Allan v Queensland Corrective Services, Department of Community Safety [2013] QIRC 89

CITATION: Scott Allan AND Queensland Corrective Services, Department of Community Safety (B/2013/21) - Decision <http://www.qirc.qld.gov.au> QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 - s. 278 - power to recover unpaid wages and superannuation contribution etc. Scott Allan AND Queensland Corrective Services, Department of Community Safety (B/2013/21) COMMISSIONER BLACK 19 June 2013 DECISION Introduction [1] The Applicant, Mr Scott Allan, was employed by Queensland Correctional Services (QCS) from 13 October 2008 until 14 January 2013. He was employed as a Custodial Correctional Officer under the terms of the Department of Community Safety - Queensland Corrective Services Correctional Employees' Award (the Award) and Queensland Corrective Services - Correctional Employees' Certified Agreement 2010 (the Agreement). At the end of his period of employment he was being paid in accordance with classification QCO1-3 as set out in Schedule 1 of the Award. For the majority of his period of employment with QCS, the Applicant worked continuous shift work. The Applicant had previously been employed by the Department of Community Safety, or its predecessor, for about eighteen months during 1989 and 1990. [2] The Applicant was absent from work on a period of workers' compensation from 28 January 2011 to 30 June 2012. He asserts that QCS did not correctly accrue leave and sick leave entitlements and incorrectly calculated superannuation contributions during the period that he was on workers' compensation. The Applicant also claimed that QCS failed to pay him pro-rata long service leave on his retirement from the public service on 14 January 2013. The Application as Filed [3] The Application as filed sought to recover the following amounts: • An amount of $8,780.03 in unpaid annual leave arising from the failure of QCS to accrue annual leave during the period 28 January 2011 to 30 June 2012. • An amount of $3,539.56 in unpaid sick leave arising from the failure of QCS to accrue sick leave during the period 28 January 2011 to 30 June 2012 and arising from the failure of QCS to pay for sick leave during the period 1 September 2012 and 14 January 2013. • An amount of $328.67 in unpaid long service leave arising from the failure of QCS to accrue long service leave for the period 28 January 2011 to 30 June 2012. • An amount of $10,228.63 in unpaid superannuation contributions arising from a failure of QCS to accrue superannuation contributions for the period 28 January 2011 to 30 June 2012. • An amount of $777.50 in unpaid annual leave loading arising from an underpayment by QCS in the calculation of annual leave loading. [4] The total amount owing in accordance with the Applicant's claim dated 18 April 2013 is $23,654.47. The Amended Application [5] On 26 April 2013, the Applicant filed a statement with the Industrial Registrar in which different amounts to those set out in paragraph 3 above were claimed. As a consequence, at the start of proceedings on 9 May 2013, the original list of claims was amended as follows: • An amount of $8,529.13 in unpaid annual leave was claimed. • An amount of $4,224.96 in unpaid sick leave was claimed. • An amount of $1,739.27 in unpaid long service leave was claimed. • An amount of $3,224.06 in unpaid superannuation contributions was claimed. The amended amount claimed did not relate to a period during which contributions were not made, but to an alleged error in the calculation of superannuation contributions for the period 28 January 2011 to 30 June 2012. -- 1 of 7 -- 2 • The claim for an amount of $777.50 in unpaid annual leave loading was withdrawn. [6] Accordingly, the total amount owing in accordance with the Applicant's amended claim is $17,717.42. Annual Leave Claim [7] The annual leave claim arises from the decision of QCS not to accrue annual leave during the period that the Applicant was away from work and receiving workers' compensation benefits, except for the first three months of that period. In his claim, however, the Applicant proceeds on the basis that he has not been credited with any annual leave accrual for the first three months. His claim covers a period of 75 weeks which extends from 28 January 2011 to 30 June 2012. If QCS has accrued leave for the first three months, then the Applicant's claim can only be sustained for a period covering 75 weeks less 13 weeks viz 62 weeks. [8] The Applicant claims that his entitlement to accrual arises from the operation of s. 119A of the Workers' Compensation and Rehabilitation Act 2003 (the WC Act). The section, which is set out below, was included in the WC Act with effect from 6 June 2011: "119A Compensation entitlement does not restrict taking or accrual of leave (1) This section applies to a worker who is entitled to compensation, including compensation payable as weekly payments. (2) The worker is entitled to take or accrue annual leave, sick leave and long service leave under an Industrial Act or industrial instrument during the period to which the compensation relates. Note - In relation to entitlements under the Fair Work Act 2009 (Cwlth), this section removes the restriction under section 130(1) of that Act.". [9] The heading to s. 119A of the WC Act says that the compensation entitlement does not restrict the accrual of leave. The heading is consistent with the Note accompanying the section (and which forms part of the section as per s. 14 of the Acts Interpretation Act 1954) which says that s. 119A of the WC Act removes a restriction imposed by s. 130(1) of the Fair Work Act 2009 (Cth). Section 130(1) of the Fair Work Act 2009 (Cth) reads as follows: "130 Restriction on taking or accruing leave or absence while receiving workers' compensation (1) An employee is not entitled to take or accrue any leave or absence (whether paid or unpaid) under this Part during a period (a compensation period) when the employee is absent from work because of a personal illness, or a personal injury, for which the employee is receiving compensation payable under a law (a compensation law) of the Commonwealth, a State or a Territory that is about workers' compensation. (2) Subsection (1) does not prevent an employee from taking or accruing leave during a compensation period if the taking or accruing of the leave is permitted by a compensation law. (3) Subsection (1) does not prevent an employee from taking unpaid parental leave during a compensation period.". [10] The effect of s. 119A of the WC Act is to remove a restriction or a prohibition on accrual. It is a matter for consideration whether, given that the prohibition is lifted, s. 119A of the WC Act then should be read to exclusively determine the matter or whether any entitlement is to be determined in conjunction with the relevant Industrial Act or the Award. In this regard, attention turns to s. 119A(2) of the WC Act which states, in effect, that the worker is entitled to accrue leave "… under an Industrial Act or industrial instrument." [11] Under s. 14B of the Acts Interpretation Act 1954, consideration may be given to extrinsic material capable of assisting in the interpretation in circumstances including if a provision is ambiguous or obscure or to confirm the interpretation conveyed by the ordinary meaning of the provision. [12] There is nothing in the extrinsic material which suggests that the intention of the legislature was to alter leave accrual arrangements for other than private sector employees who had been transferred from the state industrial relations system to the federal system. Nor does the Explanatory Memorandum of the WC Act suggest that there was any intention on the part of the legislature to change leave accrual arrangements of employees covered by the Public Service Act 2008 (or its predecessor). [13] On pages 6 and 7 of the Explanatory Notes to the Work Health and Safety Bill 2011 (the Bill), which introduced the amendments, the following explanation is given in respect to the "Estimated Cost for Implementation": -- 2 of 7 -- 3 "Workers' compensation The amendments to the Workers' Compensation and Rehabilitation Act 2003 are not anticipated to result in a cost to government. Amendments regarding leave accrual will not affect Queensland Government employees as they are not subject to the Fair Work Act 2009 (Cth). The financial impact on private sector employers is minimal given that the amendment restores the status quo prior to the commencement of the Fair Work Act 2009. Prior to commencement, annual leave and sick leave continued to accrue during a period of workers' compensation under both Commonwealth and State legislation.". [14] This extract makes it clear that it was not intended that the legislation have any affect on Queensland Government employees. Further, in respect to private sector employees, the amendment is said to restore the status quo prior to the commencement of the Fair Work Act 2009 (Cth). The intention of the legislation was disclosed at page 141 of the Explanatory Notes to the Bill where the following extract appears: "Clause 407 inserts new section 119A to allow an injured worker to accrue, and require an employer to pay an entitlement to, accrued leave while an injured worker is away from work on workers' compensation benefits. Liability for leave entitlements is the responsibility of the worker's employer. Prior to the referral of State industrial relations powers to the Commonwealth on 1 January 2010, Queensland private sector employees were entitled to accrue sick leave and annual leave while absent on workers' compensation due to the combined effects of sections 10 and 11(5)(b) of the Industrial Relations Act 1999 and section 108(3) of the Workers' Compensation and Rehabilitation Act 2003. Queensland private sector employees are now covered by the Fair Work Act 2009 (Cwlth) in the Federal industrial relations system, under section 130 of which employees who are absent from work and receiving workers' compensation are not entitled to accrue or take any leave, unless a compensation law provides otherwise. The Workers' Compensation and Rehabilitation Act 2003 is silent on the accrual of leave. Stakeholder support for the referral of Queensland's private sector industrial relations was based on a commitment from the Queensland Government that employees would not lose any entitlements derived under State law. It was not the intention of the referral to alter the benefits of private sector workers with respect to the accrual of sick, annual and long service leave entitlements while receiving workers' compensation benefits.". [15] This extract explains that s. 119A of the WC Act was included to restore the right of private sector employees to accrue sick leave and annual leave while absent of workers' compensation. The restoration of the status quo for the private sector indicates that the accrual entitlement reverts back to the industrial instrument or the industrial act. For example, in respect to annual leave, the effect of s. 119A of the WC Act will be to restore the application to private sector employers of s. 11(5) of the Industrial Relations Act 1999 which is set out below: "(5) In working out a completed year of employment, the following periods when an employee is absent without pay are not to be taken into account - (a) a period of more than 3 months when an employee is absent with the employer's approval; (b) a period when an employee is absent without the employer's approval, unless the employee is absent for not more than 3 months because of illness or injury certified to by a doctor.". [16] In the circumstances, the extrinsic materials do not support the Applicant's interpretation of s. 119A of the WC Act. I consider that the intended effect of s. 119A of the WC Act was to restore the right of certain employees to accrue annual leave, sick leave or long service leave under the terms of the industrial act or a relevant industrial instrument. This is the outcome which is conveyed by s. 119A(2) of the WC Act and which is confirmed by reference to the extrinsic material. [17] This interpretation best serves the intention of the legislature in that it restores the entitlement of private sector employees to accrue leave during periods of workers' compensation in accordance with the provisions of the Industrial Relations Act 1999 or the relevant industrial instrument. The interpretation also confirms the status quo for public sector employees in that, pursuant to s. 119A(2) of the WC Act, the entitlement to accrue is to be read in conjunction with the Award and the relevant Directive. [18] Mr Allan's entitlement to annual leave is regulated by clause 7.1 of the Award. This clause prescribes that the annual leave benefit is to be determined by the relevant Directive made under s. 54 of the Public Service Act 2008, subject to the Award. In this regard, the Award adds provisions in respect to continuous shift (clause 7.2.1); aggregate shift penalty (clause 7.2.1); taking of annual leave (clause 7.2.3); and annual leave loading (clause 7.2.4). -- 3 of 7 -- 4 [19] Directive No. 2/11: Recreation Leave is relevant. In the relevant areas, it references Directive No. 7/08: Leave without Salary Credited as Service. This directive prescribes in effect that the entitlement to have a period of absence on workers' compensation credited as service is limited to "the first 3 months of any continuous period" in the case of both recreation leave (annual leave) and sick leave. Despite the Applicant's submission to the contrary, the effect of this prescription is not affected in any way by the operation of a footnote to the provision in the schedule which deals with workers' compensation. [20] In the circumstances QCS has not erred in the calculation of the Applicant's annual leave entitlement and the Applicant's claim in this regard is rejected. Sick Leave Claim [21] Similar to the annual leave claim, the sick leave claim arises from the decision of QCS not to accrue sick leave during the period that the Applicant was away from work and receiving workers' compensation benefits, except for the first three months of that period away from work. [22] In addition to this claim, the Applicant asserts that his entitlement to sick leave should have been determined on the basis that he predominantly worked 12-hour shifts. This meant from the Applicant's perspective that an entitlement to 10 days' sick leave per annum translated to an entitlement of 120 hours' leave per annum. This interpretation is disputed by QCS which says the hourly sick leave entitlement is to be based on a 38 hour week or an average 7.6 hour day. This approach provides for an annual entitlement of 76 hours' leave. [23] There is no entitlement to a pay out of unused sick leave on termination of employment. Consequently, the Applicant's claim can only be pursued in circumstances where actual sick leave taken has exceeded his sick leave accrual (as determined by QCS) and, as a result, the Applicant has not been paid for all the time that he has had off work because of illness or injury. [24] The Applicant submits that he accrued 172.8 hours' sick leave between 28 January 2011 and 30 June 2012. In making this submission the Applicant does not appear to take into account that QCS has credited his sick leave accrual for the first three months of his period on workers' compensation. He said that between 1 July 2012 and 14 January 2013, his sick leave claims significantly exceeded his sick leave accrual (under any measure) and that QCS's calculation of his sick leave accrual meant that he was not paid for some periods of sick leave taken between 1 July 2012 and 14 January 2013 when he should have been paid if his accrual were correctly determined. According to the attachment to the Affidavit of Lloyd Casey marked LDC 28, the Applicant took the following periods of sick leave between 1 July 2012 and 14 January 2013: • 16 hours' paid leave during the period from 29 June 2012 to 5 July 2012; • 22 hours' of unpaid leave during the period from 29 June 2012 to 5 July 2012; • 121.6 hours' of unpaid leave during the period from 6 July 2012 to 29 July 2012; • 7.6 hours' paid leave on 3 September 2012; • 34 hours' paid leave during the period from 10 September 2012 to 14 September 2012; • 4 hours' unpaid leave during the period from 10 September 2012 to 14 September 2012; and • 360 hours' unpaid leave during the period from 8 November 2012 to 13 January 2012. [25] It is clear then that if the Applicant succeeds in his claim and his sick leave balance is increased, he would have an entitlement to sick leave payments. The precise amount of his entitlement would depend on the method used to calculate the sick leave entitlement and a resolution of the issue of whether he had been credited with sick leave accruals for the first three months of his period of workers' compensation. [26] Clause 7.1 of the Award does not include provisions for sick leave but provides that the sick leave benefit is prescribed by the relevant directive made under s. 54 of the Public Service Act 2008. The relevant directive is Directive No. 18/10: Sick Leave. This directive also references Directive No. 7/08: Leave without Salary Credited as Service. [27] Directive No. 18/10 is the instrument relevant to the Applicant's claim that he was, in effect, entitled to 120 hours' per annum sick leave. In clause 1 - Entitlement - Directive No. 18/10 provides that the Applicant was entitled to accumulate sick leave "at the rate of 10 working days for each completed year of service". [28] Clause 17 of Directive No. 18/10 facilitates the expression of the leave entitlement in hours. This entitlement is determined by multiplying the number of days' leave (10) by the employee's daily hours. Clause 2.1 of Directive No. 18/10 defines "daily hours" as the number of ordinary daily hours specified in an industrial instrument or the average number of hours per working day during a pay period. [29] Clause 6.1 of the Award provides that the ordinary hours of work for full-time employees shall be 152 hours per month within a work cycle not exceeding 28 consecutive days to be worked in shifts between 4 and 12 hours. -- 4 of 7 -- 5 Clause 4 of the Agreement provides that the ordinary hours of shift workers will be worked in shifts that average 38 hours per week over the life of the roster. While the terms of the Agreement prevail over the terms of the Award in the event of any inconsistency, in this case there is no inconsistency as both instruments provide for an average number of hours per week of 38 hours. It follows that it can be determined from either instrument that the average number of hours per working day is 7.6 hours. [30] Accordingly the Applicant, during the course of his employment with QCS, accrued sick leave at the rate of 76 hours per annum. [31] The other claim for resolution involves a determination about the accrual of sick leave while the Applicant was off work on workers' compensation. As previously indicated the sick leave directive references Directive No. 7/08: Leave without Salary Credited as Service. This directive prescribes in effect that the entitlement to have a period of absence on workers' compensation credited as service for the purposes of sick leave accrual is limited to "the first 3 months of any continuous period". As in the case of his annual leave claim, however, the Applicant asserts that under s. 119A of the WC Act his entitlement to accrue sick leave during a period of workers' compensation is not limited to the three month period specified in the directive. [32] For the reasons set out in my determination of the Applicant's annual leave claim, I do not accept the Applicant's construction on section 119A of the WC Act. In the circumstances the Applicant has not succeeded with either of the arguments relied on to support his claim for unpaid sick leave benefits. Long Service Leave Claim [33] The long service leave claim in part arises from the view of the Applicant that QCS did not permit the accrual of long service leave during the period that the Applicant was away from work and receiving workers' compensation benefits. QCS disputes the Applicant's view and submits that it did allow for the accrual of long service leave during the period that the Applicant was receiving workers' compensation benefits. QCS submitted that the Applicant had no entitlement to a long service leave payment upon his retirement from the public service because he had not completed 5 years' continuous service with QCS. [34] In response, the Applicant claimed that his prior service with QCS (or its predecessor) for approximately 18 months during 1989 and 1990 should be taken into account. If this period of service were joined with the period of service concluding on 14 January 2013, then he would be entitled to a pro-rata long service leave payment on retirement from the public service. [35] Clause 7.1 of the Award provides that the long service leave benefit is to be determined by the relevant directive which is Directive No. 1/11: Long Service Leave. The entitlement to long service leave is subject to the completion of a specified period of continuous service. In the Applicant's case he needed to complete at least five years' continuous service before any entitlement existed. There has been a break of approximately 18 years between the conclusion of the Applicant's first period of service and the commencement of his second period of service. [36] Directive No. 10/10: Recognition of Previous Service and Employment provides that for recognition of service for employees commencing employment with the Queensland public service prior to 1 July 2010, superseded Directive No. 2/03 is to apply. Directive No. 2/03 provides, in effect, that previous service is counted in calculating a long service leave entitlement if a person previously employed as an officer in the public service recommences duty within 12 months from the date of termination of the previous service. [37] In the circumstances, the Applicant's claim that his former period of service should be taken into account in determining his length of service with QCS as at the date of his retirement cannot be sustained. His claim for unpaid long service leave is rejected. Superannuation Claim [38] The superannuation claim arises from alleged errors in the calculation of superannuation contributions as provided for under the provisions of the Superannuation (State Public Sector) Deed 1990 (the Deed). Section 73 of the Deed provides for a continuation of the payment of superannuation contributions while a member is receiving workers' compensation. The Applicant claimed that the employer contribution should be determined by reference to the base salary plus the aggregated shift loading. QCS had completed the calculation by reference to the base salary only. If the Applicant is successful, he also claims interest that would have been earned had the correct contributions been paid into his QSuper account. [39] Section 73(2) of the Deed provides that the employer must pay the amount payable under s. 72 of the Deed "as if the member had been engaged in the member's normal work". For the purpose of s. 72 of the Deed, there is no dispute that rate of the employer contribution is 9%. The matter in contention is the rate of pay or salary which -- 5 of 7 -- 6 should be used for the purpose of determining the money value of the employer's contribution. This salary is referred to as the "superannuable" salary. [40] The Applicant asserted that during his period off work on workers' compensation he should have received superannuation contributions that were based on a superannuable salary comprising his base salary and an aggregated shift allowance of 28.5% as prescribed in Clause 4.5 of the Agreement. The aggregated shift allowance is paid to employees who work defined shift patterns which include, among other things, a requirement to work over 7 days of the week and a requirement to work night shifts. [41] Clause 4.5.2 of the Agreement provides that employees receiving the aggregated shift allowance are not to receive extra payment for week-end work, public holidays and night shifts, nor are they entitled to the benefit of clauses 7.5 and 7.2.4 of the Award. The effect of the Award exclusions is that employees paid the aggregated shift allowance do not receive an annual leave loading of 27.5% in the case of continuous shift workers, nor do they receive any additional benefit when required to work on public holidays or are rostered off on public holidays. [42] In the Applicant's circumstances, including that he was not working while on workers' compensation and that he was not making any voluntary superannuation contributions, QCS submits that the superannuable salary is to be determined by reference to the definition of "salary" set out in s. 165 of the Deed. This section prescribes that "salary" means the "rate of payment made to the officer by way of fixed remuneration for the officer's services…" and "…does not include any sum paid by way of fees or allowances". [43] It is also relevant to note that the concept of ordinary time earnings (OTE), which is applicable in the determination of minimum superannuation contributions under the terms of the Public Sector Industrial and Employee Relations Circular No. C2/09 (the Circular), does not apply in the case of workers' compensation when the employee is not working. Under the Circular, the minimum employer contribution calculation is to be determined by multiplying the contribution rate by the employee's ordinary time earnings. While ordinary time earnings is defined to include shift allowances and week-end penalty rates, the Circular is clear in excluding the application of the ordinary time earnings concept from periods of workers' compensation where no work is performed. [44] The guidelines established under the Circular are derived from the Superannuation Guarantee Ruling SGR 2009/2 issued by the Australian Taxation Office. SGR 2009/2 provides the following definition of "earnings" at paragraph 12: "12. An employee's 'earnings', for the purpose of the definition of OTE, is the remuneration paid to the employee as a reward for the employee's services. The practical effect for superannuation guarantee purposes is that the expression 'earnings' means 'salary or wages'.". [45] Paragraph 46 of SGR 2009/2 provides that workers' compensation payments made in circumstances where a worker is incapacitated and cannot work are not to be considered ordinary time earnings. The reasoning for this position is set out at paragraphs 68 and 76 of the Ruling: "68. Any workers' compensation payments received by an injured employee for the hours the employee performs work or attends work as required form part of 'salary or wages'. In contrast, if the employment has been terminated, or if the employee is paid workers' compensation for hours not worked (or not attending work as required); the payment would not be ‘salary or wages' as in these situations it cannot be said that the payment is a reward for the services of the employee to the employer. … 76. Workers' compensation payments made by or on behalf of an employer to an employee who is not required to attend work due to incapacity, or whose employment has been terminated, are not salary or wages.". [46] Having regard to the submissions and the evidence in this matter the Applicant has not been able to sustain his argument that QCS erred in determining the quantum of employer superannuation contributions required to be made during the period that he was on workers' compensation. [47] An unresolved matter at the time of hearing of the application related to the Applicant's claim that he should receive interest arising from the late payment of superannuation contributions. This matter was not in contention at the hearing and QCS undertook to ensure that, in conjunction with QSuper, interest calculations would be completed in the near future and the relevant adjustment made to the Applicant's superannuation account. The undertaking was recorded by QCS on the transcript at T1-65: -- 6 of 7 -- 7 "Further, in relation to the claim for interest on superannuation, the department has no problem with the Commission directing the Department of Community Safety to pay QSuper the amount of interest that QSuper directs. May it please the Commission.". [48] It is not necessary that I issue an order to this effect. I accept QCS's undertaking to the effect that when the interest amount is calculated, it will remit that amount to QSuper for lodgement in the Applicant's account. [49] I order accordingly. G.D. BLACK, Commissioner Hearing Details: 2013 9 May Released: 19 June 2013 Appearances: Mr S. Allan, appearing on his own behalf, the Applicant. Ms. D. Gibson, appearing on behalf of the Respondent, with Mr S. Donovan and Ms R. Rajapakse of the Department of Community Safety. -- 7 of 7 --