Court Echos the Importance of Careful Drafting...

A recent decision of the Federal Magistrates Court reinforces the potential consequences of failing to ensure clear and careful drafting in workplace documents such as enterprise agreements, remuneration programs and other similar documents.

Background

In February 1999, Visy Paper Pty Ltd (Visy) implemented a 60 week rostering system commenced at its Smithfield site in NSW (the Agreement). The employees were paid an annualised hourly rate which included paid shift and overtime penalties and annual leave loading. These components were converted into an hourly amount per week, and added to the ordinary weekly hours of work (a total of 52.95 hours per week). Employees were paid the 52.95 hours per week regardless of what hours the employee was rostered to work that week. Under the Agreement, to deter employees taking annual leave on weekends, employees who took annual leave days during a weekend shift forfeited two days annual leave instead of one. The double deduction related only to annual leave and did not include protected industrial action.

During the period 29 November 2010 and 17 December 2010, employees took two periods of protected industrial action.

Visy withheld wages from the employees in relation to the two periods of protected action in accordance with the Fair Work Act.

Visy then subsequently wrote to some of the employees rostered to work during the period of protected industrial action and advised them that it would be making further deductions from their wages on the basis that the value of the shifts not worked due to the employee’s strike action ie any shifts that attracted more than the normal hourly rate (ie the weekend shifts). The value of these shifts, the "negative hours" were then to be deducted from the hours the employees were rostered to work during the protected industrial action.

The union issued proceedings against Visy on the basis that it:

• failed to pay the employees amounts payable to them;
• made deductions from the employee’s wages which were not permissible; and
• took adverse action against the employees.

Findings

Federal Magistrate Emmett found that the Visy employee’s were engaged under a wage averaging system and were entitled to be paid a flat amount per week, regardless of what hours and when they worked. As there was no "set-off" or other relevant provision, Visy was not entitled to make the negative deductions from the employee’s wages beyond withholding their wages during the period of protected industrial action.

In making this observation Her Honour observed that;

"It is profoundly unsatisfactory that the issue that has arisen before this Court arises because the wage agreement between the parties was not expressed clearly in writing. It does neither party any credit."

In relation to the adverse action, as the deductions to the employee’s wages would not have been made unless there was protected industrial action, and no evidence was led by Visy to demonstrate that there were other reasons for the deductions, it was found that the operative reason for making the deductions was due to the employees exercising a workplace right (the protected industrial action). Consequently, Visy were found to have undertaken adverse action against the affected employees.

The union is seeking both penalties and compensation to be determined at a later date.

Summary

Care should be taken in drafting workplace documentation to avoid misinterpretation or ambiguity which may result in future ramifications particularly where complex remuneration structures are involved.

Legal advice should also be sought where employers are seeking to take an action which may potentially result in an adverse action claim.

If you would like more information about the case, or would like further information, please contact National Workplace Lawyers on +61 2 9233 3989. 

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.