A payroll reconciliation put two pay clauses under the microscope
The Fair Work Commission has decided how Unitywater pays its control room staff for overtime and annual leave - with two different answers.
In a decision handed down on July 27, 2026, the Fair Work Commission arbitrated a dispute brought by a control room operator, supported by the Australian, Municipal, Administrative, Clerical and Services Union, over how the south-east Queensland water authority calculated two pay entitlements under its enterprise agreement.
The background helps explain the dispute. Control room staff at Unitywater are paid an annualised salary that includes a 40% loading. Under the agreement, that annualised salary is paid in place of the separate shift loadings, weekend penalties, annual leave loading and public holiday pay that would otherwise apply. Between 2016 and 2024, Unitywater also applied the 40% loading when staff worked overtime and while they were on annual leave.
That changed after a payroll reconciliation. During 2024, Unitywater reviewed its accounts, made remediation payments to control room staff in December 2024, and adopted a different reading of the overtime and annual leave clauses - one that did not carry the 40% loading into either calculation. Unitywater took the view that the earlier approach had overpaid staff. The union disagreed and said there had been no overpayment. With the matter unresolved, the parties agreed to put two questions to the Commission for arbitration.
On overtime, the Commission preferred Unitywater's reading. The relevant clause states that overtime is paid on the hourly rates in the agreement's pay table - rates that do not include the 40% loading. The Commission found the wording clear and said carrying the loading into overtime would mean reading in words the parties had not written.
On annual leave, the Commission preferred the union's reading. Here the agreement was less tidy. It did not define "annualised," and it did not say the annualised salary applied to only part of the year. Relying on the ordinary meaning of the word - calculated across a full year - the Commission found nothing in the agreement to support paying a loaded rate for 47 weeks and a lower base rate for the five weeks of annual leave. Annual leave, it held, was to be paid at the annualised rate.
The Commission was careful to note it was interpreting the agreement, not rewriting it to reach a fairer result, and its reasoning turned on the specific wording in front of it.
For HR, the practical lessons are clear. Precise drafting decides these disputes. Where the overtime clause pointed plainly to a pay table, that reading held. Where the annual leave entitlement was spread across the agreement and a key term went undefined, the gap was read against the employer.
A machinery clause is not optional. The Commission repeatedly noted there was no provision explaining how the annualised salary applied across the year. If you build an annualised or loaded-rate model, set out in writing exactly what it covers, for which hours, and over what period.
And correcting one payroll issue can open another. Unitywater's reconciliation resolved one matter and then raised a fresh question of interpretation - a reminder to map the downstream entitlement effects before changing how a clause is applied. The Commission answered both questions and determined the dispute on that basis.
