who might work five days a week 7.2 hours. Both of them are, we accept, of course, working an average of 36 hours a week but if both have a child who is ill on 10 occasions during the course of the year such that they must take time off, Ms Triffitt will only be paid for six of those occasions, whereas the other employee will be paid for 10 of those occasions.

NETTLE J: She would be paid exactly the same number of hours foregone, will she not?

MR TAYLOR: Yes, she will be paid the same number of hours foregone but at the end of the year she will not have received her full annual remuneration while employee B will have. Now, what we think is terribly important to understand about these provisions is that they are, as is acknowledged by the respondents, a statutory form, limited, I accept, but a statutory form of income protection for illness.

NETTLE J: But if they each take off the same number of hours for PPCL leave, they each need the same amount of protection, surely.

MR TAYLOR: Yes, but the ‑ ‑ ‑

NETTLE J: Why should one have a greater number of hours of protection than another?

MR TAYLOR: Well, because the way that illness works, whether it is of a child or of a person, is that it necessitates them to have to take the day. They cannot just come into work after 7.2 hours, and so we say that the – consistent with the ‑ ‑ ‑

NETTLE J: Why does that matter? Whatever they take and whenever they take it they are surely entitled to the same number of hour’s protection as the other.

MR TAYLOR: We say that in circumstances where it has to be readily understood, of course, that this is not a provision like annual leave which necessarily gets paid out, it is conditioned upon a particular circumstance arising that the purpose of it is not to pay people money that they have earned but to protect them from a loss of income.

NETTLE J: Just so, to protect them against the hours that they cannot work.

MR TAYLOR: Yes, and we say that the use of the expression “10 days” is to give that entitlement, equal entitlement to all, that they can be ill on 10 days and get the same entitlement.

NETTLE J: That is the.....it does not give an equal entitlement. It gives an unequal entitlement and, in some cases, a grossly unequal entitlement.

MR TAYLOR: Well, only if you do that which the appellants urge upon you, which we say does not arise from the language of the statute, and that is to convert it into hours. There is no need, we say, to convert it into hours. It is an entitlement which is ‑ ‑ ‑

NETTLE J: It accrues by reference to hours under section 99.

MR TAYLOR: What section 99 does is govern what is paid when someone takes leave, and what they are paid when they take leave is the ordinary hours they would have worked on that day. So, in Ms Triffitt’s case, if she is ill on a particular day, for which she was rostered to work 12 hours, she will be paid 12 hours on that day.

GAGELER J: We were told by Mr Wood that section 99 works the same way on either construction. Do you agree with that?

MR TAYLOR: Yes, I think it works the same way on either construction in the sense that if you have accrued sufficient leave, then whatever ordinary hours you are rostered to work on a particular day will be paid out from that accrued leave. An issue does arise, which we will come to, about whether you are authorised by the relevant ‑ Division 7, Part 2‑2, to take any rostered overtime that you had. Certainly, section 99 works on the same basis; yes, I accept that.

Mr Wood and, for that matter the Minister, put the submission that on their interpretation an employee will always be entitled to effectively be paid for a two‑week period. That, we say, is not the case. You will always get variations, depending on roster patterns. But there are certainly roster patterns wherein days vary from week to week where you would end up, on their interpretation, not being able to be paid for a full two weeks – a roster pattern of three days one week, five days the next, five days the next, and then three, and then three, and then five and five, such that you are working, overall, 16 days over a four‑week period. But in a particular fortnight of 10 days then you, on the appellants’ argument, are only going to be paid for nine of those, you are not going to get the full two weeks. So there will be anomalies or differences, as the majority indicated, on either approach.

As you will have seen from our written submissions, we, of course, emphasise the authorities which identify the importance of construing the text in circumstances where the appellants’ case spends much time on the extrinsic materials, in particular the explanatory memorandum, and more generally, the context ‑ we emphasise the context where it has utility; it only has utility insofar as it assists in the fixing of the meaning to the statutory text.

KIEFEL CJ: What about the relevance of sections 96(2) and 99 respectively refer to ordinary hours of work in relation to accrual and accumulation of leave, and rate of pay, and section 147 which also requires ordinary hours of work for the purposes of the award?

MR TAYLOR: Yes. There is no doubt ‑ ‑ ‑

KIEFEL CJ: Are they not relevant to the question of construction?

MR TAYLOR: Indeed they are, and there is no doubt that the expression “ordinary hours of work” has work to do in the context of this division because, as Justice Gageler identified, it is relevant to section 99. I did want to come to the text of section 96(2) and section 99 after I dealt with section 96(1), but can I just before that just identify this. This, of course ‑ this day of ‑ or more if we go over ‑ but this day of submissions as to what the word “day” means arises because this Act has not defined the word “day”. It is true that the expression “working day” is defined. It is defined in circumstances where there are four sections which use that expression and we have identified them as sections 414, 441, 454 and 536.

In short, that definition is of no assistance, we say, in the context of understanding what the expression “day of leave” or “days of leave” means in this context. It is a defined expression which is used in very specific circumstances to identify, in effect, either a point in time – a date when something must be done by, or a period of time in the context of how long the Fair Work Commission has before it must deal with, in section 441, an application for orders in respect of industrial action.

So it has a very particular meaning which leaves us in the situation where the word is not defined, and we provided to the Court the additional authority in Masson v Parsons [2019] HCA 21; 93 ALJR 848. That was a case, of course, which considered what the word “parent” meant in respect of the Family Law Act in circumstances where that Act did not define the word and the question of whether a biological father not in a de facto relationship at the time of birth would fall within that meaning.

The plurality in that case at paragraph 22, against the context of no definition, said that there is no basis in that case – in the text’s structural purpose of the legislation to suppose that Parliament intended the word to have anything other than its natural or ordinary meaning, and went on in paragraph 26 to propose that when engaged in the exercise of statutory construction one does not depart from the natural and ordinary meaning unless it is plain that Parliament intended it to have some other meaning.

KIEFEL CJ: Do you accept that the word “day” has different meanings throughout the Act?

MR TAYLOR: We accept that in some parts of the Act the word “day” means a point in time, but what we identify is that at various points in the Act the word “day” is, we say, clearly intended to mean a 24‑hour period of time, and indeed we think the appellants’ concede that, the various points in the Act, indeed they must specifically go to 106E and, by identifying that when that was introduced, it was introduced in a manner which identified that the introduction of that type of leave was to be given the same meaning as other types of unpaid leave identified there.

They identify that to indicate that that must mean there are different meanings, at least a different meaning to section 96(1). We do not accept that. What we do say is that what those uses indicate is that there is an intention to use the word “day” not as a unit of time but as a 24‑hour period. I did want to come to some examples of those.

We say in the context of this Act, and these sections in particular, with respect to section 96(1), which I will turn to now, what is important, of course, to understand, is that it is a ‑ it is not just, of course, 10 days, it is an expression which is 10 days of leave, and it is important to pick up that additional notion. It comes under the heading “amount of leave”, and it is prescribing a national employment standard that is to apply equally, and we say it sets out both the nature and the quantum of the entitlement.

The nature of it ‑ it is a form of paid leave, so you are paid for the hours you were to be at work, subject, of course, to section 99, and the quantum is that it is defining the amount of such leave as 10 days. It does not use, of course, expressions like, when defining the quantum, “ordinary hours” or “fortnight” or “two weeks”, it makes no reference to a notional or average period. If we are talking about days of leave, we say the natural and ordinary meaning is 24‑hour periods during which someone is relieved of the obligation to work, that is, their absence is authorised, and that type of idea was referred to by the majority below as a “working day”.

We do not, with respect, accept Mr Wood’s contention that the Union put a different proposition below, although we did not adopt the expression “working day”. We referred to our argument, by definition, as a calendar day but the submission we put is identified by the Full Court majority decision at paragraph 5, was that we were dealing with a period of time of 24 hours during which a person is entitled to leave.

To pick up your Honour the Chief Justice’s question about the importance of the expression “a year of service”, firstly can we identify that the legislation is using the word “year”. Again, it would appear as a unit of time, its ordinary meaning to refer to a unit of time being a 12‑month period, which is consistent with the approach we take that “days to” would be given an understanding of a unit of time being a 24‑hour period.

NETTLE J: Mr Taylor, might I ask you, whilst you are at paragraph 3 of your outline, which I take it you are.

MR TAYLOR: Yes.

NETTLE J: You make reference there to CFMEU v Glendell as it were in support of your contention in that paragraph, am I correct?

MR TAYLOR: I am sorry, your Honour, I just lost the last part of your question.

NETTLE J: I beg your pardon. Paragraph 3 of the outline.

MR TAYLOR: Yes, I heard that, yes.

NETTLE J: You make reference to CFMEU v Glendell.

MR TAYLOR: Yes.

NETTLE J: As it were in support of your contention in that paragraph?

MR TAYLOR: Yes. At that paragraph, the decision of Justices White and Bromwich, with whom on this particular point the third judge Justice Siopsis agreed, are considering an argument that was specifically about annual leave, but also the same argument that is being made about personal leave, and they adopted the ‑ ‑ ‑

NETTLE J: It was two weeks’ annual leave?

MR TAYLOR: I am sorry, your Honour?

NETTLE J: It was an expression, “two weeks’ annual leave” that their Honours were considering?

MR TAYLOR: Four weeks’ annual leave in that particular case, yes. And they were considering the question of whether four weeks’ annual leave meant 20 days. The Union had contended that the particular workers, who were shift workers, who were not working five days a week but were working either three or four days a week, had not been paid more than the minimum entitlement under the NES, if they had taken 20 days because four weeks and 20 days are the same thing.

The majority said no, that is not right, what you must do is understand that four weeks means a consideration of the number of absences that you would have during that four‑week period. In that particular case it meant 14 shifts, because they were working three, one, four the other, seven a fortnight, 14 over four weeks.

So the Union’s argument that they had not exceeded a four‑week period by taking 20 days was wrong. In that regard, they rely on the Full Bench decision in the Fair Work Commission decision of RACV, which we can give you a reference to in a moment, wherein the Full Bench gave some careful consideration of what both the word “day” and “10 days” means, but also what the expression “four weeks” means in respect of annual leave.

Justice Gageler, when it came to this issue that you have raised with my learned friends, I thought it was important to identify that your Honour might be assisted by the decision in RACV. It is found in the joint book of authorities at page 1673. I am not suggesting your Honour needs to open it now, but I indicate to you that that analysis in that decision is of utility, as are the decisions of Justice Buchanan in the case we have summarised as Anglo Coal at tab 17 of the joint bundle, and the decision which Justice Edelman was just asking about, Glendell Mining, which is at tab 18.

In each of those cases, the Court took a view that the word “day” should be given the meaning for which we contend, a natural and ordinary meaning of “24‑hour period”, and the word “week” in respect of annual leave, or “four weeks”, should again be given a natural and ordinary meaning of a period of time during which an employee will be rostered to work.

GAGELER J: Would there be any reason in principle to take a different view of the nature of the reference to “4 weeks” in section 87 from the nature of the reference to “10 days” in section 96. I mean, are we dealing with a package here or are there reasons to distinguish annual leave from personal/carer’s leave?

MR TAYLOR: Your Honour, there are many similarities in the language, as your Honour has identified. There are some differences, though. The first, of course, is that we are dealing with weeks, not days, but we make the obvious point that if the Minister were right the legislature in 96(1) could have referred to two weeks. They did not. They referred to 10 days. There is that first difference.

The second difference is section 88 which, unlike personal leave, this type of leave, annual leave, can only be taken by agreement. The third proposition, the third difference which affects the purpose by which one would interpret the annual leave provisions is the fact that it is presumptively paid out as section 90(2) identifies and section 94 as well, for that matter.

The purpose of annual leave is – perhaps could be said to be beneficial rather than protective. It is not, in that sense, a form of insurance against an event happening for which one is protected against loss of income. One rather earns leave which then can take as one proceeds.

We say that the proper approach to that provision can be read entirely consistently with our interpretation as RACV and those other cases I mentioned have done by identifying the number of absences off work that can be taken in a week. So, a standard five‑day week worker will have 20 absences over a four‑week period, so if they take a day of leave they lose one‑twentieth of their annual leave entitlement. If they are working three days a week, such that they have 12 shifts over a four‑week period and they take one day of leave they lose a twelfth and it is the same - we say the same notion, the same approach that is taken - one is considering a period of time during which one can take ‑ ‑ ‑

KIEFEL CJ: Mr Taylor, would this be a fair summary of your construction of section 96(1), that there are 10 lots of 24‑hour periods, leave being calculated by reference to that part of the 24‑hour period which would otherwise have been worked?

MR TAYLOR: Yes, regardless of whether that was ‑ ‑ ‑

KIEFEL CJ: So what that effectively does is construe days as 24‑hour periods and separately construe how leave is going to be calculated as part of the meaning of “leave”, but not the “days”? I mean, it is a separate construction, is it not, of what “days” mean and what “leave” means, “leave” simply being construed by reference to how you say it is to be calculated?

MR TAYLOR: I may not have fully appreciated the way your Honour is putting it to me but we do put that 10 days of leave – or a day of leave – is to properly to be understood, as the majority did below, as an authorisation to not be at work during a 24‑hour period for whatever hours one was otherwise going to be working, which might be ordinary hours and overtime.

KIEFEL CJ: That is to construe the word “leave”.

MR TAYLOR: Yes.

KIEFEL CJ: It does not actually construe the word “days”, does it?

MR TAYLOR: No.

KIEFEL CJ: Ten days. You approach them separately and not as if they are one concept.

MR TAYLOR: I hope we do not do that. What we think we are doing by taking the expression “a day of leave” is understanding that as a single concept – and it is an authorisation to not be at work for whatever hours in a 24‑hour period that you are otherwise going to be at work. There is no suggestion, for example, that you are entitled to be paid the 24 hours. It is only the entitlement to be paid for – the authorisation is only for so much of the 24‑hour period that you are otherwise going to be working.

KIEFEL CJ: But that is only one aspect of leave, is it not? Leave is also a financial benefit and that is important because that requires a more precise calculation.

MR TAYLOR: Yes, it is a financial benefit – not one that you earn in the sense of annual leave where it will get paid out. It is, we say, more in the form of a type of insurance. But you do then go to section 99 to work out what you are paid and you are paid the ordinary hours that you would have worked on that day had you been able to work.

KIEFEL CJ: So, the notion of ordinary hours of work is relevant to the cashing out and the quantification of the financial benefit but it is not to the notion of an entitlement more generally.

MR TAYLOR: I think that is a fair way of putting our case other than this, your Honour. We do say that section 96(2) – if I turn to that now – which deals with accrual, is dealing with accrual over time and how this entitlement of 10 days amasses over time – dealing with, of course, a circumstance in which section 96(1) has created the entitlement of 10 days but has not made clear at what point you get those 10 days – beginning of the year, at the end of year, or is it progressively – and section 96(2) sets the way in which it is done. It builds progressively and uses as the metric the passage of time during the year of service.

The words, “according to the employee’s ordinary hours”, do not, in our respectful submission, mean it has to be accrued in hours. What it means is it does not accrue in periods of unpaid leave or periods of unauthorised leave – or, for that matter, periods of overtime. It only accrues in respect of periods in which there are ordinary hours – they may not be worked because you would accrue personal leave and, effectively, you are being paid for ordinary hours when you are on paid leave such as annual leave.

We say that is the work that the words do. They are making clear that what one is not doing is accruing, progressively, on a time basis. If one takes, for example, three months’ unpaid leave, you do not accrue during that period of leave further personal carer’s leave because you only accrue it according to the period in which the employee is working ordinary hours.

In that regard we do contrast, as you have seen from our submissions, the language used in the Workplace Relations Act which used a formula which made clear that what you are doing is accruing 1/26th of nominal hours, that is not necessarily your actual hours, but the nominal hours. The language of this Act has moved a long way from those concepts.

NETTLE J: Just to be clear on that, it does not accrue then, you would say, under 96(2), according to the ordinary hours of work, but rather accrues by reference to something else being the period during which the employee is not absent from work. Is that it?

MR TAYLOR: It does not - it accrues progressively during the year of service and in respect of the period during which the employee is working or is being paid for ordinary hours of work, so it is not - the accrual itself is identifying how one is accruing 10 days, how quickly one is accruing 10 days ‑ ‑ ‑

NETTLE J: According to the employee’s ordinary hours of work.

MR TAYLOR: Yes, and your Honour is quite right, we say that there is no reason to read into subsection (2) something which has the effect of converting what we say are fairly plain and ordinary words of “10 days” to something that means something quite different, which is of course the appellants’ argument that one must understand “10 days” to actually mean a somewhat, we say, complex formula which is certainly not apparent from the text of the legislation, which can be, as I said, contrasted quite strongly with the approach of the Workplace Relations Act, which did indeed make absolutely clear the entitlement was not - there was no reference to “10 days” other than in a note, which I will need to come to, but rather to hours that accrue based on a notional concept of a maximum number of hours per week multiplied, and then a formula applied of 1/26th.

NETTLE J: But is not the expression “according to the employee’s ordinary hours of work” an expression which plainly and ordinarily means that the entitlement accrues according to the ordinary hours of work?

MR TAYLOR: Yes, but we say it does not follow that that means that you must actually have a formula which is based on some notion of average ordinary hours of work over a particular period. We say that the words do nothing more or less than identify that you are only accruing during periods when the employee is indeed - has ordinary hours of work. It is accepted that employees’ ordinary hours of work will vary. People have quite a wide variety of hours of work and you do not, from those words, say that you must then somehow change what the words “10 days” mean to mean something that actually means some notional concept of hours worked.

NETTLE J: I see, thank you.

MR TAYLOR: Section 97 is not something that has been emphasised and perhaps because it is taken as read, but we do think it is important of course to understand the purpose of this type of leave, which is set out squarely in section 97 and which, we say, underpins the conclusion that it is a form of insurance from loss of income. Rather than a financial benefit it is protecting one from a loss of income from the fact that you are unable to work on particular days and, on our view, that means 10 actual days during the course of a year.

Section 98 does not set what might be thought to be one of the rules about the way in which it works generally, but it does use the expression again, “day or part‑day”, this time in the context of a public holiday and it is one of the examples that we point to by way of statutory context, which assists the Court, we say, to come to the view that the Act is using the word “day” to mean an actual day, an actual 24‑hour period in this context where the period of leave “includes a day or part‑day that is a public holiday”.

Now, the public holiday itself is defined in section 115 to mean particular days, but if the leave includes a day or part‑day that is such a public holiday then it is including, we say, a 24‑hour period or perhaps less than a 24‑hour period where public holidays are only half days, as they are from place to place. But it is consistent with our view that we are talking about a period of time that is not a notional period of time.

I think we have dealt with – I was going to come next to section 99. The only thing I would just maybe emphasise in response to a submission that appears in the Minister’s written submissions, which I think your Honour the Chief Justice raised with me that, perhaps if I understood it correctly, there is a note underneath section 147 which refers to the application of the expression “ordinary hours of work” and indicates that they have significance in determining employees’ entitlements under the NES.

That is said to be an important extrinsic indicator of the proper approach to section 96. We say yes, of course ordinary hours of work has a role to play in respect to this division, but its real work is here in respect of section 99 and how much you get paid when you take the leave.

I do not think Mondelez has any difficulty with the suggestion that their interpretation of a day, which they say to mean the employee’s average ordinary hours of work based on a five‑day week, is not one that is based on the words directly of section 96(1). None of those words, “an average of ordinary hours of work based on a five‑day week”, is found there or nearby.

We do not accept the proposition that this idea of a five‑day week, which is not mentioned anywhere in the Act, is something which is foundational to the Act, unsurprising perhaps given changes to society. It was certainly not foundational by reference to the underpinning facts of this case.

The relevant enterprise agreement was contained within the Mondelez book of further materials - if the Court has access to the book of further materials provided by Mondelez in their matter. The relevant enterprise agreement is found from page 13 of the bundle. At page 42 of the bundle, one finds the ordinary hours of work at this particular worksite.

At this particular worksite you had – the enterprise agreement has the notion of “day workers”, “continuous shift workers” and “non‑continuous shift workers” – it is under page 42 of the AFM. The company has a right to move people from any one of those, and the clause describes the ordinary hours of work and how they can be arranged. The third paragraph at about line 9 of page 42:

The ordinary hours of work for all three categories is 36 per week to be averaged over the period of the work cycle that applies in the particular section. In accordance with the provisions below –

that can be either:

5, 6 or 7 day rosters.

Then down at clause 32.1, we see for day workers:

36 per week but not exceeding 144 hours in 28 days.

In (b) they can be worked any day of the week and, indeed, they can be – in respect of continuous shift workers we have the same notion on page 43, paragraph 32.2(b), they also work 36 hours averaged over 28 days, but if you go to (c) that can be averaged over a period that does not exceed 12 months.

So this is just by way of example but there is no, we say, standard five‑day week that is contemplated by the Act. Rather, the Act contemplates, as this enterprise agreement does, all sorts of rosters – five‑day rosters, six‑day rosters, seven‑day roster patterns. They can be averaged over two weeks, which is the approach the Minister urges upon you as the proper meaning of the section. But they can also be averaged over much longer periods, 28 days, or up to 12 months consistent with the statutory provisions.

NETTLE J: Mr Taylor, if 10 days equals one 1/26th of ordinary working hours for the year, as it did under the Workplace Relations Act, would all those problems disappear?

MR TAYLOR: I do not know by way of problems, but if your Honour means if the word “day” is to be interpreted as 1/26th of nominal hours worked without ‑ ‑ ‑

NETTLE J: Not days, it is the collocation of 10 days. If that equals 1/26th of ordinary working hours for the year, do not all the problems that you are now identifying – the result of different schedules and rostering – disappear?

MR TAYLOR: We may be at cross‑purposes, but if I can answer your Honour’s question. If that were the definition, as the Workplace Relations Act had it, then you would then have an entitlement that can be calculated by reference to a formula over the course of a 12‑month period - I accept that. As a proposition of course we say that that is exactly what this legislature did not do. They did not take the words of the Workplace Relations Act and apply them. They instead took a situation where you get 10 days.

You have to understand – I was going to come to the Workplace Relations Act – you have to understand a couple of things about the Workplace Relations Act provisions. It did not guarantee you two weeks and nor did it guarantee you 10 days – 1/26th of the nominal hours of work – and that is another important understanding – under the Workplace Relations Act, it was not based on your actual ordinary hours, it was based on maximum notional hours. You could not get more than 36 notional hours – sorry 38 notional hours a week, 76 hours a year.

So even if you are working 40 or 45 ordinary hours a week you were not going to ever get, under the Workplace Relations Act, more than 76 hours, but the second thing is that whilst, as the Minister pointed out, there is reference in the material to the legislature in extrinsic materials suggesting that under the Workplace Relations Act the entitlement converted to 10 days, it did not.

Ms Triffitt and the third respondent would, under the Workplace Relations Act, be entitled to take six days not 10. It only worked out to 10 days for people working five days a week. As you will have seen from our submissions we say that when one properly understands what the Workplace Relations Act in fact entitles someone to do, one can see a legislative intention to provide an actual entitlement which is what the legislature had referred to as being something that was implied under the Workplace Relations Act.

I am jumping around, I apologise for that, but if I could just go for a moment into the explanatory memorandum to this legislation that we are looking at. That is in the joint book of authorities in volume 7 and, in particular, at page 1857. Mr Howe took you to this page and he took you to the fourth paragraph which refers to a personal leave entitlement of:

ten days of paid personal leave per annum after 12 months of service for an employee who works 38 hours per week. This entitlement is pro‑rated for employees who have not completed 12 months service.

What he did not identify, although the court may well have understood this, is that this point - what the Department of Education, Employment and Workplace Relations was writing about was what the entitlement was understood to be under the Workplace Relations Act. That is clear from the beginning or the chapeau of rule 22 on page 1857 where it refers to the standard containing “five basic entitlements”, that being standard under the work choices legislation which was in the Workplace Relations Act.

GORDON J: I thought, Mr Taylor, that you had taken us to the current arrangements to compare it with what was proposed at 1858 and the first bullet point to show there had been no change.

MR TAYLOR: Yes, and what we say is that that whilst the Department was suggesting that there is no change, what we think the Department was indicating is that there was intended to be an entitlement to 10 days. So, in page 1857 there is a statement that employees are entitled to 10 days which, of course, under the Workplace Relations Act, would not be what they are entitled to if they work compressed hours and, therefore, only less than five days a week.

The approach – the inference we say we draw from the approach of the legislature is that it intended to actually provide people with 10 days and, hence, a move from a concept of a notional formula which, for those working three 12‑hour shifts a week, would actually give them only six days to a point where they would in fact get 10 days. That would, we accept, mean an increase in the amounts that might be paid by employers and Mr Wood described our approach as employee‑centric.

The national employment standards are a set of minimum standards that apply to employees. One would appropriately, we say, take an approach of looking at it from the point of view of what is the minimum time of employees. If that is described as employee‑centric then we accept that that is the proper approach.

Yes, the explanatory memorandum did, we say, have for the relatively small number of employees who do not work standard periods of time that they would actually get 10 days when they did not before. If you back to page 1853, at paragraph r.11., as to how I read the second sentence, can I just emphasise the third sentence:

Where additional entitlements (including unpaid entitlements) are provided under the NES, this will benefit employees but may, depending on circumstances, impose a cost on an employer.

We say that one of the consequences of taking this approach of moving from an express approach of a formula based on hours worked to a system of providing 10 days is that for some employees, certainly not for most, but for some employees there would be additional entitlements that they would move from a situation where those working three days a week, 12 hours, they would not move from a situation where they would only be able to take six absences a year off on a paid basis to one where they would get 10 absences a year on a paid basis.

I was making some points about the appellants’ proposed meanings and I dealt with Mondelez and its approach. In particular, I had spoken about this concept of a five‑day week being one that is unknown to this legislation. The Minister, of course, defines “10 days” differently. As we understand it, it is defined to mean an amount of paid personal/carer’s leave accruing for every year of service equivalent to an employee’s usual weekly hours of work over a two‑week (fortnightly) period.

We say that there are a number of problems with that definition – not least the fact that those words are a long, long way from the statutory text. They seek to give the words “10 days” the meaning two weeks – notwithstanding that the legislature uses the word “weeks” elsewhere and chose not to use it here and, in circumstances as we indicated – as we have put – that, of course, not everyone works five days a week.

The expression “usual weekly hours” is not an expression that is generally used in the legislation. It is used in section 20 but that is to define ordinary hours for employees not covered by an award or enterprise agreement and even then only when they are less than 38 hours. It does not seem to be an expression that readily translates to this section.

As for the word “fortnight”, that is not a word that is used at all in the Act and, of course, raises the question – as we have done in our submissions – averaging over a two‑week period – and, of course, begs the question, which two weeks in circumstances where, as Justice Gordon raised, I think, that you can have employees who can work three weeks on and one week off. Mr Howe’s response to that was, then you must average over a longer period which ‑ ‑ ‑

GORDON J: I think to be fair, Mr Taylor, Mr Howe accepted that the answer to that was to apply the 1/26th analysis and then that led to equitable allocation across all employees consistent with their ordinary hours of work regardless of the pattern of work, either in terms of days or hours.

MR TAYLOR: Yes. It certainly, I think, requires acceptance that the notion of “10 days” meaning two weeks is one you must depart from, but at that point ‑ we rather think the Minister was focusing on “10 days” meaning two weeks because there may be said to be some correlation between 10 days and two weeks, although not one we say should be accepted in the context of this legislation.

It gets somewhat harder - one moves even further away from the text, to take the expression “10 days” and say it means 1/26th of the worker’s ordinary hours. At that point it is very hard to find any direct correlation between the words of the statute and a formula of 1/26th of ordinary hours. What one must ‑ ‑ ‑

GORDON J: I do not know about that, because if one starts with the analysis that 10 days is equivalent to the two periods of a fortnight, giving rise to the ordinary hours of work in a normal five‑day cycle, and then one comes down to the ordinary hours of work being, in effect, the link between the two of them, and that that section not only deals with the entitlement accruing but also being progressive, then the thing that dominates and drives all of the sections is arguably the ordinary hours of work, and so one understands, I think, that there is a mechanism by which both the entitlement is to be accrued and also to be determined.

MR TAYLOR: I can certainly say this, for our part, your Honour, that one must travel some distance from the words “two days” to get to “1/26th”. As I understand the proposition that was adopted by Mr Howe in answer to your Honour’s question, one must take 10 days, convert that into two weeks, and then convert that into 1/26th, and then one gives rise to a formula. Can we just say that - and I now accept I am repeating myself - if that is what the legislature had intended then there could well have been an approach which adopted the language of the Workplace Relations Act which made clear that that was the approach which led to a situation where people did not, of course, get 10 actual days.

What they got were hours, which would convert to absences, which might be considerably less than 10 days and if indeed the intention was, as we say it is, consistent with the purpose to give a form of statutory protection, if the intention was to protect people on 10 occasions, then you would move to the language of “providing 10 days” and move away from the language of “1/26th of ordinary hours worked”, and there does not appear to be, in our respectful submission, any way of reading “10 days” to get to 1/26th without turning the expression into something which is a long way from the text that the legislature had in fact used, which we say is the surest guide to its meaning.

I intended to move next to the Workplace Relations Act. I think I have dealt with most of the notions that I wish to deal with along the way. We rely of course on the decision of Baini v The Queen which is at tab 7 of the JBA - I do not know if the Court will open it - but for the principle where statutory language is re‑enacted in an altered form the ordinary approach or the principle would be that one would take ‑ the court would approach it on the basis that there is an intention that there be a different meaning. We say that in circumstances where there has been a very clear movement away from a formula where the entitlement is based on accrual rather than on a statement of the amount of leave, and its formula of 1/26th, that one would then be slow to come to a view that the legislature in fact intended the exact same entitlement to be created.

Can I next turn to point 12 of our outline - we deal with this time moving now from the statutory context of the predecessor legislation to more generally the legal history. We again identify in our outline, in our written submissions, that the decision in RACV at JBA tab 21 provides some useful summary of the origin of sick leave, and the majority decision below also adds to that at common law prior to the introduction of statutory provisions, initially in the form of awards, employees were entitled to be paid if absent from work ‑ there was no limit on that entitlement.

Initially, of course, we are talking about award‑covered employees. A hundred years ago or more many were employed day to day rather than weekly, so the concept of personal leave was not an issue. But with the advent of weekly hire, in effect, ongoing employment terminable on a week’s notice, that brought with it the introduction of a limit on paid sick leave, that is, rather than an entitlement to take it, something more in the concept of a limitation on how much you could get paid if you were unable to work due to illness and, as Mr Wood identified initially, that was said to be six days.

But what we say is that the notion that has underpinned some of our opponents’ submission that “days” is always understood to mean hours is not right. There has been from the outset an understanding prior to the Workplace Relations Act that entitlements may well be expressed in days rather than in hours and where they are expressed in days were understood to mean the hours that you would work on that day.

One of the additional authorities that we provided to the Court was one of the earliest examples of such a provision, a 1922 decision of Justice Powers[1922] CthArbRp 40; , (1922) 15 CAR 1166. Justice Powers, sitting not as of course a Judge of the High Court but sitting in his additional role as a judge of the Court of Conciliation and Arbitration, was considering the concept of weekly hire in respect of the metalliferous mining industry in circumstances where that industry was moving to weekly hire, in effect, ongoing employment.

If the Court has that decision, can I firstly ask the Court to turn to page 1178. Part of the award that his Honour made was an “hours” clause. The hours:

Forty‑four hours . . . shall constitute a week’s work –

is the opening sentence, whereas:

for bracemen four hours to be worked by them on Saturdays –

would:

carry a full shift’s pay. Six hours shall constitute a day’s work in hot and gassy places –

whereas further down, one finds that:

48 hours shall constitute a week’s work –

which, as understood against a six‑day week, meant eight hours. So workers here on a day might work a day either six hours or eight hours or four hours, and be entitled to pay.

If one turns back to the previous page, 1177, and to the bottom of that page at subparagraph (e), one finds one of the early examples of the introduction of “personal accident”, “personal illness”. If you drop to the bottom of that page, the last two lines, there is a sentence that starts, towards the end of the penultimate line:

The maximum amount of pay for days not worked owing to such accident or illness necessitating absence as foresaid shall be a total of ten days’ full pay in any year, namely from –

and then there is a period of time identified. So this is just but one example of a situation where, as an industrial prescription, people were entitled to be paid for a day, and they would be paid and that day for some might be six hours, it might be eight hours, it might be four hours, but if they fell ill on a day they would be paid the hours or the shift for that day.

So we say there is nothing – and the RACV Case follows through this history, but there is nothing in the historical analysis to support the proposition that expressing sick leave in days has some sort of special meaning that is understood to always mean a given number of hours. We think rather, this notion that it does convert to hours is one which is firmly based on the fact that that is the way the Workplace Relations Act did it.

It certainly did it by converting into hours, not on actual hours worked but on this concept of notional hours and perhaps it may well be right that employers following the Workplace Relations Act did not update their payroll systems to move from notional hours averaged over a period of time to 10 actual days, but that indeed, we say, is what the legislature intended, to move away from this idea of a formula of the sort that the Workplace Relations Act had to the notion of 10 actual days, something which reflects an entitlement which is not unknown in industrial relations at prior times.

Now, one of the things that is said against our argument in respect of section – generally but, I think, centring very much on the words of section 96(2) is the proposition that section 96(2) requires conversion into hours because it is necessary to know at any point in time how many hours you have. It is very much central, I think, to the way in which the Minister’s written submission certainly put it. You must be able to know at any given time how many hours you have. We say, with respect, that that is not right. You need to know how many days you have. You do not need to know how many hours you have.

GORDON J: Is that right, Mr Taylor? I mean I can understand that as a mother you might want to take two hours off one day, rather than the whole day.

MR TAYLOR: Yes, you may well want to take a part‑day, and if on that particular day you were rostered to work four hours, then you take two of those hours off and you have taken half of that day. You have taken a half day. You can still count in days. You do not need, we say, to convert it into hours. You accrue in fractions, we accept that, but that does not mean you have to accrue in fractions of hours. You can accrue in fractions of days and that is indeed how it would work.

It does not mean – I think this is probably what I understood - it does not mean that you cannot – certainly for workers who work standard hours - you cannot also have it reflected in a number of hours. There is no reason why you cannot as long as when someone seeks to exercise their entitlement you do not give them less than 10 days’ entitlement.

So you can convert it to hours if you wish. Ms Triffitt could be credited with 120 hours over the course of the year from which 12 hours could be deducted every time she takes leave. That would ensure she gets 10 days. Alternatively, she could be credited with 76 hours and every time she takes a day’s leave, 7.6 hours can be taken off her entitlement as long as she gets paid, as section 99 requires, the full 12 hours. These things are more mathematical exercises for payroll people. There is nothing that informs the way the legislation works.

GAGELER J: You say that section 96(2) refers to a fraction. What is the numerator and what is the denominator?

MR TAYLOR: The fraction is the period of time during the course of the year during which you are working continuous and so you would after six months have five days, you would be able to calculate it on a per‑week basis or even a per‑day basis if you get down to a number of – so if you wanted to do it over a per‑day basis it would be 10 over 365, or 365.2, to take into account leap years. If you wanted to do it per month, you would do 10 over 12, but so long as you are only counting the periods that you actually have ordinary hours of work, so you are not counting periods of unpaid leave, any of those formulas will work to determine your days of leave at a point in time.

But after six months you have accrued five days and the Minister says well, you need to know at any point in time how much leave you take – for example, you might want to take some time off for elective surgery, to which we say that is fine, you just need to know how many days you have. You have five days and so you then can identify that you have five days’ entitlement and as a result of that you are able to take a certain period of time off knowing that you will receive your ordinary pay that would otherwise be paid during that period of time.

Some of those days may well be weekend days or other days you were not rostered to work. Of course you do not get paid for those. To the extent to which there were days that you were rostered to work, they will come off your entitlement until you have reduced down to zero, and after that you might continue to be off work but at that point on unpaid.

GAGELER J: If you choose to measure it in days, you say the full denominator is 365.2?

MR TAYLOR: Yes. If you are calculating how much you have accrued today as against yesterday, then you have accrued 10/365.2 – 1.12. Ms Saunders has the full bottle on these things -365.12 if you take into account leap years, apparently – but yes, your Honour. We say the way that section 96(2) is telling you is that instead of you accruing it at the beginning of the year or at the end of the year, you are accruing it progressively. So, as time goes on, you have accrued a little more than you did previously.

GAGELER J: Unless you work 365.12 days a year, when you get to the end of the year you are not going to get your entire entitlement, are you, according to your calculations?

MR TAYLOR: I see. I was using, because we were talking about a year of service, that is why I was talking about the year, of service, the year of service incorporates periods during that year - days that you are not working but you will still - it still counts for the service, or the concept of “continuous service”. So you have, on a week that you work three days, and at the end of that week you have one more week’s service, so it is not 365.2 days that you have worked, I accept that, but it is - the entitlement is one that accrues progressively on a calendar basis in respect of any periods of time that you have ordinary hours of work in that period.

It might only be one day a week, it might be five days a week, but in that week, a week being a seven‑day period, you have had a week of service, and you have accrued 1/52nd, or 10 over 1/52nd of your entitlement to personal leave.

KIEFEL CJ: That might be a convenient time. The Court will adjourn till 2.15.

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

KIEFEL CJ: Yes, Mr Taylor.

MR TAYLOR: Thank you, Chief Justice. I was dealing with the matters identified at paragraph 13 of our written outline of oral argument and in particular the concept that one needs necessarily to convert the entitlement in section 96(1) into hours and it is said that the reason that that is necessary is because of the words of section 96(2) which are the standards proposed - put against us mean that one calculates the size of the entitlement by reference to the ordinary hours worked.

Now, our submission is that the size of the entitlement is found in subsection (1) - it is 10 days. The size of the entitlement is not found in subsection (2) which deals with the progression by which one gets to 10 days. In that regard, as I put before lunch, this is one of those areas where there has been a significant change in the way in which the legislature has approached this type of leave.

Could I take the Court back to volume 4 of the joint book of authorities and the provisions of the Workplace Relations Act and, in particular, commence at page 1116 of the joint book of authorities where one finds section 245. Section 245 provided under that Act the nature of the leave but not the quantum. When one goes to section 246, two pages on in the bundle, in subsection (1) of 246, we find the entitlement. The entitlement is not set there as a period of days or hours. The entitlement there is based on accrual, that is, the:

employee is entitled to take an amount . . . if under this section, that amount of leave is credited to the employee.

Then one goes to accrual in subsection (2) where one finds how the employee accrues. The accrual is an:

amount of paid personal/carer’s leave, for each completed 4 week period . . . of ^1/26 of the number of nominal hours worked by the employee for the employer during that 4 week period -

the precise formula, but based on four‑week periods. If an employee did not achieve a four‑week period, then they did not get an accrual. It was a 1/26th – not of the actual hours worked but of a concept of nominal hours which is defined earlier in this Act.

What we think is important is that what the Workplace Relations Act did is determine the entitlement based on the accrual. Under the Act that falls to this Court to interpret, the entitlement is in section 96(1). It is 10 days. The accrual deals with how progressively one gets to 10 days. It does not – unlike the Workplace Relations Act, the amount of hours that are worked in any given period does not determine the entitlement.

What subsection (2) is simply identifying is that when it is talking about according to periods of work – periods where ordinary hours are worked - it is simply identifying that one is progressively accruing the 10 days, the 10 days by reference to periods of time when ordinary hours of work had been worked. Hence, our progressive entitlement, as we submit is the proper approach to get to 10 days, is one that takes a look at how far according – over the course of the year of service that one has got, how many weeks or proportions of the total of 10 days over the course of a year of service one has achieved by that point.

So we say that quite important textual change, where the accrual under the previous Act was actually clearly based on hours of work, whereas here the entitlement is 10 days - subsection (2) “ordinary hours of work” is only given work to do as to how quickly one gets to 10 days. It does not change the entitlement; the entitlement is 10 days.

EDELMAN J: What would be a period during which accrual would not occur because on your construction it would not be according to the employee’s ordinary hours of work?

MR TAYLOR: It would be a period of time when an employee is not being remunerated for ordinary hours of work which would be a period, for example, where they are on unpaid leave, a period of time when they are working – if such a roster were constructed – overtime hours, so that if one works on a two weeks on/two weeks off basis but an employee is asked to work an extra week to cover someone and that is an overtime week in the context of that roster, they have accrued sufficient ordinary hours after two weeks – there is no additional accrual for the third week. Similarly, if they just take time off on an unpaid basis they are not going to continue to accrue it.

EDELMAN J: So the words, “according to an employee’s ordinary hours of work”, are a way of excluding periods such as unpaid leave or overtime?

MR TAYLOR: Yes. So focusing only on those periods when the employee is being remunerated for ordinary hours of work, and I say “remunerated for ordinary hours of work” for the reason I said before lunch, because of course employees might be being remunerated ordinary hours of work while on annual leave or other forms of paid leave, albeit they are not actually working them, and those periods would also count for the purpose of the accrual.

GAGELER J: Mr Taylor, are you coming back to section 246(2)?

MR TAYLOR: I am more than happy to, your Honour, let me just pull that up again. Section 246(2) of the Workplace Relations Act, yes?

GAGELER J: Mr Howe made something of the example that is given there.

MR TAYLOR: Yes. He did, indeed.

GAGELER J: That example, as I understand it, is based on a full‑time employee working standard hours five days a week.

MR TAYLOR: Yes.

GAGELER J: It tells us that the complex formula that we see in section 246(2) works out to 10 days of paid leave for that standard employee.

MR TAYLOR: Yes.

GAGELER J: Now, on one view - and this is not against you by any means - on one view, what has been done in section 96 is to enact a simplified rule that works in the same way for that standard employee, but does not necessarily work out in the same way for somebody who is not a full‑time worker, who does not work standard hours, or who does not work five days a week.

MR TAYLOR: Your Honour is, with respect, absolutely right. I had made a margin note against that example there. The particular example assumes that someone is working these hours five days a week. The same employee under the Workplace Relations Act, working the hours of the second respondent in this case, assuming 38 hours rather than 36 – it makes no difference – would not get 10 days under the Workplace Relations Act. They would have got six.

So, certainly, our case is that the legislature has made a conscious decision to move away from a formula that may not give people 10 days - it will for most people, but for many it will not – for a proportion it will not, and has decided to come up with the simple rule that everyone gets 10 days.

Now, as the majority said below, that may well have consequences if you want to convert this into hours. One thing it does do, at least on our case, is give everyone the same entitlement to 10 days. That might mean, as the majority said below, for an employee who works 12‑hour shifts three days a week that they get 120 hours, whereas an employee working five days a week 7.2 hours gets 72 hours.

But as the majority below said, it does not always work in the employee’s favour. If you have a shift pattern which has people working four 8‑hour days and then a 4‑hour day, and they fall ill on the 4‑hour day and they do that enough times they will actually end up getting paid less hours under our approach.

GAGELER J: So it depends on when you, the worker, get sick or when your child gets sick, both events over which you have no control?

MR TAYLOR: That, we say, is fundamental to understanding the way personal leave works. The notional purpose of it, to try and protect you from a loss of income as a result of circumstances over which you have no control, is, we say, the lens through which you consider what Parliament has intended to achieve. In our respectful submission, what Parliament has intended to do, albeit, as has been pointed out by means of simplification, is to give everyone the same entitlement.

I hear what Justice Edelman said to me at the very beginning: it is not the same when you convert it to hours. It is not; I fully accept that. It is not the same when you convert it to hours, but it is the same entitlement, if one understands it, as we say is the appropriate way of looking at it, as an entitlement to be off work for a certain number of days in a year of service – to emphasise those words – without loss of income.

GORDON J: There are two things against that, are there not, Mr Taylor? One is that you are paid hourly, which is the reason why the hook through a lot of what this work is - ordinary hours of employment or hours of work - and the second is that a fraction of a day is an hour. I think you accepted before lunch there are fractions of days taken.

MR TAYLOR: Yes. I am sorry, your Honour, partly the acoustics here but I think I might have missed the first part, but I certainly did not miss the second part. So if I can address that and, if there is something else I need to address, please raise it with me. A fraction of a day is an hour. I mean, an hour can be a fraction of a day in the sense of a 24‑hour day. But when we look at a day of leave we are talking about the hours in the day that you are otherwise rostered to work and that then is the base point from which you then determine, if you are taking something less than a full day, what portion of the day that you have taken, which then affects your consequential entitlement.

We say there is nothing particularly complicated about having 10 days at the end of a year, I accept - having 10 days and then taking a day’s leave – however many hours you were rostered to work that day, whether it was one or 12 you now have nine. To us, we do not see that being a complex concept.

Of course, if part‑days does get more complicated, but not surely beyond the wit of an employer to know how many hours you were rostered to work that day and how many hours you have taken and what percentage of a day you have lost as a result and, if it is half a day then you do not have nine days, you now have nine and a half days left - that is the way we approach it. But I might not have picked up the first part of your Honour’s question.

GORDON J: Fine, thank you.

MR TAYLOR: Can I, with your Honours’ forbearance, go back for a moment because I realised one thing I had not done was address something the Chief Justice raised with me early on, and I said I would, and I passed by point 8 of our outline without having done so. That is to look at statutory context and the way in which the word “day” is used.

You have seen our submissions, but nevertheless can I ask the Court if you would mind going back to volume 1, which has the Fair Work Act, and turning firstly to page 205 of the joint book of authorities, which has section 102 in it, and also section 103. Here we are dealing with unpaid leave, but again we have got this expression of “days”. So unpaid carer’s leave:

An employee is entitled to 2 days of unpaid carer’s leave for each occasion . . . when a member of the employee’s immediate family . . . requires care or support because of:

(a) personal illness . . . or

(b) an unexpected emergency –

So this is in addition to the paid leave, there is an unpaid two days. But if you go to section 103, there is a method by which it can be taken, and in subsection (2):

An employee may take unpaid carer’s leave for a particular permissible occasion as:

(a) a single continuous period of up to 2 days; or

(b) any separate periods to which the employee and his or her employer agree.

We say it is very difficult to read these provisions as picking up some notion of a notional hours that you have accrued up to this point. It seems to us that it is clear, particularly in 103(2):

a single continuous period of up to 2 days –

that you are not talking about, in the case of the 7.2‑hour workers, 14.4 hours.

KIEFEL CJ: But is that in part because you are not talking about something which has to be paid or can be cashed out? You can talk about different periods as relevant.

MR TAYLOR: Yes, your Honour is quite right to identify that there are some important differences in the nature of the entitlement. It is certainly unpaid. But what we want to do in this part of our submissions is identify the word “day” or “days” of leave do appear to be used in a way that we say allows the Court to consider in a consistent manner a period of time which is what we put as the ordinary or natural meaning of the word “day”, not some notional concept.

EDELMAN J: What was the equivalent of sections 102 and 103 in the Workplace Relations Act?

MR TAYLOR: That is a good question and it may be that there was not an equivalent but it could have been one of those entitlements that came in to the Workplace Relations Act at a later point. I am pretty confident it was not in the work choices legislation but it may have come in later. I will have Ms Saunders ‑ ‑ ‑

GORDON J: I thought you took us to the EM and the EM said it was an additional entitlement, was it not?

MR TAYLOR: Yes. Certainly, there are some additional entitlements. But Ms Saunders has been good enough to identify, your Honour Justice Edelman, section 250 at page 1121 of the joint book of authorities deals with unpaid carer’s leave. In that provision it refers to periods of “up to 2 days” and uses the expression “days”. So that appears to have followed similar language, at least in the context of - the amount of context. There are areas where there have been some additions but perhaps that is not one of them.

NETTLE J: Is it relevant, Mr Taylor, that the entitlement in section 102 to “2 days unpaid carer’s leave” is not one which accrues according to the ordinary working hours of the employee?

MR TAYLOR: Yes, I accept that there is an entitlement, firstly, on each occasion and that the issue arises and so I accept that there is not an accrual that is occurring. So, as I started after lunch, we do say that section 96(2), whilst it deals with how quickly one accrues it, we say it does not change what “10 days” means and if one takes a view that “2 days” and “10 days” are, albeit apart from the number, to be viewed in the same way, then we say that it follows that what we are not talking about is some idea of notional hours.

The other section I wanted to take the Court to in this regard is section 111 which deals with jury service. Again, the two points that have been raised with me arise here too I accept at the outset. This is not an entitlement that accrues and applies as a result of an event rather than a period of time worked, but it does use this expression “days” in a context of payment. So, subsection (1) identifies when it applies, when:

an employee is absent from his or her employment for a period because of jury service –

Subsection (2) identifies what they must be paid, that is, their:

base rate of pay for the employee’s ordinary hours of work –

Subsection (5), which is on page 216 of the joint book of authorities, says this:

If an employee is absent because of jury service in relation to a particular jury service summons for a period, or a number of periods, of more than 10 days in total:

(a) the employer is only required to pay the employee for the first 10 days of absence –

Again, we say “10 days” here is unlikely to mean some notional period of hours, but rather would be given its natural and ordinary meaning of 10 actual days that the person has sat on a jury and during which they were to be paid and again, we say it is consistent with the notion, if one takes a consistent view to the word “day” across these sections, then it assists to understand that in 96(1) the entitlement is to take 10 days or periods of absence off work without losing pay.

Can I now move to paragraph 14 of our outline which deals with overtime, and overtime hours? The appellants, of course, contend that the entitlement to leave in 96 is an entitlement to take not such hours as are rostered within - sorry, that “a day” is not an entitlement of such hours that are rostered within a 24‑hour period, but only the sum equalling the average of the ordinary hours divided to create a daily sum of hours. In other words, a day to them, for someone working 36 hours a week, is of course 7.2 hours.

That, though, does create difficulty for a not uncommon type of roster, which has what is referred to as built‑in overtime for someone who is rostered to work eight ordinary hours plus two overtime hours in a day as part of their standard roster to work 10 hours, of which two have been identified as their overtime hours.

Now, on our reading of them, when they take a day’s leave, then what we say to be the natural and ordinary meaning of that is that they have authorised to be off work for the full 10 hours. But if the day, properly understood, is as the appellants contend, it means 7.2 hours, then where is the entitlement to take leave for the last overtime portion of the day?

In response to that the appellants say, well, there are some sections of the Act - there are sections 62 and 63, which the Court might wish to turn up now, they are in the Fair Work Act – I will just find the page number.

KIEFEL CJ: I think we are working from pamphlets anyway, so ‑ ‑ ‑

MR TAYLOR: Good. I will just find it myself. Pages 166 and 167, which deal with maximum weekly hours, but contained within them, the fact that you can refuse to work hours above, for a full‑time worker, 38 hours a week, if they are unreasonable.

There are two problems we say that the appellants have to deal with. First, this right to not work additional hours only arises once you go above 38. These workers, the workers in question in this case, are working on average 36 hours a week, so if they fall ill on the third shift of the week it does not appear to us that they can rely on section 62 or section 63, which has similar terms, to authorise the last two hours to get to 38, because it only deals with hours over 38.

But, in any event, what you see from section 62(3) is that it is not a right to simply assert that the hours are unreasonable. Whether hours are unreasonable or not is a balancing exercise in which a number of matters must be taken into account. They include, in (d), for example, that the person is “entitled to receive overtime” pay, in (e) how much notice has been able to be given to the employer, in (h) “the nature of the employee’s role” – that is how significant and important it is relevant to the particular work that has to be done at that particular time.

What we say is quite clear. What sections 62 and 63 are saying – whatever they are saying it is nothing to do with leave. It is nothing to do with an entitlement to take leave. So there is a difficulty we say the appellants have as to how the find the authorisation, on their argument, as to what a “day” means, for those parts of a shift which are not a day’s leave. Now, of course, we say the better view ‑ ‑ ‑

KIEFEL CJ: Forgive me, Mr Taylor - from your perspective the relevance of these provisions is that they refer to portions of a day. Is that it? I am sorry, I am just not quite following the significance, what we take from these provisions.

MR TAYLOR: Entirely my fault, your Honour. The significance is this – it will probably become more apparent when I compare it to the provisions of the Workplace Relations Act, which I will do in a moment. Before I do so, so I can answer your Honour’s question, Division 7 of Part 2‑2 personal leave is the provision of the Act which authorises a person to not be at work because of illness, and there is not any other provision.

So if you take an employee who is sick on a particular day and part of that day was rostered ordinary hours, on the appellants’ argument the section is authorising them to take the leave for their ordinary hours. But where the difficulty arises for them, we say, is what about the authorisation for the other hours of the day which are not ordinary hours.

It does not arise on our argument because on our argument they are authorised to take a day, as in a 24‑hour period capturing any hours that they were going to be working that day. But on the appellants’ argument, as we understand it, they say no, the day that someone is taking is only that portion of it which is the ordinary hours, but they say, do not worry, we can get to section 62 and we can rely on section 62 because surely it is unreasonable to require someone to work hours on a day that they – when they are ill.

We say that may be the case but it is certainly not guaranteeing anything. It is a balancing exercise. As I said, your Honour, this perhaps is made clearer if one goes to the comparative provision of the Workplace Relations Act – if I could invite the Court to do that, by going to the joint book of authorities, volume 4 at page 1119.

Here one finds a clear statement of authorisation in respect of the leave that is taken – personal leave that is taken under this part of this Act. It effectively starts by saying if someone is taking leave to which they are entitled, they – and I am particularly looking at the last part of the section – are authorised not just to take the nominal hours but also they are authorised:

to be absent from work for any other hours (or part hours) on that day that the employee would otherwise have worked.

So, it is deliberately and expressly filling this gap otherwise caused by quantification of leave in nominal hours.

That is the case, notwithstanding that the Workplace Relations Act also had a “reasonable hours” provision. It is found back in 226 at JBA 1110, in subsection (4) – which is actually the following page – 1111. You will see a very similar provision to section 62 - subsection (3), the provision which allows employees to refuse additional hours.

So notwithstanding the Workplace Relations Act had such a provision, it was considered necessary if you are determining an entitlement to personal leave based on an accrual of hours worked that you need to make express that you are also authorised to take any other hours that you are going to be working that day in addition to the nominal hours.

The absence of such an express authorisation in the Fair Work Act we say is a textual pointer to the fact that the interpretation for which we contend is the preferred one because, on our contention, one does not need any additional authorisation to be able to take the additional hours.

The last thing I wanted to say on this is really just sort of a by the by but perhaps one that still has some import, not of course – not all employees work on the basis of rostered start and finish times. Take your teachers, for example, they will be paid a day’s pay – they might work eight hours a day – they might work 12 – they are paid on the same basis. They do not have a fixed start and finish time.

Again, we say, the approach of the appellants to them taking a day’s leave does tend to sort of have difficulty with exactly what is the authorised absence that a teacher has on that day? On our view, they should be authorised to take whatever time they would otherwise work on that day, regardless of whether they have fixed hours or not, whereas this notion that they are only entitled to take an average of their ordinary hours is one, we say, is contrary to the way in which the legislation works.

Can I move to point 15 – the cashing‑out provisions? The appellants place a lot of reliance on these provisions. It is, of course, important to understand that whilst cashing out is permitted, it is not the expectation – it is not the entitlement one finds in modern awards but it is certainly permitted by enterprise agreements.

When constructing such a clause, no doubt parties need to grapple with issues of how much can be cashed out and how it is to be cashed out. For those who work standard shifts – they work standards 8‑hour shifts or 10‑hour shifts – it is not varying – or 12‑hour shifts – it is not varying week to week – no issue arises.

This issue only arises where you have volatile rosters which change week to week and we accept that in those cases the parties are going to have difficulties in ensuring that they draft an enterprise agreement which provides for a cashing out, if that is what they intend to do, in a way that meets the obligation to pay out at least, that is, no less than what they would be paid if they took the leave.

In that regard, can we commend to the Court the decision of Justice Buchanan in CFMEU v Anglo Coal at joint book of authorities tab 17, where this issue arose in respect of shift workers, of working at that point 12 and a half hour shifts, and what they should be entitled to be paid out over 15 days, and in that case the judge had a bit of difficulty in saying they should be paid out what they would be paid if they worked those shifts, not just the nominal hours, but the full amounts. If they had accrued 15 days, they should get 15 days at 12 and a half hours.

We do accept the proposition that you have these volatile types of shifts in order to ensure that someone gets, in effect, at least the amount they would get paid, then one would, in that scenario, be forced, as the majority below indicated it held, on our interpretation, to pay them out on the basis that they would fall ill on the days where they worked the longer hours. But for our part, the fact that such a view would on one view favour the employee does not mean, in the context of beneficial legislation, that that means that the entire interpretation of what “10 days” is must be reconsidered, and one comes to a different view.

That takes me now to the final section of our oral submissions, dealing with extrinsic material. Can we say at the outset that we accept that parts of the extrinsic material that the appellants rely heavily on, pages 64 and 65, are difficult to read in a way that is not inconsistent with the propositions for which we contend, but can we start with these propositions, which would be, we say, readily accepted by the Court, that in determining statutory meaning, extrinsic material such as explanatory memoranda have a role at the first instance in providing context to help ascertain purpose or the mischief that the legislation is directed towards, but cannot be relied upon, we say, to displace the meaning of the statutory text.

Indeed, in our respectful submission, extrinsic material cannot be used to ascertain meaning as against purpose, or mischief, other than as permitted by section 15AB of the Acts Interpretation Act. So one can use it if there is ambiguity, but we say what you cannot do - and with respect to the appellants’ submissions, we say that they get extremely close to this if not actually into this territory - you cannot use the explanatory memorandum to create the ambiguity and then use it again to solve it, because of course Parliament passes the Bill, it does not pass the explanatory memorandum, it does not pass that which is written by the Department as to what its understanding is of the way it works.

Now, we had a number of authorities there - you will see in paragraph 16. I would like to open one of them, if the Court would bear with me - that is the decision in Saeed at volume 5 of the joint book of authorities from page 1130. It captures, I think, a number of these propositions.

Here the Court was dealing with a section of the Migration Act (Cth) and, in particular, whether the relevant provisions could be taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to visa applicants who are outside the migration zone.

Now, it was clear in the explanatory memorandum and in the statement of the Minister in the second reading speech that that was, indeed, the intention of the provision as the Court approached it. But if I could take the Court to page 1342 of the joint book of authorities into the decision at paragraph 31 of the plurality. It starts with a reference to Justice Gummow’s observation in Wik Peoples v Queensland:

it is necessary to keep in mind that when it is said the legislative “intention” is to be ascertained, “what is involved is the ‘intention manifested’ by the legislation”. Statements as to legislative intention made in explanatory memoranda or by Ministers, however clear or emphatic, cannot overcome the need to carefully consider the words of the statute to ascertain its meaning.

The plurality then referred to the decision in Re Bolton; Ex parte Beane. There again there was a second reading speech which was relied upon to determine whether section 19 of the Defence (Visiting Forces) Act authorised a warrant to arrest a man said to be a deserter from the United States armed forces. The second reading speech made clear that that was the intention. As part of coming to a view that that intention had not been achieved, the Court set out there and you see the quote there from Re Bolton in paragraph 32 - having referred to the second reading speech that:

while deserving serious consideration, cannot be determinative; it is available as an aid to interpretation. The words of a Minister must not be substituted for the text of the law. Particularly is this so when the intention stated by the Minister but unexpressed in the law is restrictive of the liberty of the individual. It is always possible that through oversight or inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens, the task of the Court remains clear. The function of the Court is to give effect to the will of Parliament as expressed in the law.”

In paragraph 33, the plurality go on to cite principle from Catlow v Accident Compensation Commission that:

it is erroneous to look at extrinsic materials before exhausting the application of the ordinary rules of statutory construction -

and then in paragraph 34 to say that resort to extrinsic materials cannot be used to ascertain statutory intention, which is actually revealed by the text itself.

So, in short, we say that following those principles one must start and finish with the text and the text is text which identifies, on our view, an entitlement of 10 days which should be given its ordinary, natural meaning and 96(2) does not alter that entitlement, it merely defines how quickly one gets to 10 days.

We accept that one can go to the explanatory memorandum to look at the purpose or mischief – and to the extent to which Mr Howe, for example, brought to the Court’s attention that one of the purposes was to simplify a safety net – or as I took the Court to, that some of the leave entitlements are enhanced, and that might be seen as part of the purpose, to enhance – those things can be relied upon.

We say in a way that is consistent with our argument, because there is of course a simplicity, we say, in taking a complex set of formula and converting them into a notion that one gets 10 days progressively over the course of a year, and every time one takes leave one loses one day and one is simply adding and subtracting days of leave without having to go to the complexity of determining hours of work.

GAGELER J: Mr Taylor, if you look at the examples at page 65, we were told by Mr Wood that the example of Tulah and the example of Brendan would be the same on either construction, if you assume a standard five‑day working week.

MR TAYLOR: Yes.

GAGELER J: But we were told that the example of Sudhakar would be correct on his construction, but incorrect on your construction. Do you accept that?

MR TAYLOR: I do not. In none of those examples does it say that someone gets less than 10 days, including Sudhakar. I do accept, though, that if Sudhakar – if the example had gone on and said that he works a particular roster pattern of compressed hours, that those 76 hours might result in less than 10 days, that would be against me.

But the example does not go that far. It simply indicates that he will get 10 days, 76 hours of leave, and it is frankly – the example is unclear as to whether, on the particular assumed facts, Sudhakar would get more or less than the 10 days that we say and if Sudhakar took 10 days, that they would end up being more or less than 76 hours paid to Sudhakar during the course of the year.

To the extent to which Mr Howe took you to the general principles, particularly on page 1871, particularly the third and fourth paragraph, as I said, we accept that those paragraphs do not sit happily with the contentions to which we advance in these proceedings.

GAGELER J: Perhaps it depends on how you read the bracketed words.

MR TAYLOR: Yes, I think it does. Certainly I am just reminded of your Honour’s question that in that RACV case, the full Bench was taken to the explanatory memorandum, taken to these examples in particular and the view that they expressed was that they could not see any of those examples being inconsistent with the notion that someone is entitled to 10 days and is paid the hours that they would ordinarily work on those days. That is less clear with Sudhakar, because we just do not know precisely what days that Sudhakar took or to what extent that the roster pattern works out in a way that means that it is in fact 76 hours.

The last thing I wanted to say in this context of use of extrinsic material is to remind the Court of section 15AB(3)(b). When one is considering the use of extrinsic materials provisions which apply broadly it is said to be desirable that persons should be able to rely on the ordinary meaning conveyed by the text. That, we say, has particular relevance to a provision in an Act which provides standard entitlements for all employees other than casuals ‑ desirable that they understand it and do not have to have recourse to predecessor legislation or to explanatory memoranda to understand an expression which might strike the ordinary person as having a clear meaning, in fact, means something different.

The notion, for example, that when the second respondent takes a day off because she is ill she has not lost a day’s leave but she has actually lost 1.66 recurring days’ leave, is not a notion which one readily reads into the entitlement, but that is the way it works out on my friend’s case – 7.2 hours is a day for her and so if she is not at work for her 12‑hour shift she has not lost a day, she has lost one and two thirds days. We do say that there is some real force to be given to section 15AB(3)(b) in the context of legislation like this, and that one would not give the meaning that my friends contend for.

The task of this Court, we say in summary, in determining the meaning of this text, is to take the words of the section. We say the Court would reject the complex formula that the appellants attempt to retrofit into the word “day” or “10 days”. Even the notion that the word “day” means 1/26th of ordinary hours worked over a year, we say is just a long, long way
from the expression “10 days”. Rather, when read as part of an expression “day of leave” we say it does have a natural and ordinary meaning. It is the meaning that you have 10 times during the course of the year that you can be paid the ordinary hours that fell on the day that you fell ill, and that that is the better way of reading the provision. I thank the Court.

KIEFEL CJ: Thank you, Mr Taylor. Yes, Mr Wood.

MR WOOD: Thank you, your Honour. We just have a few points in reply, the first of which deals with the question of part‑days. It should be recalled that our learned friends moved below from the construction of “day” meaning a calendar day or a 24‑hour period to a working day to accommodate the problem of part‑days because you cannot have a fraction of a calendar day or a 24‑hour period, but you can have a fraction of that part of the day devoted to work, as my learned friend said, a percentage of a day.

So on a 4‑hour shift, if you take four hours off you lose the whole day. If you take four hours off on a 12‑hour shift you lose a third of the day. That very construction indicates the inequity in two ways, the inequity between someone working a 12‑hour shift and a 4‑hour shift. They both take off the same amount of time - to use Justice Gordon’s example, to deal with a sick child - say four hours. One of them, on our learned friend’s construction, loses a full day. The other loses a third of a day, assuming a 12‑hour shift.

My learned friend says this is just a mathematical exercise. He would not be so phlegmatic if it was your leave that was being reduced in this way when the person working next to you, because they happen to be working a 12‑hour shift and you are working a 4‑hour shift, you lose a day and they lose a third of a day. Now, that is an inequity that follows from the fact that our learned friends construe “day” as meaning absences, and it does not accommodate the taking of part‑days in a fair way.

Secondly, our learned friends say that there is an issue with rostered overtime on our construction. It is really the only anomaly they point to about our construction. This is not an anomaly they argued below. It was not the subject of argument. It was a function of the decision of the majority. The answer is simple. If you take paid personal/carer’s leave on any shift, and you are paid for your ordinary hours, and by definition the preconditions to the taking of that leave are met, that is, you are unfit for work because of illness or injury or you have got a legitimate caring responsibility, is it seriously suggested that the employer could lawfully command the employee to work the rostered overtime, the overtime rostered, or not? It just is not an issue, having regard to the ‑ ‑ ‑

EDELMAN J: That may be right, but in the scheme of the Act, there is a difference between a guaranteed entitlement and a provision which depends upon reasonableness.

MR WOOD: That is true, your Honour, but this is the mistake the majority made below. They talk about section 96 as authorising the leave. That is true in part. It authorises the payment of the leave provided the conditions are met, but the converse does not apply. Just because that leave is authorised and paid because of section 96 does not mean that unpaid leave is not authorised otherwise pursuant to the contract. It just does not follow. It is not an anomaly. We have set that out in paragraphs 20 to 23 of our submissions in reply.

Thirdly, our learned friends rely upon Glendell, and Justice Nettle asked a question about their reliance in paragraph 3 of their outline at paragraph 133 of Glendell. We would simply ask the Court to look at the underlying decision in RACV, not in its result but in the submissions that were made, which are reflected at paragraph 36 at 1658 of the joint book of authorities. That submission, which was rejected in RACV, and RACV, the ratio was adopted by the Court in Glendell, is one that is on all‑fours with the submission we make to this Court and we made below.

It is consistent with Justice Gageler’s observation that annual leave and sick leave should be treated identically for the purposes of this construction. It also reflects the idea that came through in questions from the Chief Justice and Justice Gordon that the ordinary hours of work, in subsection (2), have a centrality or a driving aspect – they are key to the mechanism.

Now, the way in which our learned friends tried to break apart the connection between subsection (2) and subsection (1) is to read “according to” as meaning “during”. But, of course, as Justice Nettle pointed out, it means more than “during”. In our submission, we say the link between subsection (2) and subsection (1) is provided by understanding that there is a five‑day working week. It does not matter for us whether the Court thinks, no, the better way to construe this is to construe it the way the Minister does and look at the phrase “10 days” or the way we do, and look at the meaning of the word “day” in context.

GAGELER J: It is put against you that you do not get a five‑day working week from the scheme of the Act.

MR WOOD: Yes, your Honour. I was just about to ‑ ‑ ‑

GAGELER J: You were about to go to that?

MR WOOD: ‑ ‑ ‑ to deal with that. It was said it does not underpin the Act. This is a substantial societal achievement. It created the weekend. It is the reason buildings are closed, schools are out and sport is played on weekends – the fact of the achievement of a five‑day working week, post‑World War II. It is also reflected in the Act. My learned friend says it is not mentioned in the Act.

In section 134(1)(da)(iii) and section 139(1)(e), the Fair Work Commission is directed to make modern awards that reflect, by virtue of penalty rates, work on weekends, which is hardly surprising given the controversial circumstances which led to the making of this Act – that is, the controversial circumstances in relation to the previous Act – that the weekend is identified in the Act as an important societal factum in relation to which the Fair Work Commission is directed to make awards which reflect that fact. It is so basal, we would say, that it is surprising that our learned friends do not accept that.

Dealing then with the fourth point in reply, our learned friends say that you cannot get anything from the notes to the Workplace Relations Act which refers to “10 days”. That is true if you accept their construction. If their construction is right, then the EM was wrong. If our construction is right, the EM was right and there is nothing, as my learned friend Mr Howe said to the Minister in the EM to the Fair Work Act which suggests that there was some wrong that needed to be changed along the lines that my learned friend argued for.

Fifthly, our learned friends go to provisions of the Act and say “day of absence” or “day of leave” might have a different meaning to the meaning we ascribe to Subdivision A of Division 7 and relevantly, “annual leave” in Division 6. They go to Subdivision B, unpaid carer’s leave; Subdivision C, compassionate leave. They did not go to unpaid family and domestic and violence leave, Subdivision CA.

GAGELER J: But they could have, could they not? They could have, it is the same pattern.

MR WOOD: They could have, exactly, they could have. The answer is, as the Chief Justice said, there are differences between a day of leave in these sections and a day of leave for the purposes of annual leave and paid personal carer’s leave. The Chief Justice said these ones are not paid or cashed out and, as Justice Nettle said, they do not accrue according to ordinary working hours.

They are covered by section 106E, which suggests that they probably do mean an absence, or at least they have the same meaning, whatever that is, throughout, that is, throughout Subdivision B, Subdivision C and Subdivision CA. But that was part of our argument – it was one of our textual indicators to suggest that our construction was open.

Sixthly, our learned friends, in effect, accept the anomalies that we have identified in relation to the cashing‑out provisions of the Act. They say, wrongly, no, this does not matter, that there are no entitlements of this type found in modern awards. There are in fact in two – the timber industry award and the stevedoring industry award.

But that does not matter; it does not matter whether there are two or there are 100. You are talking about construing the section within the subdivision and giving all the sections work to do. As to whether those sections have ever been picked up the Fair Work Commission or, indeed, anyone making enterprise agreements is neither here or there. Then they accept what we say about the anomalies with the cashing‑out provisions.

Seventhly, they accept by implication all the other anomalies that we point out because what they said in relation to Justice Gageler’s question about the so‑called same entitlement to 10 days is that that entitlement works in the same way for all employees but it only does that if you assume that sick leave, or sickness, only falls on working days.

Unless you make that assumption it does not work in that way. It gives different levels of cover depending upon when you work. Only if you assume, as the majority below assumed, that sickness only occurs on working days can you say that the same level of protection, the same entitlement in that respect is afforded to all classes of employees, and there is no answer – our learned friends gave no answer to the proposition that there is no – there is no equity in relation to the value of the accrual. They accept that, that if your roster changes – I beg your pardon – if you work one day as to compared to three days as compared to five days, you get more hours of sick leave accrued per year because you work more hours on a certain day, even if your ordinary hours of work on a weekly basis are identical.

Eighthly, the 1920s case that our learned friend referred to sheds no light on the issues before the Court. In relation to that case payment was – or that award that was made – payment was weekly, on a daily basis, and it mattered not – the hours that you worked had no influence upon the daily rate of pay. If you worked four hours on a Saturday for certain classes or you worked six classes under difficult conditions or you worked eight hours you got the same daily rate of pay. The right to daily sick leave under that award was not dependent upon hours of work, had nothing to do with hours of work. Whether you worked four, six or eight you got the same amount.

Here, in this section, in this subdivision, the entitlement is linked to the ordinary hours of work in a way that that award made in the 1920s was not. A better example of the historic equivalence of hours, weeks and days is found in the case that we provided by email yesterday. This is the case reported at 1976 of the Arbitration Reports at page 452. That is a decision of the Industrial Commission of New South Wales when it was probably, arguably, the pre‑eminent Industrial Tribunal in the country, more pre‑eminent than the federal Tribunal at that stage. At page 466 the point is made that there is a claim - at 466 you will see halfway down the page:

The unions sought the following changes to cl. 21, Sick Pay:

(1) Ten days paid sick leave per year instead of the existing provisions of 40 hours for employees with less than five years continuous employment, 64 hours for employees with at least five years but less than ten years continuous employment . . .

There is no doubt that a tendency is developing towards a prescription of 80 hours sick leave per annum but that movement, as yet, seems to be in its early stages. It must be recorded, however, that in South Australia, by a 1972 statute, employees are entitled to two weeks sick leave per annum. By far the most common award prescription seems at present to be 40 hours sick leave in the first year of employment with 64 hours in the second and subsequent years.

Now, you can see there, the concepts are all used interchangeably. A week equivalent to five days, two weeks equivalent to 10 days, 80 hours because it was a 40‑hour standard working week equivalent to two weeks and 40 hours - and 64 hours to reflect, at that time, the development from one week sick leave towards two weeks sick leave. At that point in some awards the entitlement was for eight days.

Lastly, and I think ninthly, it is possible to take a narrow view of the explanatory memorandum, particularly in relation to the examples on page 65, but the fourth example on page 64 is unanswerable in terms of being consistent with our construction and wholly inconsistent with our learned friends’ construction. I perhaps should not say “example”. My learned friend, Mr Howe, called these “principles” so perhaps I should call them “principles”.

GAGELER J: This is the paragraph beginning “Therefore”?

MR WOOD: Yes, your Honour. Unless there is anything else, that is all that is all we have in reply.

KIEFEL CJ: Yes, thank you. Yes, Mr Howe.

MR HOWE: Your Honours, there are just a couple of very brief points in reply which should only take a couple of minutes. Firstly, your Honour Justice Gageler raised with my learned friend, Mr Taylor, the example appearing at the foot of section 246(2), which is on page 1118 of the Court authorities - could I just ask your Honours to go back to that example, and also to note the example at the foot of section 249(2).

In each of those examples there is no predicate to the effect that the 38 hours each week was worked evenly on five days. We were relying upon the example not only to demonstrate that the reference to “10 days” in section 96 had some legislative provenance but, very clearly, your Honours, the reference to “10 days” in that example is in fact proxy for “two weeks” and, similarly, the reference to “10 days” in the example at the foot of section 249(2) is proxy for “two weeks”. That is the exact argument that the Minister advances as to the meaning of “10 days” in section 96(1). In that regard could I just ask your Honours to go as well to the extrinsic material that accompanied the insertion ‑ ‑ ‑

GAGELER J: Mr Howe, I do not want to argue with you, but is it really a proxy or is it really just the outcome of doing the maths in that standard example?

MR HOWE: Well, with respect, we think it is a proxy. If I could take the Court to the extrinsic materials, it is of course the logical extension of the maths – if each of the 38 hours was worked five days a week in equal numbers of hours that would be the inevitable consequence of the maths. But the examples actually given are not expressly stipulated in that way and the extrinsic materials or the explanatory memorandum, which explained this regime, is to be found in volume 7 behind tab 28, and in particular on page 1881, paragraph 556.

Your Honours will, if it pleases, note the whole of that paragraph but also the description of the amount of “76 hours of personal leave” being two weeks of 38 hours each. That is by reference in effect to those provisions that I have just taken your Honours to. So, we get two things out of the legislative predecessor of the Fair Work Act – explicit reference to 10 days – and in circumstances where that expression carried with it the meaning of two weeks, which is the result for which we contend in relation to section 96.

Your Honour, I think, Justice Gageler, also asked whether cashing out was permitted under the Workplace Relations Act. I could be mistaken about that but certainly someone raised a question about that.

KIEFEL CJ: I think it was submitted that it was prohibited.

MR HOWE: We do not think that is right. If your Honours just quickly go to section 245A of the predecessor legislation – that is to be found on page 1116. Your Honours will quickly see that it is entitled “Entitlement to cash out an amount of paid personal/carer’s leave”. So that was something which was part of the predecessor Act and, indeed, was – if your Honours go to subsection (3) and also to the general scheme, the amount to be paid out was calculable in a very certain, predictable and precise way.

Your Honours, just in relation to jury service, very briefly, under section 111, and perhaps it goes without saying, but we really are talking about a conferral of an entitlement which is very substantially different. It is non‑progressive, it is non‑accruing, it is not calculable or expressed to be conferred by reference to ordinary hours of work, and it is not liable to be taken by an employee in any fractions of a day.

Finally, in relation to the explanatory memorandum, my learned friend put that one both starts and ends with statutory text. We would suggest that that proposition requires some revisiting in the light of the observations of this Court in A2’s Case – and we, in effect, rely upon what we have said about the relevant principles of construction in paragraphs 23 to 26 of our written submissions in‑chief.

One starts with the statutory text, obviously enough, but one does not end with the text. But in any event, when one adopts a text‑based approach here by virtue of section 96(2), 97, 99, the note to section 142 and the important role played by legislative history as well, one does not make a fortress of literalism or retreat to a dictionary in order to ascertain the meaning of this statutory expression in section 96.

May it please, we are otherwise content to rely on our written submissions in relation to all of the other matters that my learned friend put to the Court. May it please.

KIEFEL CJ: Thank you, Mr Howe. The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow in Melbourne for pronouncement of orders.

AT 3.31 PM THE MATTER WAS ADJOURNED