Hitachi Rail STS Australia Pty Ltd v Schoof - Enterprise Agreement Interpretation

Original Word Document (90.3 KB) Federal Court of Australia

Hitachi Rail STS Australia Pty Ltd v Schoof [2026] FCA 343

| File number: | WAD 118 of 2024 |
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| Judgment of: | COLVIN J |
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| Date of judgment: | 27 March 2026 |
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| Catchwords: | EMPLOYMENT - proper construction of enterprise agreement provisions concerning the calculation of penalty and overtime - whether allowances to be included in 'base hourly rate' - whether waiting time penalty provision for delay in payment of 'wages' applies to non-payment of allowances - held that allowances not to be included in base hourly rate and declarations accordingly - declaratory relief as to waiting time penalty refused as a matter of discretion |
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| Cases cited: | Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378

Avard v Australian Capital Territory [2025] FCAFC 72

Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots [2025] FCAFC 45 |
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| Division: | Fair Work Division |
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| Registry: | Western Australia |
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| National Practice Area: | Employment and Industrial Relations |
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| Number of paragraphs: | 47 |
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| Date of hearing: | 10 February 2026 |
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| Counsel for the Applicant: | Mr IM Neil SC with Mr SR Pack |
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| Solicitor for the Applicant: | Corrs Chambers Westgarth |
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| Counsel for the Respondent: | Mr S Heathcote |
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| Solicitor for the Respondent: | Heathcote Workplace Law |
ORDERS

| | | WAD 118 of 2024 |
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| BETWEEN: | HITACHI RAIL STS AUSTRALIA PTY LTD (ACN 068 707 380)

Applicant | |
| AND: | NEVILLE SCHOOF

Respondent | |

| order made by: | COLVIN J |
| DATE OF ORDER: | 27 March 2026 |
THE COURT DECLARES THAT:

1. On the proper construction of the Ansaldo STS Australia Pty Ltd Enterprise Agreement 2019:

(a) For the purposes of calculating the penalty rates payable to employees under cl 4.10, the rate to be multiplied is the applicable hourly rate in Schedule B, excluding the amount of any allowances payable under cl 5.1.

(b) The 'base hourly rate of pay' referred to in cl 4.11.2(c), used for calculating overtime rates (except for casual employees), is the applicable hourly rate in Schedule B, excluding the amount of any allowances payable under cl 5.1.

(c) The 'base rate (excluding casual loading)' referred to in cl 4.11.2(d), used for calculating overtime rates for casual employees, is the applicable hourly rate in Schedule B, excluding the amount of any allowances payable under cl 5.1.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1 Mr Neville Schoof is a former employee of Hitachi Rail STS Australia Pty Ltd. He worked as an electrician and communications technician. Between dates in 2019 and 2023, his employment was covered by the terms of the Ansaldo STS Australia Pty Ltd Enterprise Agreement 2019. He claims that Hitachi applied an incorrect interpretation of the penalty rate and overtime provisions of the Agreement in calculating his pay. Hitachi used the 'ordinary hourly rates' in Schedule B to the Agreement as the basis for determining penalty and overtime payments. Mr Schoof says that Hitachi should have used a rate that was the sum of the ordinary hourly rate in Schedule B and the allowances in Schedule C. Hitachi seeks declarations to the effect that its approach to the interpretation of the Agreement was correct.

2 A separate issue was raised by Mr Schoof concerning a provision in the Agreement about delays in payments to employees. It was said to provide for a 'waiting time' penalty that should have been paid to Mr Schoof. By the time of hearing, Mr Schoof no longer pursued that claim. However, in circumstances where the claim had been advanced, Hitachi presses for declaratory relief concerning the waiting time penalty provision.

3 For the following reasons, Hitachi's approach to the construction issues concerning penalty and overtime payments is correct and it is entitled to the declaratory relief that it seeks as to that aspect of the case. As to the waiting time issue, there being no continuing controversy between the parties as to that issue and no substantive submissions advanced for Mr Schoof on the issue, it is appropriate for the Court to decline to exercise its discretion as to the grant of declaratory relief.

Relevant principles as to interpretation of enterprise agreements

4 The relevant principles were recently summarised in Corporate Air Charter Pty Ltd v Australian Federation of Air Pilots [2025] FCAFC 45 at [9]-12, cited with approval in Avard v Australian Capital Territory [2025] FCAFC 72 at 45 where the issues concerned the construction of an enterprise agreement.

5 Neither party contended that there were surrounding circumstances that might bear upon the proper construction of the Agreement. Hitachi submitted that it was appropriate to have regard to the history of waiting time penalty provisions in the Australian industrial law setting when construing that aspect of the Agreement.

Relevant provisions of the Agreement and the competing constructions

6 At the heart of the issues between the parties as to the proper interpretation of the penalty and overtime rate provisions of the Agreement is a disagreement as to the extent to which differences in language used to describe the allowances and entitlements of employees have substantive significance.

7 In order to understand the context of the key provisions within the Agreement, it is appropriate to have regard to the overall structure of its provisions.

8 The Agreement provides for the ‘ordinary hours of work' of employees: cl 3. It says that ordinary hours of work may vary based upon location and work requirements: cl 3.1(a). It says that, in general, ordinary hours of work shall be 38 hours per week: cl 3.1(b). Further, the spread of hours will vary based on the work location of the employee: cl 3.2(a). Therefore, there is no specified window within which 'ordinary hours' must be worked.

9 Work on weekends and public holidays as well as work on any week day in excess of eight hours is to be paid in accordance with the relevant penalty provisions in the Modern Award: cl 3.2(b).

10 The employee must submit time sheets: cl 3.9. Default by the employee in submitting time sheets 'may result in delayed payment of wages': cl 3.9(c).

11 Part 4 of the Agreement is headed 'Wages and Classification'. Wages are to be paid on a weekly basis, subject to receipt of a completed timesheet from the employee: cl 4.1(a). Wages are to be paid into a financial institution account as nominated by the employee: cl 4.1(c). The 'hourly wage rates' are said to be contained in Schedule B: cl 4.2(a). The rates of pay listed in Schedule B are said to be 'inclusive of any annual leave loadings when annual leave is taken': cl 4.2(b). There is provision for the 'minimum hourly rates of pay contained in Schedule B' to be increased by 2% per annum: cl 4.3(a).

12 Schedule B comprises a table headed 'Ordinary Hourly Rates'. It specifies hourly rates of pay for different employee classifications for each year to which the Agreement applies. Accordingly, it is clear that Schedule B specifies the 'hourly wage rates' referred to in cl 4.2(a). Further, as stated in cl 4.2(b), those hourly wage rates are inclusive of annual leave loadings.

13 Clause 4.10 of the Agreement provides as follows:

Employees working on a roster with normal spread of hours Monday to Sunday will be paid the following:

(i)    Saturday - will receive Saturday Penalty of 50% on first two (2) normal hours or first two (2) normal hours worked before 12 noon. All normal hours after the first two (2) hours or after 12 noon will be paid a Saturday Penalty of 100%.

(ii)     Sunday - will receive Sunday Penalty of 100% on normal hours

Saturday and Sunday penalties are not payable on overtime.

14 It may be noted that cl 4.10 provides for the penalties to be received on 'normal hours' for employees working a 'normal spread of hours'. As will emerge, the issue between the parties is not concerned with the hours to which overtime is to be applied. Rather, it is concerned with the rate to which the penalty is to be applied. What is clear from cl 4.10 is that the penalty rates do not apply to overtime. Rather, penalty rates are to be paid on normal hours that are required to be worked on a Saturday or Sunday. In context, 'normal hours' must refer to ordinary hours that are worked as part of a roster where the ordinary hours have a 'normal spread' over the week.

15 As to overtime, there is a specific provision to the effect that employees shall be required to work rostered and/or un-rostered overtime, referred to as 'additional hours': cl 4.11.1(a). It is also acknowledged that employees may need to work considerable overtime per week: cl 4.11.1(b).

16 There is a specific provision in cl 4.11.2 for the calculation of overtime payments. It is in the following terms:

(a)    Monday to Friday Employees

(i)    At the rate of time and a half (1.5)

• for the first two (2) hours worked beyond the ordinary hours (including RDO accrual) on any day in the working week of Monday to Friday; and

• for the first two (2) hours worked on Saturday before 12 noon.

(ii)    At the rate of double time (2)

• for all hours beyond ten (10) ordinary hours worked per day for the working week of Monday to Friday, and all hours after the first two (2) hours or 12 noon on Saturday.

• and all day Sunday.

(b)    For all other employees working on rosters and/or projects, the Overtime rates will be dependent on the base hours of the roster. First (2) two hours of overtime Monday to Saturday is paid at the rate of time and a half (1.5) and then the rate of double time (2) thereafter. Sunday overtime is at the rate of double time (2).

(c)    All overtime is calculated by reference to an Employee's base hourly rate of pay. Each day stands alone except for continuing overtime worked past midnight which counts as part of the previous day's work.

(d)    Casual employees will be paid overtime rates calculated on their base rate (excluding casual loading).

(e)    Superannuation is not paid on overtime.

17 Plainly, cl 4.11.2 differentiates between two categories of employees. The first category is those employees who work their ordinary hours 'Monday to Friday'. For those employees, significance is given to the fact that their working week is Monday to Friday. Their overtime depends upon the ordinary hours worked each day. The second category is for those employees who work their ordinary hours according to a roster or the requirements of a project. Their overtime is determined by the total ordinary hours worked each week.

18 Significantly, cl 4.11.2(b) deploys the concept of 'base hours of the roster' whereas the concept of 'ordinary hours' is used in cl 4.11.2(a). Those two provisions are concerned with identifying the hours that will qualify as overtime. Then, cl 4.11.2(c) deals with the calculation of the amount to be paid for overtime hours worked. Clause 4.11.2(c) applies both to instances covered by cl 4.11.2(a) (namely employees working Monday to Friday) and to instances covered by cl 4.11.2(b) (namely employees on rosters and/or projects). It uses the term 'base hourly rate of pay' to refer to both instances.

19 Hitachi contends that the reference to the 'base hourly rate' in cl 4.11.2(c) is to the ordinary hourly rates specified in Schedule B. It says that this is the foundational rate to which the overtime rates for all employees are to be applied. As will be explained, the Agreement goes on to provide for various allowances that are to be paid. Some of those allowances are expressed as a rate per hour. Others are specified as a 'Flat rate per week'. Mr Schoof contends that the 'base hourly rate of pay' includes these allowances and it is the ordinary hourly rate plus allowances to which the overtime rate is to be applied. He says that the aggregate of these amounts comprises the 'base rate' for the purposes of the overtime provision. He makes an equivalent claim in relation to penalty rates.

20 As to the allowances, cl 5 specifies various allowances that are to be paid 'in addition to the hourly rate where applicable'. The allowances are specified in Schedule C. As has been mentioned, the allowances are specified as either an 'all purpose rate per hour' or a 'Flat rate per week'. Mr Schoof says that the allowances are to be added to the ordinary hourly rate where applicable and the summation is the 'base hourly rate of pay'. Consequently, on his case, the base rate of pay includes the allowances.

21 One difficulty with Mr Schoof's contentions concerns the way in which they affect employees who are not working Monday to Friday. As has been mentioned, the language of 'base hours' does not apply to those employees. They are to be paid overtime on hours worked beyond 'ordinary hours'. There is nothing to indicate why the hourly rate for ordinary hours of work to which overtime and penalty rates are applied should be different for Monday to Friday workers compared to those working a roster or on a specific project.

22 Finally, there is the waiting time provision. It is set out in cl 5.11 in the following terms:

(a)    Unless an Employee has been notified that payment will be delayed for reasons beyond the reasonable control of the Company, an employee kept waiting for his or her wages shall be paid at overtime rates up to the maximum of one (1) hour per day for each day delay in payment.

(b)    The above clause is not applicable if time sheets are submitted late by of the Employee or if the Employee has not complied with the requirements of Clause 3.9.

23 Mr Schoof had maintained that cl 5.11 applied to underpayment of entitlements provided for by the Agreement where those underpayments were in respect of allowances. As has been mentioned, by the time of hearing he did not press that claim. Nevertheless, Hitachi still sought declaratory relief concerning the claim.

The base hourly rate of pay for overtime

24 For the following reasons, in relation to overtime, the construction of cl 4.11.2(c) advanced by Hitachi should be adopted.

25 First, as to Monday to Friday employees, overtime is calculated on hours worked beyond 'ordinary hours'. The rates for ordinary hours are specified in Schedule B. The language 'ordinary hourly rates' as used in Schedule B must indicate that the rates are those to be paid for working ordinary hours. Importantly, there is no 'base hours' concept that applies to Monday to Friday employees. The notion of 'base hours' is only introduced for the purposes of identifying the hours to which overtime rates will apply when an employee is working on rosters and/or projects. Therefore, the use of the expression 'base hourly rate of pay' in cl 4.11.2(c) is explicable as a compendious way of explaining the two situations. There is no reason why the term 'base hourly rate of pay' would have different consequences for calculating the pay for Monday to Friday employees when compared to employees working rosters and/or projects. Yet, the overtime rate for Monday to Friday employees is specified by reference to ordinary hours, not some concept of base hours.

26 Second, the construction contended for Mr Schoof would mean that the overtime rate applies both to the ordinary hourly rate of pay specified in Schedule B and the allowances specified in Schedule C. Consequently, for ordinary hours, the allowances would be paid at the rate specified in Schedule C but for overtime hours there would be an uplift in the allowance rate because the overtime penalty would apply both to the ordinary hourly rate of pay and the allowance. There is no apparent industrial reason why the allowances should be more for overtime worked than for ordinary hours worked. Mr Schoof was unable to point to any such reason.

27 Third, some of the allowances are expressed to be paid at a flat rate per week. The formulation of the rate for the allowance in that way is inconsistent with the construction contended for by Mr Schoof. He suggested that his construction could be accommodated by deriving an hourly rate from the weekly rate based upon the ordinary hours to be worked for each week. However, that submission does not engage with the significance of the flat rates. If indeed the Agreement was structured in the manner contended for by Mr Schoof then it would not make sense to specify weekly allowances. Alternatively, there is no explanation as to why the weekly allowances would not be subject to a form of uplift based upon overtime worked but the other allowances would have the overtime rate applied to them for overtime worked.

28 Fourth, in the sequence of logic in the Agreement, the allowance provisions follow after the provisions in relation to ordinary hours, the rates for ordinary hours and the payment of overtime. There is no cross-reference in cl 4.11.2 to the allowances. This structure indicates that the terms of cl 4 as to payment for overtime are intended to apply without requiring any reference to the allowance provisions. They are separately provided for by cl 5.

29 Fifth, the use of the descriptor 'all purpose' to describe the allowance rates that are specified as a rate per hour in Schedule C does not support Mr Schoof's construction. It is terminology that may be explained by the fact that the descriptions apply generally and are not limited to particular employee classifications. This may also be explained by the fact that they apply irrespective of the duties that may be performed by the employee. In those senses, the rates are for all purposes. Further, the terminology 'all purpose' is not to be found in the substantive provisions of the Agreement which describe how to calculate overtime payments. The use of the phrase 'all purpose' in the Schedule specifying the allowances does not indicate that it is a rate for the purpose of determining the amount to be paid for overtime. There is nothing in the terms of Schedule C to indicate that the specification of such a purpose was in view as part of the specification of the allowance rates in the schedule.

30 Finally, the pleaded case advanced by Mr Schoof indicated that his claim concerned only the site allowance and the working away allowance. There was no logic advanced as to why the construction contended for might apply to those allowances but not to others.

The calculation of penalty rates

31 As has been explained, the penalty rates provided for by cl 4.10 apply to ordinary hours worked on a Saturday or Sunday by an employee with a 'normal spread of hours'. The 'base rate of pay' terminology is not used in cl 4.10. Therefore, Mr Schoof's case as to the penalty rates must draw upon the use of the base rate concept in the overtime provisions. For reasons I have given, the use of that terminology, does not support the conclusion that the overtime rates are to be applied to ordinary hourly rates in Schedule B plus allowances. Once that conclusion is reached, there is no real foothold for the claim that the penalty rates are to be applied to the ordinary hourly rates in Schedule B plus allowances. Further, similar issues arise with Mr Schoof's construction as arose for cl 4.11.2. There is no logic advanced as to why the allowance would be subject to the penalty for some of the 'normal hours' and not others. There was no suggestion that the nature of requiring ordinary hours to be worked on a Saturday or Sunday might explain why the allowance to paid on those days might be subject to the application of the penalty.

32 Therefore, in relation to penalties, the construction of cl 4.10 advanced by Hitachi should be adopted.

The waiting time penalty

33 As has been explained, the Agreement requires wages to be paid weekly into a financial institution account nominated by an employee. Clause 5.11(a) provides that unless an employee has been notified that payment will be delayed for reasons beyond the reasonable control of the employer, 'an employee kept waiting for his or her wages shall be paid at overtime rates'. Those payments are to be made up to a maximum of one hour per day for each day of delay.

34 The issues that had been joined between the parties as to the application of cl 5.11 on the facts of the present case were narrow. Mr Schoof did not claim that cl 5.11 applied where (a) there had been payment made of that which the employer genuinely believed to be due; (b) an underpayment was a consequence of a bona fide mistake or a bona fide dispute; or (c) payment was made by transfer to the employee's nominated account, even if it was an underpayment. Those concessions left limited circumstances where the waiting time penalty might accrue.

35 Also in issue was to whether cl 5.11(a) was confined to payments for ordinary hours on the basis that it was payment for ordinary hours were the 'wages' of employees.

36 As has been explained, shortly prior to the final hearing, Mr Schoof withdrew any remaining defence. At the hearing, Hitachi accepted that the real issue that had been raised by Mr Schoof was to the effect that cl 5.11 applied to a failure to pay allowances, being the uplift in those allowances that he said should have been paid by applying penalty rates and overtime to those allowances. Hitachi maintained that allowances did not form part of the 'wages' referred to in cl 5.11.

37 On the evidence, at the time of commencement of proceedings, there was a justiciable controversy between the parties concerning the proper construction of cl 5.11.

38 Shortly after the commencement of the proceedings, by reason of the nature of the relief sought, orders were made for Hitachi to notify all the employees who were covered by the Agreement as far as they were alive and could be found. Those steps were taken. No other person has sought to participate in the proceedings. However, there is evidence that other employees of Hitachi who were covered by the Agreement were also of the view that payments that should have been made by Hitachi had not been made. It is not clear whether that position extended to the waiting time 'wages' point that is now pressed by Hitachi despite a lack of opposition by Mr Schoof.

39 Finally, as to parties, when these proceedings were commenced, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia was also a respondent. However, some considerable time before the hearing, the Union ceased to take any active role in defence of the proceedings.

40 It is in those circumstances that Hitachi seeks declaratory relief against Mr Schoof. The terms of that relief are to the effect that cl 5.11 only applies to what Hitachi describes as 'base wages' and not to allowances. Reliance is placed upon aspects of the Agreement that are said to indicate that the term 'wages' is used in that sense in cl 5.11.

41 Hitachi says that there is utility in granting that relief because there is no indication that the various employees who were given notice of the proceedings now adopt the same position as Mr Schoof. It follows that the utility in granting the declaratory relief sought is not for the purpose of binding Mr Schoof but rather in the interests of being able to obtain a declaration that might be used in some way to answer claims by other employees who are not parties to the proceedings. Of course, as to Mr Schoof he will be bound by his conduct in these proceedings and the position he adopted in relation to the waiting time penalty. It is not necessary for a declaration to be granted against him to achieve that position.

42 As explained in Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 at [27]-32, in the circumstances I have described, the Court has jurisdiction to grant declaratory relief but the Court has a discretion to exercise whether to do so.

43 The scope of clauses like cl 5.11 that provide for a waiting time penalty appear to have an historical origin that would require detailed consideration before reaching a conclusion on the construction point. It is undesirable for this Court to reach a conclusion as to an issue of that kind in circumstances where the contentions have been presented without any opposing argument.

44 Most significantly, in circumstances where the basis for the claim to the additional allowances has not been upheld, there remains no scope for the application of cl 5.11 to the allowances. The point in relation to cl 5.11 was entirely contingent upon success on the part of Mr Schoof as to the points that he raised as to the penalty rates and overtime being applicable to the allowances. Therefore, I can see no real utility that would be served by resolving the further point.

45 For those reasons, in the exercise of the Court's discretion, I decline to grant the further declaratory relief sought.

Final declaratory orders and costs

46 For the reasons I have given, there should be declaratory orders substantially in the terms sought by Hitachi as to the issues concerning the calculation of allowances.

47 At the conclusion of the hearing both parties indicated that they had no submissions to make as to costs. Therefore, no issue arises as to the costs of the proceedings.

| I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin. |
Associate:

Dated: 27 March 2026

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