2024 WAIRC 00148
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION : 2024 WAIRC 00148

CORAM : INDUSTRIAL MAGISTRATE E. O'DONNELL

HEARD : WEDNESDAY, 14 DECEMBER 2022, THURSDAY, 15 DECEMBER 2022, & WEDNESDAY, 1 MARCH 2023

DELIVERED : FRIDAY, 5 APRIL 2024

FILE NO. : M 100 OF 2021

BETWEEN : AUSTRALIAN WORKER’S UNION
CLAIMANT

AND

OIL & GAS REPAIR AUSTRALIA PTY LTD (ACN: 137 698 161)
RESPONDENT

CatchWords : INDUSTRIAL LAW – Omission of employer to pay entitlements for accrued but untaken paid annual leave upon termination of employment – incorporation of leave into roster – agreement to take leave – requirement to take leave – reasonableness of requirement
Legislation : Fair Work Act 2009 (Cth)
Instrument : Hydrocarbons Industry (Upstream) Award 2010
Hydrocarbons Industry (Upstream) Award 2020
Case(s) referred
to in reasons: : AIMPE v Curtis Island Services Pty Ltd [2015] FWCFB 6093
Clifford-Smith v Keen Bros. (WA) Pty Ltd [2022] WAIRC 00712
Canavan Building Pty Ltd [2014] FWCFB 3202
Chinese Australian Services Society Limited v Sun [2022] FCA 1076
Craig v Transocean International Resources Limited; Transocean International Resources Limited v Russell UKEATS/0029/08; UKEATS/0030/08; [2009] IRLR 519
Jones v Odyssey Marine (No 1) [2020] WAIRC 00118
Jones v Odyssey Marine (No 2) [2020] WAIRC 00794
Fong v Halliburton Australia Pty Ltd [2019] FCCA 2885
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28
Re Hull-Moody Finishes Pty Ltd [2011] FWAFB 6709
Russell v Transocean International Resources Limited [2011] UKSC 57
Smith v Quasar Constructions Pty Ltd [2015] FCCA 557
Surveillance Australia Pty Ltd v Australian Federation of Air Pilots [2023] FWC 3078
Wardman v Macquarie Bank Ltd [2023] FCAFC 13
Williams v Macmahon Mining Services Pty Ltd (No 1) [2009] FMCA 511
Williams v Macmahon Mining Services Pty Ltd (No 2) [2009] FMCA 763
Williams v Macmahon Mining Services Pty Ltd [2010] FCA 1321
Result : The claim is dismissed.
Representation:


Claimant : Ms M Saraceni (of counsel) instructed by Mr M Quinn (industrial officer) and Mr L Edmonds (of counsel) on behalf of the Australian Workers’ Union
Respondent : Mr A Pollock (of counsel) with Mr S Rogers (instructing counsel) as instructed by Mills Oakley

REASONS FOR DECISION
Introduction
1 Oil & Gas Australia Pty Ltd (OGR) is a labour hire company. Its core business is to provide human resources to the offshore oil and gas, maritime and construction industries.
2 One of the projects for which OGR supplies personnel is the INPEX Ichthys LNG project (project). The project comprises various facilities, one of which is the Floating Production, Storage and Offloading (FPSO) facility. That facility is located in the Ichthys Field, about 220 kilometres offshore from Western Australia.
3 On various dates between 5 November 2017 and 3 August 2020, Allan Gray, Clinton McDermott, Paul McMahon and Mark Stott (the employees) worked at the FPSO as production technicians, having been employed and supplied to the project by OGR.
4 The specific dates when the employees were employed by OGR in that capacity were:
· Allan Gray – 5 November 2017 to 24 October 2019.
· Clinton McDermott – 11 October 2017 to 24 July 2018.
· Paul McMahon – 30 July 2018 to 26 August 2019.
· Mark Stott – 28 January 2018 to 3 August 2020.
5 Each of the employees:
· Was employed on a series of fixed term contracts.
· Was at all relevant times employed on a full-time basis.
· Worked a roster of three weeks on duty working 12 hours per day followed by three weeks off – i.e., an ‘even-time’ roster.
· Accrued paid annual leave in the amounts set out in the Agreed Statement of Facts.
6 During their periods of employment, none of the employees ever applied to take annual leave.
7 When each employee ceased employment with OGR, none was paid out for accrued but untaken paid annual leave.
Applicable legislation and instruments
8 Per paragraphs 5 and 6 of the Agreed Statement of Facts:
· The Hydrocarbons Industry (Upstream) Award 2010 (2010 Award) (as in force from time to time) covered and applied to each of the employees insofar as they were employed by OGR prior to 4 February 2020.
· The Hydrocarbons Industry (Upstream) Award 2020 (2020 Award) covered and applied to each of the employees insofar as they were employed by OGR on and from 4 February 2020.
9 Their employment was otherwise governed by the provisions of the Fair Work Act 2009 (Cth) (FWA), including the National Employment Standards (NES).
The claim
10 The Australian Workers’ Union (Union) brings this claim on behalf of the employees.
11 The Union claims that OGR has contravened a provision of the NES and is thereby liable to a civil remedy pursuant to s 44 of the FWA.
12 The NES provision allegedly contravened is s 90(2) of the FWA, which provides:
If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
13 Per cl 27.1 of the 2010 Award and cl 25.1 of the 2020 Award, ‘Annual leave [was] provided for in the NES’.
14 Clauses 27 and 25, respectively, of the 2010 Award and 2020 Award, in conjunction with s 87(1)(a) of the FWA, gave each of the employees an entitlement of 4 weeks paid annual leave for each year of service with OGR. The provisions of s 87(1)(b) were not applicable, as none of the employees was a shiftworker.
15 At the relevant time, FWA section 87(2) provided:
An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.
16 As noted above, there is no argument between the parties as to the accrual of paid annual leave; the parties agree that the employees accrued such leave in the manner contemplated by s 87(2).
17 The Union and OGR part ways, however, when it comes to the issue of whether the employees took their accrued paid annual leave. The Union says that patently they did not, and that is evidenced by the fact that none ever applied to take annual leave. On that basis, the Union submits, this is a straightforward case of contravention of s 90(2), since OGR admits the employees accrued leave, but made no payment to the employees for accrued but untaken leave upon termination.
18 OGR, on the other hand, maintains that it was a term of the employees’ contracts that their periods of employment were characterised by a continual cycle of accrual and acquittal of leave, such that there was no outstanding leave balance left upon termination. OGR says that annual leave was integrated into the roster and therefore effectively ‘zeroed out’ during every period off duty.
19 OGR argues that it was a plain term of the employees’ contracts that annual leave was to be treated in this way; or, alternatively, that it was a term that was implied on one or more of various bases.
20 OGR also relies upon the hourly rate paid to the employees as evidence that they were paid for annual leave during the course of their employment and were not entitled to any further payout on termination.
The evidence
21 The evidence at trial consisted of witness statements (with annexures) and oral evidence from the following witnesses:
For the Union
· Douglas Heath, Organiser with the Union
The employees:
· Clinton McDermott
· Mark Stott
· Allan Gray
· Paul McMahon
For OGR
· Ian Cantley, Managing Director of OGR
22 As part of OGR’s case, the Court also received a statement and report from Geoffrey Bull, industrial relations consultant.
23 The witness statements of Mr McDermott, Mr Gray and Mr Stott were extremely brief, lacked detail and were in exactly the same layout. Relevantly, each stated:
· I was employed by OGR on a full-time basis in the role of Production Technician.
· OGR paid me an hourly rate of pay of $95.88.
· There is nothing in my contract of employment with OGR which addresses annual leave.
· I did not make a request for annual leave during the period of my employment with OGR.
· I never took or accessed annual leave during the time I was employed by OGR.
· OGR never paid me any money in lieu of me taking my annual leave.
· I never agreed with OGR to forgo or trade my entitlement to annual leave.
24 Mr McMahon’s witness statement was significantly more detailed and contained annexures, including two payslips.
25 Mr McMahon’s statement included the following:
· My employment was in the role of Production Technician working offshore.
· OGR never told me which Award classification I came under.
· The terms and conditions of my employment were regulated by a series of written fixed- term contracts of various duration and the provisions of the Hydrocarbons Industry (Upstream) Award 2010.
· Throughout my employment with OGR I was paid an hourly rate of pay of $95.88 plus statutory superannuation contributions.
· I ordinarily worked offshore on a roster of three weeks on duty working 12 hours per shift followed by three weeks off duty (a work cycle which alternated between 3 weeks of nights or 3 weeks of days).
· Based on the specific words of that clause, I understood that my “salary” or hourly rate paid by OGR included compensation for:
i. shift work;
ii. weekend work;
iii. working on public holidays;
iv. travelling time to and from central pick-up point to transport to site and vice versa;
v. allowances for disabilities / industry allowance for working away from home in a remote and hazardous environment;
vi. meal allowance;
vii. tool allowance; and
viii. stand by allowance.
· There was no mention of paid annual leave or paid sick leave in my OGR Contract of Employment.
· There was no reference to paid sick leave or paid annual leave on the payslips OGR provided to me.
· I did not make a request to access paid annual leave during my employment with OGR. That was due to the fact that I was only employed with OGR for just over 12 months.
· OGR never paid me any money in lieu of me taking my annual leave.
· I never asked OGR to cash in my paid annual leave entitlements.
· I never agreed with OGR to forgo or trade my entitlement to paid annual leave.
· [A] one-off roster change appears to be the dates Ian Cantley refers to at paragraph 24(c) of his witness statement and describes as “unpaid leave” that I took. I was paid for the period affected by the one-off roster change. It was not unpaid leave.
· I was paid only for hours worked and logged on client-verified timesheets. Accordingly, each pay amount varied as the fortnightly pay cycle did not synchronise with the three-week roster cycle.
26 At trial, the employees gave the following evidence which in my opinion is of most relevance to the issues to be determined.
Clinton McDermott
27 Mr McDermott said he had been in the oil and gas industry ‘in one way or another for 17 years’. He agreed that he had worked both onshore and offshore in that time, and that he was familiar with the various ways in which work is rostered within the industry (ts 73).
28 Mr McDermott said that when he spoke to Mr Cantley during the recruitment process, he was led to believe his contract ‘was a casual day rate contract’ (ts 74); however, once he received the contract, he understood that was not the case (ts 73).
29 He said that during his employment with OGR, he did not make any request for annual leave because he was hoping to accrue the annual leave by the time of completion of the contract, and because he had ‘never required any additional time off than what was set out in the normal roster’ (ts 70). In a similar vein, he said he did not ask questions about how to apply for annual leave, ‘because I tend not to take annual leave’ (ts 76).
30 He later reiterated that he never took any ‘voluntary leave’ outside of his normal roster (ts 72), and then said at least three more times that he never needed annual leave (ts 84-85).
31 He also said he did not recall taking time off by request during the period when he was ‘actually rostered on to be at work’ (ts 82).
32 With respect to the three weeks off in the roster cycle, he said:
The three weeks off, it’s your time to do whatever you wish to do
although, by mutual agreement with OGR he could be recalled to work during that time (ts 82).
33 Mr McDermott disagreed with the proposition that annual leave being integrated into the roster cycle was discussed with him during the recruitment process and said that is not what happened during his recruitment phone call (ts 74). He said that there was never a discussion around, or information saying, that annual leave was put into the rostered time off (ts 84); ‘whereas where I work now it is [put into the roster] and it’s expressed explicitly in the contract that the annual leave is incorporated into your time off’ (ts 85).
34 When asked whether he had signed a contract which included the fact that the terms of the 2010 Award applied to his employment, he replied:
I signed the contract but, um, what’s a (sic) industry up award - what is it? (ts 75)
the last part of his answer querying counsel’s reference to the 2010 Award.
35 Despite that question concerning the 2010 Award, Mr McDermott indicated some knowledge of the 2010 Award when he said, ‘no operators work on the award’. He then clarified that statement, saying, ‘the award for the industry is set lower than pretty much anyone gets paid, so everyone’s usually paid above the award’ (ts 77).
Mark Stott
36 Mr Stott said he had worked for almost 20 years in offshore oil and gas, but his employment with OGR was only his second such job in Australia. Previously, he had spent 10 years in the North Sea in Scotland, and four years on an international drill ship (ts 108).
37 He accepted during cross-examination that he was familiar with the various ways in which offshore oil and gas work is rostered, and that he was also familiar with the various ways in which annual leave might be taken in accordance with a roster (ts 99-100).
38 He said that prior to starting work with OGR, he had emailed Elise and Leyla, who worked for OGR. He also had a discussion, either with Mr Cantley or with one of the ladies from the office, but could not remember specifically who that discussion was with. He accepted that he therefore could not disagree with Mr Cantley’s evidence that it had been explained to him that annual leave was included in the roster cycle (ts 100). However, he refuted the proposition that he knew annual leave was integrated into the roster (ts 107).
39 Mr Stott said he did not apply for any annual leave during his employment (ts 102) because he was of the belief that he was a casual employee, based on the original paperwork he had been given – namely, his letter of employment. He said:
I thought I was a casual because in the section where it says “Salary”, it says I will receive a day rate, ah, based on my experience. I’ve always received monthly pay when I’ve been a full-time employee, so a day rate and a fixed-term contract made me believe I was a casual employee … to me, it doesn’t – what I was getting paid doesn’t meet my personal definition of a “Salary” (ts 93-94).
40 When OGR offered Mr Stott a ‘2-year extension’ to his contract, he asked Mr Cantley if he was now considered a full-time employee. Mr Cantley replied that he had always been a full-time employee. This prompted Mr Stott to ask about ‘benefits’, and Mr Cantley replied that they were ‘all included in your day rate’ (ts 94). This was by means of an email in which Mr Cantley said:
I’m not sure what you mean about annual leave. Leave is included in the rate, but not sick leave. If you’d like leave that’s outside your normal rostered time off, that can be arranged with the client and OGR, but it is not paid (ts 104).
41 Mr Stott was not happy with that answer, but ‘got the impression [Mr Cantley] wasn’t going to discuss it with me any further’ (ts 94).
42 Mr Stott went on to execute the new contract in December 2019. He said he did not raise any issues concerning annual leave or other benefits because he found Mr Cantley ‘quite difficult to deal with … once he has told you something there is no point arguing’ (ts 105).
43 The contract was short-lived – due to border closures caused by the COVID-19 pandemic, Mr Stott was stood down in March or April 2020, after which he went home to Queensland and did not return to Western Australia. He received a notice of termination from OGR in July 2020 and a redundancy payment (ts 94).
Allan Gray
44 Prior to working for OGR, Mr Gray had worked in the onshore oil and gas industry. His employment with OGR was his first time working in the offshore industry.
45 He said he never applied for annual leave while working for OGR. He said:
Um, I – I hadn’t actually applied for annual leave. Um, I wasn’t aware that, ah – because there’s – there’s no mention of it in the, um – in the documents – in the contract, there’s no mention of it, so I wasn’t aware that I could actually apply…
Ah, the reason was because I didn’t know I could take annual leave, because it’s not in the, um – in the contract. It’s not written anywhere and it wasn’t verbally communicated to me that I could (ts 124).
46 With respect to the dates referred to at paragraph 24(c) of Mr Cantley’s witness statement as periods of unpaid leave, Mr Gray said that for the most part he had not applied for unpaid leave, and in fact those dates coincided with the dates that he was normally rostered off (ts 123-124).
47 He said that in December 2017, he took some unpaid leave to look after his terminally ill mother; then in December 2018 he had ‘another incident’ where he applied for, and was granted, unpaid leave (ts 124).
48 During cross-examination, Mr Gray said he had been in gainful employment all his life, and in oil and gas altogether for about 20 years. He accepted that he understood a feature of permanent employment is access to annual leave, but said that he made no inquiries and no attempt to use any annual leave during his period of employment with OGR (ts 131).
49 When counsel for OGR suggested this was because he knew annual leave was integrated into the roster cycle because he had been told that by OGR, he said:
No, that’s not correct. I wasn’t told at all and it’s not - not in writing anywhere. And - and you know, from - that’s a - that’s a very important point, because if it’s that important, it should be written so it’s - it’s plain to see for everybody (ts 132).
50 In re-examination, Mr Gray agreed that in his witness statement, Mr Cantley had attributed 160 days of unpaid leave to Mr Gray. Mr Gray said that those days coincided with his rostered days off (ts 134).
Paul McMahon
51 Prior to working for OGR, Mr McMahon had spent a considerable amount of time working in the oil and gas industry in a range of settings, often remote, but also at various onshore sites (ts 137).
52 He said he was familiar with the way work is rostered and the way annual leave is taken in the offshore oil and gas sector and on remote sites (ts 137).
53 OGR initially provided Mr McMahon with a casual contract dated 18 July 2018 (Annexure PM 1 to his statement). Mr McMahon queried this and was told that that contract had been given to him in error. He signed a different, fixed term offer of employment on 25 July 2018 (Annexure PM 3 to his statement).
54 Mr McMahon did not discuss annual leave with anyone from OGR prior to signing the contract and said he ‘wouldn’t normally think it necessary’ (to discuss it) (ts 139).
55 He disagreed with the suggestion that OGR explained during the recruitment process that annual leave was integrated into the off-duty part of the roster cycle. He strongly stated in evidence that the discussion he had did not cover annual leave (ts 139).
56 He noticed that his contract did not contain an express term dealing with annual leave, but did not ask any questions about that. He said:
No, I didn’t [ask questions], because … I was also furnished with a copy of a Fair Work statement, which includes the National Employment Standard. So where the contract fell silent on annual leave … I deferred to the National Employment Standard (ts 140).
57 He repeatedly denied knowing that annual leave was integrated into the off-duty periods of the roster (ts 144).
58 In re-examination, he said that during his period of employment with OGR:
… I wasn’t looking for leave at the time. I didn’t have any desire to take leave. I was keen to keep working as much as I could. And … the nature of the industry is fairly volatile and, um, I suspected that, ah, I could be terminated, ah, on fairly short notice, ah, for, if you like, making waves. Um, after my sick pay, ah, application was denied, ah, and the particular reply that came through, um, I felt, ah - I didn’t feel comfortable and secure in, um, asking difficult questions (ts 145).
Ian Cantley
59 Mr Cantley was the Managing Director of OGR during the employees’ periods of employment.
60 In his witness statement, he confirmed that Mr Gray, Mr McDermott, Mr McMahon and Mr Stott were employed by OGR and supplied as production technicians to INPEX’s FPSO in the Ichthys Field during the agreed periods.
61 Mr Cantley does not state which award classification the employees fell under, and the job description at Annexure IC 1 does not contain a reference to an award classification. However, the employees were all paid an hourly rate of $95.88.
62 In his witness statement, Mr Cantley said Exhibit 10, Witness Statement of Ian Cantley dated 27 June 2022 [16], [19] - [21].
:
· The [employees] were all paid $95.88 (gross, exclusive of super) per hour, for each hour worked offshore at the FPSO on the Project during the on-duty period for three weeks.
· The working day usually comprised 12 hours per day for each day, during the three-week
on-duty period (totalling 252 hours per three week on-duty swing).
· The [employees] were also paid 12 hours travel time to the Project and 12 hours travel time home from the Project, amounting to an additional 24 hours of pay.
· All up, on a standard three-week swing, the employees were paid for 276 hours, totalling around $26,462.88 (gross, exclusive of super).
· The remuneration earned during the on-duty period also included time paid to compensate [the employees] during the off-duty period, which included a component for annual leave. The pay cycles paid fortnightly regularly fell over the off-duty periods.
· A consequence of the even time roster is that employees are off duty (and paid during that time) for six months of the year. The six month off-duty period comprises the employee’s accrued annual leave and paid off-duty time.
· The [employees] took their accrued annual leave entitlements in accordance with their roster cycles. That is, once each employee finished their on-duty period and commenced their off-duty period, each took the annual leave they accrued during the preceding on-swing working period until that accrued annual leave balance was exhausted, and then took paid off-duty days until the end of the off-duty period. This is the standard arrangement for any OGR employee who works in a remote location or under a cycle work roster arrangement.
· If these employees want[ed] additional time off, they could ask OGR for the extended time off on top of their usual off-duty period. OGR would then seek approval from INPEX for this to occur. In these circumstances, the employee would take unpaid leave.
63 Mr Cantley said that the employees well understood that their annual leave was to be taken in accordance with the roster cycle.
64 He said that each of the employees took, and was paid, his accrued annual leave in accordance with OGR’s roster.
65 At trial, Mr Cantley gave the following evidence:
· INPEX made it clear in the tender process that they wanted OGR’s people to work a roster of three weeks on and three weeks off; INPEX also wanted OGR to integrate the employees’ annual leave into the off-duty period (ts 167).
· The employees were all employed in the same category, which was production technician, Level 1 Offshore. That was not an award classification but came from the INPEX matrix (ts 168).
· The initial tender timeframe was 6 months, which was why the employees were given 6-month contracts (ts 169).
· OGR paid the employees fortnightly. The company worked out how much to pay each fortnight based on timesheets (ts 169).
· All four employees were paid an hourly rate of $95.88. There was no difference between the contracts despite some expressing an hourly rate and some expressing a day rate (ts 169).
· OGR did not provide the employees with INPEX’s policies and procedures, despite those policies and procedures being referred to in the contracts (ts 171).
· OGR had the ability to recall the employees to work during the off-duty period, but it had to be in consultation with the employee (ts 179).
· INPEX was not ‘insistent’ that OGR require their employees’ annual leave be integrated into the roster system, but the type of roster INPEX wanted was one that filled holes in the rosters INPEX had for its direct employees (ts 179).
· INPEX employees worked a ‘Norwegian’ roster, and the OGR employees were to fill in the gaps; so OGR was asked to tender on a three-week on, three-week off roster (ts 235).
· OGR did not keep records on the accrual of annual leave for the employees, because it zeroed out (ts 181-182).
· During the employees’ off-duty period, they were still being paid (ts 184).
· Mr Cantley did not agree that the hourly rate of $95.88 was their ‘base rate of pay’. He said the base rate of pay was about $27.90, based on the highest classification in the 2010 Award (ts 184-185).
· He said that effectively, the employees were paid for 6 hours per day over 6 weeks (ts 185).
· The pay packets for the employees would vary from fortnight to fortnight, depending on how many hours were in their timesheets (ts 185). For example, if somebody went offshore and only worked three days and then had a pay cycle, they would be paid for those three days. Then, if they were offshore for a further 18 days, there would be another pay cycle within that period of 18 days, so the pay would vary. There was no averaging of pay so that the employees received the same pay every fortnight (ts 186).
· Mr Cantley accepted that the employees’ contracts did not spell out in express words when annual leave was to be taken (ts 201).
· He said that annual leave accrued during the on-duty period, and then zeroed out during every off-duty period (ts 205).
· The employees were entitled to 152 hours of annual leave per year (ts 205).
· Annual leave accrued as a percentage of each hour worked. In order to accrue the full entitlement of 152 hours, an employee would have to work a full year – but, in any event, for these employees, leave zeroed out after every on-duty period (ts 205).
· OGR did not keep records of leave accruals for the employees, because it immediately zeroed out (ts 207).
· None of the employees requested to cash out any annual leave (ts 207).
· Asked to explain what he meant by ‘zeroing out’, Mr Cantley said (ts 212):
[Y]ou earn the, um - the accrual of the holidays during your on-duty period. And then, it’s - it’s paid out during their off-duty period and it’s zeroed out. I mean, you start again when you go offshore again.
· The employees were paid $95.88 per hour during the offshore period, but they were paid on the basis of a 12-month period. During that 12-month period, the pay ‘evened out’ (ts 213).
· A salary is an annual amount of money (ts 215).
· It did not matter if an employee worked for six, eight or 12 months – the accrual of annual leave worked the same way (ts 215). For example:
[I]f I had a 12-month contract and I only worked six months, I wouldn’t be getting all my holiday accruals in the second six months of my contract. I would be getting it as soon as I start. And it would be calculated as a percentage on every hour over a 12-month period for 152 days. So if I work six months, then it’s going to be the same – it’s just going to be the same percentage per hour. It doesn’t get any different, that percentage (ts 216).
· He said there was no paid annual leave (ts 218).
· Mr Cantley’s understanding was that it did not matter specifically when annual leave was taken within the off-duty period (ts 218).
· OGR did not ‘direct’ the employees to take annual leave, other than by telling them that the rate was inclusive of annual leave, and that annual leave was taken during the
off-duty period (ts 219-220).
· Mr Cantley could not say which days of the employees’ off-time were paid annual leave days and which days were other than that (ts 227).
· Prior to this case, OGR had never received inquiries or disputes about paid annual leave (ts 229).
· It was not possible that any of the employees had been paid for more than their entitlement to annual leave because in the case that they worked a longer swing – for example, when Mr Stott worked five weeks offshore – that was followed by an equal time onshore (ts 230).
· Mr Cantley did not think it would have been easier to make the arrangement clear by having it written explicitly in contracts (ts 230).
· He said he personally interviewed Mr Stott and Mr McDermott, and he told both of them that annual leave was included in the off-duty period (ts 222; 232).
· He could not remember any of the employees being recalled to duty from an off-duty period (ts 235).
How does an employee access annual leave?
66 Section 88 of the FWA provides:
(1) Paid annual leave may be taken for a period agreed between an employee and his or her employer.
(2) The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.
67 As Driver J observed in Smith v Quasar Constructions Pty Ltd & Anor [2015] FCCA 557, (Quasar):
[T]he key defining concept under s.88(1) is agreement between the parties for the employee to take a period of paid annual leave. The Fair Work Act does not limit the mode of agreement: it may be oral, in writing or implied by conduct. In addition, s.90(2) provides for payment for annual leave when the employment ends “if . . . the employee has a period of untaken paid annual leave”. [161]
68 Subsections 93(3) and 93(4) of the FWA provide:
(3) A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.
(4) A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.
69 In many employment contexts with which most of us are familiar, an employee takes a period of annual leave after applying for it – usually in written form using a hard copy or online Human Resources form – and upon the employer agreeing to the request. That would be probably the most straight-forward type of agreement which is contemplated by s 88 of the FWA. While there are circumstances in which the employer may refuse such a request – for example, due to business needs at that particular time, or to prevent too many employees vacating the business at one time – it may not be unreasonably refused.
70 As is clear from the terms of s 93(3), it is possible for a modern award or enterprise agreement to take a more prescriptive approach to the taking of leave, by requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances. As is the case with refusal under s 88, a s 93(3) requirement must be reasonable.
71 A question arises as to the timing of a s 88 agreement or a s 93(3) requirement. The emphasis that both parties have placed upon the terms of the contract (or lack thereof) – explicit and / or implied; written and / or oral – suggest that they are of the view that, at least in the case of offshore employees, the position must be determined at the time of the contract.
72 I would observe that without a crystal ball, it would generally be impossible to write the terms of a s 88 agreement into an employment contract, because nobody can foresee what will be the circumstances of (a) the business; and (b) an individual employee at any future time. Consequently, applications – and thereby s 88 agreements – to take leave are determined once the employment relationship is under way, and well after the execution of the employment contract.
73 With respect to s 93(3) requirements, the position is usually different. Various cases show that it is possible to deem when leave must be taken in industrial instruments – in which case, that requirement exists before and during employment contracts for individual employees. In that scenario, provided the requirement is reasonable, no application for leave and consequential s 88 agreement is required, because the timing of leave is pre-determined – see, e.g., Jones v Odyssey Marine (No 1) [2020] WAIRC 00118 and Jones v Odyssey Marine (No 2) [2020] WAIRC 00794 (Odyssey Marine).
74 Alternatively, it could be considered that a reasonable s 93(3) requirement which is either written into an employment contract, or which is imported into a contract by virtue of the contract referring to the applicability of an industrial instrument which carries the requirement, becomes a pre-determined s 88 agreement.
Was there an agreement between the employees and OGR to take periods of annual leave?
75 OGR’s submissions that the employees agreed to take annual leave in the off-duty periods are essentially to the effect that:
· The taking of annual leave as part of the off-duty periods was explained to the employees as part of their interview process, and was therefore a verbal term of the contracts; or
· The salary clause in the contracts was intended to cover payment for annual leave.
76 Mr Cantley gave evidence at trial that the requirement to take annual leave in the off-duty periods was explained to the employees as part of the interview process. He said that he personally had these conversations with Mr McDermott and Mr Stott, but not with Mr Gray or Mr McMahon.
77 All of the employees strongly refuted the suggestion that they were told during the interview process about the requirement to take leave during the off-duty periods.
78 Since no witness gave direct evidence of telling Mr Gray or Mr McMahon about the annual leave requirements during their interviews, there is nothing to challenge their evidence on the point – aside from Mr Cantley’s evidence to the effect that somebody would have told them, which is not especially persuasive. In those circumstances, I cannot conclude that any such discussion became a verbal term of Mr Gray’s or Mr McMahon’s contracts.
79 With respect to Mr McDermott and Mr Stott, Mr Cantley was adamant that he had personally told them that annual leave was incorporated into the roster.
80 Mr McDermott was equally adamant no such conversation took place.
81 Mr Stott conceded that he could not disagree with Mr Cantley’s evidence that he had been told about annual leave being integrated into the off-duty part of the roster, but ultimately disagreed with the proposition that he knew that annual leave was treated this way. I consider these two aspects of Mr Stott’s evidence to be obviously inconsistent. It seems to me that on his own evidence, there is a possibility that Mr Cantley told him that annual leave was integrated into the roster. He may have forgotten, but that is not the same thing as never having been told.
82 On the balance of probabilities, I accept Mr Cantley’s evidence that he did tell Mr McDermott and Mr Stott that annual leave was to be integrated into the roster and taken in the off-duty period.
83 However, I also take the view that the written contracts provided to and signed by the employees were intended to constitute the entirety of the employment agreement between OGR and the employees.
84 Consequently, I do not consider that Mr Cantley’s verbal discussions with Mr McDermott and Mr Stott became terms of their contracts.
The salary clause
85 Turning then to the salary clause, which was identical in each of the employees’ employment contracts, it provided as follows:
Your salary is all inclusive and takes into account all responsibilities, disabilities and other factors associated with the work, location and environmental factors. Your salary includes payment for all hours worked, weekends and shift work, and recognises that due to the nature of work you also work on public holidays.
86 Mr Cantley said that the salary ‘included a component’ for annual leave. What does that actually mean?
87 A similar clause was considered in Williams v Macmahon Mining Services Pty Ltd (No. 1) [2009] FMCA 511 (Macmahon). In that case, Mr Williams claimed that he should have been paid for accrued but untaken annual leave on termination of his employment with Macmahon Mining Services (Macmahon).
88 Macmahon submitted that, according to the terms of Mr Williams’ contract, he was a casual employee and therefore not entitled to payment for annual leave.
89 The contractual provision at issue (Macmahon clause) was the following term:
The rate of pay is all inclusive and takes into account all responsibilities, disabilities, allowances ... and includes payment for all hours necessary to undertake your rostered duties, and as a casual employee, a loading in lieu of paid leave entitlements. The rate includes compensation for any necessary shift, public holiday and weekend work. Macmahon [6].

90 At first instance, Lucev FM (as he then was) determined that Mr Williams was not a casual employee and therefore was entitled to payment for untaken annual leave on termination.
91 However, having regard to the terms of the identified contractual term – specifically, the reference to ‘a loading in lieu of paid leave entitlements’ – his Honour found that Macmahon was ‘entitled to set-off any sum of money appropriated from the casual loading paid to Mr Williams in lieu of annual leave.’ Ibid., [76].

92 Ultimately though, the Court was unable to quantify an amount for set-off, because the term was not prima facie appropriated to annual leave, and the evidence otherwise did not establish that it was: Williams v Macmahon Mining Services Pty Ltd (No 2) [2009] FMCA 763, [87] - [89].

However, in the Court’s view, the loading is not specifically a casual loading, and it does not identify particular paid leave entitlements which it is said to be in lieu of. Furthermore, it was not set at a specified amount. It is therefore not possible to accurately quantify the amount of the loading or the leave entitlements it was said to be in lieu of. The evidence therefore does not establish the essential building blocks for the claimed set-off.
…
Mr Williams is also correct in noting that a casual loading is compensation for the loss of a basket of amenities and entitlements, not limited to leave, but including, for example, termination and redundancy benefits. In those circumstances, Macmahon Mining cannot allocate the notional 20% casual loading solely against annual leave, sick leave and public holidays. Proper allocation of any casual loading would require consideration of the wider basket of amenities and entitlements suggested by Mr Williams. And the difficulty with that course is that the evidence simply does not establish any basis on which those entitlements can be allocated in a specific way against specified quantums so as to allow the proper calculation of any set-off. [87]-[89] (footnotes omitted)
93 On appeals by Macmahon to the Federal Court, Williams v Macmahon Mining Services Pty Ltd [2010] FCA 1321.
Barker J upheld the findings at first instance and dismissed the appeals. Albeit the statutory scheme was different at the time of that decision, the following observations by his Honour apply equally to the framework created by the FWA: Ibid., [61] - [67].

The appellant also relies on authority it says is supportive of its view: James Turning Roofing Pty Ltd v Peters [2003] WASCA 28, (2003) 132 IR 122 at [21], as well as the Explanatory Memorandum to the Workplace Relations Amendment (Work Choices) Bill 2005 (Cth).
Mr Williams, however, seeks to emphasise the following framework of the WR Act in relation to leave accrual. Section 232 entitled an employee to accrue a period of annual leave during his or her employment. Section 236 entitled the employee to take a period of annual leave, if authorised, and prohibited the employer from unreasonably refusing leave. Section 235(2) arose only if an employee had a period of accrued leave when the employment ended and entitled the employee to payment in that event.
The WR Act therefore did not permit the payment of an amount of money in lieu of a period of time off work on pay. Accordingly, a provision which seeks to substitute a payment in place of actual leave excludes that entitlement. Mr Williams submits that this is made clear by s 233 which permitted, subject to strict limitations, the cashing out of annual leave. An employee could forego a period of annual leave if he or she elected in writing to do so. A workplace agreement applying to the employment permitted an employee to forego annual leave. The employee was then entitled to pay in lieu of the annual leave of at least his or her basic periodic rate of pay for the period foregone and the maximum amount of leave foregone was two weeks in any 12-month period. Those restrictions would be for no purpose if, consistent with the [Australian Fair Pay and Conditions Standard] AFPCS, an employer could simply nominate a rate of pay said to include payment and wherewithal paid annual leave.
…
In my view, there is a real inconsistency between the contractual term and the entitlement that s 173 seeks to preserve. I accept the framework of the scheme of the WR Act provisions contended for on behalf of Mr Williams. Section 173 reflects a parliamentary intention that a person cannot, by one means or the other, contract out of their entitlement to be paid out annual leave and other leave entitlements at the end of an employment period, save for the particular provisions allowing for the sacrifice of annual leave.
In any event, as the Federal Magistrate found, the Contract does not attempt to make any particular allocation between different types of leave, which it contends have been provided for in advance. It simply asserts the hourly rate is inclusive. In doing so it simply purports to justify the payment of a more generous hourly rate by asserting it is inclusive of any of the nominated benefits. This is a plain attempt to contract out of the payment of those benefits without regard to whether or not they are actually payable at the time of payment of the hourly rate. [61] - [67] (emphasis added)
94 Macmahon establishes that an employer cannot replace an entitlement to have paid time off work – which is what annual leave is – with a rate of pay, no matter how high the rate is. To the extent that OGR makes that argument, it is in error. The rate itself cannot include a component for annual leave.
95 If the OGR employees had accrued but untaken annual leave on termination, they were entitled to be paid their base rate of pay for all such accrued hours. There was nothing in the employees’ salary clause that could be appropriated to that purpose, and the clause did not even go as far as the Macmahon clause, insofar as that clause contained a non-specific reference to loading for ‘paid leave entitlements’.
96 For similar reasons, a comparison of this case to Wardman v Macquarie Bank Ltd [2023] FCAFC 13 (Wardman) is misplaced.
97 In Wardman, the employees had taken annual leave. Their argument was that they had not been paid appropriately either:
· whilst on leave; or
· when paid for untaken leave on termination.
98 In the case before me, the argument on behalf of the employees is that they did not even take annual leave and therefore should have been paid for all accrued but untaken annual leave on termination.
99 If the Union’s claim were that the employees had taken leave at their hourly rate of pay, and/or that they had been paid for accrued leave on termination at that rate, but in either or both cases had been underpaid, then Wardman would strongly support the submission that the rate of pay sufficiently covered the monies owing and could be appropriated to that purpose. In that scenario, the case would be on all fours with a case like James Turner Roofing Pty Ltd v Peters [2003] WASCA 28 or Clifford-Smith v Keen Bros. (WA) Pty Ltd [2022] WAIRC 00712.
100 But here, the issue is very different. The argument is that the employees did not take any annual leave and were entitled to be paid out for their untaken leave balance. An all-in rate cannot compensate for the accrual or taking of leave because, as the Union correctly emphasises, the statutory framework creates entitlements to accrue and take leave, and not simply to be paid for a nebulous concept of ‘annual leave’ which is divorced from the reasons why the entitlement exists – principal among those reasons being the need for rest from work.
101 If there was any agreement between OGR and the employees that the employees’ annual leave was incorporated into their off-duty periods, it was not to be found in the salary clause in the employees’ contracts.
Introduction to the contract
102 The employment contracts also provided, in the introduction Exhibit 1, Statement of Agreed Facts dated 27 May 2022, Annexures 1 - 4.
:
Your employment will be in accordance with the provisions of this employment offer, the Hydrocarbons Industry (Upstream) Award 2010, and the Company’s and our Client’s Policies and Procedures. Your acceptance of this offer is also your acceptance to work in accordance with these Policies and Procedures as amended from time to time.
103 On signing their contracts, the employees agreed that the 2010 Award was applicable to their employment.
104 Clause 27.4 of the 2010 Award and cl 25.4 of the 2020 Award are in the following identical terms:
Arrangements for taking leave
(a) Where an employee works in a remote location or on cycle work made up of working days and non-working days, a period of paid annual leave includes working and non-working days during the period.
(b) Where an employee works in a remote location or on cycle work made up of working days (on-duty period) and non-working days (off-duty period), an employer may reasonably require that:
(i) any period or periods of annual leave taken by the employee must be a multiple of the on-duty period under the employee’s work cycle roster; or
(ii) the employee take annual leave as provided in the roster cycle.
105 I consider that these clauses are of the kind contemplated by FWA ss 93(3) and 93(4).
106 Specifically, subparagraph (b)(ii) of each clause is a term which ‘allows for an employee to be required to take paid annual leave in particular circumstances’, as contemplated by s 93(3). It does not, in and of itself, impose that requirement.
Is a requirement under subparagraph (b)(ii) a reasonable requirement?
107 Before I consider whether there was any requirement by OGR for the employees to take leave as provided in the roster cycle, it is necessary to consider:
(i) What such a requirement means; and
(ii) Whether the requirement is reasonable – which is necessary to avoid contravention of FWA s 93(3).
108 The evidence of Douglas Heath (for the Union) and Geoffrey Bull (for OGR) establishes that persons employed in offshore industries are employed on rosters comprising on-duty periods spent on the offshore facility and off-duty periods spent onshore. Picking up the language of the 2010 and 2020 Awards, these employees are employed ‘on cycle work made up of working days and non-working days’.
109 Both Mr Heath and Mr Bull refer to the existence of the ‘Norwegian’, or 40%, roster pattern, as well as even-time rosters of the kind worked by the employees in this case, where the period of on-duty time is equal to the time spent off duty.
110 Mr Heath stated that employees on a 40% roster are usually required to take leave in their
off-duty periods. He said further that in his experience, payslips of employees required to take leave in that way will set out which part of the off-duty period is annual leave, and which part is general rest and recreation (R&R). In this way, employees are aware when they have no obligation to return to work (annual leave), as opposed to periods off-duty (R&R) when they might be recalled to work or might be required to undertake work-related tasks such as training or meetings (ts 51).
111 With respect to hydrocarbon employees who work an even-time roster Mr Heath states:
The usual arrangement for hydrocarbon employees who work an even time roster is to take annual leave during their on-duty period but take a whole roster cycle (i.e. the combined on and off-duty period) as annual leave. Exhibit 2a, Witness Statement of Douglas Heath dated 20 June 2022 [14].

112 However, under cross-examination by counsel for OGR, he conceded that there are offshore employees working even-time rosters who are required, under their applicable enterprise agreements, to take leave during their off-duty periods, in the same way as those on the 40% roster (ts 44 – 51).
113 That concession was only made after some prevarication on Mr Heath’s part, along with a misinterpretation of the meaning of a clause in the Diamond Offshore Enterprise Agreement 2019-2023 (DOEA).
114 In his statement, Mr Heath expressed the view that the DOEA ‘requires agreement to be reached between the employer and the employee for annual leave to be taken during the
off-duty period’, and that ‘[i]n the event an employer and employee don’t agree to take annual leave during the off-duty period, leave is paid out on termination of employment or cashed out as set out in clause 9.2’. Exhibit 2b, Further Witness Statement of Douglas Heath dated 1 July 2022 [3a].

115 A reading of the relevant clause immediately reveals that is not the case. The clause at issue prescribes the manner in which leave is to be taken – namely, in the off-duty periods. It is expressed in a mandatory way, using the words ‘is to be taken’. Similar clauses which have been considered in cases, some of which will be discussed below, have been found to deem that leave must be taken during the off-duty periods of cycle work rosters.
116 I find the evidence Mr Heath insisted upon during cross-examination – namely, that:
[M]y experience, with the Diamond Offshore employees is that they don’t take, uh, annual leave during the off-duty period, but they in fact get, um, the annual leave cashed out at the termination…(ts 45)
– to be inconsistent with the provisions of DOEA and therefore unreliable. That evidence is indicative of an attempt on Mr Heath’s part to be overly favourable to the position strained for by the Union with respect to OGR’s claimed liability to pay for untaken leave on termination. Although I am not dealing with a clause of the type found in the DOEA, that merely serves to highlight that Mr Heath should have made the concession much more readily than he did. The fact that he did not reduces his credibility.
117 Ultimately though, what the evidence of both Mr Heath and Mr Bull establishes is that in the offshore employment context, a requirement to take leave ‘as provided in the roster cycle’, or in accordance with the roster, means a requirement to take leave either exclusively in the
off-duty period of the roster, or a requirement to take leave as a block consisting of an on-duty and off-duty period, i.e., a complete work cycle – see, for example, Diamond Offshore Enterprise Agreement 2019-2023; Legeneering (Aust.) Pty Ltd Woodside Offshore Maintenance Enterprise Agreement 2021; Wood offshore Maintenance Services Greenfields Agreement 2021.
118 The evidence also establishes that these arrangements are commonplace and have regularly been approved by the Union when it has participated in bargaining for agreements in which they appear.
119 There is a further aspect of the particular requirement contended for by OGR in the present case – namely, that even though the employees never applied for annual leave, they nonetheless took it, because it was automatically encompassed in each off-duty period. Thus, argues OGR, the accrual of annual leave was immediately acquitted, or ‘zeroed out’ in each off-duty period.
120 This Court considered exactly that type of requirement in Odyssey Marine. In that case, the employee, Mr Jones, worked an even-time roster, initially as a deckhand but then as a master, and was covered by three enterprise agreements (dated 2009, 2013 and 2016) during his employment.
121 Mr Jones never applied for leave, but portions of his off-duty periods were described as annual leave in his payslips. Mr Jones contended that description was incorrect, and further that, upon termination, he should have been paid for accrued but untaken annual leave. Odyssey Marine argued that he had no accrued but untaken leave, as it had all correctly been incorporated into his off-duty periods, in accordance with the provisions of the relevant agreements. The parties’ positions were described thus (in Odyssey Marine [2020] WAIRC 00118):
Odyssey paid annual leave as it accrued with the taking and payment of annual leave occurring during the 28 days off period. The effect of Odyssey’s payment of accrued annual leave during the off-roster period is that annual leave did not accrue beyond the immediately preceding on duty roster period. In that sense it was a zero-sum balance with, on Odyssey’s view, there being no (or little) accrued entitlement to paid annual leave or remaining unpaid annual leave at the time of Mr Jones’ employment termination. Odyssey says this is entirely consistent with the application of the relevant clauses of the Agreements on the Even Time Roster.
Mr Jones maintains that he never took annual leave and that the 28 days off cannot be, and was not, taken as annual leave [12] – [13].
122 The task for the Court was the interpretation of the relevant clauses of the agreements, which were in the following terms:
2009 Agreement
15.3.1 Annual leave will accrue in accordance with the National Employment Standards but will be taken during the rostered off duty periods and incorporated into the paid off duty time with the net effect being that no annual leave will be taken during duty periods and there being no impact from the accrual and utilisation of annual leave on the Company as result of the operation of an equal time roster.
2013 Agreement
22.0 Annual leave will accrue in accordance with the National Employment Standards but will be taken during the rostered off duty periods and incorporated into the paid off duty time with the net effect being that no annual leave will be taken during duty periods and there being no impact from the accrual and utilisation of annual leave on the Company as a result of the operation of the equal time roster. Therefore, there shall effectively be no accruals or payment of annual leave as these provisions are included in the rates of pay set out in clause 14.0.
2016 Agreement
24.1 Full-time Employees are entitled to paid annual leave … under the NES.
24.2 For each year of service the NES entitles Full-time Employees to:
24.2.1 4 weeks of paid annual leave; or
24.2.2 5 weeks of paid annual leave if the Full-time Employee is a “continuous shiftworker” as defined in clause 11.4 of this Agreement.
24.3 Annual leave entitlements accrue on the basis of 38 ordinary hours of work per week and are paid at the Base Hourly Rate of Pay. Full-time Employees are not entitled to annual leave loading.
24.4 Full-Time Employees are entitled to paid annual leave in accordance with the FW Act. It is acknowledged and agreed that accrued paid annual leave is taken during off duty periods not at work as part of the Even Time Roster.
24.5 The Company and Full-Time Employees shall work together to ensure annual leave balances are maintained at reasonable levels to alleviate staffing disruptions and the need for additional resources.
24.6 An Employee may cash out any portion of accrued annual leave that is in excess of four (4) weeks.
123 Her Honour Industrial Magistrate Scaddan concluded that the intention and the effect of cl 15.3.1 of the 2009 Agreement was ‘to provide work arrangements created by the Even Time Roster, which includes all annual leave, accrued and taken, in the off-duty roster periods’ [35] – the effect being no impact upon Odyssey Marine.
124 With respect to the 2013 Agreement, her Honour said:
The 2013 Agreement is … in similar terms to the 2009 Agreement, although, relevantly, cl 14.3 of the 2013 Agreement includes the incorporation of annual leave in the aggregate rate of pay and cl 22 of the 2013 Agreement includes the additional words ‘[t]herefore, there shall effectively be no accruals or payment of annual leave as these provisions are included in the rates of pay set out in clause 14.0’ after the otherwise same words contained in cl 15.3.1 of the 2009 Agreement.
Therefore, to the extent that it was required, cl 22 of the 2013 Agreement reinforces the annual leave position in the 2009 Agreement by the incorporation of annual leave into the paid off duty time where the practical way this was done was to pay any accrued annual leave in the off-duty period. The effect of this was no impact upon Odyssey [39] – [40]. (original emphasis)
125 With respect to the 2009 and 2013 Agreements, her Honour granted summary judgment in favour of Odyssey Marine.
126 The claim with respect to the 2016 Agreement proceeded to hearing. In that case, IM Scaddan concluded that although the relevant clause in the 2016 Agreement was broader in scope than the 2009 and 2013 clauses, the intention for the taking of annual leave for employees working an even-time roster was the same as it had been under those previous clauses – namely, that leave could only be taken during the off-duty period of the roster. Otherwise, as her Honour noted, the words, ‘[i]t is acknowledged and agreed that accrued paid annual leave is taken during off duty periods not at work as part of the Even Time Roster’ had no meaning.
127 In Odyssey Marine [2020] WAIRC 00794 Her Honour said:
I find that the preferred construction of cl 24.4 of the 2016 Agreement is that accrued paid annual leave was incorporated into Mr Jones’ off duty time on the Even Time Roster. The practical manner in which this was done was annual leave was deducted in the subsequent off duty period as and when it accrued in the preceding on duty period [58].
128 In finding that requirement reasonable, her Honour had regard to evidence led by Odyssey Marine, being evidence establishing that:
· [T]he predominant industry practice reflects not only the Even Time Roster structure, but also the accrual and taking of annual leave in the same manner as Odyssey.
· [T]he taking of annual leave during the off-duty time is part of the acknowledgment that employees in the industry have an extended period of paid time off in contrast to other employees who have traditionally four to five weeks of paid annual leave.
· [T]he structure of Odyssey’s annual leave clause is consistent with key competitors’ enterprise agreement annual leave arrangements.
· [W]hile Mr Jones’ was refused two requests to take annual leave during the on duty period, he was granted access to other leave types for the same period [55]. (endnotes omitted)
129 A similar clause was considered in AIMPE v Curtis Island Services Pty Ltd [2015] FWCFB 6093 (Curtis Island). That clause was in the following terms:
22.2 Full-time or part-time Employees shall be entitled to a period of leave at the rate of one (1) day’s leave for each day of duty, such leave to be taken in lieu of five weeks annual leave, public holidays and weekends worked (while working the roster defined in clause 11.2, all Employees are deemed shiftworkers for the purposes of the NES) with the first 5 weeks of non-duty period in any 12 month period being deemed to have satisfied an Employee’s entitlement to annual leave in accordance with the NES.
130 Although the issue in Curtis Island was different from the issue in Odyssey Marine and this case, it is notable that there was no suggestion that the cl 22.2 requirement was unreasonable.
131 Having regard to:
· the prevalence of such arrangements;
· the practicalities of the industrial context; and
· the fact that the Union has bargained for many enterprise agreements in which such arrangements appear without complaint,
I am satisfied to the requisite standard that they are reasonable, and therefore do not contravene FWA s 93(3).
132 Consequently, if OGR required the employees to take their leave in the off-duty periods in the roster – such that they immediately used any annual leave which had been accrued in the immediately preceding on-duty period and thereby maintained a zero balance of annual leave – that requirement was (a) contemplated by the FWA and the 2010 and 2020 Awards; and (b) reasonable.
Other cases
133 A number of authorities deal with the situation of annual leave in circumstances where employees automatically have time off work by virtue of the industry in which they work. This includes industries such as teaching, which has school holidays, and professional sport, which has seasons (albeit teachers do not have the entirety of school holidays on leave, and professional sportspeople use some of the off-season for training and the like). Those authorities establish the following:
· As discussed above, an enterprise bargaining agreement can deem that employees on an even-time roster take their leave during the off-duty periods, without further mention of that arrangement in the individual employment contracts, and without the necessity for an employee to apply for leave and have the leave refused: Curtis Island; Odyssey Marine.
· An individual arrangement for an award-free employee may deem that leave is taken in accordance with a roster: Fong v Halliburton Australia Pty Ltd [2019] FCCA 2885 (Fong).
· An oral contract for a teacher may allow an employer to deduct two weeks’ leave on the basis that the teacher automatically takes leave at a particular time of year without loss of pay: Chinese Australian Services Society Limited v Sun [2022] FCA 1076.
· It is likely that individual flexibility agreements under enterprise bargaining agreements can allow for leave to be taken during field breaks: see Surveillance Australia Pty Ltd v Australian Federation of Air Pilots [2023] FWC 3078, in which Fair Work Commission Deputy President Millhouse granted a stay pending appeal of a decision of Connolly C to the contrary. In granting the stay, the Deputy President referred to Curtis Island and Odyssey Marine.
· In the offshore oil and gas industry, it is reasonable for employers to refuse applications, as they arise, for annual leave during the on-duty swing: Craig v Transocean International Resources Limited; Transocean International Resources Limited v Russell UKEATS/0029/08; UKEATS/0030/08; [2009] IRLR 519 (Transocean).
Was there a requirement as contemplated by FWA s 93(3)?
134 The ability for OGR to make a s 93(3) requirement for the employees to take leave in their
off-duty periods was provided by 2010 Award cl 27.4(b)(ii) and 2020 Award cl 25.4(b)(ii).
135 It is the case that the employees’ contracts did not explicitly address the subject of annual leave. Nor were the employees provided with any policy documents which set out either OGR’s or INPEX’s annual leave policies or requirements.
136 However, on one view, the contracts set out at the very least the basis for a s 93(3) requirement, if not the requirement itself. This is because they all contained the provision:
You will work a continuous rolling roster of 3 weeks on duty and 3 weeks off duty for the period covered by this contract or as directed by the Client. You will be advised of the start and finish dates of the roster before commencement of each swing.
137 In Transocean the UK Employment Appeals Tribunal (EAT) considered the rights of offshore workers in the oil and gas industry in respect of annual leave. It upheld the employers’ appeal. A further appeal by Russell and others to the UK Supreme Court was dismissed: Russell v Transocean International Resources Limited [2011] UKSC 57.
138 In Transocean, each of the workers had applied for leave by giving the requisite ‘regulation 15 notice’, and each had been refused leave on the dates requested, on the basis that the dates fell within the on-duty period.
139 In considering whether it had been made clear to the employees that they had to take their annual leave during field breaks (the equivalent of off-duty periods), one of the things the EAT looked to was the terms of the workers’ contracts. The contracts all had slightly different terms.
140 The contract of one of the employees, Mr Craig, contained the following clause:
“A tour of duty on the drilling unit will be for 7, 14, or 21 consecutive days of 12 hours per day. This tour will be followed by an off-time period of 7, 14, or 21 days respectively ……” Transocean [54].

141 That clause differed from most of the other contracts, which referred in some way to ‘paid
off-time’ or to ‘leave onshore’, or similar.
142 The judicial member of the EAT considered, in the case of Mr Craig’s contract, that ‘the reference to a tour of duty being followed by an equal period of “off time” was sufficient to communicate to [Mr Craig] that his employers required him to take leave during the “off time” periods’. Ibid., [108].
The lay members considered otherwise.
143 However, the majority of the tribunal considered that in the case of workers including Mr Craig, ‘[the employers’] responses to their requests for leave also intimated to them, in accordance with the [employers’] notification entitlements, that their employers required leave to be taken during field breaks.’ Ibid., [119].

144 It is arguable that the reference to a ‘rolling roster of 3 weeks on duty and 3 weeks off duty’ was sufficient to communicate to the employees that OGR required them to take leave during their off-duty periods, and in that sense constituted a s 93(3) requirement.
145 By signing contracts including that term, the employees agreed to a roster which inherently met the requirement for rest, whilst on pay, which is at the core of the NES requirement for leave. The NES does not import any qualitative characteristic into ‘annual leave’. As in Transocean, it is an arithmetical exercise. In this case, that arithmetical exercise demonstrates that each of the employees received well in excess of their entitlement to annual leave during the off-duty periods:
· Allan Gray worked for approximately 102 weeks. He accrued 7.86 weeks (298.68 hours) of annual leave and had approximately 51 weeks off duty.
· Clinton McDermott worked for approximately 41 weeks. He accrued 3.13 weeks (118.94 hours) of annual leave and had approximately 20 weeks off duty.
· Paul McMahon worked for approximately 54 weeks. He accrued 4.19 weeks (159.22 hours) of annual leave and had approximately 27 weeks off duty.
· Mark Stott worked for 131 weeks. He accrued 10.06 weeks (382.28 hours) of annual leave and had approximately 65 weeks off duty.
146 But in any event, Transocean also establishes that in the statutory framework applicable in the UK at the relevant time – which in my view is sufficiently similar to the FWA provisions to make the case persuasive – it was sufficient for the employers to refuse requests for annual leave during the workers’ on-duty periods.
147 Based on Mr Cantley’s evidence it is clear that if the employees had requested to take paid annual leave during their on-duty periods, those requests would have been denied. I draw this conclusion from Mr Cantley’s evidence that leave was incorporated into the off-duty periods; that if the employees had wanted leave during the on-duty time, it would have been treated as unpaid leave; and from his response to Mr Stott when Mr Stott asked about ‘benefits’ once he had received his 2-year contract.
148 Such refusal would have effectively conveyed the requirement to take leave in the off-duty periods – as did the employers’ regulation 15 notices in Transocean.
149 The fact that OGR did not convey the requirement explicitly was a result of the fact that none of the employees applied to take annual leave. However, in my opinion the requirement was a latent requirement – always present in the fabric of the employees’ work requirements, and inevitably going to be revealed if they had applied for leave.
150 I am not persuaded by any argument that because the employees did not explicitly ask for annual leave, they did not take it. Having regard to the following facts:
· The employees received an annual salary;
· The employees worked an even-time roster during which they received the annual salary, regardless of whether they were offshore or not – in other words, this constituted time off work without loss of pay;
· The time the employees spent onshore was, in every case, well in excess of the four weeks they were entitled to annually, for paid leave, even taking into account any recall for work purposes – as to which, there was no evidence in any event;
I find that they did take their annual leave.
151 Mr Stott’s ignorance of the fact that he was always a full-time employee, and Mr Gray’s complaint that nobody explained to him that he could apply for annual leave, are irrelevant to the issue whether there was a valid s 93(3) requirement.
152 The fact is that both were, by virtue of their contracts, full-time employees, employed on a rolling roster of three weeks on, three weeks off, with annual leave entitlements.
153 Had either sought to apply for annual leave during the on-duty portion of the roster, they would have been met with a refusal and an explanation that annual leave was taken in the off-duty periods.
154 As in Transocean, it is not surprising that it was not suggested on behalf of OGR’s employees that the existing on-duty / off-duty pattern was problematic from a health and safety perspective – it clearly was not.
155 In dismissing the annual leave claim in Fong, Lucev FCCJ said:
In Appendix B the [International Commuter Assignment] (ICA) expressly provided that for the six-month period concerned so called “field breaks” would “compensate a number of factors including holiday breaks and no additional leave or vacation provisions apply”. The contractual effect of that provision was to provide for annual leave to be taken as a field break or breaks, and therefore the entitlement claimed does not arise: FW Act, s 94(6).
In any event, s 94(5) of the FW Act provides that an employer “may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable”. Given that the ICA required Mr Fong to work on a particular assignment, in a particular place, and for a fixed period during which there were periods that he was not required to work (the field breaks), the requirement to take paid annual leave during those periods was in the Court’s view reasonable. That view is reinforced by the fact that the [Hydrocarbons Industry (Upstream) Award 2010] (HI Award), applicable to award employees in the industry contains a provision to similar effect to that in Mr Fong’s ICA.
It follows that Mr Fong’s annual leave claim is not made out [96] – [98]. (emphasis added)
156 Here, Lucev FCCJ recognised the specific contractual provision which provided for annual leave to be taken as a field break or breaks. On that basis alone, the entitlement claimed did not arise.
157 However, his Honour went on to observe that in any event, FWA s 94(5) enables an employer to require an award/agreement free employee to take a period of paid annual leave, provided the requirement is reasonable. His Honour then listed the features of Mr Fong’s employment assignment – all of which are features of the employees’ employment in the case before me – and concluded that in view of those features, the requirement to take leave in a field break was reasonable.
158 His view was reinforced by the fact that the industry award applicable to other employees in the same industry (but not to Mr Fong) ‘contains a provision to similar effect’ to that in Mr Fong’s ICA – that award being the Hydrocarbons Industry (Upstream) Award 2010.
159 In my opinion, it cannot be and is not the case that just because OGR’s employees did not request an entitlement that they never would have been granted – where such refusal would have been entirely reasonable – they therefore retain a monetary claim to that entitlement.
Did the employees agree to take annual leave ‘as provided in the roster cycle’?
160 I have found that there was a valid and reasonable s 93(3) requirement by OGR that the employees take paid annual leave in accordance with the roster cycle – namely, during their
off-duty periods. For that reason, I need not consider whether any of the employees agreed to take leave in that way.
161 However, as Driver J said in Quasar, s 88 does not limit the mode of agreement to take paid annual leave. It can be oral, written or agreed by conduct.
162 In my opinion, Mr McDermott and Mr McMahon agreed by their conduct to take leave in their off-duty periods.
163 Mr McDermott said in evidence that he ‘never required any additional time off than what was set out in the normal roster’ (ts 70). He also said he ‘never needed annual leave’ (ts 84-85).
164 The irresistible inference to be drawn from that evidence is that Mr McDermott received all the leave he needed from the roster cycle. Insofar as he says he never ‘needed’ annual leave – that is because he actually took it, in the off-duty periods.
165 As for Mr McMahon, it is clear from his evidence that he possessed a thorough knowledge of his entitlements and the fact that they arose from the NES. He may well have had some concern about requesting annual leave after his sick leave had not been paid, but I do not accept that someone as self-possessed and knowledgeable as Mr McMahon would not have requested annual leave if he had wanted or needed it. For that reason, I consider that he too agreed by his conduct to take leave in the off-duty periods.
Were the employees paid during their annual leave?
166 When the employees took annual leave during their off-duty periods, they were entitled to be paid in accordance with FWA s 90(1):
If … an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
167 Clause 22.1 of the 2010 Award and cl 13.1(a) of the 2020 Award provide that a full-time employee’s ordinary hours of work will be an average of 38 hours per week.
168 That gives, as Mr Cantley said in evidence, an entitlement to 152 hours (38 x 4) of annual leave per annum.
169 Clause 20 of the 2010 Award and cl 18 of the 2020 Award provide for the payment of an annual salary, which is what the employees received. Clause 20.3 of the 2010 Award provides:
For the purposes of the NES, the base rate of pay of an employee receiving an annual salary under this clause comprises the portion of the annual salary equivalent to the relevant rate of pay in clause 14—Minimum wages and excludes any incentive-based payments, bonuses, loadings, monetary allowances, overtime and penalties and any other separately identifiable amounts incorporated into the annual salary.
170 That clause echoes the terms of FWA s 16, which defines ‘base rate of pay’.
171 Clause 18.3 of the 2020 Award was in the same terms as cl 20.3 of the 2010 Award, save for a reference to ‘clause 16 – Minimum rates’.
172 As noted earlier, the employees’ job descriptions did not specify their award classification. There was no evidence in the trial as to what their classification was.
173 However, throughout their employment, they earned an hourly rate of $95.88. The salary clause in the contracts makes clear that that rate included loadings and monetary allowances for all factors associated with the work. In my opinion, Mr McMahon’s list at paragraph 22 of his statement represents an accurate description of the factors the rate was intended to cover.
174 Pursuant to 2010 Award cl 14.1, the minimum weekly rate of pay for an adult employee at the highest classification of Level 7 was $1069.80. That was the pay rate applicable for Level 7 in the first full pay period that started on or after 1 July 2019. The immediately preceding minimum weekly rate of pay for Level 7 was $1038.60 (from 1 July 2018). The table at cl 14.1 did not break that rate down any further.
175 However, the equivalent table at cl 16.1 of the 2020 Award (as at 1 July 2021) provided for a minimum weekly rate of $1115.70 for Level 7. The table at cl 16.1 also provided the corresponding minimum hourly rate, which for Level 7 was $29.36.
176 Dividing $1115.70 by $29.36 gives 38, meaning the weekly rate was calculated on a normal working week of 38 hours. The minimum hourly rates for Level 7 from 1 July 2018 and 1 July 2019 therefore would have been $27.33 ($1038.60 / 38) and $28.15 ($1069.80 / 38) respectively.
177 A Level 7 employee earning the rate of $29.36 provided for in the 2020 Award would therefore have been entitled to be paid a total of $4462.72 (152 x $29.36) if he or she took all four weeks of annual leave over a year of work. Of course, that rate has hardly any applicability to this case, since all employees except for Mr Stott had ceased working for OGR before the 2020 Award came into effect.
178 As an aside, simple arithmetic demonstrates that the amounts claimed are significantly overestimated, because they have been wrongly calculated on the basis of $95.88 per hour.
179 Bearing in mind that FWA s 90(2) requires the employer to pay the employee ‘the amount that would have been payable had the employee taken the period of leave’, the claimed amounts should have been calculated on the base rate of pay as provided by the 2010 Award provisions.
180 The Union did not correctly ascertain what that base rate was, but it was clearly somewhere close to Mr Cantley’s best guess of ‘about $27.90’ during evidence (ts 184).
181 What I have been leading to with the preceding exercise is a finding as to whether OGR paid the employees for their annual leave whilst they were taking it. That is the principle for which Canavan Building Pty Ltd [2014] FWCFB 3202 (Canavan) is authority. That case establishes that annual leave cannot be paid for incrementally in advance.
182 I will say, first, that there is no clause of the 2010 Award or 2020 Award and no term of the employment contracts in this case that has the explicit effect of the offending enterprise bargaining agreement provisions under consideration in Canavan.
183 In Canavan, the offending provision would have had the effect that employees were effectively on unpaid leave at the time of taking what was supposed to be annual leave; in addition, there was a possibility that they could be paid for annual leave at a rate less than the base rate of pay they were entitled to, in the event that they had had a promotion between the payment in advance and the taking of the leave.
184 OGR paid the employees a consistent rate of pay of $95.88 per hour, which represented the employees’ hourly rate on an annual salary. As discussed at length at trial, that rate took into account all the factors mentioned in the salary clause. But no part of that rate was a loading in lieu of paid time off – i.e., in lieu of the right to actually take time off and be paid whilst on that time off.
185 I note in this context that the contracts of Mr Gray and Mr McDermott provided that ‘Fortnightly salary will be calculated by dividing the annual salary by 26.’ This suggests that they were paid the same amount every fortnight. I do not have any payslips for Mr Gray or Mr McDermott, so I am not certain that they were paid in that way. If they were, I would have no difficulty in finding that they were paid for their annual leave at the time they took it.
186 The contracts of Mr McMahon and Mr Stott did not contain the provision about dividing the annual salary by 26. According to Mr McMahon’s payslips, his pays certainly fluctuated in accordance with how many hours he had worked in the relevant pay cycle.
187 Given my uncertainty as to exactly how Mr Gray and Mr McDermott were paid, I will for present purposes assume that all the employees’ pays fluctuated on account of differences in the number of hours included in each timesheet. If so, it follows that the temporal connection between the taking of annual leave and payment for that leave – identified in Canavan as a key feature of the NES provisions pertaining to annual leave – also varied.
188 In his dissenting judgement in Re Hull-Moody Finishes Pty Ltd [2011] FWAFB 6709, Cambridge C said:
The fundamental notion of paid annual leave is defeated if at around the commencement of or during the period of actual leave, there is no payment provided in respect of the period of absence from work. The redirection of the payment into an hourly rate creates such disconnection with the period of absence from work so as to effectively make the period of absence a period of unpaid leave. The obvious practical outcome is to establish financial disincentive for the taking of the period of leave. Thus the rationale for the establishment of paid annual leave involving annual rest and recuperation away from work is impugned and the protected benefits and safeguards intended by Division 6 are violated [55].
189 I do not consider that the same concerns arise in the context of employees paid an annual salary for cycle work. It seems to me that the requirement for an ‘inextricable link’ between the taking of annual leave and payment for it lessens when the following factors are present:
· An annual salary paid throughout the period of employment; and
· Off-duty periods which far exceed the time off work provided for by annual leave and thereby provide ample opportunity for rest and recreation.
190 In that context, there is no financial disincentive to take annual leave, since the employees take the leave as a function of the roster. Nor is the requirement for ‘annual rest and recuperation’ impugned in the manner identified by Cambridge C in his dissent.
191 In my opinion, in the case of cycle work, some flexibility must be afforded to the concept of the temporal connection between leave and payment for the leave.
192 In circumstances where it would be open to the employer to pay a regular fortnightly wage to employees made up of an unvarying hourly rate, the fact that the pays are in fact variable dependent on the specific hours worked – but still add up to the annual salary – should not make the employer suddenly liable to pay extra simply because there may be a slight disconnect between payment, and the period of absence from work.
Does the lack of record-keeping matter?
193 The Union raised an issue as to the lack of reference to annual leave in the payslips or any other records. On that issue, in Quasar Driver J said:
The provisions of the NES (see Division 6 – Annual Leave, Part 2-2 of the Fair Work Act) do not mandate that a period of annual leave can only be taken by an employee if it is actually recorded by the employer.
…
Thus, while the failure by an employer to maintain accurate annual leave records may expose them to a penalty for breach of its record-keeping obligations under s.535 of the Fair Work Act, this is a separate issue from whether under s.90(2) [an employee] had a period of untaken paid annual leave when his employment ended. [160] – [162]
194 In Fong, the Court noted the following evidence as to the employer’s record-keeping:
[W]hen the Court made enquiries as to how Halliburton recorded when an employee took annual leave on a field break Ms Easter stated annual leave was not recorded in the SAP [internal software system used by payroll] or on an employee payslip, there was just an expectation that annual leave would be taken as part of their field break. Ms Easter confirmed there was no application for annual leave from the employee on a field break, there was no recording of annual leave in the system for the annual leave taken on the field break and there was no deduction of the annual leave days taken, whether nominally or otherwise, on the field break in the SAP, and the employees continued to receive base salary. [46]
195 That evidence did not prevent the Court from dismissing Mr Fong’s annual leave claim.
196 Based on those authorities, I find that OGR’s lack of records of annual leave does not lead to the conclusion that the employees had untaken paid annual leave when their employment ended.
Contravention of entitlement to sick leave and carer’s leave
197 In the case of Mr McMahon, he did not take unpaid leave. He attempted to take sick leave, supported by a medical certificate as evidence. He was not paid for sick leave. In my opinion, OGR’s failure to pay two days’ sick leave was a definite contravention of FWA s 96.
198 Mr Gray took unpaid leave to care for his terminally ill mother. He should have been afforded at least 10 days paid carer’s leave. In my opinion, OGR’s failure to pay carer’s leave was also a clear contravention of FWA s 96.
199 However, as neither of these failures is part of the claim, it is not open to the Union to seek penalties for those contraventions.
Observation
200 As is clear from these reasons, OGR:
· Did not explicitly state its annual leave requirements in the contracts;
· Did not pay Mr McMahon for sick leave, even though he had substantiated an application for paid sick leave with evidence;
· Did not pay Mr Gray for carer’s leave so that he could care for his terminally ill mother.
201 None of this reflects well on OGR.
202 As to sick leave and carer’s leave, it appears that OGR took a cavalier attitude to its obligations under the FWA – in fact, Leyla Osborne explicitly told Mr McMahon he was not entitled to sick leave, which was patently wrong – and has without doubt contravened FWA s 96.
203 As to annual leave, OGR should have stated clearly in the contracts that it was integrated into the off-duty periods. As Mr Gray said, it should have been written down for all to see. On that point, I cannot understand why Mr Cantley said in evidence that it would not have been easier to state the requirement explicitly. In the offshore oil and gas industry, that is clearly a reasonable requirement and such a simple addition to the contracts would have avoided these proceedings.
Conclusion
204 For the foregoing reasons, the claim is dismissed.


E. O’DONNELL
INDUSTRIAL MAGISTRATE