Background
Pacific National (Queensland Coal) Pty Ltd operated coal-freight services in Queensland. Its employees were covered by the Pacific National Queensland Coal Enterprise Agreement 2018, which listed “Short Term Incentives” as one component of employees’ total remuneration package.
Pacific National had made short-term incentive (STI) payments in earlier years, using annually issued guides that set eligibility criteria and performance targets. It made no STI payment for the 2021/2022 financial year. The company sought a declaration that the 2018 agreement did not require the payments. The unions cross-claimed, alleging a breach of the agreement and of s 50 of the Fair Work Act 2009 (Cth), and sought compensation and penalties.
The Court’s Holding
Justice Wigney held that the 2018 enterprise agreement did not entitle covered employees to STI payments for the 2021/2022 financial year, or at all. Clause 19.2(a), which described the total remuneration package as including STIs, did not itself impose an obligation on Pacific National to make those payments.
Other remuneration components were expressly payable and quantified elsewhere in the agreement: base salary, the aggregate penalty multiplier and the performance bonus. By contrast, STIs were neither defined nor quantified, and the agreement contained no payment obligation or calculation method. Past payments and annual employer-set criteria could not supply the missing contractual obligation. The bargaining material also supported the conclusion that STI payments were understood to be non-guaranteed.
Key Takeaways
- Listing a payment as a component of “total remuneration” does not necessarily create an enforceable entitlement to it.
- An enterprise agreement is less likely to require a payment where it contains no obligation, definition, amount or calculation method for that payment.
- Past discretionary payments and employer policies cannot override the objective text of an enterprise agreement.
Why It Matters
The decision underscores the importance of precise drafting in enterprise agreements, particularly where incentive payments may ground statutory enforcement and civil penalties. A reference to a bonus should clearly state whether it is guaranteed, discretionary, conditional, and how it is calculated.
The Court declared that no STI entitlement existed, dismissed both unions’ cross-claims, and made no order as to costs.