Application to deal with a dispute
[2017] FWC 3687
•1 AUGUST 2017
| [2017] FWC 3687 |
| FAIR WORK COMMISSION |
STATEMENT AND RECOMMENDATIONS |
Fair Work Act 2009
s.739 - Application to deal with a dispute
B-d Farm Paris Creek Pty Ltd
v
Ian Johnson
(C2017/3411)
B-D FARM PARIS CREEK PTY LTD EMPLOYEE COLLECTIVE WORKPLACE AGREEMENT 2009
[AE874844]
Food, beverages and tobacco manufacturing industry | |
COMMISSIONER HAMPTON | ADELAIDE, 1 AUGUST 2017 |
Dispute – enterprise agreement past nominal expiry date – whether scheduled annual wage increases continue beyond the stated nominal life of agreement – parties have sought the views of the Commission – application of the agreement considered in context and when instrument is taken as a whole – earlier decision distinguished – assessment made – recommendations issued.
1. What this dispute is about
[1] B-d Farm Paris Creek Pty Ltd (the applicant employer) has applied for the Commission to deal with a dispute under s.739 of the Fair Work Act 2009 (the FW Act) about the proper application of the B-d Farm Paris Creek Pty Ltd Employee Collective Workplace Agreement 2009 1 (the Agreement). In particular, the parties have competing contentions about the proper application of clause 12.3 of the Agreement.
[2] Clause 12.3 provides, in effect, that the minimum hourly rates specified in the Agreement would be adjusted annually. The question that arises is whether under the terms of the Agreement, this adjustment continues beyond its nominal life, which has expired some three years ago.
[3] The respondent party to the application is Mr Ian Johnson, a former employee who was subject to the terms of the Agreement. Mr Johnson’s current status might in some circumstances lead me to the view that the Commission should not deal with what is essentially a dispute about an alleged underpayment of wages involving former parties. However, both parties have sought this assistance, and more importantly, the Agreement remains in operation and there are other employees covered by it. Further, there is at least some doubt about the capacity for the Commission to make a binding determination, given the terms of the dispute resolution clause within the Agreement, which do not expressly authorise arbitration, 2 and the import of s.595(3) of the FW Act. Constructively, despite these potential limitations, the applicant employer is seeking some clarification given the present uncertainty.
[4] I note that the applicant employer has apparently made some payments to employees beyond those required under its approach to the Agreement. However, those rates are unlikely to be sufficient to cover the correct payments if the Agreement is to be applied as contended by Mr Johnson.
[5] I also note that the parties have had some discussion with the office of the Fair Work Ombudsman (FWO) and that those discussions have been held in abeyance pending this process. Those discussions also include matters of agreement interpretation that are beyond the immediate issue, including how any adjusted rates are to be applied to a casual employee, but these matters will be impacted by the approach being canvassed in this application.
[6] The parties have now made their submissions on the matter and confirmed their request that the Commission issue a public assessment expressing an “opinion” 3 about the proper application of the Agreement and also making any appropriate recommendations.
2. The terms of the Agreement
[7] The Agreement was approved by the Commission (then Fair Work Australia) on 16 March 2010. It was an instrument made during the bridging period as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and this meant, amongst other matters, that it was tested against the relevant Notional Agreement Preserving a State Award (NAPSA) , rather than the relevant Modern Award; being the Food Beverage and Tobacco Manufacturing Industry Award 2010.
[8] The Agreement had a nominal expiry date of 22 March 2014 and it continues in operation under the terms of the FW Act. There has been no application to the Commission for the approval of any “replacement” enterprise agreement and I have not been informed of any bargaining occurring in the period following the nominal expiry date.
[9] Clause 12.3 of the Agreement states:
“12.3 The Minimum hourly rates specified in Appendix B will increase by 3% annually on the anniversary of the commencement of this Agreement.”
[10] Appendix B provides a table of rates which were to apply at the commencement of the Agreement but does not set out the rates that would apply as a result of adjustments required by clause 12.3.
[11] Essentially the dispute centres around whether the annual increase of 3% applies only until the nominal expiry date, or alternatively, whether it continues until the Agreement is terminated or replaced by a new instrument.
3. The relevant terms of the FW Act
[12] Without overlooking the other provisions of the FW Act that may bear upon this matter, the following provisions directly impact upon the issues.
[13] Section 54 defines when an enterprise agreement is in operation and provides as follows:
“54 When an enterprise agreement is in operation
(1) An enterprise agreement approved by the FWC operates from:
(a) 7 days after the agreement is approved; or
(b) if a later day is specified in the agreement—that later day.
(2) An enterprise agreement ceases to operate on the earlier of the following days:
(a) the day on which a termination of the agreement comes into operation under section 224 or 227;
(b) the day on which section 58 first has the effect that there is no employee to whom the agreement applies.
Note: Section 58 deals with when an enterprise agreement ceases to apply to an employee.
(3) An enterprise agreement that has ceased to operate can never operate again.”
[14] None of the circumstances contemplated under s.54(2) apply in the case of the Agreement here.
[15] The requirement that an enterprise agreement contain a nominal expiry date arises from s.186 of the FW Act in the following terms:
“186 When the FWC must approve an enterprise agreement—general requirements
… …
Requirement for a nominal expiry date etc.
(5) The FWC must be satisfied that:
(a) the agreement specifies a date as its nominal expiry date; and
(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.”
[16] The relationship between the base rate under an enterprise agreement and the relevant modern award as specified under the FW Act includes the following provision:
“206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.
If an employee is covered by a modern award that is in operation
(1) If:
(a) an enterprise agreement applies to an employee; and
(b) a modern award that is in operation covers the employee;
the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.
(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.
If an employer is required to pay an employee the national minimum wage etc.
(3) If:
(a) an enterprise agreement applies to an employee; and
(b) the employee is not covered by a modern award that is in operation; and
(c) a national minimum wage order would, but for the agreement applying to the employee, require the employee’s employer to pay the employee a base rate of pay (the employee’s order rate) that at least equals the national minimum wage, or a special national minimum wage, set by the order;
the base rate of pay payable to the employee under the enterprise agreement (the agreement rate) must not be less than the employee’s order rate.
(4) If the agreement rate is less than the employee’s order rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the employee’s order rate.”
[17] Without setting out the relevant terms, it is evident to me that the Agreement covered, and applied to, Mr Johnson and still covers and applies to the present employees of the applicant employer within the meaning of those terms of the Act. 4
[18] For completeness, I also observe that after the end of the nominal expiry of an enterprise agreement, different rules apply to the taking of protected industrial action 5 and the termination of these instruments.6
4. The positions of the parties
4.1 The Applicant Employer
[19] Mr Hilliar, who appeared with permission on behalf of the applicant employer, contends that the apparent intention of the Agreement was that the annual adjustments in clause 12.3 would only apply for the nominal life of the Agreement. In support of that contention, the applicant employer relies upon the decision of the Commission in Catalina Country Club Limited 7 (Catalina).
[20] In terms of the importance of the legislative context, the applicant employer contended as follows:
“20. The Act provides a ‘safety net’ mechanism in section 206 by which the base rates of pay under an enterprise agreement are maintained at the relevant base rates in a modern award that covers the employees in question.
21. In this regard, there is a clear contemplation by the legislature of the parties to an enterprise agreement being bound for a specific period, and the need to ensure the objects of the Act are upheld after that period has elapsed. Furthermore, it permits the safety net to be maintained while the parties to the agreement negotiate from the standpoint of relative status quo.
22. With respect to the objects of the Act, section 3(b) provides:
[e]nsuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;
23. It is noted that this particular provision sets out that the ‘safety net’ is to be guaranteed by way of the National Employment Standards and modern awards, as opposed to the continuing active operation of enterprise agreements.
24. It is the Applicant’s contention that the objects of the Act in relation to enterprise bargaining are not similarly expressed, but should be considered in conjunction. Section 171(a) provides that the objects of the Act in relation to enterprise bargaining are:
[t]o provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits
25. There is no reference to the creation or maintenance of a ‘safety net’ through enterprise bargaining. The focus on collective bargaining in good faith is emphasised in lieu of any provision for the continuing operation of an enterprise agreement.
26. The Applicant contends that it would be the inverse of the object set out in section 171(a) for an enterprise agreement to continue to apply increases following nominal expiry where the Act provides a mechanism in section 206 to uphold the safety net base rate.
27. As indicated by Sams DP in Catalina at [115] and [117], this could confer an unreasonable windfall on employer and union parties to an agreement where increases negotiated during a period of success for a business continue to apply without limitation, foreseeably during times of hardship.
28. The Act and decisions of the tribunal are clear in providing that an enterprise agreement may operate for a maximum of four years. The continuing operation of clauses such as clause 12.3 of the Agreement undermines the principle that collective bargaining should be rekindled from a position of status quo following the nominal expiry date.
29. Such a position would further undermine the intention of the parties when entering into an enterprise agreement to be bound by the nominal term. Even were this to be the intention of the parties, the Applicant submits that it does not stand to reason that the parties to an enterprise agreement are able to bind themselves to positive obligations that are sustained following the nominal expiry date.
30. Rather, this would give employee and union parties to an enterprise agreement unreasonable bargaining power. This is particularly so where an employer party has found itself in a lesser state of financial health and wishes to seek the future application of a more modest increase.” 8
[21] The applicant employer further submitted as follows:
“…
31. It is the submission of the Applicant that there is, on this basis, a clear judicial position to the effect that increases contained within an enterprise agreement will not be passed on once the Agreement has nominally expired.
32. It is further submitted that this position is supplemented ably by the objects of the Act in relation to the provision of a safety net of entitlements through the modern award system and a simple, fair collective bargaining framework.
33. As stated, Sams DP opined in Catalina at [8] that the terminology ‘while this agreement is in operation’ had no bearing on the operation of the relevant clause in those proceedings. Therefore, the Applicant submits that there is no material difference between the clause under consideration in Catalina, and clause 12.3 in the Agreement.
34. On this basis, the Applicant contends that it has been reasonable in applying the decision in Catalina and not passing on increases following the nominal expiry of the Agreement.
35. As there is no clear legislative guidance on this dispute, weight has been placed by the Applicant upon a decision of the FWC in deciding not to increase the rates of the Agreement.
36. The decision in Catalina relevant to this dispute is not expressed in a way that confines its application to the specific clause. Rather, it undertakes a broader examination of legislative principles and tribunal decisions to inform an ambit position. That position is clearly stated by Sams DP to be that the rates in an enterprise agreement will not increase following its nominal expiry.
37. The Applicant contends that appropriate weight be given to the Catalina decision, as it bears both factual relevance to this dispute as well as being expressed in the aforementioned broad terms.
38. Further, the Applicant respectfully submits that it is in the public interest for the FWC to issue further judicial consideration of this ambit dispute on the public record. This will aid businesses in understanding their obligations in relation to wage increments under an expired enterprise agreement, and avoid further disputes of this nature within the Applicant business and elsewhere.” 9
4.2 Mr Johnson
[22] Mr Johnson contends, in effect, that the 3% annual adjustments under clause 12.3 should continue for as long as the Agreement remains in place.
[23] Mr Johnson did not provide any written submissions but relied upon his position advanced at the conference. In general terms, that was based upon the proposition that the provision should be applied according to its own terms.
5. The proper application of the Enterprise Agreement to the dispute
5.1 The approach to be applied
[24] A number of Full Benches of the Commission have outlined the approach that should be adopted in considering the construction and meaning of an enterprise agreement. The most recent statement of the principles was set out in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited10 (AMWU v Berri) in the following terms:
“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:
1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”
[25] This is a non-exhaustive statement of the principles to be adopted11 and I have applied this approach in determining this dispute.
[26] In Geo A Bond & Co Ltd (In Liq) v McKenzie,12 (Geo A Bond) Street J said:
"...it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award."
[27] In Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005 Lacy SDP observed that:
“It is a widely accepted principle of statutory interpretation that the rules of construction are rules of common sense. Where the choice is between an interpretation that will result in inconvenience, injustice or absurdity and another which avoids such a result, then the latter ought to be adopted.”13
[28] The importance of context was emphasised by Burchett J in Short v Hercus Pty Ltd14 in the following terms:
“6. No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia [1913] HCA 41; (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.
… …
8. That much is fairly clear. Where there is seen to be a difficulty, the court can often go to the history of the matter. A number of illustrations will be found in Nurses (South Australia) Award (Interpretation) Case (ubi supra). But an ambiguity or obscurity may not be immediately seen on the face of a document. Both the problem and its solution may appear only when the wider context from which an expression first sprang is brought to notice. Is the court then forbidden to look past the document itself that is before it? The respondent says the instant award is clear, and we must shut our eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent's contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently. (Cf. Pickard v. John Heine and Son Limited [1924] HCA 38; (1924) 35 CLR 1 at 9, per Isaacs A.C.J.) That is certainly sufficient to justify a reference to its source. Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R [1991] HCA 21; (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.”
[29] The nature of the present task has also been emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia15 in the following terms:
“[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:
‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’”
[30] All of the above observations are consistent with the approach taken in AMWU v Berri. In the end, my present task is to ascertain the objective intention based upon the language and terms of the Agreement, when read as a whole, and considered having regard to its context and purpose.
5.2 The meaning of clause 12.3 when read in context
[31] At the outset, the consideration involves the ordinary and natural meaning of the terms of clause 12.3 when read in context. There is no express or implied limit upon the application of the clause and unlike many enterprise agreements the actual annual adjustments relating to each of the years within the nominated life are not set out within the instrument. Further, the Agreement does not state the extent of the wages adjustments that are due under the instrument.
[32] The context for the consideration of the provision includes the fact that the Agreement remains in operation under the terms of s.54 of the FW Act as none of the events contemplated for it to cease have occurred in this case. This means that all of the terms of the Agreement remain enforceable and binding upon the parties.
[33] Catalina involved a decision as to whether to terminate a nominally expired enterprise agreement under s.225 of the FW Act. The issue about whether the wage adjustments continued to apply was a collateral one involved with assessing the potential impact of the termination. The Deputy President acknowledged that the issue was not “strictly speaking” relevant to whether the applicant employer had met the relevant tests to lead to the termination. Rather, he was attempting to recalibrate the negotiations. 16
[34] However, within that context, the Deputy President found that the Union’s position - that the scheduled increase under the Catalina enterprise agreement continued to be due after the end of the nominal life - was untenable, on the following basis:
● The fundamental principle underlying enterprise bargaining is to provide certainty to the parties as to the wages and conditions during the nominal term of the agreement;
● The principles of enterprise bargaining would be further undermined if the wage adjustments continued to operate and the union party could simply obfuscate;
● In the absence of evidence to the contrary, he could not imagine that the parties intended for the wage increases to operate beyond the nominal life and the union in its “heart of hearts”, did not really believe that it was justified;
● Parliament intended that the negotiation of an new agreement would be from the standpoint of the “status quo” and the continued operation of the adjustments would not be consistent with that approach;
● There would be some doubt as to whether the union was negotiating in good faith if it insists upon the precondition that the increases would continue; and
● Many agreements contain a commitment to commence renegotiation prior to the agreement’s expiry and this is designed to avoid the present difficulty.
[35] It is evident to me that the Deputy President used the contextual circumstances to conclude that the parties actually intended that the increases, that were to occur under the Catalina enterprise agreement whilst “the agreement is in operation”, to mean, for the nominal life of that agreement. Clause 12.3 of the Agreement here contains no limitation of any sort upon the continued operation of the provision.
[36] I do accept the point made in Catalina that bargaining for agreements generally involves parties agreeing upon wage outcomes that contemplate the nominal life of the instrument. This is predicated upon the understanding that agreements are generally renegotiated at their conclusion and this fits the broad scheme of the FW Act. Further, at least in policy terms, it may be undesirable for an enterprise agreement to continue to operate with automatic adjustments that do not take account of changed circumstances. In that regard, the fact that an enterprise agreement can be terminated in appropriate circumstances after the end of its nominal life is also relevant. However, each enterprise agreement must be considered on its own terms to discern the objective intention. Further, given that the terms of the Agreement continue to apply and there is no evident limit upon the continued operation of clause 12.3, it is also reasonable that the full terms of the instrument would apply until it ceases to operate (or is varied).
[37] That is, under s.54 of the FW Act, the Agreement continues in force beyond the nominal life and it continues to apply to the parties. Further, the Agreement continues to mean that the terms of the modern award do not apply and the parties did not in this case, as is commonly done, confirm that the wage adjustments are to apply only in specific years whilst the instrument was operating during its nominal life.
[38] I accept the following proposition arising from the decision of the Commission in Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union 17 as relied upon by the applicant employer:
“The prevailing legislative provisions have provided for the continuation of agreements after their nominal expiry date subject to an ability to make application to terminate the Agreement. Different tests have applied, some more limited than the current provisions and some less restricted. It is clear that enterprise agreements are intended to apply for a limited period and either be renegotiated, renewed, varied, replaced, terminated or left unaltered depending on negotiations between the parties and the operation of the legislative provisions.” 18
[39] In the present Agreement, the parties have not specified a package amount of wage adjustments for the nominal life, not expressly or even impliedly linked the increases to the anniversaries occurring only during the nominal life, and have not placed any limitation at all upon the extent, or duration, of the annual adjustments provision. The terms of the instrument, including clause 12.3, are left unaltered by the nominal expiry. In my view, the confidence that the parties should hold that the agreed package would operate in full (subject only to statutory intervention or the termination/variation of the agreement) whilst the enterprise agreement remains in force is, subject to any express indication to the contrary, also an important consideration.
[40] This approach does not involve the enterprise agreement operating as a safety net, but rather, operating according to its own terms whilst it remains in force under the terms of the FW Act. I note that it would have been very easy for the parties to have confirmed a contrary intention, which is common under many such agreements.
[41] I accept that s.206 of the FW Act applies and this has the impact that the base rates in the Agreement cannot be less than those specified in the modern award. This provision means that the rates applying at the end of the nominal life of the Agreement may in any event have to be adjusted at least to that extent. However, I do not discern any apparent intention in the FW Act, or in the Agreement itself, for this provision to mean that clause 12.3 should not apply as agreed.
[42] There is no evidence of any contrary objective intention and such would not be able to contradict the plain meaning of the Agreement in any event.
[43] To the extent that the continued operation of the Agreement in the present form does not suit the contemporary circumstances of the parties, a new enterprise agreement can be negotiated. Ultimately, this is the approach contemplated by the FW Act, and if adopted, would also have the additional benefit of ensuring clarity in terms of future wages and conditions of employment.
6. Conclusions and Recommendations
[44] I accept that the applicant employer has acted in good faith in applying the Agreement to date and has constructively sought clarification about the issue by making and pressing this application.
[45] However, for reasons set out above I consider that despite the passage of the nominal life of the Agreement, clause 12.3 continues to operate and apply such that the 3% adjustment was required on the anniversary of the approval of the Agreement and will continue to apply whilst the instrument remains in operation.
[46] Having regard to this view and all of the circumstances, the Commission makes the following recommendations to the parties:
1. That the applicant employer reconsiders its position and calculates the proper rates under the Agreement in light of the Commission’s views about the matter in dispute.
2. That an assessment be made of the payments that were due to Mr Johnson under the terms of the Agreement compared to the actual payments that he received. Any underpayment of entitlements should be rectified. If there is a dispute about those calculations the parties should at least initially seek to resolve these through the Office of the FWO.
3. That the applicant employer undertakes the same process with each of the current and former employees engaged under the terms of the Agreement.
4. That should the applicant employer not accept the above recommendations, steps are taken to have the issue determined by a Court of competent jurisdiction (or the Commission, if subsequently empowered to do so by all of the relevant parties).
5. That in any event, the present parties to the Agreement commence negotiations for a new enterprise agreement.
[47] Liberty to apply generally is also granted to the parties.
COMMISSIONER
Appearances:
H Hilliar of Employsure (with permission) with W Gadd, for B-d Farms Paris Creek.
I Johnson on his own behalf.
Conference details:
2017
6 July
Adelaide (by telephone)
Written submissions:
B-d Farm Paris Creek Pty Ltd: 6 and 20 July 2017.
1 [2010] FWAA 2173, 16 March 2010.
2 An undertaking given as part of the approval process refers to the Commission exercising powers under the FW Act but does not expressly refer to arbitration. No final view on this issue has been taken.
3 This is the term used in s.595(2) of the FW Act.
4 Sections 52 and 53 of the FW Act.
5 Part 3-3 of the FW Act.
6 Subdivision D of Part 2-4 of the FW Act.
7 [2013] FWCA 2005.
8 Supplementary written submission.
9 Ibid.
10 [2017] FWCFB 3005.
11 See also Paper Australia Pty Ltd t/a Australian Paper v Australian Manufacturing Workers’ Union [2017] FECFB 1621 at [21].
12 [1929] AR (NSW) 498 at 503; See also City of Wanneroo v Holmes (1989) 30 IR 362 (at 378-379) and Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2].
13 Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005, [2008] AIRC 1074, at para 17; See also National Union of Workers v Plexicor Australia [2008] AIRC 1134.
14 (1993) 40 FCR 511.
15 [2013] FWCFB 8557.
16 Catalina at [8].
17 [2010] FWA 2434.
18 Ibid at [26].
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