The FWC has in varying 97 awards to address casuals’ overtime payments rejected employer arguments that its application of a compounding formula in the aged care sector contradicts the “widely accepted” proposition that penalties should not be applied to loadings.
Addressing similar Ai Group concerns over its use of the compounding formula in varying the health professionals and support services and electrical, electronic and communications contracting awards as part of the tribunal’s four-yearly review, the FWC full bench said its approach was based on the use of the expressions “time and a half”, “double time” and “double time and a half” in clause 25.1(b) of the aged care award.
Vice presidents Adam Hatcher and Joe Catanzariti and Deputy President Geoff Bull said that on the basis of full bench decisions in AMWU v Energy Australia Yallourn Pty Ltd and ANMF v Domain Aged Care (QLD) Pty Ltd, they had in reasons for issuing draft variations previously held that “these are traditional industrial expressions which have a traditional meaning”.
“The ‘time‘ referred to is the rate of pay that would be payable to the employee for ordinary hours,” the bench continued, quoting from its August decision.
“In the case of casual employees, the ordinary time rate is inclusive of the casual loading.
“Therefore, the overtime rate is calculated by reference to the ordinary time rate inclusive of that loading, unless there is some provision which expressly indicates otherwise.
“That means that the casual loading is included in the overtime rate on a compounding basis.”
Not a “universally-applied” proposition
The bench said it did not accept the Ai Group’s contention that various authorities supported the proposition that it has been “widely accepted” that a penalty rate is not to be applied on “another such rate or premium”, at least in the context of overtime penalty rates.
“The decision of a single member in Re Aged Care Association Australia Ltd & Others relevantly concerned an application to vary the Nurses Award to provide that the penalty rates for weekend work in clause 26 of the award were payable in substitution for the casual loading,” said the bench.
“In rejecting the application, the member made reference to the ‘…normal notion that multiple penalties are to be applied, but that penalties are not applied on penalties’.
“That may be accepted as a ‘normal’, but certainly not a universally-applied, proposition.”
The bench emphasised that the casual loading had not traditionally been characterised as a penalty rate.
“That position is maintained in the structure of the FW Act, which sets out in s139(1) the matters which may be the subject of modern award terms and categorises separately ‘minimum wages’ (which, under s284(3), includes casual loadings) in paragraph (a) and ‘penalty rates’ (which includes for working unsocial, irregular or unpredictable hours and for working on weekends or public holidays or on shifts) in paragraph (e).
“Accordingly, the ‘normal notion’ referred to in the decision is not relevant to how a penalty rate is to be applied to a minimum ordinary-time award rate of pay that includes the casual loading.”
Delay for Victorian aged care sector
The bench also found that the Ai Group’s reliance on single-member decisions in Transport Workers’ Union of Australia v SCT Logistics and Australian Manufacturing Workers’ Union (AMWU) v UGL Pty Ltd T/A UGL Limited was similarly “misplaced”.
“In the former decision, the member said, in the course of considering whether an enterprise agreement provided for shift loadings to compound upon the casual loading, that ‘in terms of general principles it is well established that it is not usual that an industrial instrument will provide for the payment of a penalty on a penalty’.”
“The member went on to conclude, based on his analysis of the agreement’s provisions, that the shift loading was payable on the casual rate, including the casual loading, on a compounding basis.
“We cannot identify any inconsistency between this decision and the proposition we derived from the Yallourn and Domain Aged Care decisions.”
Turning to the “substantive” matters raised in the Ai Group’s submissions, the bench rejected that the Yallourn and Domain Aged Care decisions offered no general meanings for the expressions “time and a half”, “double time” and “double time and a half”.
“Both decisions proceeded on the basis that the ‘time‘ referred to in these expressions, on their ordinary meaning, is the employee’s ordinary time rate of pay,” said the bench.
“The Ai Group’s submissions did not identify that these expressions had any different ordinary meaning.
“Both decisions also proceeded on the basis that, in the absence of any textual contra-indicator, the ordinary rate of pay for a casual employee includes the casual loading.”
Confirming its August conclusion regarding the Aged Care Award , the bench noted that the COVID-19 pandemic has had “disproportionate” effects on the sector, “particularly in Victoria”.
“Because this may have affected the capacity of employers in the sector to make any necessary adjustments in response to award variations, we have decided that 1 March 2021 will be the operative date of the variation,” concluded the bench.
Variations in the remaining awards, subject to modifications, will take effect on November 20.
The issue of overtime for casuals was first put on the FWC’s agenda in 2017, following consideration of an FWO paper which found many awards “do not clearly state how overtime and penalties interact with the casual loading”.