Alleged underpayment of entitlements and non-payment of shiftworker annual leave – a win for Halliburton
firstname.lastname@example.org | August 13, 2020
How all becomes clear and simple
HLS Legal represented Halliburton Australia (Halliburton) in its recent win in the Federal Circuit Court in a decision regarding key provisions of the Fair Work Act 2009 (Cth) (the Act) and the Long Service Leave Act 1958 (WA) (the Long Service Leave Act).
The decision is the first Court decision to clarify what it means for a shiftworker to regularly work Sundays and public holidays in the context of the additional week of annual leave for shiftworkers in s 87 of the Act.
The decision confirms that pay arrangements commonly utilised in the offshore industry and at remote locations, or which include a variable pay element more generally, are consistent with the Act and the Long Service Leave Act.
Finally, the decision confirms that employers and employees may agree to roster annual leave into field breaks or R&R in certain circumstances.
Halliburton provides survey and drilling related services to the hydrocarbons and geothermal industries.
The work of the former employees of Halliburton (the applicants) involved providing Halliburton’s services at offshore and remote onshore facilities operated by Halliburton’s clients.
The applicants were made redundant in 2013 and 2015.
During the proceedings, the applicants argued that Halliburton incorrectly paid their annual leave, payment in lieu of notice, redundancy pay and long service leave.
The applicants argued that they were entitled to an additional week’s annual leave as shiftworkers and that Halliburton had breached the Act by rostering annual leave into field breaks.
Relevantly, the applicants were paid a base salary of up to $78,000.
The base salary was paid regardless of whether the applicants were working offshore or at remote onshore facility or were at home and not working.
The applicants were paid an additional Operating Day Rate (ODR) for offshore/remote onshore work of up to around $720 per day.
The base salary and ODR together allowed the applicants to earn around $100,000 to $200,000 per year.
The applicants’ work offshore and at remote onshore facilities was intermittent. The applicants’ work pattern was subject to the demands of Halliburton’s clients. There were no set rosters for the applicants.
All annual leave, redundancy pay, payment in lieu of notice and long service leave paid to the applicants was paid at the base salary only.
The matter was heard by Lucev J in August last year and judgement was delivered on 10 October 2019.
Shiftworker entitlement to annual leave
The applicants argued that because they worked 12 hour shifts when offshore or onshore at a client facility that they were shiftworkers.
The applicants relied on s 87(3) of the Act as the basis of their entitlement. This section provides the conditions that must be met for a shiftworker who is award/agreement free to be entitled to 5 weeks annual leave.
Halliburton argued that the applicants were not entitled to the additional week of annual leave because:
- Halliburton’s enterprise in which the applicants were employed did not roster shifts continuously 24 hours a day, 7 days a week, although operations offshore may be 24 hours a day, 7 days a week;
- accordingly, it could not be said that the applicants were regularly rostered on continuous shifts; and
- in any event, the applicants did not regularly work Sundays and public holidays.
Halliburton argued that the term “regularly works on Sundays and public holidays” had an arbitral history which meant 34 Sundays and 6 public holidays.
Lucev J held that the applicants were not shiftworkers for the purposes of the additional week of annual leave.
Lucev J agreed that it was Halliburton’s enterprise in which the applicants were employed that mattered and held that Halliburton did not operate continuous shift rosters.
Lucev J referred to the intermittent work patterns of the applicants and stated these were the “antithesis of the regularly rostered shift work referred to in s.87(3)(a)(ii) of the FW Act.”
In respect of the “regularly works on Sundays and public holidays” element, Lucev J accepted the 34 Sundays and 6 public holidays standard put forward by Halliburton.
For these reasons, Lucev J held that the applicants’ claim to an additional week of annual leave as shiftworkers was not made out.
ODR on Annual Leave and Redundancy Pay
The applicants argued that ODR ought to have been included in their annual leave and redundancy pay because the ODR was part of their “base rate of pay” as prescribed by s 16(1) of the Act.
The applicants argued that the ODR ought to have been included in the “base rate of pay” as it made up the biggest component of their pay in monetary terms and because it was referable to the applicants’ ordinary hours of work.
Halliburton argued that the ODR should be regarded as a payment of the kind in s 16(1)(a) to (e) of the Act and therefore not included in the payment of annual leave and redundancy pay.
Lucev J held that the ODR was not part of the “base rate of pay” as it was a bonus or separately identifiable amount and that the ODR would not have been paid during a period of annual leave.
Relevantly, Lucev J stated:
 The evidence plainly establishes that Halliburton treated, and paid, the ODR as a discretionary bonus. There is no doubt that it was paid as often, and indeed more often, than not. That however merely reflected the nature of the bonus and the conditions upon which it was paid, and in particular that it was payable for work in remote places, but also for work under other arduous conditions, and sometimes for particular types of training or workshop activity. For Mr Conway it seemed that ODR, and sometimes half ODR, was payable because he had requested it in relation to particular kinds of travel events and meetings, and Halliburton had agreed, in the exercise of its discretion, to pay it for those events and meetings.
For these reasons, Lucev J held that the applicants’ claim that the ODR ought to have been included in their annual leave pay and redundancy pay was not made out.
ODR on Payment in Lieu of Notice
The applicants argued that ODR ought to have been included in their payment in lieu of notice pursuant to s 117(2)(b) of the Act because the payment was part of their “full rate of pay” as prescribed by s 18 of the Act.
Halliburton argued that the evidence suggested that the applicants would not have been offshore or at a remote onshore location during their notice period and therefore the ODR would not have been part of the “full rate of pay” for notice period.
Lucev J held that the ODR would not have formed part of the applicants’ full rate of pay because there was no evidence that the applicants would have done anything other than continued upon their field break on their base rate of pay had they had to work out their notice period.
For these reasons, Lucev J held that the applicants’ claim that the ODR ought to have been included in their payment in lieu of notice was not made out.
ODR on Long Service Leave
The applicants argued that ODR ought to have been included in their long service leave pay because the payment was part of their “ordinary time rate of pay” as prescribed by s 4(1) and (2) of the Long Service Leave Act. The applicants’ relied on the same logic they applied to the annual leave claim.
Halliburton argued that the ODR was not included in “ordinary time rate of pay” as it fell within the exceptions to “ordinary time rate of pay” which includes bonuses and shift premiums.
Lucev J held that the claim was not made out as he had already found that the ODR was a bonus and agreed that the ODR could also be considered a shift premium.
Annual Leave in Field Breaks
It was argued for the first applicant that Halliburton contravened the Act when it rostered annual leave into this applicant’s field breaks.
The applicant’s employment contract provided that “field breaks” would “compensate a number of factors including holiday breaks and no additional leave or vacation provisions apply”.
Halliburton argued that the clause didn’t contravene the Act due to s 94(5) of the Act.
Section 94(5) and (6) of the Act provide:
- an employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable; and
- an employer and an award/agreement free employee may agree on when and how paid annual leave may be taken by the employee.
Halliburton argued that the annual leave clause in the first applicant’s employment contract was reasonable for reasons including that clause 27.4(b)(ii) of the Hydrocarbons Industry (Upstream) Award 2010 (Hydrocarbons Award) provides that where an employee works in a remote location or on cycle work made up of working days (on-duty period) and non-working days (off-duty period), an employer may reasonably require that the employee take annual leave as provided in the roster cycle.
Lucev J agreed that the annual leave clause in the first applicant’s employment contract complied with section 94 of the Act for reasons including the analogy to the Hydrocarbons Award.
For this reason, Lucev J held that the first applicant’s claim that Halliburton contravened the Act when it rostered annual leave into the first applicant’s field breaks was not made out.
The decision confirms that the practice of paying a base salary and variable elements, and not including the variable elements in the payment of certain entitlements, is lawful.
This will come as some comfort to employers, as will:
- the clarification of what the phrase “regularly works Sundays and public holidays” means in respect of the additional week of annual leave for shiftworkers; and
- that annual leave can be rostered to be taken in field breaks or R&R in some circumstances.
The full decision is available here: Fong & Ors v Halliburton Australia Pty Ltd  FCCA 2885 (10 October 2019).
This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.
If you would like to discuss any matters raised in this article, please contact HLS Legal on (08) 9322 5202.