2024 WAIRC 00868
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2024 WAIRC 00868



CORAM
:
INDUSTRIAL MAGISTRATE D. SCADDAN



HEARD
:
WEDNESDAY, 21 AUGUST 2024



DELIVERED
:
FRIDAY, 4 OCTOBER 2024



FILE NO.
:
M 14 OF 2024



BETWEEN
:
DANIEL SUMMERS


CLAIMANT





AND





PHI INTERNATIONAL AUSTRALIA PTY LTD (ACN: 008 932 189)


RESPONDENT

CatchWords : INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – Alleged contravention of an enterprise agreement – Alleged contravention of a National Employment Standard – Claim for untaken paid annual leave upon termination of employment – Construction of annual leave clause of the relevant enterprise agreement on Even Time Roster
Legislation : Fair Work Act 2009 (Cth)
Industrial Relations Act 1979 (WA)
Instrument : PHI International Australia Kimberley Engineering and Ramp Staff Enterprise Agreement 2022
HNZ Broome Ground Enterprise Agreement 2017
Case(s) referred
to in reasons: : David Jones v Odyssey Marine Pty Ltd [2020] WAIRC 794; 100 WAIG 1322
Australian Worker’s Union v Oil & Gas Repair Australia Pty Ltd [2024] WAIRC 148; 104 WAIG 352
City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426
Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829; (2014) 318 ALR 54
Kucks v CSR Ltd (1996) 66 IR 182
Amcor Limited v Construction Forestry Mining and Energy Union & Ors [2005] HCA 10; (2005) 214 ALR 56
The Australian Maritime Officers’ Union v Curtis Island Services Pty Ltd [2015] FWC 1836
Surveillance Australia Pty Ltd v Australian Federation of Air Pilots [2024] FWCFB 234; (2024) 331 IR 405
Smith v Quasar Constructions Pty Ltd [2015] FCCA 557
Fong v Halliburton Australia Pty Ltd [2019] FCCA 2885
WorkPac Pty Ltd v Rossato [2020] FCAFC 84; (2020) 378 ALR 585
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; 132 IR 122
Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 390; 100 WAIG 519
Mildren & Anor v Gabbusch [2014] SAIRC 15
Miller v Minister of Pensions [1947] 2 All ER 372, 374
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362
Fedec v The Minister for Corrective Services [2017] WAIRC 00828; 97 WAIG 1595
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Excelior Pty Ltd [2013] FCA 638
Result : Claim dismissed
Representation:
Claimant : Ms E. Ong (of counsel)
Respondent/s : Mr R. Boothman (of counsel)



REASONS FOR DECISION
1 On 9 February 2024, the claimant, Daniel Summers (Mr Summers), commenced a claim against his previous employer, PHI International Australia Pty Ltd (PHI), alleging PHI failed to comply with a term of the PHI International Australia Kimberley Engineering and Ramp Staff Enterprise Agreement 2022 (EA 2022) and in doing so contravened the Fair Work Act 2009 (Cth) (FWA).
2 The alleged contravention concerns a similar issue to that determined by the Industrial Magistrates Court (IMC or Court) in David Jones v Odyssey Marine Pty Ltd [2020] WAIRC 794; 100 WAIG 1322 (Odyssey Marine) and Australian Worker’s Union v Oil & Gas Repair Australia Pty Ltd [2024] WAIRC 148; 104 WAIG 352 (Oil & Gas Repair), namely the taking, and the accumulation, of annual leave by an employee on an equal shift work roster (commonly referred to as an even time roster).
3 Mr Summers claims:
· he did not apply for or take annual leave during his employment with PHI, and he was entitled to annual leave pursuant to s 87(2) of the FWA;
· he was entitled to accrued annual leave, and to have such annual leave paid out on termination, under cl 21.1.4 of EA 2022 (and its predecessor HNZ Broome Ground Enterprise Agreement 2017 (EA 2017));
· PHI failed to pay him untaken paid annual leave upon termination of his employment contrary to s 90(2) of the FWA; and
· as a result, PHI has contravened s 44, s 87(2) and s 90 of the FWA,
(the Claim)
4 Mr Summers seeks orders for:
· PHI to pay him $22,330.1593 in unpaid annual leave entitlement;
· pre-judgment interest on the judgment amount;
· a pecuniary penalty for contravention of s 44 of the FWA;
· a civil penalty for contravention of s 44(1) of the FWA; and
· any penalty be paid to him.
5 PHI denies the Claim and says:
· EA 2017 applied to Mr Summers’ employment from 2 November 2020 to 9 August 2022, and, where he was a shift worker on an even time roster, the combined effect of cl 6(b)(i)(4) and cl 11(a)(b)(a) of EA 2017 was to discharge annual leave during a compressed work-cycle of 210 days per year;
· Mr Summers did not comply with cl 11(b)(c) of EA 2017 in applying for annual leave; and
· EA 2022 applied to Mr Summers’ employment, and all annual leave that had accrued and was not taken from 10 August 2022 was paid to Mr Summers upon the termination of his employment.
6 PHI denies it contravened EA 2017 or EA 2022.
7 In the alternative, if the Court finds PHI’s practice was inconsistent with EA 2017 or EA 2022, any order should be reduced where:
· Mr Summers’ annual salary compensated him for 210 ordinary days per annum;
· Mr Summers performed work on less than 182 days per annum during his employment period; and
· the amount paid to him for the days he did not work, and was not on annual leave, being 28 days is capable of being set-off.
8 Schedule I outlines the jurisdiction and practice and procedure relevant to the IMC.
Issues for Determination
9 The following issues require determination:
(a) What is the proper construction and application of cl 11 in EA 2017 (and, if relevant, cl 21 in EA 2022) as it relates to FIFO Employees?
(b) Does annual leave accrue under the terms of cl 11 of EA 2017 (and, if relevant, cl 21 of EA 2022)?
(c) Is Mr Summers entitled to the payment of untaken paid annual leave under s 90(2) of the FWA?
(d) If the answer to (b) and (c) is yes, should any amounts owed be set off against payments made to Mr Summers?
Agreed Facts
10 The parties prepared a statement of agreed facts of which the relevant facts are as follows (the Agreed Facts). Exhibit 3 – Statement of Agreed Facts (SOAF).

11 PHI is a ‘constitutional corporation and a ‘national systems employer’ as those terms are defined in the FWA, and substantially engages in activity performing work on, or associated with, helicopters.
12 Prior to 30 April 2020, PHI was named HNZ Australia Pty Ltd.
13 Mr Summers was employed by PHI from 2 November 2020 to 12 October 2022 on a full-time basis working in Broome, Western Australia as a Licensed Aircraft Maintenance Engineer (LAME).
14 From 2 November 2020 to 9 August 2022, EA 2017 applied to Mr Summers’ employment. From 10 August 2022 to 12 October 2022, EA 2022 applied to Mr Summers’ employment. His employment was also subject to a contract of employment dated 29 September 2020 (the Contract). Exhibit 3 at SOAF 3.

15 From 2 November 2020 to 8 August 2022, Mr Summers was engaged on a shift work roster of 21 days on and 21 days off (the Even Time Roster) (First Employment Period). From 9 August 2022 to 12 October 2022, Mr Summers was engaged on a shift work roster of 15 days on and 13 days off (Second Employment Period).
16 Employees could be required to work additional hours outside of the normal roster or ordinary hours of work, and where employees returned to work or stayed on for additional hours, they were paid at one and one-half times the ordinary shift rate.
17 Mr Summers was entitled to annual leave in accordance with the National Employment Standards (NES) under the FWA.
18 Mr Summers annual salary was $172,000, which was paid at a base rate of pay for ordinary hours worked at the hourly rate of $59.06512.
19 In Mr Summers’ payslip for August 2022, his annual leave balance was expressed as ‘409.95 hours’. Exhibit 3 at SOAF 4.
In his payslip for September 2022, his annual leave balance was expressed as ‘31.89 hours’. Exhibit 3 at SOAF 5.
In his payslip for October 2022, 39.26 hours of annual leave was paid out upon termination of his employment. Exhibit 3 at SOAF 7.

20 Annual leave records are provided. Exhibit 3 at SOAF 6.

21 On 30 November 2021, PHI emailed each of the engineer employees to whom EA 2017 applied, including Mr Summers, in relation to annual leave. Exhibit 3 at SOAF 8.

22 On 9 February 2022, PHI sent a letter to each of the engineer employees to whom EA 2017 applied, including Mr Summers, regarding annual leave balances. Exhibit 3 at SOAF 9.

23 On 2 March 2022, Mr Summers sent an email response to PHI with a letter attached. Exhibit 3 at SOAF 10.

24 On 16 August 2022, PHI emailed each of the engineer employees to whom EA 2022 applied, including Mr Summers, regarding, amongst other things, leave balances and EA 2022. Exhibit 3 at SOAF 11.

Mr Summers’ Evidence
25 Mr Summers relied upon his written witness statement signed on 21 June 2024 and he gave oral evidence at the hearing (Summers Statement). Exhibit 1.

26 In summary, and additional to the Agreed Facts, Mr Summers’ evidence is:
(a) around September 2020, as part of the recruitment process, he attended a video conference interview with several PHI representatives;
(b) he recalled it being briefly mentioned in the interview that his roster would be three weeks on and three weeks off and that he would get annual leave, although there was no detail provided;
(c) PHI or its representatives did not mention any enterprise agreement during the interview or during any pre-employment conversations;
(d) he was never informed during recruitment and ‘onboarding’ that annual leave would be taken during his off-swing, or which off-swing periods would be considered annual leave, or how he was to apply for annual leave;
(e) on 2 October 2020, he received an email from PHI offering him employment with the following documents attached:
i. the Contract with standard terms and conditions;
ii. a generic position description for LAME; and
iii. Fair Work Information Statement,
(f) he did not receive EA 2017 with the email dated 2 October 2020. He signed the Contract on 3 October 2020 and returned it to PHI;
(g) from 2 October 2020 to 8 August 2022, his roster was always three weeks on and three weeks off with no options to change the pattern;
(h) he was rostered to work 182 days per year with 182 days off work;
(i) he could be requested to work more than the rostered hours and days on-swing and he was paid accordingly. These ‘over time’ shifts were ‘tacked’ on to the end of or start of a swing and were carried out on a voluntary basis upon PHI’s request for employees to undertake over time work;
(j) the employee could turn down offers of overtime work or work while on the off-swing;
(k) he was not aware of the process for applying for annual leave and does not recall if he was told about annual leave forms or having to fill out annual leave forms;
(l) he was not requested or directed to put in an annual leave form or told to take annual leave until ‘a while’ into his employment when he received some communication about PHI moving to the ‘Datacom’ system;
(m) this information included how to access payslips via ‘Datacom’ and how to request leave using ‘Datacom’;
(n) he did not apply for or take annual leave during his employment with PHI, either before or after the introduction of ‘Datacom’ or during his on-swing period;
(o) during the period of employment with PHI he worked every on-duty period when he was rostered to work;
(p) his annual leave continued to accrue on his payslip;
(q) his three weeks off-swing usually made him feel like he had enough break between work, and it did not necessitate him taking annual leave;
(r) he recalled a colleague applying for annual leave for his on-swing through ‘Datacom’ and believed it was rejected on the same day, so he didn’t bother trying to apply for leave;
(s) he heard about PHI employees not getting annual leave when bargaining was started for the replacement enterprise agreement, but he was not part of that process, although he recalled someone saying it was because of some ‘bullshit clause in the Agreement’;
(t) some unspecified time later, PHI sent him, and others, an email dated 30 November 2021 about leave applications and how PHI calculates leave, but he did not recall being told to take annual leave or apply for annual leave by PHI until this email;
(u) he did not take annual leave from August 2022 to September 2022; and
(v) his right to annual leave arises under the NES contained in the FWA or under cl 24.4 of EA 2022.
27 In his oral evidence, Mr Summers clarified in the Summers Statement, at paragraph 24, to the best of his knowledge he worked every rostered period. However, there were seven days where he was stood down during the rostered period. Therefore, the Summers Statement was amended to that effect.
28 In cross-examination, Mr Summers:
(a) in summary, confirmed that he had worked in the Aviation Industry as an Engineer for about 30 years, including 20 years in oil and gas primarily as a FIFO worker on various rosters;
(b) reluctantly, accepted that he worked a compressed work cycle of 210 days where he was required to work 182 days;
(c) reluctantly accepted the difference between 210 days and 182 days was 28 days;
(d) said he was not instructed to take 28 days leave in the calendar year, but accepted this was contained in the Contract and EA 2017, but maintained that he was not provided the enterprise agreement as an annex to the Contract;
(e) stated the ‘balance’ of his annual leave changed one month before the termination of his employment;
(f) in reference to paragraph 25 of the Summers Statement, Mr Summers denied believing that he was on annual leave and maintained that he was carrying out the Even Time Roster;
(g) agreed that he had six months of the year off, but then indicated that the Contract was attractive because it was an Even Time Roster and annual leave;
(h) said other (past) employers enabled the taking of annual leave only on the on swing;
(i) disagreed the three week on/three week off cycle was attractive but said it compensated him for working away and long days;
(j) said it was better to be a traditional worker, displaying an entrenched view on this;
(k) took it for granted the Contract included three week on/three week off cycle plus annual leave rather than recalling any discussion on whether it, in fact, did;
(l) said he worked every rostered period he was told to work and denied the work cycle included annual leave, although he could not explain how he would work the minimum 182 days required if annual leave was taken during the on-duty roster;
(m) had no knowledge of the reasons why a work colleague was refused annual leave during the on-duty roster;
(n) from his perspective, he banked annual leave and maintained it was his discretion to take annual leave and he chose not to take it. He maintained he did not need to apply for annual leave and banked it instead;
(o) appeared to suggest that the enterprise agreement not being attached to the Contract invalidated its terms;
(p) believed he was not taking annual leave during the off-swing and that he would take annual leave (when he wanted) during the on-swing;
(q) lacked specificity about when he says he was told or not told about EA 2017 annual leave terms; and
(r) agreed that he did not work all the rostered time indicated in the Summers Statement.
29 Parts of Mr Summers’ evidence was uncontroversial. However, aspects of his evidence were, in my view, disingenuous and, at times, he adopted an entrenched view in the face of evidence to the contrary. For example, in the Summers Statement he obliquely referred to the rigidity of the roster, but he well knew what he was being offered by PHI and had worked similar rostering systems for 20 years. Further, he denied the obvious benefit of working for six months of the year for an annual salary, when he previously stated he felt the three weeks off ‘made him feel like [he] had enough time off’. He was reluctant to concede uncontroversial issues such as the payment of an annual salary for a 210 compressed work cycle and being required to work 182 days per year during that compressed work cycle.
30 The consequence of this is that I view his evidence, particularly his personal views, with some degree of scepticism, unless supported by other independent evidence.
PHI’s Evidence
31 Zoe Wilson (Ms Wilson), Shared Services Manager – APAC & EMEA, prepared and signed a witness statement dated 12 July 2024 on behalf of PHI (Wilson Statement). Exhibit 2.

32 In summary, and additional to the Agreed Facts, Ms Wilson’s evidence is:
(a) she has been employed by PHI since 13 July 2022 as a Payroll Manager and since 6 October 2023 in her current position;
(b) she has observed that EA 2017 and EA 2022 are well-known amongst PHI employees and are readily available in electronic form on PHI’s internal SharePoint database and via an electronic link through payroll updates to employees;
(c) changes to EA 2017 were made to the rostering and/or annual leave provision in EA 2022 as a result of requests by the relevant union and PHI employees;
(d) at all times (relevant to the Claim) during which EA 2017 applied, PHI’s FIFO engineering employees have worked an ‘equal time’ roster of three weeks on-duty and three weeks off-duty;
(e) these employees receive an annual leave entitlement of 28 days per annum, which is integrated into their off-duty periods as provided in cl 11(a)(b)(a) of EA 2017, and stems from employees being engaged on a work cycle of, and being compensated for, working 210 days per annum, when they are only rostered to work an average of 182 days per annum;
(f) on that basis, the 28 days annual leave is incorporated into the off-duty roster and employees are not required to ‘apply’ for annual leave in a general sense because they are compensated for this based on their compressed 210 work cycle;
(g) she is aware Mr Summers’ payslip for August 2022 expressed an annual leave balance of 409.95 hours and explains that such annual leave balances were included on all FIFO engineering employee payslips where:
i. relevant employees did not apply for annual leave as it was being discharged during their off-duty periods; and
ii. PHI did not have an automatic process to remove the discharged annual leave deemed to have been taken by FIFO engineering employees during this time (meaning there was no process by which discharged annual leave was accounted for in PHI’s internal payroll system),
(h) this was not an accurate record of Mr Summers’ annual leave entitlements in August 2022, which had been automatically discharged during the off-duty periods;
(i) PHI has now rectified this issue so that payslips for all FIFO engineering employees reflect their annual leave balance on a monthly annual leave accrual;
(j) upon reviewing the Summers Statement and rosters, she identified Mr Summers worked overtime during his employment but paid overtime rates in accordance with EA 2017 and EA 2022, and generally worked overtime at the beginning or end of his on-duty roster (rather than being recalled to work);
(k) at SOAF 6 to the Agreed Facts at page 2 there is a comment for the payroll period 1 September 2022 to 30 September 2022 which states ‘Re Old EBA 210 shifts v 182 worked’. This comment refers to the number of shifts Mr Summers should have worked to comply with EA 2017;
(l) from 2 November 2020 to 8 August 2022, in accordance with EA 2017, Mr Summers should have worked 371 days based on 210 shifts per year or, alternatively, worked 321 days based on his agreed working time of 182 days per year; and
(m) upon reviewing Mr Summers’ rosters during this period, Mr Summers only worked 315 days (excluding overtime), meaning he did not work every on-duty period as claimed in the Summers Statement at paragraph 24.
33 In cross-examination, Ms Wilson confirmed there was no leave form attached to the Wilson Statement. While she could not confirm if Mr Summers applied for annual leave during his employment, she believed that he did not.
34 Ms Wilson’s evidence was generally uncontroverted and based on documents corroborating her evidence.
Documents
35 The Contract states, amongst other things Agreed Facts at SOAF 3.
:
· ‘Your remuneration is set out in [EA 2017]…’
· It is a Fixed Term – Touring contract.
· Clauses 5.1(a) and 5.2(a) of the Standard Terms and Conditions provides the ordinary hours of work and that the actual hours will be set out in rosters determined by the respondent.
· Clause 10.2(a) of the Standard Terms and Conditions states the remuneration package includes compensation for all entitlements that might otherwise be due under any applicable industrial instrument that may apply to the employment such as EA 2017.
· Clause 11 of the Standard Terms and Conditions states that in accordance with legislation, the claimant is entitled to, relevantly, 28 days of paid annual leave.
· Clause 11.2 of the Standard Terms and Conditions states the claimant and the respondent will comply with any terms about the requirement to take annual leave specified in any applicable industrial instrument.
36 The August 2022, September and October 2022 payslips are referred to in the Agreed Facts.
37 The record of annual leave shows the accrual of annual leave and its acquittal. Agreed Facts at SOAF 6.

38 The email from the respondent dated 30 November 2021 recites the terms of cl 11 of EA 2017.
Claimant’s Submissions
39 The claimant submits he is entitled to annual leave in accordance with the NES and that he did not apply for annual leave, nor did he fill in any annual leave form. He was never directly told during the recruitment or ‘onboard’ process that annual leave was to be taken during his off-duty roster until November 2021.
40 The claimant refers to the NES and restates the provisions of ss 87, 88, 92 and 93 of the FWA.
41 The claimant further refers to the Contract and restates cl 11.2. He says he is entitled to 28 days of paid annual leave.
42 The claimant admits that upon the commencement of his employment, EA 2017 applied to him. The claimant restates cl 11 of EA 2017 and maintains that he did not apply for or take annual leave, ergo any annual leave accrued where there is no provision for the wiping out of leave balances to zero.
43 The claimant contends PHI unilaterally reduced accrued leave balances around the time of EA 2022 commencing, contravening the NES.
44 Therefore, accrued annual leave balances which existed under EA 2017 carried on accruing while EA 2022 applied to his employment.
45 The claimant recites cl 21 of EA 2022 and restates the submissions for EA 2017 and says that all accrued annual leave (409.95 hours plus 31.89 hours) had to be paid out in accordance with cl 21.1.8 of EA 2022 and s 90(2) of the FWA.
46 The claimant refers to three cases, which for my part have limited, if any, relevance to the matters in issue in the Claim.
47 There is no provision in EA 2017 and EA 2022 that provides for employees' annual leave entitlements to be automatically discharged during their off-duty periods. The claimant did not agree to take annual leave during his off-duty period and there was a process for taking annual leave.
48 The entitlements in EA 2017 are contrary to the concept of annual leave entitlements being automatically discharged during the off-duty periods where EA 2017 contemplates annual leave being taken as part of rostered days on.
49 The claimant in reply submissions, and notwithstanding it did not form a basis for the Claim, raises the issue of unreasonableness, although what requirement the claimant says is unreasonable is not clearly specified. The claimant appears to suggest that it is unreasonable to apply for annual leave at the beginning of the year because it may lead to absurd or uncertain outcomes.
50 The claimant then questions why any employee would want to take leave during their off-duty period when they can take it during their on-duty period. The claimant suggests the respondent should have directed the claimant to take annual leave rather than reducing the balance of accrued leave.
51 Notwithstanding the claimant’s admission that he was paid for a 210-day compressed work cycle, he appears to submit that this did not form part of EA 2017 as suggested by the respondent.
Respondent’s Submissions
52 The respondent submits that the Claim raises substantially the same issues as in Oil & Gas Repair and is on all fours with the issues considered in that case.
53 The respondent says the claimant’s entitlement to annual leave was governed by the NES and supplemented by EA 2017 until 10 August 2022 when EA 2022 applied to the claimant’s employment.
54 The respondent says it is undisputed that the claimant’s accrued but untaken annual leave for the Second Employment Period was paid out in accordance with EA 2022. Thus, the dispute is limited to the First Employment Period.
55 The respondent submits that properly construed cl 11(a)(b)(a) and cl 6(b)(i)(4) of EA 2017 constitute an entitlement for, and a requirement on, employees to accrue and take 28 days of annual leave each year and provide for employees to take those 28 days of annual leave during their off-duty periods.
56 The claimant signed and agreed to the Contract terms, which referred to an industrial agreement where the requirement to take annual leave in EA 2017 was a reasonable requirement for the purposes of s 93(3) of the FWA.
57 While the Contract did not explicitly set out a requirement to take annual leave during the off-duty periods, its terms provided that EA 2017 applied to his employment and required the claimant to take annual leave as specified in the applicable industrial instrument. Clause 11(a)(b)(a) of EA 2017 required the claimant to take annual leave in the year it falls to meet the requirements of a 210-day compressed work cycle. Clause 11(a)(b)(a) of EA 2017 is of the kind contemplated by ss 93(3) and (4) of the FWA.
58 Rostering arrangements of the type worked by the claimant are commonplace and regularly approved by workplace unions when bargaining for agreements, including the claimant’s union.
59 It is irrelevant that the claimant did not apply for annual leave, as he was paid an annual salary which compensated him regardless of whether he was on-duty or off-duty. He was provided with time off work without loss of pay.
60 The claimant worked and was compensated for working the Even Time Roster which incorporated annual leave and inherently met the requirement for rest, whilst on pay, the core of the NES requirement for leave. The claimant was paid an annual salary based on the compressed work-cycle of 210 days per year, where the Even Time Roster equated to working 182 days per year after annual leave had been discharged. The claimant was deemed to take 28 days of annual leave each year to work the requisite number of days required of his full-time salary.
61 The claimant’s payslip for August 2022 erroneously expressed an accrued annual leave entitlement where the claimant had taken those hours within the arrangement that required him to take his 28 days annual leave entitlement as part of his off-duty period.
62 The three cases referred to by the claimant do not discuss the issue arising in the Claim and are irrelevant to the matters in issue.
What is the Preferred Construction and Application of cl 11 in EA 2017 for the Purposes in Determining the Accrual of Annual Leave?
63 The principal issue for determination is the preferred construction and application of cl 11 of EA 2017, principally as it relates to the accrual of annual leave under these clauses. The reason being is that in respect of the First Employment Period, EA 2017 was the applicable industrial instrument, and if annual leave did not accrue during the First Employment Period, then the amount paid for untaken annual leave in respect of the Second Employment Period will likely discharge the respondent’s obligation.
64 The principles for construing industrial instruments, including enterprise agreements, are uncontroversial. Schedule II to these reasons outlines the principles applicable to the construction of enterprise agreements, which can be broadly summarised as follows.
65 The interpretation of an industrial instrument begins with consideration of the natural and ordinary meaning of the words used. City of Wanneroo v Australian Municipal, Administrative, Clerical Services Union (2006) 153 IR 426, 438 (City of Wanneroo).
An industrial instrument is to be interpreted in light of its industrial context and purpose and must not be interpreted in a vacuum divorced from industrial realities. City of Wanneroo 438, 440.
An industrial agreement must make sense according to the basic conventions of English language. City of Wanneroo 440.
The circumstances of the origin and use of a clause is relevant to an understanding of what is likely to have been intended by its use. Transport Workers’ Union of Australia v Linfox Australia Pty Ltd (2014) 318 ALR 54.
Narrow and pedantic approaches to the interpretation of an industrial agreement are misplaced. Kucks v CSR Ltd (1996) 66 IR 182; Amcor Ltd v CFMEU & Ors [2005] HCA 10; (2005) 214 ALR 56.

66 Clause 11 of EA 2017, relevantly, provides:
a) Annual leave
(a) The NES provides that for each year of service with the Company an Employee is entitled to 4 weeks of paid annual leave, or 5 weeks if the Employee is a 'shift worker'. For the purposes of the Agreement, a shift worker is a full time Employee working a seven-day shift roster in a part of the Company in which shifts are continuously rostered 24 hours a day and include the requirement to regularly work on Sundays and public holidays.
(b) FIFO Engineering Employees
a. FIFO Engineering Employees work a compressed work-cycle which comprises the working of 210 days per annum, on average. FIFO Engineering Employees are required to take leave in the year that it falls, which results in FIFO Engineering Employees taking 28 days of annual leave per annum and FIFO Engineering Employees working an average of 182 days per annum.
b. The parties acknowledge that:
i. The Company has revised its roster and annual leave arrangements for FIFO Engineering Employees to allow annual leave to be taken as part of rostered days on.
ii. Under the revised roster and annual leave arrangements, the number of days that an Employee is required to work during the year is the same as existed under any contracts of employment before the parties entered into this Agreement;
iii. In light of the revised roster and annual leave arrangements, the annual leave entitlements provided for in this Agreement are not greater or lesser than, and provide more flexibility than, the annual leave entitlements provided under any contract of employment entered into prior to this Agreement.
iv. Notwithstanding sub-clause iii above, to the extent that the annual leave provided for in this Agreement are greater or lesser than the annual leave entitlements provided under any contract of employment entered into prior to this Agreement, the terms of this Agreement will apply.
c. FIFO Engineering Employees are required to apply for annual leave at the commencement of each year. Annual leave will generally be taken in blocks of seven days, or multiples of seven days.
d. Where a FIFO Engineering Employee, working primarily on a 21 days-on roster, elects to take four consecutive weeks of annual leave, the following process will be followed:
i. The FIFO Engineering Employee will request that their ‘back-to-back’ provide an additional week's cover (which by agreement between the Employees, may be reciprocated at a later time in the year).
ii. The FIFO Engineering Employee may request that an Employee who is not their back-to-back, provide cover for the week (which by agreement between the Employees, may be reciprocated at a later time in the year).
iii. The Company may elect to utilise a contractor to fill the period of leave.
iv. The Company may elect to manage the Operation on a ‘reduced crew’ for the period.
…
b) Taking annual leave
i) Non-FIFO Employees seeking to take annual leave must make their requests at least four weeks in advance to allow the Company to manage its operational requirements.
ii) Annual leave will only be granted if the Employee's applicable Senior Base Engineer /Chief Engineer (or nominated delegate) has approved it. Approval will not be unreasonably withheld.
iii) Employees may be recalled from annual leave at the Company's request to meet its operational requirements. The Company will not unreasonably recall an Employee from annual leave
iv) Employees may be required to take their annual leave in accordance with a roster or in multiples of rostered on and off time.
v) The employer will not unreasonably refuse to agree to a request by the Employee to take paid annual leave.
vi) Requests for single days, or part-days of annual leave may be granted in exceptional circumstances. (emphasis added)
67 The starting point is that the respondent’s employees, including Mr Summers, were entitled to be paid annual leave in accordance with the FWA: cl 11(a)(a) of EA 2017.
68 Mr Summers’ ‘entitlement to paid annual leave’ arises under s 87(1)(a) of the FWA, which ‘accrues progressively … and accumulates from year to year’ (emphasis added): s 87(2) of the FWA. ‘Paid annual leave may be taken for a period agreed between an employee and his or her employer’ and ‘[t]he employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave’: s 88 of the FWA.
69 However, s 93(3) of the FWA provides that 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’. Further, a ‘modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave’: s 93(4) of the FWA.
EA 2017 – What was the minimum work requirement?
70 In determining the principal issue, it is necessary to first consider the minimum work requirements applicable to FIFO Engineers, including Mr Summers.
71 As observed by the respondent, the terms of EA 2017 are not limited in their application to a category of employee but covers non-casual Engineers and members of Ramp staff based at Broome (referred to as ‘Employees’): cl 2(i)(ii) of EA 2017. Clause 5(a) of EA 2017 further classifies Employees into three subcategories, including FIFO Engineers, Broome Resident Engineers and Broome based Ramp Staff.
72 Consistent with the requirements particular to the employee subcategories, certain terms of EA 2017 apply differently to the three subcategories of Employees, including, but not limited to, the payment of overtime and annual leave. Most terms apply in the same way to the three subcategories, including, but not limited to, personal and other leave and termination of employment.
73 Therefore, it is fair to say that EA 2017 is mainly a generic agreement with specific arrangements applicable to the employment subcategory. With that, certain terms relevant to a subcategory of employee are embedded in clauses. I note that ‘industrial agreements are usually not drafted with careful attention to form by persons who are experienced in drafting documents that have legal effect’, and I would say that aptly applies with respect to EA 2017.
74 I also note that the terms of EA 2017 were agreed between the Australian Licensed Aircraft Engineers Association, the employee bargaining representatives and the respondent, and approved by the Fair Work Commission on 22 December 2017 Exhibit 3 at SOAF 2.
, with the approval process involving a ‘Town Hall’ meeting before the workforce endorsed EA 2017 at a ballot. Exhibit 2 at SOAF 2 at [2017] FWCA 7018 at [7].

75 It is uncontroversial that Mr Summers was employed in the subcategory of FIFO Engineer as a LAME and worked 182 days per annum on a 21 day on and 21 days off roster: Summers Statement, Agreed Facts and Schedule 1, cl 1.2 of EA 2017.
76 The terms of EA 2017 do not expressly provide that a FIFO Engineer work an average of 182 days per year. As stated, this information is divined by reviewing other clauses. For example, the number of ordinary days per annum worked by a FIFO Engineer is referred to in cl 6 entitled ‘Hours of Duty’ but under cl 6(b)(i)(4) to calculate the daily overtime rates. Similarly, the number of ordinary days per annum worked by Broome Resident Engineers is referred to in cl 6(b)(i)(5) also to calculate the daily overtime rates.
77 Clause 11(a)(b)(a) of EA 2017, refers to a FIFO Engineer working an average of 182 days per annum in the context of annual leave entitlement and working a compressed cycle of 210 days per annum and taking 28 days of annual leave per annum (210 days – 28 days = 182 days)
78 Similarly, the reference to FIFO Engineers working on a 21-day on roster is referred to in cl 11(a)(b)(d) of EA 2017 in the context of the process to be followed where a FIFO Engineer elects to take four consecutive weeks of annual leave.
79 The Contract sheds little light on either of these agreed working terms of Mr Summers’ employment, as the only mention of 182 days is in cl 5.3 under the Standard Terms and Conditions to the Contract for the purpose of calculating day rates for additional days worked.
80 Yet, both parties seemingly had a good understanding of what was required of the other party, as it related to being at work. That is, Mr Summers was required to be at work for 21 days and not be at work for 21 days on a continuing roster cycle, the combined effect being that he was required to work 182 days per annum and, while reluctant to concede the point, Mr Summers agreed and accepted that he was on (and knew he was on) a compressed 210-day work cycle. Again reluctantly, Mr Summers also accepted that the difference between what he was remunerated for, and what he in fact worked, was 28 days, the equivalent of paid annual leave.
81 It is uncontroversial that Mr Summers was paid an annual salary.
82 However, what Mr Summers appeared to press was that he was required to work not 182 days, but 182 days minus 28 days (for annual leave), meaning he was only actually required to work 154 days per annum (or five months of the year).
83 As a proposition I do not accept that Mr Summers was required to work less than 182 days per annum. I do not accept this for the following reasons:
· notwithstanding the lack of direct expression in EA 2017, once regard is had to the whole of the agreement FIFO Engineers are required to work 182 days per annum and that they do by reference to a rostering agreement;
· as already mentioned, cl 6(b)(i)(4) of EA 2017 refers to the number of ordinary days worked by FIFO Engineers per annum as 182, which equates to approximately 1820 hours per annum (see cl 6(b)(i)(4) where the average hours of work are 9.4 hours per day with a 30-minute meal break);
· clause 11(a)(b)(a) of EA 2017 provides FIFO Engineers work an average of 182 days per annum;
· the ordinary hours of work for a full-time employee is the average of 38 hours per week averaged over a 12 week period, or 1824 hours annually, with employees working less than an average of 38 hours per week being deemed to be part-time and to receive pro-rata remuneration and benefits: cl 6(a)(i) and (ii) of EA 2017 and cl 5.1 of the Standard Terms and Conditions to the Contract;
· ordinary hours of work may be rostered at any time Monday to Sunday: cl 6(a)(iv) of EA 2017 and cl 5.2(a) and (b) of the Standard Terms and Conditions to the Contract;
· the Contract offers Mr Summers full-time employment on a Fixed Term - Touring contract with an annualised salary consistent with Schedule 1 of EA 2017, which he signed on 3 October 2020;
· EA 2017 provides for ‘Tour arrangements’ at cl 6(c), including at (i) that Employee’s actual hours of work will be set out in the roster determined by the respondent from time to time;
· in the Summers Statement, Mr Summers stated said he was always rostered on a three week on/three week off pattern, resulting in him being rostered to work 182 days per annum; and
· in the Wilson Statement, Ms Wilson states FIFO Engineers are rostered to work an average of 182 days per annum.
84 Thus, in my view, if Mr Summers was required to work on average 182 days per year, then it cannot be the case that annual leave formed part of this 182 days, where it would mean he would work less than what was required.
85 To that end, I have considerable doubt that at an interview for a full-time position of FIFO Engineer, the respondent’s representatives gave some unspecified indication to Mr Summers he would work something less than 182 days per annum by reducing this number of days by the equivalent of four weeks annual leave. In fact, in cross-examination, Mr Summers admitted that he could not recall a discussion about the terms of employment being on a three week on/three week off roster plus annual leave, but that he took this for granted.
Clause 11 of EA 2017
86 As stated, cl 11(a)(a) of EA 2017 is consistent with the NES and s 87(1) of the FWA.
87 Thereafter, in cl 11(b)(a) of EA 2017, FIFO Engineers are stated to work a compressed work-cycle comprising the working of 210 days per annum, which is reduced by 28 days of annual leave per annum resulting in the employee working an average of 182 days per annum. The reduction is based on the requirement for the FIFO Engineers to take leave in the year it falls.
88 Clause 11(a)(b)(b) of EA 2017 is an explanatory clause, which indicates, at (i), that previously something other than annual leave be taken as part of rostered days on was available. Logically that something is likely to have been that annual leave was taken as part of rostered days off. However, it is apparent from cl 11(a)(b)(b)(ii) to (iv) that this was not intended to increase annual leave entitlements but to provide increased flexibility to the taking of annual leave.
89 This increased flexibility is contained in cl 11(a)(b)(d) of EA 2017. That is, for FIFO Engineers on the three week on three week off roster who want to take four consecutive weeks in a row, thereby encroaching into part of the on roster, there is a process to be followed in (d)(i) to (iv) involving the provision of an additional week’s cover by someone on the opposite swing or another employee (to be paid back later by the employee wanting an additional week’s leave) or by the respondent if the respondent elects to use a contractor or manage on a reduced crew.
90 Implicit in this is that annual leave is taken primarily in the off-duty roster.
91 Reinforcing this is that annual leave is generally to be taken in blocks of seven days or multiples thereof and it is only in exceptional circumstances that single days will be approved: cl 11(a)(b)(c) and cl 11(b)(vi) of EA 2017.
92 Thus, the following observations can be made:
· FIFO Engineers are contracted, and paid, for 210 days per annum;
· the number of actual days worked is reduced to 182 days per annum on account of the taking of 28 days of annual leave per annum;
· annual leave is not banked (but taken in the year it falls) consistent with the option to take four consecutive weeks in a row; and
· FIFO Engineers may request (or elect) at the commencement of the year to take four weeks annual leave (of which an additional week encroaches on rostered on duty time), but that involves a process of cover by either another FIFO Engineer or the respondent where the respondent makes certain elections.
93 Bearing in mind that certain annual leave terms apply to some and not all subcategories of employees, there will be clauses that have limited if no practical application to FIFO Engineers, given their employment and rostering conditions. Further, certain clauses have no application to FIFO Engineers as they relate to other subcategories of employees, namely Broome Resident Employees and Broome Based Ramp Staff (see cl 11(a)(c) and (d) of EA 2017).
94 The application and taking of annual leave process requires FIFO Engineers to apply for annual leave at the commencement of each year for approval by the Senior Base Engineer or Chief Engineer and the respondent cannot unreasonably refuse a request to take paid annual leave: cl 11(b)(ii) and (v) of EA 2017.
95 None of the foregoing in any way prevents a FIFO Engineer from accessing other leave (such as personal leave) entitlements provided in EA 2017.
Other similar cases
96 In Odyssey Marine, the IMC discussed leave entitlements in the context of an even time roster, referring to The Australian Maritime Officers’ Union v Curtis Island Services Pty Ltd [2015] FWC 1836 (Curtis Island). The relevant paragraphs, [25]-[26], are set out below:
Importantly in Curtis Island, at first instance and on appeal, it was acknowledged that days off on an even time roster are not paid leave as that term is ordinarily understood, but, having regard to the words used in the analogous annual leave clause in Curtis Island and the particular work arrangements, it was clearly intended that the off duty period satisfy the taking of all leave.
The analogous annual leave clause in Curtis Island expressly stated that a period of non-duty (or off duty) roster period was deemed to have satisfied the employees entitlement to annual leave provided in the NES. (original emphasis)
97 It contained no express deeming provision, save that under the terms of cl 24.4 of the GO INSHORE Port Hedland Enterprise Agreement 2016 (Cth) (the 2016 Agreement) it was ‘acknowledged and agreed that accrued paid annual leave is taken during the off-duty periods’ [27].
98 The claimant in Odyssey Marine relied on the words, or lack of words, contained in cl 24 of the 2016 Agreement in support of his preferred construction of the clause.
99 Odyssey’s response was that proper consideration of the clause requires something more than consideration of the words themselves and that something more is, in part, contained in the uncontroverted witness evidence about the 2016 Agreement bargaining process and the reasons for the amendment [from earlier agreements].
100 After considering the evidence and having regard to the terms of the 2016 Agreement, the IMC found the fact that cl 24 of the 2016 Agreement did not expressly state that annual leave was deemed to have been included in the off-duty period was not determinative of the intention and purpose of the clause. The intention and purpose of the clause was capable of being deduced by reference to other relevant factors, including that employees did not apply to take annual leave and the accounting process recorded on payslips.
101 Ultimately the IMC found that the preferred construction of cl 24 of the 2016 Agreement, based also on 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’, was that accrued paid annual leave was incorporated into the claimant’s, Mr Jones, off duty time on the Even Time Roster. This finding was made notwithstanding cl 24.4 of the 2016 Agreement did not use deeming words with respect to the incorporation of accrued paid annual leave as part of the off-duty period.
102 Further, the IMC also found that the requirement to take accrued paid annual leave during the off-duty period was reasonable, having regard to the particular circumstances. Namely, the net effect of the Even Time Roster is that employees were paid an annual salary which included six months of the year off duty (noting the 12 hours per day worked while on duty), but the Even Time Roster did not prohibit access to other types of leave while at work during the on duty period (such as sick leave and parental leave) where appropriate
103 In Oil & Gas Repair, Industrial Magistrate O’Donnell considered similar annual leave clauses under the Hydrocarbons Industry (Upstream) Award 2010 and Hydrocarbons Industry (Upstream) Award 2020 in the context of an even time roster. Her Honour made the following relevant findings:
· at [132], any requirement by OGR employees to take their leave in the off-duty periods in the roster [thus maintaining a zero balance of annual leave] was contemplated by the FWA and the relevant awards, and reasonable;
· at [144], arguably the reference to a ‘rolling roster of 3 weeks on duty and 3 weeks off duty’ was sufficient to communicate to OGR’s employees the requirement to take leave during their off-duty period;
· at [145], by signing contracts including the [rolling roster term], the employees agreed to a roster which inherently met the requirement for rest, whilst on pay…each of the employees received well in excess of their entitlement to annual leave during the off-duty period; and
· at [150], OGR’s employees not explicitly asking for annual leave, did not mean they did not take it where they received an annual salary, worked an even time roster where they did not lose pay when they had time off work, and the time spent onshore was well in excess of the four weeks of paid annual leave they were entitled to.
104 The facts in Oil & Gas Repair are similar to the Claim, including evidence by Mr McDermott in Oil & Gas Repair where he stated that ‘he never required any additional time off than what was set out in the normal roster’ and he ‘never needed annual leave’ (see Oil & Gas Repair at [163]). In the Summers Statement, at [25.1], Mr Summers states ‘[t]hree (3) weeks off at a time usually made me feel like I had enough time off or a break between work that it didn’t necessitate me taking annual leave’.
105 Other similar evidence includes: no mention of paid annual leave in the contract of employment; no request made to access paid annual leave during employment; no agreement to forgo or trade entitlement to paid annual leave; not taking or accessing annual leave during employment; and not being informed how to take annual leave.
106 In Surveillance Australia Pty Ltd v Australian Federation of Air Pilots [2024] FWCFB 234 (Surveillance Australia), the Full Bench of the Fair Work Commission overturned on appeal a determination of a Commissioner that acquitting annual leave during off-duty periods on roster was inconsistent with s 88(1) of the FWA and the relevant agreement.
107 In doing so, the Full Bench referred, at [18] to a FIFO employee requesting once per year to an extension to an off rotation for the purpose of having an extended holiday, and the process associated with this. In addition, the Full Bench observed there was no capacity in the rostering terms for a FIFO employee to use annual leave accrued other than in four day blocks each
28-day rostering cycle.
108 Further, the Full Bench observed, at [23], the rigid pattern of annual leave accrual and use, and the effect of the rostering terms limited the days on which annual leave may be taken such that there was no scope to reach agreement to take annual leave during the on-duty periods.
109 The Full Bench agreed, at [25], that Surveillance Australia’s rostering terms as they related to paid annual leave were consistent with s 88(1) of the FWA in that the nature of the rostering terms involved an agreement between the FIFO employee and Surveillance Australia about how and when annual leave would be taken.
110 The Full Bench accepted, at [30], that the rostering terms resulted in a loss of flexibility to choose the time, duration or banking of annual leave that would result if the FIFO employees had not agreed with Surveillance Australia to take annual leave in the manner specified in the rostering term. However, the Full Bench did not accept that the full benefit of the NES was lost in the rostering terms, principally on the basis that an employee retained a right to request a period of extended leave and Surveillance Australia could not unreasonably refuse such a request.
111 The Full Bench considered cl 6.1 of the Surveillance Australia Pilot and Observer Agreement 2016 and, at [39], stated:
At its foundation, clause 6.1 of the Agreement operates upon the basis that paid annual leave will be taken at times agreed between an employee and the appellant. The rostering terms which provide for the times when an employee will take annual leave are consistent with the Agreement because the parties to it have agreed that annual leave will be taken at the times specified in the rostering terms. The rostering terms do not preclude an employee and the appellant reaching an agreement about times other than those specified in the rostering terms when the employee will take annual leave.
112 Notably, in Surveillance Australia, as in the Claim, the appeal was not about the rigid application of the rostering terms where an employee requested to take annual leave outside of those rostering terms.
The relevance of the process of taking annual leave
113 The Contract at cl 11.2 of the Standard Terms and Conditions provides that Mr Summers and the respondent will comply with any terms about the requirement to take annual leave specified in any applicable industrial agreement.
114 The applicable term being cl 11(a)(b) to (d) of EA 2017. While the respondent’s lack of formal process in submitting an annual leave application may seem inconsistent with cl 11(a)(b)(c) of EA 2017, the practical reality, consistent with cl 11(a)(b)(d) of EA 2017, is annual leave was intended to be taken during the off-duty period of an employee’s roster. The application process was relevant to an employee requesting a period of annual leave that coincided with the on-duty period of the employee’s roster. That is, if an employee wanted to take an extended period of annual leave beyond the three weeks off-duty.
115 In those circumstances, it is readily understandable that the respondent would need to approve leave as it may impact upon the rosters and the number of employees on shift. In addition, it is reasonable to assume the respondent would need to know who was on shift and to account for leave taken when the employee was otherwise required to be on duty.
116 An example of this was referred to in the Summers Statement, where Mr Summers refers to a work colleague requesting annual leave via the respondent’s on-line platform (Datacom) during his on-duty roster, and it being refused. Thereafter, Mr Summers did not bother ever trying to apply for annual leave. Exhibit 1 at [25].

117 However, notably, Mr Summers did not know the reason for any refusal of annual leave, and Mr Summers never applied for annual leave because he felt the three week off-duty time was enough time off. Oral evidence and exhibit 1 at [25].
Accordingly, Mr Summers could not know whether any extended annual leave applied for by him in accordance with cl 11(a)(b)(d) of EA 2017 would be refused.
118 Mr Summers relies, in part, on his lack of knowledge of the process for applying for annual leave. Mr Summers is no novice to FIFO work or workplaces generally, having worked for approximately 30 years in the Aviation Industry as an Engineer, including 20 years on a FIFO roster. It is reasonable to infer an employee with that amount of experience can make enquiries about any forms or processes relevant to taking any form of leave.
119 Further, having worked in the Aviation Industry for an extended period employed by a variety of employers, it is also reasonable to infer that he understood he was employed under some form of industrial instrument. However, if he did not, which I wholly reject, then the Contract referred to EA 2017, and a copy of the Fair Work Information Statement was included with the Contract in compliance with s 125(1) of the FWA. Exhibit 1 – attachment thereto.

120 The Fair Work Information Statement provided a link to checking enterprises agreements.
The relevance of the annual leave accounting on Mr Summers’ payslips
121 Mr Summers also relies, in part, upon the purported accumulation of annual leave on two payslips. Exhibit 3 – SOAF 4 and SOAF 5.

122 Reliance upon these payslips is predicated on the ability to accumulate annual leave under EA 2017. As already stated, cl 11(a)(b)(a) of EA 2017 did not provide for FIFO Engineers to ‘bank’ annual leave which they were required to take in the year that it falls. Thus, under the terms of EA 2017, Mr Summers could not accumulate annual leave even if he wanted to or thought that he could.
123 While I leave to one side the reasonableness criteria under s 93(3) of the FWA, the Claim is not that it is unreasonable not to be able to accumulate annual leave or that it is unreasonable to be required to take leave in the year it falls. The Claim is that Mr Summers was entitled to accrued annual leave and the untaken annual leave was not paid out upon termination.
124 The Wilson Statement explains the annual leave balances on the August 2022 payslip. Exhibit 2 at [15] to [16].
It appears that this also coincided with the introduction of EA 2022.
125 While it might be surprising that the respondent did not have sufficient processes in place to discharge annual leave in the way the respondent intended, it does not necessarily change the preferred construction and what was intended by the terms of EA 2017.
126 A similar issue was discussed in Oil & Gas Repair at [193] to [196], where a review of two authorities, Smith v Quasar Constructions Pty Ltd [2015] FCCA 557 (Quasar) and Fong v Halliburton Australia Pty Ltd [2019] FCCA 2885, drew a conclusion that OGR’s lack of records of annual leave did not lead to the conclusion that employees had untaken paid annual leave when their employment ceased.
127 Most relevant to the Claim are comments by Driver J in Quasar at [162]:
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 employer] had a period of untaken paid annual leave when his employment ended.
128 I note that the respondent’s processes now account for how the respondent intends annual leave to be taken and recorded.
129 The content of the Wilson Statement is consistent with the respondent’s email communication to FIFO Engineers dated 30 November 2021. Exhibit 3 at SOAF 8.

130 That is, the respondent informed FIFO Engineers of cl 11 of EA 2017, noting that employees had not complied with cl 11. However, the respondent also advised that employees had been paid for their annual leave in the year it fell due for the year or years they had not submitted the annual leave application. While the respondent used the term in advance in the email, in the context in which it was used, it was meant to convey that the employee’s annual salary had already compensated the employee for all time worked and paid annual leave.
131 In this way, it is no different to any other employee who is paid an annual salary, which compensates the employee for time worked and time away from work as paid annual leave. That is, the employee is not further paid for paid annual leave.
132 The respondent’s position is further explained to Mr Summers in a letter dated 9 February 2022, where the respondent explains that Mr Summers has not submitted annual leave requests in compliance with EA 2017 and to enable the respondent to acquit its own obligation with respect to accounting for the recording of annual leave.
133 To the extent that the respondent requests Mr Summers’ consent to input the annual leave into the respondent’s database on his behalf, in my view, this consent extends only to actual inputting and not to obtaining Mr Summers’ approval for a zero-leave balance, where he is informed that [g]oing forward, you will need to input your annual leave requests yourself.
134 The respondent did not require Mr Summers’ consent for a zero-leave balance because, for reasons below, he was not entitled to accrued annual leave under EA 2017.
Determination
135 In respect of the preferred construction and application of cl 11 of EA 2017, I find that there was no entitlement to accrued annual leave. I do so for the following reasons:
· while the NES and the FWA provide for an entitlement to paid annual leave (consistent with the wording in cl 11 of EA 2017), EA 2017 and the Contract requires a FIFO Engineer (including Mr Summers) to take paid annual leave in particular circumstances. Provided the requirement in the particular circumstances is reasonable, the requirement complies with s 93(3) of the FWA;
· the requirement in Mr Summers’ case is that he was ‘required to take leave in the year that it falls due’ and the particular circumstance was the combined factors of working a compressed work cycle of 210 days per year for an annual salary on a roster cycle where he was required to work an average of 182 days per annum and take 28 days of annual leave; and
· the effect of this requirement was that Mr Summers’ paid annual leave was discharged each year by it being taken during the times he was off duty, such that there was no accumulation of annual leave year to year.
136 This interpretation of cl 11 of EA 2017 also reflects the average required working days of 182, which could not be achieved, and was intended, by a FIFO Engineer taking paid annual leave as part of the off-duty roster cycle.
137 As already observed, the Claim was not advanced on the basis that the requirement to take leave in the year it falls due was unreasonable, however, for completeness' sake I am satisfied, and I find that the requirement to take leave in the year it falls due was reasonable. I do so for the following reasons:
· Mr Summers was paid an annual salary throughout the period of his employment;
· the annual salary compensated him for both 182 days of required work on average and 28 days of paid annual leave to work on a compressed 210-day work cycle on roster;
· the off-duty period far exceeded the time of work ordinarily provided by 28 days of annual leave, and by his own admission Mr Summers was well rested as a result of the 21 days off roster thus having ample opportunity for rest and recuperation;
· there was no financial disincentive to take annual leave where it formed part of the roster cycle;
· clause 11 of EA 2017 affords some flexibility for extended annual leave outside of the off-duty roster cycle; and
· other leave entitlements under EA 2017 are not prohibited or impacted by this requirement.
138 Therefore, in relation to the First Employment Period, where I find there was no entitlement to accrued annual leave under the terms of EA 2017 and that all paid annual leave was discharged in the off-duty roster cycle, I also find that there was no untaken paid annual leave outstanding upon termination of Mr Summers’ employment.
139 In relation to the Second Employment Period, as provided in the Agreed Facts, the respondent paid to the claimant accrued annual leave on termination of the claimant’s employment. There is no evidence the respondent paid the incorrect amount or that the computation is incorrect.
140 Accordingly, I find there is no untaken paid annual leave outstanding for the Second Employment Period.
Respondent’s Alternative Argument Concerning Set-Off
141 In the alternative and had cl 11 of EA 2017 applied as suggested by the claimant, PHI says that any amounts paid in annual leave are capable of being set off against the amount sought by the claimant.
142 It is arguably unnecessary to determine PHI’s alternative argument considering the findings and determination made. However, I make the following comments noting that the parties did not fully argue the issue of set-off.
143 Notwithstanding the High Court found Mr Rossato was a casual employee and thus obviating the requirement to consider other issues discussed in Workpac Pty Ltd v Rossato [2020] FCAFC 84; 378 ALR 585 (Rossato), the Full Federal Court considered the principles applicable to set off determining WorkPac were not entitled to set off against its liabilities any of the payments made under the contracts of employment. Helpfully, at [865], White J (after lengthy discussion of relevant cases) distilled propositions concerning the entitlement of an employer to set off in analogous circumstances:
(a) the issue may require the application of the parties’ contract: Poletti v Ecob at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478‑9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]‑[52]. I will refer to this as the “Contractual Principle”;
(b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti v Ecob at 332‑3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the ‘Designation Principle’;
(c) close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and
144 the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56]. (original emphasis)
145 Similarly, in James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; 132 IR 122 (James Turner), White J also summarised relevant principles (albeit other cases have commented on aspects of these) at [21]:
1. If no more appears than that (a) work was done; (b) the work was covered by an award; (c) a wage was paid for that work; then the whole of the amount paid can be credited against the award entitlement for the work whether it arises as ordinary time, overtime, weekend penalty rates or any other monetary entitlement under the award.
2. However, if the whole or any part of the payment is appropriated by the employer to a particular incident of employment the employer cannot later claim to have that payment applied in satisfaction of his obligation arising under some other incident of the employment. So a payment made specifically for ordinary time worked cannot be applied in satisfaction of an obligation to make a payment in respect to some other incident of employment such as overtime, holiday pay, clothing or the like even if the payment made for ordinary time was more than the amount due under the award in respect of that ordinary time.
3. Appropriation of a money payment to a particular incident of employment may be express or implied and may be by unilateral act of the employer debtor or by agreement express or implied.
4. A periodic sum paid to an employee as wages is prima facie an appropriation by the employer to all of the wages due for the period whether for ordinary time, overtime, weekend penalty rates or any other monetary entitlement in respect of the time worked. The sum is not deemed to be referable only to ordinary time worked unless specifically allocated to other obligations arising within the employer/employee relationship.
5. Each case depends on its own facts and is to be resolved according to general principles relating to contracts and to debtors and creditors. (original emphasis)
146 To that I would also add his Honour’s comment at [44]:
There is nothing in the cases referred to which is to the effect that, where payments are made pursuant to a contractual arrangement without regard for award obligations, they are to be completely ignored and left out of account in looking to see whether an obligation imposed by the award has been satisfied. At their highest they are authority for the proposition that if an employer impliedly or expressly appropriates a payment of money to a particular obligation arising in the employment relationship (ie to a particular incident of employment) the employer is to be held to that appropriation and cannot seek later to reappropriate or ‘reprobate’. The cases are not authority for the proposition (upon which the judgments below seem to have proceeded) that unless there is an express appropriation to a particular award entitlement the sums paid by the employer to the employee are to be ignored or treated as referable only to ordinary time worked.
147 In Moate v I.P.C Pty Ltd (ACN 061 746 996) [2020] WAIRC 390; 100 WAIG 519 at [102], Industrial Magistrate Flynn summarised the principles to be applied where an employer claims that a payment to an employee is to be set off against an obligation to the employee under the FWA, including an obligation under a modern award:
(a) An employer’s payment to an employee may be applied in satisfaction of the FW Act Obligation, if (before payment) the employer designates the payment to be for the purpose of satisfying the obligation, i.e., the employer appropriates the payment: Irving [12.42]
(b) There must be a ‘clear correlation’ between, on the one hand, the employer’s purpose in making the relevant payment and, on the other hand, the purpose of the relevant FW Act Obligation: Irving [12.42] - [12.43], [12.46]; Linkhill [84].
(c) Appropriation by an employer in satisfaction of a FW Act Obligation may arise from: an agreement between the parties or from ‘a unilateral act by the employer prior to payment’: Irving [12.42].
(d) Agreement. If the parties have agreed that an employer’s payment is to be appropriated for an agreed purpose, the payment is to be applied in satisfaction of FW Act Obligation that clearly correlate to the agreed purpose; the payment will not be applied in satisfaction of obligations that do not correlate to the agreed purpose: Irving [12.46]; Poletti v Ecob (No2) (1989) 31 IR 321
(e) ‘Unilateral act by the employer prior to payment’. If the intention of the employer in making a payment is to appropriate the payment in satisfaction of a purpose that closely correlates to the purpose of the relevant FW Act Obligation, the payment is to be applied in satisfaction of that obligation: Irving [12.46]; Linkhill [98]. The appropriation must be communicated to the employee. The intention of the employer is ascertained objectively by inference from facts known to both parties; the subjective intention of the employer is irrelevant: OShea v Heinemann Electric Pty Ltd (2008) FCR 475 [49]. A statement in a payslip that an amount is paid to satisfy specified FW Act Obligation is evidence of an intention to appropriate the payment stated in the payslip to the identified obligation: Irving [12.52]. However, labels used by the parties are not determinative: Irving [12.53]; Australian and New Zealand Banking Group Ltd v FSU [2001] FCA 1785 [55]) ‘The intention may be inferred from the circumstances in which the payment was made’: Irving [12.52]; Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400. The subject matter of the contractual obligation to make the payment must closely correlate to the FW Act Obligation, although it is not necessary that the same terminology be used in the contract as the obligation in the FW Act: Irving [12.46]; Linkhill [98]; Australian and New Zealand Banking Group Ltd v FSU [2001] FCA 1785 [52].
(f) The purpose of an employer in making a payment to an employee on the basis of a set rate for each hour that is worked will need to be assessed. The whole of an amount paid by an employer may be credited against all FW Act Obligation if (and only if) the purpose of the payment by the employer is found, as a fact, to ‘cover all the monetary obligations arising in the employment relationship whatever they may be’: James Turner Roofing [24], [43]; Linkhill [96] - [98]. In James Turner Roofing such a purpose was inferred by the parties’ agreement to an ‘all in’ hourly rate. By way of contrast with an ‘all in’ rate, an inference commonly be drawn from the employer’s payment of a ‘flat hourly rate’ is that each payment satisfies the FW Act Obligation to pay for each hour worked and was not for another purpose: Linkhill [97]. Similarly, a failure to follow a proscribed procedure for variation of a FW Act Obligation may permit an inference that an employer payment is not in satisfaction of the obligation: Irving [12.49] - [12.50].(original emphasis)
148 For the following reasons, it is arguable that PHI could have set-off monies paid to the claimant on account of untaken paid accrued annual leave (if liable to pay that amount):
(a) the claimant was paid an annualised salary for a 210-day work cycle of which the claimant was required to work 182 days per annum (and not less than 182 days);
(b) clause 10.2 of the Contract provides that the remuneration package is an all-in amount, and that this amount may be set off against all entitlements under EA 2017. It then lists the inclusions but does not limit those inclusions;
(c) clause 11 of the Contract provides the basic entitlements which are afforded under the FWA;
(d) the basic entitlements include, amongst other things, paid personal leave. However, and as an example, it is not suggested that the claimant would be further paid to take paid personal leave or any of the other types of leave;
(e) the claimant and PHI agreed to these terms;
(f) the difference between the payment of the annualised salary and the work required to be done was 28 days, or the equivalent of the entitlement to 28 days paid annual leave; and
(g) therefore, there is, in my view, a ‘clear correlation’ between the purpose by PHI in making the payment of the annualised salary (over the course of the year) and the obligation to pay annual leave under the FWA.
Outcome
149 Having regard to the findings and determination made, I am not satisfied the claimant has proven the Claim to the requisite standard and the Claim is dismissed.



D. SCADDAN
INDUSTRIAL MAGISTRATE


SCHEDULE I: Jurisdiction, Practice and Procedure of the Industrial Magistrates Court of Western Australia Under the Fair Work Act 2009 (Cth): Alleging Contravention of FWA
Jurisdiction
[1] An employee, an employee organization or an inspector may apply to an eligible state or territory court for orders regarding a contravention of the civil penalty provisions identified in s 539(2) of the FWA.
[2] The IMC, being a Court constituted by an industrial magistrate, is an ‘eligible State or Territory court’: FWA, s 12 (see definitions of ‘eligible State or Territory court’ and ‘magistrates court’); Industrial Relations Act 1979 (WA), s 81 and s 81B.
[3] The application to the IMC must be made within six years after the day on which the contravention of the civil penalty provision occurred: FWA, s 544.
[4] The civil penalty provisions identified in s 539 of the FWA include a provision of the NES as it relates to annual leave: s 44 and s 61(2)(d) of the FWA.
[5] An obligation upon an ‘employer’ under s 44 of the FWA is an obligation upon a ‘national system employer’ and that term, relevantly, is defined to include ‘a corporation to which paragraph 51(xx) of the Constitution applies’: FWA, s 42, s 14 and s 12. An entitlement of an employee covered by an agreement is an entitlement of an ‘employee’ who is a ‘national system employee’ and that term, relevantly, is defined to include ‘an individual so far as he or she is employed … by a national system employer’: FWA, s 42 and s 13.
Contravention
[6] Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the Court may make orders for an employer to pay to an employee an amount that the employer was required to pay under the modern award: FWA, s 545(3)(a).
[7] The civil penalty provisions identified in s 539 of the FWA include:
· Contravening a NES: FWA, s 539 and s 44(1) (referrable to s 61(2)(d) of the FWA)
[8] An ‘employer’ has the statutory obligations noted above if the employer is a ‘national system employer’ and the obligation is to an ‘employee’ who is a ‘national system employee’.
[9] Where the IMC is satisfied that there has been a contravention of a civil penalty provision, the Court may make orders for:
· An employer to pay to an employee an amount that the employer was required to pay under the FWA: FWA, s 545(3).
· A person to pay a pecuniary penalty: FWA, s 546.
[10] In contrast to the powers of the Federal Court and the Federal Circuit Court, an eligible State or Territory court has no power to order payment by an entity other than the employer of amounts that the employer was required to pay under the FWA. For example, the IMC has no power to order that the director of an employer company make payments of amounts payable under the FWA: Mildren & Anor v Gabbusch [2014] SAIRC 15.
Burden and standard of proof
[11] In an application under the FWA, the party making an allegation to enforce a legal right or to relieve the party of a legal obligation carries the burden of proving the allegation. The standard of proof required to discharge the burden is proof ‘on the balance of probabilities’. In Miller v Minister of Pensions [1947] 2 All ER 372, 374, Lord Denning explained the standard in the following terms:
It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal it is not.
[12] In the context of an allegation of the breach of a civil penalty provision of the FWA it is also relevant to recall the observation of Dixon J said in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362:
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.
[13] Where in this decision I state that 'I am satisfied' of a fact or matter I am saying that 'I am satisfied on the balance of probabilities' of that fact or matter. Where I state that 'I am not satisfied' of a fact or matter I am saying that 'I am not satisfied on the balance of probabilities' of that fact or matter.

SCHEDULE II: Construction of Industrial Instruments
[14] This case involves, in part, construing an enterprise agreement and statutes. Similar principles apply to both. The relevant principles to be applied when interpreting an industrial instrument are set out by the Full Bench of the Western Australian Industrial Relations Commission in Fedec v The Minister for Corrective Services [2017] WAIRC 00828; 97 WAIG 1595 [21]  [23].
[15] In summary (omitting citations), the Full Bench stated:
· The general principles that apply to the construction of contracts and other instruments also apply to the construction of an industrial agreement;
· the primary duty of the court in construing an instrument is to endeavour to discover the intention of the parties as embodied in the words they have used in the instrument;
· it is the objectively ascertained intention of the parties, as it is expressed in the instrument, that matters; not the parties' subjective intentions. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean;
· the objectively ascertained purpose and objective of the transaction that is the subject of a commercial instrument may be taken into account in construing that instrument. This may invite attention to the genesis of the transaction, its background and context;
· the apparent purpose or object of the relevant transaction can be inferred from the express and implied terms of the instrument, and from any admissible evidence of surrounding circumstances;
· an instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience. However, it must be borne in mind that business common sense may be a topic on which minds may differ;
· an instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed so as to have some operation; and
· industrial agreements are usually not drafted with careful attention to form by persons who are experienced in drafting documents that have legal effect.
[16] The following is also relevant:
Ascertaining the intention of the parties begins with a consideration of the ordinary meaning of the words of the instrument. Ascertaining the ordinary meaning of the words requires attention to the context and purpose of the clause being construed. City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; 153 IR 426 [53]  [57] (French J) (City of Wanneroo).
Context may appear from the text of the instrument taken as a whole, its arrangement and the place of the provision under construction. The context includes the history of the instrument and the legal background against which the instrument was made and in which it was to operate: City of Wanneroo [53]  [57] (French J); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Excelior Pty Ltd [2013] FCA 638 [28] [30] (Katzmann J).