Team Members:

Ian Colgrave
Sathish Dasan
Cecilia White
Michael Foley
John Ward

Issue 26 May 2005

EMPLOYMENT BRIEFLY

SPECIAL LOCAL GOVERNMENT EDITION

AVAILABILITY ALLOWANCES - SUMMARY OF DECISION IN MITCHAM V DOE AND POTENTIAL IMPACT FOR COUNCILS

In the recent decision of Judge Hannon in Mitcham Council v Doe [2005] SAIRC15 (in which the Council appealed the decision of Industrial Magistrate Farrell at first instance) it was held that an employee was entitled to an Availability Allowance pursuant to the Municipal Officers (SA) Award 1998 (“Award”) despite the fact that he was never explicitly directed or instructed to hold himself on immediate standby – it was enough that there was an “implicit” direction or instruction on the part of Council. Further, it was held that the provision of a “commuter use” motor vehicle to the employee as part of his employment package (which was intended to compensate him for out of hours work) did not dispose of Council’s obligation to pay an Availability Allowance to the employee.

Council has appealed the decision to the Full Bench of the Industrial Relations Court and it will be heard on 1 August 2005. However, in the interim, the decision has significant implications for Councils in terms of their requirement to pay availability allowances.

Factual background

The employee was employed by Council as a Compliance Officer, with a primary function of animal management. Whilst his ordinary hours of work were 9.00am to 5.00pm, Monday to Friday, he occasionally attended work outside of those hours to deal with particular emergency situations. Initially, the employee was paid overtime in respect of those emergency attendances in accordance with the Call Out provisions contained in clause 6.7 of the Award. These rates apply where the employee was required to be in a “lesser state of readiness” within the meaning of clause 5.4.1 of the Award which provides that:

In February 2001 the employee was provided with a “commuter use” vehicle in exchange for his entitlement to the call out rates.

The employee claimed that he had in fact been instructed to carry out “availability duty” within the meaning of Clause 5.4.1(b) from 7 February 2000 (when he commenced employment with Council) to 19 December 2003 and claimed the applicable Availability Allowance for that period. Council argued that the employee was never directed to hold himself on immediate standby in order to be eligible for the Availability Allowance. Rather, he was only required to be in a “lesser state of readiness”. Further, Council argued that from February 2001 when the employee was provided with a motor vehicle in lieu of call out rates, the employee and Council had effectively entered into an agreement pursuant to Clause 6.4.6 of the Award and that the employee was therefore compensated for his out of hours attendances by his “suitable employment package”.

On Appeal, His Honour Judge Hannon upheld the decision of Industrial Magistrate Farrell making the following findings:

• The employee did not have flexibility or a discretion as to whether or not he attended work to deal with an emergency, and therefore he was required to hold himself on immediate standby.
• It was not necessary for “explicit” directions to have been given in order for the Respondent to be entitled to the availability allowance. It was enough that there was an “implicit instruction that the Respondent be available for recall to work outside his normal working hours”.

In respect of clause 6.4.6 of the Award, he held that there was no valid agreement between the parties pursuant to that clause, and that the parties could not agree to forgo an entitlement to availability allowance for three reasons:

• The entitlement to Availability Allowance in the Award is contained in clause 5.4 entitled “Allowances”. Whereas, the provisions of clause 6.4.6 are confined to an agreement which takes into account out of hours work attracting overtime. The Award limits the ability to make alternative arrangements to amounts payable for the lesser state of readiness (pursuant to clause 6.7) only;
• The agreement entered into was not one for a “suitable employment package”. What is “suitable” must be measured by an objective standard or “suitability” or “fairness” and not simply a package that is mutually agreed between the parties; and
• There was no valid agreement as it was not recorded in writing in accordance with clause 6.4.6. The document which purported to introduce the motor vehicle instead of the call out rates was never signed by the employee.

Impact for Councils

Pending the outcome of the appeal to the Full Bench;

• Councils should give careful consideration to the issue of “implicit “ directions and whether, by their conduct, Councils are creating an expectation by employees that those employees are required to be on “immediate standby” to attend work during prescribed times outside of their normal working hours.
• In circumstances where the particular arrangements are not clearly defined (that is, in situations where there has been no explicit direction or instruction to an employee to be on immediate standby) Councils should review the nature of those arrangements and ensure that Council’s understanding and the employee’s understanding of the arrangement are the same.
• Where it is intended that an employee be on immediate standby, this should be made the subject of a clear direction or instruction. A direction or instruction in writing prescribing the actual hours they are to be on immediate standby is obviously the most prudent way to achieve this.
• If it is only expected that an employee hold themselves in a “lesser state of readiness” so as to only be entitled to overtime for the hours during which they actually attend work outside of ordinary hours, then Council should clearly stipulate to the employee that they are not on immediate standby, and that, for example, there is flexibility or discretion as to whether they actually attend work when called.

The decision also has implications with respect to arrangements entered into pursuant to Clause 6.4.6 of the Award. As it stands, the decision has the result that Councils cannot enter into such arrangements as a means of “contracting out” of the liability to pay an allowance, only overtime (which includes “call out” payment). Further, the decision serves as a timely reminder to Councils of the importance of recording such arrangements in writing and ensuring that all parties have signed the applicable agreement.

We will be sure to report to Councils as to the outcome of the Full Bench Appeal.

For further information about issues covered in this article, please contact our Employment Team, Ian Colgrave, Sathish Dasan, Cecilia White or Michael Foley on 8210 1200.

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