2 October 2020
Programmed Industrial Maintenance Pty Ltd v The Construction Industry Long Service Leave Payments Board [2020] WAIRC 00758
In a decision that will likely have wide-ranging implications across Western Australia resources sector, a Full Bench of the Western Australian Industrial Relations Commission (WAIRC) has found that employees performing maintenance and repair work at operational resource facilities are in the “construction industry” and therefore covered by the Construction Industry Portable Paid Long Service Leave Act 1985 (WA) (Portable LSL Act).
Long service leave in Western Australia
In Western Australia, workers are generally entitled to long service leave under the Long Service Leave Act 1958 (WA). This entitlement does not depend on a worker being in any particular industry.
Sitting alongside, but separate to, this “general” scheme, workers in the “construction industry” are entitled to long service leave under a scheme established by the Portable LSL Act (Construction Industry Scheme), which is operated by the Construction Industry Long Service Leave Payments Board (Board). Every State and Territory in Australia has enacted a scheme similar to the Construction Industry Scheme.
This different entitlement has its origin in it being observed in Australia since around the early-1980s that workers in the building and construction industry were less likely to qualify for long service leave because they were generally engaged on a short term or intermittent basis to perform work on particular construction projects, with their employment ending at the completion of each project. The Construction Industry Scheme attempted to address this mischief by tying eligibility for long service leave not to continuous employment with a single employer, but to service “in the construction industry”.
From the perspective of employers, the key difference between the Construction Industry Scheme and the “general” scheme, is that employers covered by the Portable LSL Act are required to make ongoing contributions to the Board in relation to all of their relevant employees, from their first day of employment, which is not able to be recovered even if these employees leave their employment, or the “construction industry”, before satisfying the relevant service requirements.
In early 2017, the WAIRC handed down a decision which found that the scope of the Construction Industry Scheme went beyond what was previously understood by the WA business community (and the Board).[1] This decision found that the Construction Industry Scheme extended to work performed by a company which engaged in the installation of air-conditioning systems at established residential properties (i.e. properties that were not under construction). The essence of this finding was that the Construction Industry Scheme was not limited to work performed in what was commonly understood as the “building and construction industry”, because Parliament had not defined “construction industry” as being limited to work performed on construction sites. The effect of this was that the performance of any work within the scope of the Portable LSL Act, which includes construction, erection, installation, renovation, alteration, demolition or maintenance and repairs, would be within the “construction industry”, subject to some minor exceptions.
Summary of the Full Bench decision
Following the 2017 WAIRC decision, the Board directed Programmed Industrial Maintenance Pty Ltd (PIM), a large industrial maintenance contractor who provided services to a number of operators in WA’s resources industry, to register as an employer under the Portable LSL Act on the basis that the Board considered that the work it performed was on a “site”, even though the relevant locations were all established operating assets, some of which had been in operation for over 40 years.
PIM challenged this direction in the WAIRC on a number of grounds, but particularly on the basis that the word “site” in the Portable LSL Act should be limited to “building or construction sites”, as this was the meaning that would be most consistent with the purpose of the Construction Industry Scheme and the intention expressed in Parliament when the Portable LSL Act was introduced.
At first instance, Chief Commissioner Scott (who had also decided the 2017 decision) rejected PIM’s challenge and confirmed her view that “site” merely referred to any location at which the relevant works were performed, which gave the Portable LSL Act an incredibly wide breadth of operation.
PIM appealed the Chief Commissioner’s decision, again on a number of grounds, but primarily on the basis that the Chief Commissioner had erred by construing the term “site” (and its cognate expressions) in the definition of “construction industry” too broadly and in a manner that was incongruent with the purpose of the Portable LSL Act.
Ultimately, while the Full Bench made some criticisms about the approach adopted by the Chief Commissioner, in particular by not considering the purpose of the Act at the same time as considering the meaning of “site”, and upheld one of PIM’s grounds of appeal, the Full Bench did not consider that these issues established that the decision should be overturned. That is, the Full Bench endorsed the finding that “site” simply meant the place at which the other activities in the definition occurred, but did not include an employer’s own premises.
What does this mean?
This decision has a number of potential implications for operators of operational resources facilities in Western Australia. This is because it is likely that, by virtue of the interpretation confirmed by the Full Bench, a large proportion of the routine, minor and ongoing maintenance and repair work performed at these facilities, which includes mines, refineries, smelters, processing facilities and related infrastructure, will likely be caught by the Portable LSL Act. In particular, this could include maintenance and repair work performed by:
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plumbers;
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painters, spray-painters and sandblasters;
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bricklayers, plasterers, stonemasons and tilers;
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riggers and scaffolders;
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electrical and mechanical fitters and tradespersons; and
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most operators of heavy equipment, such as excavators, graders, and mobile cranes;
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welders and boilermakers.
On this basis, we expect to see the Board proactively seeking to register contractors who employ the workers above, and that these contractors may seek to pass-through the costs of complying with the Construction Industry Scheme to their clients, the operators of these facilities.
For further information, please contact:
Anthony Longland, Partner, Herbert Smith Freehills
anthony.longland@hsf.com
Endnotes
[1] Sparks ‘N’ Security v Construction Industry Long Service Leave Payments Board [2017] WAIRC 164
