Alan Markof v City of Kalgoorlie-Boulder
[2013] FWC 1161
•9 APRIL 2013
[2013] FWC 1161 |
FAIR WORK COMMISSION |
DECISION AND REASONS FOR DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Alan Markof
v
City of Kalgoorlie-Boulder
(C2012/3003)
and
Donald Richard Marrv
City of Kalgoorlie-Boulder
(C2012/3004)
COMMISSIONER CLOGHAN | PERTH, 9 APRIL 2013 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] .
[1] This is an application by Messrs Markof and Marr (collectively the Applicants) to the Fair Work Commission (Commission) for the resolution of a dispute with their employer, the City of Kalgoorlie-Boulder (Employer).
[2] Resolution of the dispute is in accordance with a Dispute Settlement Procedure (DSP) contained in the City of Kalgoorlie-Boulder Union Collective Workplace Agreement 2011 (2011 Agreement).
[3] The procedural background to this dispute is contained in my Interim Decision and Reasons for Decision issued on 8 February 2013 [2013] FWA 839 PR533860.
[4] The hearing into the application was adjourned on 29 January 2013 and recommenced on 7 March 2013. On recommencement, Mr Marr gave evidence in relation to his application and I received closing submissions from Mr A Johnson, Secretary, Western Australian Shire Councils, Municipal Road Boards, Health Boards, Parks, Cemeteries and Racecourses, Public Authorities, Water Boards Union (LGRCEU) and Mr J Lord, Employee Relations Advisor, Local Government Workplace Solutions, Western Australian Local Government Association (WALGA).
[5] The Commission received documentation as a result of procedural directions which was incorporated into the arbitral proceedings. Having received the written material, oral evidence and submissions, this is my decision and reasons for decision on the substantive issue in dispute.
CONTEXT OF DISPUTE
[6] The 2011 Agreement, that is the subject of this dispute, was approved by the then Fair Work Australia on 31 October 2011.
[7] The 2011 Agreement consolidated into one document the City of Kalgoorlie-Boulder Union Collective Workplace Agreement 2006 (Agreement) for Municipal Employees (Outside Workers) (2006 Agreement) and conditions in the Local Government Officers (Western Australia) Award 1999 (LGO Award).
[8] The 2011 Agreement contains Clause 10: Staffing Structure and Remuneration. The clause essentially deals with the transition of outside employees from their previous classification/salary structure to a classification/salary structure in the 2011 Agreement.
[9] It should be noted that Clause 10: Staffing Structure and Remuneration of the 2011 Agreement relates to the outside workforce only. The new structure in the 2011 Agreement retained the classification structure of indoor employees which is based upon the classification structure contained in the LGO Award.
[10] Simply put, there was no change in the classification structure for “indoor” employees, however, “outdoor” employees had to transition from their then current classification structure and salaries to a new classification structure and salaries on the commencement of the 2011 Agreement.
THE DISPUTE
[11] The Applicants, pursuant to the 2006 Agreement, were employed as Level 6 General Hand/Plant Operators on the Maintenance Crew. At the time of transition to the 2011 Agreement the Applicants received a salary of $42,111 per annum.
[12] On transition to the 2011 Agreement, the Applicants were appointed to a Level 3 Step 1 classification with a salary of $43,142.21 per annum. Having established their commencing classification in the 2011 Agreement, the Applicants would also receive the bargained salary outcomes of 10% from 9 May 2011 and two further increases of CPI plus 1% or 3.5% whichever was the greater, on 9 May 2012 and 9 May 2013.
[13] As a consequence of an internal appeal provision within the 2011 Agreement, the Applicants:
● had sought and were successful in gaining reclassification of Level 3 Step 1 to Level 3 Step 2; and
● following further consultation with the Employer, were reclassified to Level 3 Step 4 with a salary of $45,365.71 from 9 May 2011.
[14] Notwithstanding the internal processes for reclassification to Level 3 Step 4, Messrs Markof and Marr are seeking that, in accordance with Clause 10: Staffing Restructure and Remuneration of the 2011 Agreement, they be reclassified Level 4 Step 1 with a commencing base salary of $46,548.03 from 9 May 2011.
[15] The Employer disputes the Applicant’s claim and asserts that Messrs Markof and Marr have, in accordance with the transitional arrangements and appeal provisions, been correctly classified.
[16] With the exception of the preliminary jurisdictional matter which I have dealt with in PR533860, there is no argument that the applications have not been properly made in accordance with the DSP in the 2011 Agreement.
ISSUE
[17] The issue for determination is whether, in accordance with the 2011 Agreement, the Applicants should have been classified Level 4 Step 1 on transition to the 2011 Agreement.
RELEVANT PROVISIONS OF THE 2011 AGREEMENT
[18] “10.1 Classification Structure
10.1.1 The classification structure of the City of Kalgoorlie-Boulder is in accordance with the Local Government Classification levels as outlined in Schedule A for those employees previously covered by the Local Government Officers Award.
10.1.2 For employees previously covered by the Municipal Employees (Outside Workforce) Award, the Classification Descriptors are to be developed in consultation with the Unions and Staff Consultative committee - Depot Representatives. These classifications will contain the work value statements for each level. For the employees covered by this Agreement this is to be completed within 12 months of the Agreement being approved by Fair Work Australia.
10.1.3 On the signing of this Agreement, the Outside Workforce will transition from the salary scale of the previous EBA on to the nearest higher salary and step of the new salary scale as detailed below
Salary Scale (Previous EBA 2006) | New Salary Scale (2011) |
Level 3 | Level 2 Step 2 |
Level 4 | Level 2 Step 3 |
Level 4A | Level 3 Step 1 |
Level 5 | Level 3 Step 1 |
Level 6 | Level 4 Step 1 |
Level C8 | Level 3 Step 1 |
Level C6 | Level 4 Step 1 |
Level C5 | Level 4 Step 1 |
Example:
Based on Level 4 (Old Outside Salary level) transition to new scale Level 2 Step 3
Old Base rate = $39,330 plus | New base rate including allowances and leave loading = $46,568 | |
Industry Allowance | $ 995 | |
Location Allowance | $ 822 | |
Leave Loading | $ 529 | |
Total Annual | $41,676 | $46,568 |
10.1.4 Classification Appeals process for Outside Employees affected by the transition
(1) Where an employee disputes their allocated classification, such dispute shall be notified in writing to their immediate supervisor and the dispute will be dealt with in accordance with the Disputes resolution Procedure detailed in Clause 28.3 of this Agreement.
(2) The employer shall respond in writing to the employee in four (4) weeks from the date that the written appeal was lodged.
(3) In the event that the employee is reclassified, the operative date of effect shall be in the case of transitional employees, the date upon which the Agreement was approved by Fair Work Australia and in all other cases, the date that the written appeal was lodged with the employer.
(4) In the event that there is a dispute in regards transitional classifications for outside employees, this is to be completed within six months of the approval of the Agreement by Fair Work Australia.
10.2 Salary Increases
In accordance with this Agreement between the City of Kalgoorlie-Boulder and its employees, the Council agrees to increase the salary rates as follows:
10.2.1 10% from the beginning of the first full pay period on or after 9 May 2011.
10.2.2 CPI+1% or 3.5% whichever is greater from the beginning of the first full pay period on or after 9 May 2012
10.2.3 CPI+1% or 3.5% whichever is greater from the beginning of the first full pay period on or after 9 May 2013.
NOTE: The Leave loading component will be added to the annual percentage increase of each year and is equivalent to 1.4808% of base salary. |
NOTE: The Location Allowance that was in the previous two Agreement is retained but incorporated into the hourly rate, Location Allowance of $822 pa (ie “with dependents” rate) will be granted to all employees and be added to the base rate after the percentage increase is applied. |
10.2.4 ...
10.2.5 Schedule of Salaries
Employees salaries shall be based on the following minimums, paid on a fortnightly basis:
SALARY SCALE - (includes annual increases + leave loading + location allowance)
This will be the minimum depending on the CPI movements of each year.
Level | Current Annual as at Dec 2010 | Current Fortnightly As at Dec 2010 | Annual Increase at Lodgement May 2011 (+10%) | Annual Increase May 2011 with 10%+_ LL + Location | Annual Increase May 2012 (+3.5%) | Annual increase May 2012 With 3.5%+ LL + Location | Annual Increase May 2013 (+3.5%) | Annual increase May 2013 with 3.5% + LL + Location |
Level 2.1 | 38,842.28 | 1,493.93 | 42,726.51 | $44,180.80 | 44,221.94 | $45,698.37 | 45,769.70 | 47,269.06 |
Level 2.2 | 39,712.82 | 1,527.42 | 43,684.10 | $45,152.58 | 45,213.05 | $46,704.16 | 46,795.50 | 48,310.05 |
Level 2.3 | 40,981.40 | 1,576.21 | 45,079.54 | $46,568.68 | 46,657.32 | $48,169.83 | 48,290.33 | 49,827.01 |
Level 2.4 | 41,997.12 | 1,615.27 | 46,196.83 | $47,702.51 | 47,813.72 | $49,343.35 | 49,487.20 | 51,041.61 |
Level 3.1 | 43,142.21 | 1,659.32 | 47,456.43 | $48,980.77 | 49,117.41 | $50,666.34 | 50,836.52 | 52,410.90 |
Level 3.2 | 43,880.43 | 1,687.71 | 48,268.47 | $49,804.83 | 49,957.87 | $51,519.25 | 51,706.39 | 53,293.66 |
Level 3.3 | 44,618.92 | 1,716.11 | 49,080.81 | $50,629.20 | 50,798.64 | $52,372.47 | 52,576.59 | 54,176.75 |
Level 3.4 | 45,365.71 | 1,744.84 | 49,902.28 | $51,462,.83 | 51,648.86 | $53,235.28 | 53,456.57 | 55,069.76 |
Level 4.1 | 46,548.03 | 1,790.31 | 51,202.83 | $52,782.64 | 52,994.93 | $54,601.28 | 54,849.75 | 56,483.57 |
Level 4.2 | 47,372.77 | 1,822.03 | 52,110.05 | $53,703.29 | 53,933.90 | $55,554.15 | 55,821.59 | 57,469.79 |
Level 4.3 | 48,077.24 | 1,849.12 | 52,884.96 | $54,489.68 | 54,735.94 | $56,368.07 | 56,651.70 | 58,312.19 |
... |
10.3 Incremental Progression
10.3.1 Each employee shall be appointed to their position with the City on a specific classification that is a combination of a “Level” and an increment or “Step” within that level.
10.3.2 ...
10.3.3 ...
10.3.4 ...
10.3.5 ...
10.3.6 Movement to a higher level of classification shall only occur by way of promotion or reclassification.”
EVIDENCE
[19] Prior to the introduction of the 2011 Agreement, the Applicants were classified as Level 6 employees in the 2006 Agreement.
[20] The 2006 Agreement contains a work value statement for Level 6 employees as it does for other levels 1.
[21] The movement of employees to a higher classification level in the 2006 Agreement “shall only occur by way of promotion or reclassification” 2.
[22] Level 6 is the highest classification for outside employees covered by the LGRCEU in the 2006 Agreement.
[23] The effect of the 2011 Agreement was to bring indoor and outdoor staff under a single consolidated enterprise agreement. The 2011 Agreement adopted the prevailing classification structure of the indoor enterprise agreement. Consequently, it was necessary to transition outdoor employees to the classification structure which exists for indoor employees. This transitional arrangement is reflected in subclause 10.1.3 of the 2011 Agreement.
[24] The relevant words of subclause 10.1.3 read as follows:
“10.1.3 On the signing of this Agreement, the Outside Workforce will transition from the salary scale of the previous EBA on to the nearest higher salary and step of the new salary scale as detailed below.”
[25] The Applicants were transitioned from Level 6 in the 2006 Agreement to Level 3 Step 1 of the 2011 Agreement.
[26] Following notification of their Level 3 Step 1 classification, the Applicants appealed.
[27] In the appeal, Mr Markof states:
“...the EBA clearly states old level 6 goes to 4.1, it [his transition] should be at 3.3 or 3.4, as there are only 4 plant operators here and we should be at the above level”. 3
[28] Mr Marr, in his appeal, states:
“Gone from L6 to 3.1 which is a truck driver whare (sic) is L6 is a machine operator come acting leading hand when required. Now my level is the same as a truck driver rate. Whare (sic) their is 4 machine operators in the depot who should all be on level 3.4.” 4
[29] Importantly, the Applicants’ immediate Manager and Director recognised that the transitional arrangements failed to recognise the different skills and responsibilities “over a normal truck driver” and recommended that the Applicants be classified as Level 3 Step 2 or Step 3.
[30] The Applicants were reclassified to Level 3 Step 2 from 9 May 2011 5 following the initial internal appeal procedure.
[31] Following discussions in the Commission, a further review was undertaking by the Employer. This resulted in the Applicants being reclassified Level 3 Step 4 from 9 May 2011 6.
[32] The Applicants are seeking to be transitioned from Level 6 in the 2006 Agreement to Level 4.1 in the 2011 Agreement.
[33] Much of the documentary evidence was common to both parties.
[34] As part of the evidence received, the LGRCEU submitted “without prejudice” correspondence to indicate that originally Level 6 employees were seeking to be classified Level 5 Steps 1 and 2 7. In addition, the LGRCEU provided written notes of a bargaining meeting which indicated the Union’s desire that there be a “clear intent for transition to Levels 3/4/5 of current outdoor employees”8. Finally, the LGRCEU submitted also a “without prejudice” email chain to the Employer which states, under the heading Classification, “the employees seek that their Classification remains equitable”, to which the Employer responded, “noted...however, I consider the transition arrangements at the new levels fair and reasonable and offer a good outcome for all staff”9. The Employer’s email is dated 19 April 2011.
[35] The above email was subsequent to a meeting of Mr Burnett, Chief Executive Officer (CEO) and all outdoor employees on 9 March 2011. Prior to the meeting, the CEO advised a number of supervisors, including the Applicants’ Manager and Director, that the meeting on 9 March 2011 was to discuss “the new EBA and the levels of transition...[and requested] Supervisors and Managers please make yourself familiar with your staff current levels as they will want ot (sic) see how it directly impacts them” 10.
[36] At the meeting on 9 March 2011, the CEO distributed a Outside Staff Transition document which sets out where outside employees will transition to in the proposed enterprise agreement. The document states, that with the exception of two (2) unidentified employees, Level 6 employees will transition to Level 4 Step 1 in the proposed agreement.
[37] On the same day (9 March 2011), the bargaining committee met. At the meeting, Mr Burnett advised that he had met with outdoor employees and presented the bargaining representatives “...with the model for the level transition” 11 (the Outside Staff Transition document).
[38] A copy of the Outside Staff Transition document provided by Mr Burnett was sent out with the minutes of the meeting. This document was important to the Employer’s case. This meeting resulted in the initiating email from the LGRCEU referred to in paragraph [34] in which the Union sought that current Level 6 transition to Levels 5.1 and 5.2 but did not raise the asterisk in which two employees would not transition with the other Level 6s to Level 4.
[39] On 5 April 2011, the Employer responded to the LGRCEU’s counter offer of 25 March 2011. The response, relevant to classifications states:
“The intention has always been for Outdoor staff to transition to the indoor salary scale to the nearest higher dollar value so not to suffer any disadvantage. It was also recognised that in the transition, that there would be some staff who would come out better off than others and some staff who would have access to more incremental steps”. 12 (my emphasis)
[40] On 5 April 2011, Mr Burnett sent a memorandum to all staff which attached a spreadsheet which demonstrated the Employer’s offer to all levels of the organisation.
[41] Finally, the Employer submitted minutes of a meeting on 19 April 2011 in which the LGRCEU stated that “employees want their classifications after transition to remain equitable” 13.
[42] I now turn to the oral evidence.
[43] Mr Markof gave evidence that he has been employed for 5.5 years and is currently a Grader Operator (General Hand) 14.
[44] Mr Markof stated that in meetings with Mr Burnett, nothing specific was said about Levels 4s, 5s and 6s in the 2006 Agreement transitioning to an exact level. Mr Markof stated that Mr Burnett had said ‘You would transition to...the new EBA” 15.
[45] Mr Markof’s evidence was that two supervisors had indicated to him that they had not been required to advise Mr Markof or Mr Marr that “we would be going to a level 3.1” 16.
[46] With regard to Mr Marr’s first appeal where he sought to be reclassified to Level 3 Step 2 of 3, his evidence was “we [the Applicants] were...conciliatory to their need and [the need for] a difference between a leading hand and us - myself and Don” 17.
[47] Mr Markof conceded that in his first appeal, he sought a Level 3 Step 3 or 4; “we knew...that there had to be a difference between us and a leading hand. A leading hand went to 4.1. even though [a] leading hand was on the same wage as me, technically he should have gone, by your EBA, to the same wage as me” 18.
[48] Mr Markof’s expectation was that after seeking a level 3 Step 3 or 4, the Employer would place them on Level 4 Step 1 and “leading hands would then go to 4.2” 19.
[49] Mr Marr is employed as a Plant Operator.
[50] Mr Marr gave evidence that he is seeking to properly apply the terms of the Agreement 20. Mr Marr reports to a leading hand21. Finally, Mr Marr initially sought a Level 3 Step 3 or 4 because “that was up for debate at the time that the discussions were still being resolved”22.
[51] In cross examination, it was put to Mr Marr that at a meeting with Mr Burnett, he received a detailed “Outside Staff Transition” document 23 which included an asterisk stating “two level 6 positions will transition to level 3 not 4. Supervisors will speak to the affected employees about their matter”. Mr Marr’s response was that, “well, if I had it [the document], I would have had a quick browse at it and then probably threw it in the bin later on because I wasn’t happy with the enterprise agreement at that time”24.
[52] Evidence given by Mr Duff for the City of Kalgoorlie-Bouler was that in the transition of outdoor employees to the single classification/salary scale, Mr Markof and Mr Marr would transfer to Level 3 Step 1. Further, leading hands would transfer to Level 4 Step 1. The general consensus of managers and supervisors was that the Applicants “should not be transferred to the same level as the leading hands because their roles did not require supervisory responsibility 25.
[53] On 9 March 2011, at a meeting of outdoor staff, Mr Duff gave evidence that Mr Burnett circulated the Outside Staff Transition document. The document indicated that two Level 6 employees would not transfer to Level 4. This document was provided later to all bargaining representatives 26. Mr Duff’s evidence was that it was, “understood” by all managers and supervisors, with the exception of the Applicants, that the remaining Level 6 positions would transfer to level 4 Step 1 in the new classification structure27.
[54] Mr Duff’s evidence was that there was an internal management requirement that a supervisor would discuss with Mr Markof and Mr Marr their particular circumstances 28. Mr Duff did not give evidence as to whether this occurred or not.
[55] Mr Duff’s evidence was that as existing indoor staff would remain on their current classification structure, and “our main focus was ensuring that outdoor staff transitioned without any loss of money or conditions 29.
[56] Further evidence given for the Employer from Mr Burnett was that it was the intention of the Employer to distinguish between Messrs Markof and Marr and leading hands 30. He also stated he considered it inappropriate to specifically identify Mr Markof and Mr Marr at the meeting of all outside employees on 9 March 201131. As a consequence of not identifying the Applicants, Mr Burnett agreed that the employees could not be certain who the asterisk referred to32.
[57] Mr Burnett confirmed in his evidence that the Applicants were to be advised by a supervisor that they were not transitioning to Level 4 Step 1 in the new classification structure, however, he was unaware of whether this had actually occurred 33. However, Mr Burnett was of the view that, if having read the asterisk and you were a Level 4 employee in the old structure, you would query as to whether you were one of the two employees who would not transition to a Level 4 classification34.
[58] Mr Burnett gave evidence that at a meeting, an employee, who is now known to be Mr Markof, came up to him, screwed up the Outdoor Staff Transition document “threw it down and called me something like that” 35. It is not relevant what “that” is, except to say that Mr Markof was not happy with the proposed enterprise agreement. Mr Burnett gave evidence that he was unsure of the logic to Mr Markof’s outburst especially as the proposed enterprise agreement provided for a “17 per cent increase over three years as a minimum”36. Mr Markof does not deny that such an incident took place, but gave evidence that he was unhappy, “being classified under an indoor agreement and I’m an outside worker”37. Mr Markof denies that his outburst to Mr Burnett was because he was aware that he was to be transitioned to a Level 3 Step 1 in the proposed new agreement38.
SUBMISSIONS RELATING TO INTERPRETATION OF SUBCLAUSE 10.1.3 OF THE 2011 AGREEMENT
[59] The LGRCEU, on behalf of the Applicants, submitted that there was no ambiguity in subclause 10.1.3 of the 2011 Agreement and consequently, circumstances do not invite consideration of extrinsic material.
[60] The LGRCEU further submitted that I should adopt Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337 and that the “...evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible to more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning [para 22] and “consequently, when the issue is which of two or more possible meanings is to be given to a contractual provision we look not to the actual intentions or expectations of the parties before or at the time, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting” [para 24].
[61] The Employer submitted that there is ambiguity in subclause 10.1.3 of the 2011 Agreement and it is necessary to consider extrinsic material in resolving its meaning.
[62] The Employer submitted that I should follow the approach in The Australian Workers Union - West Australia Branch v Co-operative Bulk Handling[2010] FWAFB 4801, and in particular, the summary of VP Lawler in Watson & Ors v ACT Department of Disability Housing and Community Services [2008] AIRC 29 which was adopted by the Full Bench and set out below:
“[15] In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”
IS SUBCLAUSE 10.1.3 OF THE 2011 AGREEMENT AMBIGUOUS?
[63] Subclause 10.1.3 is a term in the 2011 Agreement dealing with the transition of the outdoor workforce to the new classification structure. The term provides that employees “will transition from the salary scale of the previous EBA [2006 Agreement] on to the nearest highest salary and step of the new salary scale”. Such a “nearest higher salary” transitional provision is unexceptional in industrial bargaining.
[64] Pursuant to the 2006 Agreement, the parties agreed that the Applicants’ annual base salary was $42,111. Including the then industry allowance, the Applicants’ salary was $43,132.28. Prior to the making of the enterprise agreement, the “nearest higher salary” in the classification structure for indoor employees, as at December 2010, is $43,142.21 or the classification Level 3 Step 1. This salary and classification structure is contained in subclause 10.2.5 of the 2011 Agreement as set out in paragraph [18].
[65] If subclause 10.1.3 of the 2011 Agreement ended with the words “new salary scale”, I suspect that this dispute would not be in the Commission because the plain and ordinary meaning would have been clear. Mr Markof and Mr Marr could have no argument that they had been correctly transitioned to Level 3 Step 1 of the 2011 Agreement based upon their salary.
[66] However, subclause 10.2.5 continues with the words, “as detailed below”. What is “detailed below” is a schedule which also clearly indicates that Level 6 employees move to Level 4 Step 1. This detailed schedule clearly contradicts the proposition “nearest highest salary and step of the new salary scale”. For this reason, I find that, at least in relation to Level 6 outside employees under the 2006 Agreement, the terms of subclause 10.1.3 of the 2011 Agreement are capable of more than one meaning. For this reason, I consider extrinsic material will be of assistance in interpreting subclause 10.1.3 of the 2011 Agreement.
INTERPRETATION OF ENTERPRISE AGREEMENTS
[67] I do not propose to traverse the many decisions of the Commission and other jurisdictions in relation to the interpretation of enterprise agreements.
[68] For the purposes of this decision, I rely upon Full Bench in Cape Australia Holdings Pty Ltd T/A Total Corrosion Control Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 3994 and in particular paragraphs [7] to [9] below:
“[7] As to the general approach to the construction of enterprise agreements the observations of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo) are apposite:
“[53] The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘....ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 (Short v Hercus) at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).”
[8] While his Honour’s observations were made in the context of interpreting an award the same principles apply to the interpretation of enterprise agreements. For example, similar observations were made by their Honours Gummow, Hayne and Heydon JJ in Amcor v CFMEU:
“Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.”
[9] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo, at paragraph [57]:
“It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeoA Bond and Co. Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
“Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.”
[69] In my view, it is reasonable and appropriate, when attempting to interpret a term of an enterprise agreement (especially a term which is “tailored” to a specific “one-off” transitional circumstance) to understand and consider its context. This approach is needed more so when the term is capable of having more than one meaning. To adopt and adapt the words of Burchett J in Short v Hercus, it is pertinent to examine the “soil” from which subclause 10.1.3 once “grew” before being transplanted into the 2011 Agreement.
CONSIDERATION
[70] Prior to the 2011 Agreement, employees of the City of Kalgoorlie-Boulder were covered by two separate workplace instruments. One industrial agreement covered indoor or administrative staff. The other workplace instrument covered outdoor employees. Each of the industrial instruments had a distinctive and different classification and salary structure.
[71] The City of Kalgoorlie-Boulder made a decision to create a common classification and salary structure for all its employees with the exception of the CEO and those designated under the Local Government Act 1995 as Senior Employees.
[72] This decision became the subject of bargaining for what was to become the 2011 Agreement.
[73] The Employer adopted the prevailing classification and salary structure for administrative staff as the basis of a common classification structure for all employees.
[74] As a consequence of these two decisions, it was necessary to transition outdoor employees from their prevailing classification and salary to a common classification structure and corresponding salaries. This is not the first time such an initiative is undertaken and it is not without its difficulties - the most obvious being that there is not always a “neat fit” or “marrying” two classification structures.
[75] The LGRCEU insisted that the transition of outdoor employees to the new structure did not disadvantage its members. This request was agreed to by the Employer and reflected in subclause 5.6.3 of the 2011 Agreement.
[76] Further, it is not unusual for employers to underpin such a transition with the industrial principle that the transitioning employees will move to the “nearest highest salary”. That principle was also applied in this instance.
[77] It is also common for employers to take the opportunity to assess their current transitioning structure, in this case, outdoor employees and make modifications. In this instance, the City of Kalgoorlie-Boulder made the decision that, notwithstanding the principle of “nearest highest salary”, leading hands who were Level 6 under the 2006 Agreement, would transition to Level 4 in the newly created common classification structure. However, in making an exception to the “nearest highest salary” rule for leading hands, this posed a problem for the Employer, as the Level 6 classification, also contained Mr Markof and Mr Marr.
[78] The Employer, in making its decision to transition leading hands to Level 4 classification, distinguished between those employees, and the Applicants, on the basis of supervisory responsibility. I find the Employer’s approach was reasonable and without any malice towards Mr Markof and Mr Marr. In reaching such a conclusion, I find comfort in the honest assessment of Messrs Markof and Marr, who were of the same view, that their classification should be distinguished from the leading hands.
[79] I now turn to the manner in which the Applicants were advised that they would be treated differently to leading hands.
[80] The Employer provided to employees and bargaining representatives a transitioning schedule for outdoor employees. There is no dispute between the parties that the transitioning schedule clearly states that two Level 6 employees will transition to Level 3 not Level 4. In my view, the Employer did not intend to mislead or deceive the Applicants who would not transition from Level 6 in the old structure, to Level 4 in the new structure.
[81] However, I do consider the Employer should have acted more carefully and ensured that the Applicants were provided with sufficient information about the proposed transitioning arrangements. Mr Markof gave written evidence that there was no discussion with him regarding his transitioning classification 39. This written evidence was repeated in oral evidence40.
[82] Although it is not determinative of my decision, Mr Markof’s evidence of not being advised that he would not transfer to Level 4 in the 2011 Agreement, has to be contrasted with the facts that on internal appeal, he sought to be reclassified to Level 3 Step 3 or 4 and not Level 4. Secondly, both he and Mr Marr did not enquire as to whether they, as Level 6 employees, were the two employees who were “asterisked” in the Outside Staff Transition document. Finally, his outburst at the CEO/Outdoor Staff meeting on the proposed enterprise agreement which, as he understood, would have provided him with a 25% wage increase over three years as a Level 4 employee, on the basis that he preferred outdoor staff to remain on a separate agreement.
[83] I am satisfied, on the evidence before me, that the “soil” in which subclause 10.1.3 of the 2011 Agreement grew from, had the clear intention to transition Level 6 leading hands to Level 4 in the common structure. However, I am also satisfied that the Employer did not want to transition Mr Markof and Mr Marr (as Level 6 employees) to the same level because they did not have the same supervisory responsibilities. For that reason, they were to transition to their actual nearest highest salary and step, which was Level 3 Step 1. I cannot conclude that Mr Markof and Mr Marr were completely unaware of this transitioning arrangement, however, the Employer could not confirm that such a discussion took place.
[84] The Applicants also raised other issues in the hearing which I have considered.
[85] In vague terms, the Applicants and the LGRCEU raised a comparator argument that some other employees below Level 6 were reclassified to Level 4 in the new common structure. I have no evidence that this occurred, and secondly, if it did, for what reason. Finally, it has little, if any, bearing on my interpretation of subclause 10.1.3 of the 2011 Agreement.
[86] The Applicants introduced evidence to demonstrate that their role, duties and responsibilities were akin to that of a leading hand. It would be improper and inappropriate to make such a determination given the paucity of evidence and the fact that the Applicants had specifically relied, in their applications, upon the schedule in subclause 10.1.3 of the 2011 Agreement.
CONCLUSION
[87] From my reasons above, it follows that I am satisfied that for the purposes of these applications, subclause 10.1.3 of the 2011 Agreement is ambiguous. I am satisfied that Mr Markof and Mr Marr were transitioned to the nearest highest salary and step in the new classification structure. I am also satisfied that the schedule detailed in subclause 10.1.3 of the 2011 Agreement conflicts with the nearest highest salary principle condition in subclause 10.1.3. Notwithstanding this conflict between the introductory narrative to the schedule and the schedule itself, I am satisfied that the Applicants were transitioned to the “nearest highest salary” and were never intended to be transitioned pursuant to the schedule. Subsequent events have resulted in further personal reclassifications for the Applicants but that was proper and in accordance with internal appeal processes.
[88] Finally, the Employer submitted paragraph 578(b) of the FW Act requires that, when performing my functions under the FW Act, I must take into account equity, good conscience and merits of the matter. Whether such a provision is relevant to a matter of interpretation is arguable. In the present applications, if it is relevant, I am satisfied on the evidence, that the consideration of equity, good conscience and merit lies with the Employer.
[89] I am uncertain as to whether orders are necessary because the City of Kalgoorlie-Boulder has written to both Applicants advising them that from 9 May 2011 the positions they occupy are classified Level 3 Steps 1-4. However, as part of the appeal process, their transitioning classification is Level 3 Step 4 from 9 May 2011. The parties are to confer and advise my Associate if orders are necessary and what form they should take.
COMMISSIONER
Appearances:
A Johnson for the Applicants.
J Lord for the Respondent.
Hearing details:
2013:
Perth,
29 January and 7 March.
1 Appendix A of 2006 Agreement
2 Subclause 8.4 of the 2006 Agreement
3 Exhibit R3 (1)
4 Exhibit R3 (2)
5 Exhibit R3 (4)
6 Exhibits R3 (8) and (9)
7 Exhibits A3 (1)
8 Exhibit A3 (2)
9 Exhibit A3 (3)
10 Exhibit R3 (14)
11 Exhibit R3 (16)
12 Exhibit R3 (18)
13 Exhibit R3 (22)
14 Transcript PN 91 and PN 92
15 Transcript PN 97
16 Transcript PN 103
17 Transcript PN 97
18 Transcript PN 164
19 Transcript PN 164
20 Exhibit A4
21 Transcript PN 478
22 Transcript PN 496
23 Exhibit R3 (15)
24 Transcript PN 505
25 Exhibit R4
26 Exhibit R4
27 Transcript PN 247
28 Transcript PN 252
29 Transcript PN 268
30 Transcript PN 336
31 Transcript PN 377
32 Transcript PN 388
33 Transcript PN 339
34 Transcript PN 344
35 Transcript PN 379
36 Transcript PN 380
37 Transcript PN 404
38 Transcript PN 420 to PN 422
39 Exhibit A1
40 Transcript PN 97
Printed by authority of the Commonwealth Government Printer
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