Australasian Meat Industry Employees Union, The v Devro Pty Ltd

[2021] FWC 4254

[2021] FWC 4254

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Australasian Meat Industry Employees Union, The
v
Devro Pty Ltd
(C2020/8437)

DEPUTY PRESIDENT CROSS SYDNEY, 19 JULY 2021

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – method of deduction or accrual of paid annual leave by day workers – quantum of annual leave entitlement for continuous shift workers –interpretation –dispute resolved and concluded.

[1] This dispute concerns a claim by the Australasian Meat Industry Employees’ Union (the AMIEU), regarding the method of deduction or accrual of paid annual leave by day workers, and the quantum of annual leave entitlement for continuous shift workers, of employees of Devro Pty Ltd (Devro), employed at 139 Sydney Road, Kelso, NSW, 2795.

[2] The dispute concerns the operation and interpretation of Clauses 28.1 and 28.2 of the Devro Pty Limited Operating Employees Enterprise Agreement 2018 (the 2018 Agreement). Those clauses provide:

28.1

Subject to this clause, annual leave will be provided in accordance with the NES prescribed by the Act. For the purpose of this Agreement, a reference to the NES includes a reference to its successor in law.

28.2

For the purpose of section 87 of the Act, in addition to the leave provided by subclause 28.1, a shiftworker, that is a shiftworker who is rostered to work regularly on Sundays and Public Holidays, shall be allowed six days in additional annual leave - provided that, if during the year of employment an Employee has served a portion of it as a shiftworker, the additional leave shall be one day for every thirty-six ordinary shifts worked as a shiftworker.

[3] The matter was allocated to me on 18 November 2020 and on 1 February 2021, I issued directions for the filing and service of evidence, and outlines of submissions. At the hearing of the matter on 15 March and 26 April 2021, Mr J Schultz appeared for the AMIEU and Mr K Brotherson of Counsel, instructed by Thomson Geer Solicitors, appeared for Devro. No objection to permission to appear was taken by the AMIEU, and permission was granted for Devro to be legally represented, pursuant to s.596 of the Fair Work Act 2009 (Cth) (the Act). The appearance of competent and experienced union advocates and legal practitioners contributed to the efficient conduct of the proceeding.

[4] There was no issue that the dispute related a matter arising under the 2018 Agreement (Clause 10 of the 2018 Agreement), nor that the requisite steps in the disputes procedure clause for the dispute had been followed.

[5] Devro accepted that:

(a) The Fair Work Commission (the Commission) had jurisdiction to determine the dispute by arbitration (Clause 10.11 of the 2018 Agreement, and section 739(4) of the Act);

(b) The Commission is not precluded from dealing with the dispute; and

(c) The AMIEU is covered by the 2019 Agreement and has standing to agitate the dispute in the Commission.

The Issues for Determination

[6] In accordance with consent orders made on 18 December 2020, the Commission is “to arbitrate on the quantum of the annual leave entitlement conferred on day workers and shiftworkers pursuant to clause 28 of the Devro Pty Limited Operating Employees Enterprise Agreement 2018.”

[7] The AMIEU contends that the 2018 Agreement provides for annual leave to be accrued at the rate of:

(a) 160 hours per year for Day Workers, or 6.152846 per fortnight; and

(b) 248 hours per year for Shift Workers, or 9.5385 per fortnight. This equates to 31 days of 8 hours, or 6.53 weeks of ordinary time.

[8] In contrast, the position of Devro is that the proper construction of the Agreement is that annual leave be accrued at the rate of:

(a) 152 hours per year for Day Workers; and

(b) 200 hours per year for Shift Workers.

[9] The issues can be referred to as the Day Worker Issue and the Shift Work Issue.

The Evidence

[10] The following persons provided witness statements in the proceeding:

•  Mr Peter Asimus, Multiskilled Operator, working as a continuous shift basis dated 3 February 2020 – for the AMIEU;

•  Ms Marlene O’Farrell, a packing worker on day shifts, dated 2 March 2020 – for the AMIEU

•  Mr Jason Schultz, Industrial Officer of the AMIEU, dated 11 February 2020 – for the AMIEU;

•  Ms Sulfi Hindman, Human Resources Advisor of Devro, dated 5 March 2020 – for Devro;

•  Ms Sally Russell, Human Resources Business Partner ANZ of Devro, dated 5 March 2021 – for Devro;

•  Mr Paul Grinter, Engineering, Technology and Maintenance Manager of Devro, dated 5 March 2021 – for Devro; and

•  Mr Ivan England, Safety and Production Manager of Devro, dated 5 March 2021 – for Devro.

[11] Devro had sought to rely on a statement dated 12 March 2021 from Mr Trevor Reece, who was employed by Devro from 1981 to 2016, during which time he held the roles of Pay Master, Personnel Officer, Personnel Manager and Production Manager. That statement, filed one business day before the hearing of the matter, was not admitted into evidence due to the prejudice its admission would cause the AMIEU. 1

[12] After the proceedings on 15 March 2021, and prior to making oral submissions on 26 April 2021, the parties filed the following submissions:

(a) the Applicant’s Final Submissions dated 12 April 2021 (the Applicant’s Submission);

(b) The Respondent’s Outline of Final Submissions dated 20 April 2021 (the Respondent’s Submission); and

(c) The Applicant’s Final Submissions in Reply dated 22 April 2021 (the Applicant’s Reply).

(a) Mr Asimus

[13] Mr Asimus noted he was a member and delegate of the AMIEU, and he started his employment with Devro on about 28 April 2003. He is employed on a full-time basis as a Multiskilled Operator working on continuous lines and on a continuous shift basis.

[14] He noted he was paid fortnightly and was provided a payslip every fortnight. He annexed a bundle of payslips to his statement.

[15] Mr Asimus noted that he had worked as a Multiskilled Operator on continuous lines, and on a continuous shift basis for 17 years. Until early 2021, the continuous shift meant that he rotated through three different shifts; day shift 7am to 3pm, afternoon shift 3pm to 11pm and night shift 11pm to 7am. In December 2020, Devro changed to two twelve-hour shifts.

[16] Mr Asimus noted that as an AMIEU delegate he has been involved in bargaining for the last two enterprise bargaining negotiations at Devro. At each negotiation, he had raised concerns about the annual leave calculations, and had discussed clause 28.2 of the Agreement on several occasions as it provides shiftworkers with six additional days annual leave which they had not received.

(b) Ms O’Farrell

[17] Ms O’Farrell noted that she had been employed by Devro since August 2006, as a permanent employee on a full-time basis as a packer working on day shifts. She is a member of the AMIEU. Her employment is subject to the 2018 Agreement.

[18] Ms O’Farrell annexed two of her payslips dated 30 December 2020 and 13 January 2021. She noted that as a day worker, when she is rostered to work, she commences work at 7.00 am and finishes at 3.30pm. She is provided a 30 minute lunch break which I understand is unpaid. Her roster is structured over four week periods such that she works 19 days each four weeks, and has one RDO.

(c) Mr Schultz

[19] Mr Schultz noted that he is employed as an industrial officer with the AMIEU, NSW Branch. He exhibited to his statement the following documents:

(a) The Devro A Division of Johnson & Johnson Australia Pty Limited Agreement 1988;

(b) The Devro Enterpise Award 1996;

(c) The Devro-Teepak Pty Limited OPertaing Employees Enterpise Agreement 1998;

(d) The Devro Pty Limited Operating Employees Enterprise Agreement 2006;

(e) The Devro Pty Limited Operating Employees Enterprise Agreement 2009;

(f) The Devro Pty Limited Operating Employees Enterprise Agreement 2012;

(g) The Devro Pty Limited Operating Employees Enterprise Agreement 2015; and

(h) The 2018 Agreement.

(d) Ms Hindman

[20] Ms Hindman noted that Devro's operations in Australia are located at Kelso, New South Wales and its primary operation in Australia is the manufacture of food casings. Devro employs approximately 207 employees in Australia at its Kelso facility, including sales staff and two offsite managers working in global roles.

[21] The 2018 Agreement covers the workforce the subject of this dispute. The 2018 Agreement commenced operation on 3 December 2018 and nominally expired on 2 February 2021. Devro's employees are employed either as Continuous Shiftworkers (Shiftworkers) or as Day Workers, in accordance with the 2018 Agreement.

[22] The 2018 Agreement defines each of those categories of worker as follows:

(a) 'Continuous Shiftworker' is defined in clause 3.8 as "an Employee rostered to work according to a roster providing weekly shift rotation which may include as ordinary working days Saturdays, Sundays and Public Holidays";

(b) 'Day Work Employee' is defined in clause 3.9 as "an Employee who is not ordinarily a Continuous Shiftworker and includes a Day Employee."

[23] Ms Hindman stated that employees are paid an annualised salary pursuant to clause 19.2 of the 2018 Agreement. The 2018 Agreement includes three different concepts of rates of pay. They are:

(a) A 'Base Hourly Rate'. That term is defined in clause 3.5 as "means the rate of pay identified as such and payable to an Employee as set out at Annexure A", and is described in clause 19.3 of the 2018 Agreement as "the minimum hourly wage;"

(b) An 'Annualised Salary'. That term is defined in clause 3.3 as "means the rate of pay identified as such and payable to an Employee as set out in Annexure A." The entitlements included in the Annual Salary are identified in clause 19.2(d) of the 2018 Agreement, which provides that the Annual Salary includes:

(i) The Base Hourly Rate;

(ii) Unless otherwise specified in the Agreement, all rates, penalties and allowances which might otherwise be payable to an Employee under the 2018 Agreement;

(iii) Shift loading and weekend penalties;

(iv) Payment for six Public Holidays to be worked per annum;

(v) Overtime rates for working rostered overtime; and

(vi) Annual leave loading; and

(c) An Annual Salary Hourly Rate. The Annual Salary Hourly Rate is included in the table in Annexure A to the 2018 Agreement and it is the equivalent of 1/40th of the weekly equivalent of the Annual Salary. Within the business, the term 'ORD rate' is the language commonly used at the site to describe this rate, however the 'ORD rate' is not a term used in the 2018 Agreement. The Annual Salary does not include payment for certain allowances (such as those specified in clause 21 of the 2018 Agreement) or for certain types of un- rostered overtime (clause 27.1(b) of the 2018 Agreement).

[24] The ordinary hours of work for Shiftworkers are prescribed by clause 25 and Annexure C – Hours of Work of the 2018 Agreement. Under those provisions:

(a) Fundamentally, Shiftworkers are employed to work:

(i) a maximum of 152 ordinary hours per 28 day roster cycle, Monday to Sunday inclusive, in shift lengths of 8 hours except on Saturdays and Sundays which may be worked as 12 continuous hours;

(ii) one compulsory rostered overtime shift per 28 day cycle under clause 25.3 (Compulsory Overtime Shift), operationally known as the '21st shift'. That term is historic, as the Compulsory Overtime Shift is in fact the 20th shift worked by the employees in their shift cycle. Payment for the Compulsory Overtime Shift is included in the employee's Annual Salary in accordance with clause 19.2(d)(v) of the 2018 Agreement; and

(b) Any time worked outside of the rostered hours (which includes the Compulsory Overtime Shift provided for in the Annual Salary) is overtime and is payable in addition to the Annual Salary at double the rate of the employee's 'Base Rate of Pay' pursuant to clause 27.1 of the 2018 Agreement. However, there is flexibility to alter the way in which the 152 ordinary hours are arranged within a cycle under the 2018 Agreement, primarily under clause 24.2 of the 2018 Agreement with particular groups of workers.

[25] Ms Hindman stated that Devro's Shiftworkers are allocated to a particular working group depending on the type of work they undertake. Specifically, the Shiftworkers are allocated to either the 'Continuous Lines' group or the 'HG&S Group.'

[26] All groups of Shiftworkers are presently working under an altered hours of work arrangement under clause 24.2 and Annexure C under the 2018 Agreement. Notwithstanding those arrangements, all Shiftworkers are still working hours of work which are arranged as 152 ordinary hours plus one Compulsory Overtime Shift each 28 day cycle. Un-rostered overtime remains payable at double the Base Hourly Rate.

[27] Ms Hindman noted that prior to approximately March 2020, the Continuous Lines Shiftworkers worked continuously in 3 x 8 hour shifts per day (Day Shift, Afternoon Shift and Night Shift). Under that arrangement, each Continuous Lines Shiftworker would be rostered to work 19 days of 8 ordinary hours of work, one day off work free of ordinary hours (which is operationally known as a Rostered Day Off (RDO) although the term RDO is not used in clause 25 of the 2018 Agreement) and one additional 8 hour day worked as the Compulsory Overtime Shift. Because of the nature of the work undertaken by Continuous Lines Shiftworkers and the critical need to minimise the risk of contamination of the plant by Covid-19 so far as practicable, in March 2020 Devro, the AMIEU and the Continuous Lines Shiftworkers agreed to temporarily move from a system of 3 x 8 hour continuous shifts each 24 hours, to 2 x 12 hours continuous shifts each 24 hours (Temporary 12 Hour Shift Arrangement). This new arrangement was effective from 29 March 2020 and is still in place, with Devro agreeing upon request of employees and the AMIEU to retain the arrangement until a new enterprise agreement to replace the 2018 Agreement is negotiated.

[28] Regarding the ordinary hours of work for Day Workers, Ms Hindman stated that they are prescribed by clause 24 of the 2018 Agreement and, in some circumstances, Annexure C. Fundamentally, under clause 24.1, Day Workers are employed to work a maximum of 152 ordinary hours per 28 day roster cycle, Monday to Friday inclusive, in shift lengths of 8 hours, between the hours of 6.00 am and 5.30 pm. Subject to any alteration to those working arrangements permitted under clause 24.2 or 24.3, any time worked outside of those parameters is overtime and is payable at the employee's Base Rate of Pay under clause 27.1 of the 2018 Agreement.

[29] Regarding Annual leave accruals for employees under the 2018 Agreement, Ms Hindman stated annual leave for employees is regulated by clause 28 of the 2018 Agreement and clause 4 of the undertaking given at the time of approval of the 2018 Agreement (the Undertaking).

[30] When a Day Worker or a Shiftworker takes a day of annual leave, a deduction is made from their annual leave accrual which is equal to the number of ordinary hours the worker was absent on leave according to their roster for that day. For example, if an employee was rostered to work 8 ordinary hours and took the whole day off, 8 hours would be deducted from their leave accrual. If they instead took half a day off, they would have 4 hours deducted from their annual leave accrual.

[31] Ms Hindman annexed various historical documents dating back to the period 1980 to 1983 that outlined the basis for annual leave accruals for shiftworkers.

[32] Ms Hindman provided explanation of payslips exhibited to the statements of Mr Asimus and Ms O'Farrell, and various references contained in those statements.

[33] Regarding historical industrial agreements covering Devro's employees which regulated hours of work and annual leave, Ms Hindman gave evidence as to her knowledge of those agreements, particularly regarding the 2012 bargaining round, and the 2018 bargaining round wherein the Undertaking was provided. Undertaking 4 of the Proposed Undertakings addressed the FWC's concerns in respect of clause 28.2 of the 2018 Agreement annual leave entitlements for Shiftworkers, as follows:

"4. For the sake of clarity, clause 28.2 of the Agreement provides:

(a) one additional week's annual leave for shiftworkers, as defined by the Agreement; and

(b) additional annual leave on a pro rata basis (based on one additional week's annual leave per annum) for dayworkers, who do not otherwise meet the definition of shift worker under the Agreement, when they cover shiftworkers undertaking work that satisfies the definition of shiftworker, as defined by the Agreement, during one or more parts of the year."

[34] Finally, Ms Hindman noted that in a 2020 Joint Consultative Committee meeting on 2 July 2020, she attended the meeting with Mr Peter Asimus, Mr Rob Kirkham, Mr Ivan England, Mr Gavin Lamb, Mr Steve Owens, Mr Peter Hotham and Mr Jason Schultz (the 2 July Meeting). In that meeting, Ms Hindman recalled Mr Schultz:

(a) Saying words to the effect that the drafting of clause 28.2 of the 2018 Agreement was an "unfortunate mistake" by Devro that exposed Devro to more cost than the one day for the shift workers he had been asking for; and

(b) In response to Ms Hindman’s comment to the effect that the workers were not entitled to an extra day of annual leave, Mr Schultz said words to the effect that it should be a business decision, not an argument of entitlement, because 6 extra days was much more expensive. In response, Ms Hindman reiterated that she did not think the workers were entitled to an extra day or an extra week of annual leave.

(e) Ms Russell

[35] Ms Russell stated she was involved in the negotiation and approval process in respect of the Devro Pty Limited Operating Employees Enterprise Agreement 2015 (the 2015 Agreement) on behalf of Devro. The 2015 Agreement contained annual leave entitlements for Devro's Operator employees at clause 29. The part of clause 29 which explained the quantum of an employee's annual leave entitlement were sub-clauses 29.1 and 29.2 being:

29. Annual leave

29.1

Subject to this clause, annual leave will be provided in accordance with the NES prescribed by the Act. For the purpose of this Agreement, a reference to the NES includes a reference to its successor in law.

29.2

For the purpose of section 87 of the Act, in addition to the leave provided by subclause 29.1, a shiftworker, that is a shiftworker who is rostered to work regularly on Sundays and Public Holidays, shall be allowed six days in additional annual leave - provided that, if during the year of employment an Employee has served a portion of it as a shiftworker, the additional leave shall be one day for every thirty six ordinary shifts worked as a shiftworker.

[36] Ms Russell stated her understanding of the amount of annual leave that sub-clauses 29.1 and 29.2 provided Operator employees was that:

(a) Non shiftworkers were entitled to accrue 152 hours of annual leave per annum; and

(b) Shiftworkers were entitled to accrue 200 hours of annual leave per annum.

[37] The Purpose of clause 29.2 of the 2015 Agreement was to explain a shiftworker's leave accrual from clause 29.1 in more detail.

[38] Ms Russell gave evidence regarding the bargaining for the 2015 Agreement. Those minutes of that bargaining did not disclose that the AMIEU made any change the annual leave entitlements of Operator employees, or say that how the company was accruing and paying in accordance with the then 2012 Agreement was wrong.

[39] Ms Russell attached to her statement the documents filed with the Commission for the approval of the 2015 Agreement.

[40] Ms Russell noted that on 17 February 2016, she attended a Joint Consultative Committee (JCC) meeting between Devro and the AMIEU. The agenda for that meeting records that the AMIEU wished to table a discussion about annual leave entitlements as prescribed in Clause 29.1 and 29.2 of the 2015 EA. Those minutes record that Mr Reece advised that the annual leave matter went back to 1983.

[41] On 16 March 2016, the AMIEU sent Ms Russell a letter in respect of clause 29 of the 2015 Agreement. In that letter, Mr Usher:

(a) Suggested that Devro's day workers were entitled to 20 days per year under the 2015 EA;

(b) Suggested that Devro's shift workers were entitled to 26 days of annual leave per year under the 2015 EA; and

(c) Requested that Devro address any outstanding annual leave owed to employees.

[42] To the best of Ms Russell’s recollection, the above correspondence was the first time the AMIEU raised concerns in respect of Devro's application of clause 29 of the 2015 Agreement. Various correspondence was exchanged thereafter.

(f) Mr Grinter

[43] Mr Grinter stated that he was one of the company representatives involved in the negotiation process for the 2018 Agreement. He had recently reviewed the available company records relevant to the 2018 bargaining, and, to the best of his knowledge and belief, those materials contained a detailed account of the matters discussed between Devro and the AMIEU at that time. Those records disclose that the only claim related to annual leave that was made in the bargaining the period was a company claim related to how annual leave days are to be taken.

[44] The AMIEU did not raise any concerns in respect of the accrual or quantum of annual leave during the course of negotiations for the 2018 Agreement.

[45] Mr Grinter also gave evidence regarding a bargaining meeting on 8 November 2017, where both Devro and the AMIEU presented their respective log of claims. The documentary materials from that meeting record that:

(a) Devro made a proposal to limit single day annual leave days to only five (5) days in each calendar year; and

(b) The AMIEU raised a number of other matters for Devro's consideration, none of which related to questions in respect of accrual or quantum of annual leave entitlements.

[46] Mr Grinter attended a subsequent meeting between Devro and the AMIEU, at which the AMIEU tabled a further, third written log of claims. None of those claims related to questions in respect of accrual or quantum of annual leave entitlements.

[47] Mr Grinter further stated that to the best of his knowledge and belief, no operator employee covered by the 2018 Agreement has raised any concern relating to the accrual or quantum of annual leave under the 2018 Agreement.

(g) Mr England

[48] Mr England also gave evidence regarding the 2 July 2020 Joint Consultative Committee Meeting. He noted that the parties discussed annual leave accrual for Devro dayworkers. The minutes of that meeting record, at the section 'New Business,' that annual leave accrual for dayworkers was discussed, as follows:

"Annual leave accrual – for day workers.

Wording in EA specify 6 weeks not 5. Union wants 1 day to not [pursue] the extra week."

[49] Mr England also recalled Mr Schultz saying words to the effect that:

(a) There was potentially a clause in the 2018 Agreement that could suggest that 6 weeks annual leave is available to dayworkers (Six Week Claim); and

(b) If Devro would not give dayworkers one extra days' leave, the AMIEU would pursue the Six Week Claim with the Fair Work Commission

Factual Findings

[50] On 8 October 1981, an enterprise agreement was filed with the NSW Industrial Registrar on 21 December 1981 (the 1981 Agreement). The 1981 agreement contained a change in the wording of the annual leave entitlement applicable to employees of Devro. Clause 13(b) of the 1981 Agreement provided the “six days in additional annual leave” (which is still found in clause 28.2 of the Agreement) and replaced the wording in the previous agreement of “one week’s additional leave.”

[51] The Respondent’s operation moved from a 40 to 38 hour week in 1983. In the industrial agreement filed with the NSW Industrial Registrar on 19 August 1983 (the 1983 Agreement) at clause 8, Hours of Day Work, the 38 hour week arrangement of 152 ordinary hours to be worked as 19 days of 8 hours is outlined. Clause 8 of that 1983 agreement is identical to clause 24 of the 2018 Agreement, aside from the span of ordinary hours now being 6am to 5.30pm as opposed to 7am to 5.30pm.

[52] The 1983 Agreement provided that:

(a) All leave is provided as per “The NSW Holidays Act 1944” (as amended).

(b) In accordance with the provision of the above Act, each employee is entitled to an annual holiday of 4 weeks. In accordance with the "reduced working week” agreement, the annual holiday of 4 weeks shall consist of 19 paid days and 1 or more unpaid rostered days off.

(c) In addition to the leave provided by subclause (a) of this clause seven-day continuous shift workers, that is shift workers who are rostered to work regularly on Saturdays, Sundays and public holidays, shall be allowed 6 days in additional leave; provided that, if during the year of employment an employee has served for portion of it as a seven- day continuous shift worker, the additional leave shall be one day for every 36 ordinary shifts worked as a seven-day continuous shift worker.

[53] Since 1983, the consistent practice of the Respondent has been to accrue 152 hours of annual leave per year for Day Workers, and 200 hours for continuous Shift Workers.

[54] The current form of annualised salary arrangements has existed since around 1994/1995, and the effect of that annualised salary is that the RDO (while being a day free of ordinary hours of work in a roster cycle) is already a paid day, notwithstanding the employee's absence from work.

[55] A consent award, the Devro Pty Limited Operating Employees Award 2002 (the 2002 Award) was made by the New South Wales Industrial Relations Commission, which was subject to the requirements of the Industrial Relations Act 1996 (NSW) and applicable wage fixing principles. Clause 18 of the 2002 Award provided, as had predecessor industrial instruments since 1979, that:

18.1 All leave is provided as per the Annual Holidays Act 1944 (NSW).

18.2 In addition to the leave provided by Sub-Clause 17.1, seven day continuous shift workers, that is shift workers who are rostered to work regularly on Saturdays, Sundays and Public Holidays, shall be allowed six days in additional annual leave - provided that, if during the year of employment an employee has served a portion of it as a seven day continuous shift worker, the additional leave shall be one day for every thirty six ordinary shifts worked as a seven day continuous shift worker.

[56] Until 2006, the Annual Holidays Act 1944 (NSW) was referenced in the various industrial instruments covering Devro and the AMIEU. Those instruments operated in conjunction with underlying state award regulation and decisions of the New South Wales Industrial Relations Commission on state employment standards, which had provided an additional weeks’ leave for continuous shiftworkers for many years. 2

[57] Until 27 March 2006, and the commencement of the WorkChoices amendments to the Workplace Relations Act 2005 (Cth) (the WR Act), Devro was subject to the jurisdiction of the Industrial Relations Commission of New South Wales, and from that date subject to federal industrial law. The Devro Pty Limited Operating Employees Workplace Agreement 2006 (the 2006 Agreement) was made in accordance with the WR Act, as was a subsequent agreement in 2009. The 2006 Agreement saw the introduction of what is now clause 28.5 of the 2018 Agreement which provides that:

It is expected that a minimum of twenty two days annual leave for shiftworkers and seventeen days for dayworkers will be required to be taken in any calendar year and that, so far as is reasonable, leave will be taken each year to ensure that a maximum of three days is carried forward in the next calendar year.

[58] The 2015 Agreement contained annual leave entitlements at clause 29. That clause provided:

29. Annual leave

29.1 Subject to this clause, annual leave will be provided in accordance with the NES prescribed by the Act. For the purpose of this Agreement, a reference to the NES includes a reference to its successor in law.

29.2 For the purpose of section 87 of the Act, in addition to the leave provided by subclause 29.1, a shiftworker, that is a shiftworker who is rostered to work regularly on Sundays and Public Holidays, shall be allowed six days in additional annual leave - provided that, if during the year of employment an Employee has served a portion of it as a shiftworker, the additional leave shall be one day for every thirty six ordinary shifts worked as a shiftworker.

[59] Employees are paid an annualised salary pursuant to clause 19.2 of the 2018 Agreement. The 2018 Agreement includes the three different concepts of rates of pay, being Base Hourly Rate, Annualised Salary, and Annual Salary Hourly Rate.
[60] The ordinary hours of work for Shiftworkers are:

(i) a maximum of 152 ordinary hours per 28 day roster cycle, Monday to Sunday inclusive, in shift lengths of 8 hours except on Saturdays and Sundays which may be worked as 12 continuous hours;

(ii) one compulsory rostered overtime shift per 28 day cycle under clause 25.3 (Compulsory Overtime Shift), operationally known as the '21st shift'; and

(b) Any time worked outside of the rostered hours (which includes the Compulsory Overtime Shift provided for in the Annual Salary) is overtime and is payable in addition to the Annual Salary at double the rate of the employee's 'Base Rate of Pay' pursuant to clause 27.1 of the 2018 Agreement. However, there is flexibility to alter the way in which the 152 ordinary hours are arranged within a cycle under the 2018 Agreement, primarily under clause 24.2 of the 2018 Agreement with particular groups of workers.

[61] Because of the nature of the work undertaken by Continuous Lines Shiftworkers and the critical need to minimise the risk of contamination of the plant by Covid-19 so far as practicable, in March 2020 Devro, the AMIEU and the Continuous Lines Shiftworkers agreed to temporarily move from a system of 3 x 8 hour continuous shifts each 24 hours, to 2 x 12 hours continuous shifts each 24 hours (Temporary 12 Hour Shift Arrangement).

[62] Day Workers are employed to work a maximum of 152 ordinary hours per 28 day roster cycle, Monday to Friday inclusive, in shift lengths of 8 hours, between the hours of 6.00 am and 5.30 pm. Subject to any alteration to those working arrangements permitted under clause 24.2 or 24.3 of the 2018 Agreement, any time worked outside of those parameters is overtime and is payable at the employee's Base Rate of Pay under clause 27.1 of the 2018 Agreement.

[63] When a Day Worker or a Shiftworker take a day of annual leave, a deduction is made from their annual leave accrual which is equal to the number of ordinary hours the worker was absent on leave according to their roster for that day. For example, if an employee was rostered to work 8 ordinary hours and took the whole day off, 8 hours would be deducted from their leave accrual. If they instead took half a day off, they would have 4 hours deducted from their annual leave accrual.

[64] When the 2018 Agreement was made, the Undertaking was provided regarding annual leave entitlements for Shiftworkers.

[65] I accept, based on the evidence of Ms Hindman and Mr England, and in the absence of any challenge by Mr Schultz, that in the 2 July 2020 Joint Consultative Committee Meeting, the parties discussed annual leave accrual for Devro dayworkers. I further accept that Mr Schultz attempted to elicit an agreement to further annual leave by referring to what he described as an "unfortunate mistake" by Devro, that exposed Devro to more cost than the one day for the shift workers he had been asking for.

Consideration

[66] There is no dispute between the parties as to the principles that I must apply in properly construing the Agreement. Those principles were summarised by the Full Bench in Berri (at paragraph [114]) 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 aid 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.

15. 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.”

[67] As observed at principle 1 in Berri, the resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose, with such context being apparent from:

a) The text of the agreement viewed as a whole;

b) The disputed provision’s place and arrangement in the agreement; and

c) The legislative context under which the agreement was made and in which it operates.

(a) The Day Worker Issue

[68] In the Applicant’s Submission, the following was submitted regarding the Day Worker Issue:

4. The Day Worker issues arises because of inconsistencies in the application of the enterprise agreement. These inconsistencies are evident on an examination of the agreement, the pay slips issued by the respondent, and the evidence of Ms Hindman and Ms O’Farrell.

5. While a little complex, the evidence as to what occurs around day workers and annual leave is uncontroversial. It is as follows:

(a) Day workers are paid on the basis of an annual salary.

(b) Day workers work (with exceptions that are not relevant), 152 hours over a 19 day period. The 20th day, which they do not work and is unpaid, is referred to as a “Rostered Day Off”;

(c) In order to provide consistent pay, the 20th day is treated as if it was worked on the pay slips and paid as if it was worked. It follows that the pay slip shows the workers working 40 hours per week, and that the hourly rate of pay shown on the slips is 1/40th of 1/52 of the annual salary (or 1/2080th of the annual wage). This rate is known as the base rate.

(d) Workers are allocated 152 hours of annual leave each year.

(e) Annual leave is paid at the base rate.

6. The dispute arises because the fiction of the base rate (which is, in reality, simply a device used to average wages in a work pattern that is not consistent every week) is used as an actual hourly rate for the purpose of annual leave.

7. The Union identified two solutions:

(a) The respondent could acknowledge that the RDO is, in fact, a paid RDO, and continue to use the base rate but provide workers 20 days annual leave. Given the fact that the base rate is set out in the agreement, this seems to be a more correct approach.

(b) The respondent could maintain that the RDO is unpaid, and that workers should only receive 19 days annual leave a year. In such circumstances, the correct rate for annual leave should be 1/38th of 1/52 of the annual salary (or 1/1976th of the annual salary).

8. The Union is content with either option.

9. The Union further notes that this dispute is one of the respondent’s making, and particularly arises from confusion stemming from, as the respondent’s witness conceded, pay slips that do not correctly reflect what actually occurred in terms of hours worked. The Union notes the respondent’s obligations as to pay slips, particularly that they should not be misleading in respect of a material particular which the employer is aware of.

(Footnotes omitted)

[69] The Respondent submitted that on the plain words of clause 28.1 of the 2018 Agreement, the entitlement of a Day Worker to annual leave is 4 weeks in accordance with NES, relevantly s.87(1)(a) of the Act. There is no ambiguity and no provision in the 2018 Agreement for any entitlement additional to the NES.

[70] Adopting the approach from Mondelez v AMWU & Ors, 3(Mondelez)the Respondent submitted that annual leave entitlement of Day Workers in accordance with clause 28.1 of the Agreement (and the NES) should accrue at a rate equivalent to an employee's ordinary hours of work in a week over a 4 week period, or 1/13th of the employee's ordinary hours of work in a year. Accordingly, the entitlement of a Day Worker is 152 hours as currently provided by Devro.

[71] Finally, the Respondent noted that 152 ordinary hours of annual leave equates to the 19 actual working days of 8 ordinary hours of a Day Worker over a 4 week period. That does not mean that an employee receives less than 4 weeks leave, but simply properly reflects the NES. Further, due to the averaging of ordinary hours, the 20th day in the 4 week work cycle is already a non-working day (known as a RDO) for which employees are paid because of the operation of the annual salary system. There is also no error in Devro deducting 8 hours of leave for each day of annual leave by a Day Worker as is confirmed by the principles in Mondelez.

[72] As noted above in the Respondent’s Submission, the issue of calculating leave entitlements arising under the NES was considered by the High Court in Mondelez. The Court considered whether personal leave entitlements under s.96 of the Act should be calculated on an actual “working day” basis or a “notional day” basis by reference to an employee’s ordinary hours of work. The Court in affirming the notional day basis, stated the following conclusion: 4

"The expression '10 days' in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee's ordinary hours of work in a year. A 'day' for the purposes of s 96(1) refers to a 'notional day', consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period."

[73] In their joint judgement in Mondelez, Keiffel CJ, Nettle and Gordon JJ, held at [29]:

“The "notional day" construction also conforms with the Fair Work Act more broadly. First, the similarity of language and concepts in the paid personal/carer's leave scheme in Subdiv A of Div 7 of Pt 2-2 and the paid annual leave scheme in Div 6 reflects that "10 days" (in s 96(1) in respect of paid personal/carer's leave) and "4 weeks" or "5 weeks" (in s 87(1) in respect of paid annual leave) progressively accrue according to an employee's "ordinary hours of work" and are cashed out in the same way.”

[74] Whilst Mondelez related to personal leave entitlements, the reasoning had regard to the similarity with annual leave entitlements under the NES, and its conclusions are equally apposite to the consideration of such annual leave entitlements.

[75] I consider that either “solution” proposed by the AMIEU results from a misunderstanding of the Annual Salary provision of the 2018 Agreement. Clause 19.2(d) of the 2018 Agreement provides:

(d) The Annual Salary includes the following entitlements:

(i) the Base Hourly Rate;

(ii) unless otherwise specified in this Agreement , all rates, penalties and allowances which might otherwise be payable to an Employee under this Agreement ;

(iii) shift loading and weekend penalties;

(iv) payment for six Public Holidays to be worked per annum;

(v) overtime rates for working rostered overtime; and

(vi) annual leave loading.

[76] The relevant Annual Salaries and Annual Salary Hourly Rate for each classification of employees covered by the Agreement are set out in Annexure A of the Agreement. The Annual Salary Hourly Rate is the rate shown on pay slips for rostered hours of work comprising rostered ordinary hours of work and, as relevant, rostered overtime (as 'normal hours'), and other entitlements such as annual leave, public holidays and RDO's. Employees are paid 40 units of pay at the Annual Salary Hourly Rate per unit, each and every week, for a total of 80 units per fortnight (2080/year).

[77] 152 hours of annual leave are accrued each year for a Day Worker. 152 hours is equivalent to the ordinary hours of work for a Day Worker in a 4 week roster cycle. When annual leave is taken, the Respondent deducts 8 or 12 hours (as appropriate) dependent upon the applicable roster arrangement set in accordance with the 2018 Agreement, but no leave is deducted in respect of the day (or days) in the work cycle where there is not a requirement to work ordinary hours which is an RDO.

[78] I note that in AWU v Department of Industry, 5 (Department of Industry), Commissioner Murphy of the Industrial Relations Commission of New South Wales, when dealing with a similar dispute concerning the accrual and payment of annual leave, and with the origins of the particular provisions in the introduction of a 38 hour week, found:6

However, in the case of many employees, including those in the class of employee which is the subject of these proceedings, the 38 hour week was implemented, not by reducing the daily number of hours worked, but by maintaining a working day of 8 hours and allowing employees to have one RDO every four weeks (20 working days) without loss of pay, resulting in an average of 38 hours worked per week over the cycle of four weeks. A typical work pattern under this type of arrangement had an employee working three weeks of five 8 hour days with the fourth week comprising four 8 hour days and an RDO.

In order to ensure that the employee’s pay did not drop during the pay period in which the RDO was taken, the fiction was developed that for each 8 hour day that was worked, 7.6 hours attracted pay for that day and 0.4 of an hour accrued towards, and was paid in respect of, the RDO.

It was generally not intended that leave entitlements expressed as days or weeks would be increased by the introduction of the 38 hour week, which would be the consequence of the outcome contended for by the AWU in this matter. There is no logic, for example, in reducing the average hours of work over a four week period from 160 to 152 (20 x 7.6 hours) but maintaining the entitlement to four weeks recreation leave as being equivalent to 160 hours (20 x 8 hours). The AWU has led no evidence that such an outcome was intended by the parties to either the CFO Award or the COE Award.

(Emphasis added)

[79] Regarding reduction of leave balances in the particular circumstances, Commissioner Murphy further held: 7

I agree with the submission of the Department that the entitlement to 4 weeks or 152 hours of recreation leave each year comprises 19 days of 8 hours with 0.4 of an hour each day notionally accruing to an RDO with the result that the employee has 20 days off work with no loss of pay.

Where recreation leave is taken in single days or blocks of days, the employee’s recreation leave balance should be debited 8 hours, with 0.4 of an hour notionally accruing to an RDO, for each such day of recreation leave taken. I do not see that this approach in contrary to that adopted by the Full Bench of the Fair Work Commission in RACV Road Service Pty Ltd v Australian Municipal, Administrative, Clerical and Services Union (2015) 249 IR 150, a decision which was relied upon by the AWU in these proceedings.

I reject entirely the proposition put by the AWU that, for each day of recreation leave taken, the employee’s recreation leave balance should be debited only 7.6 hours with 0.4 of an hour still accruing towards an RDO. There is nothing in the wording of any of the provisions under consideration in this matter which supports such a proposition. Further, there is a serious disconnect between the AWU’s proposition that each of the 7.6 hour days of recreation leave still accrues 0.4 of an hour towards an RDO and the generally accepted concept that, on a normal working day, for 0.4 of an hour to accrue to an RDO, 8 hours has to be worked.

[80] I consider the above conclusions equally apposite to the Day Worker issue in this matter. The text of the 2018 Agreement viewed as a whole, and the legislative context under which the 2018 Agreement was made and in which it operates, establishes that Devro’s approach of accruing 152 hours of annual leave per year for Day Workers (at the time of the introduction of the 38 hour working week equivalent to 19 x 8 hour shifts and being 4 weeks of work time) is consistent with the proper construction of the Agreement.

(b) The Shift Worker Issue

[81] Regarding the Shift Worker Issue, the AMIEU submitted that in determining the issue of interpretation of clause 28 of the 2018 Agreement the Commission is guided by the principles of Berri and AMIEU v. Golden Cockerel Pty Limited. 8 The AMIEU submitted the general approach is that the Commission should first determine whether or not ambiguity exists. If there is, the Commission may then be assisted by extrinsic matters.

[82] The AMIEU contended that the Commission would not need to consider the extrinsic matters as the plain reading of the term is clear and unambiguous. The clause provides that workers are entitled to the National Employment Standards, plus an additional six days. However, even if the Commission were to undertake an assessment of the extrinsic material, those materials do not support the interpretation contended for by the Respondent but instead support the AMIEU’s position.

[83] The AMIEU submitted that the uncontroversial evidence as to the history of the clause was:

(a) The Respondent from about 1980 onwards provided shift workers an entitlement expressed as their statutory entitlement plus six days.

(b) In about 2006 the statutory entitlement for shift workers was increased such that the statutory entitlement included an additional week.

(c) The parties did not change the terms of the agreement which continued to provide shift workers an entitlement to the statutory amount, plus an additional six days.

[84] Finally, the AMIEU submitted the plain meaning of the clause is clear and understood. Ms Russell, who gave evidence for Devro agreed that clause 29.1 of the 2015 Enterprise Agreement (which was in the same terms as clause 28.1 of the current agreement) provides annual leave in accordance with the NES. Ms Russell’s evidence was that NES provides 4 weeks annual leave for Day Workers and 5 extra days for Shift Workers. Ms Russell further agreed that clause 29.2 (equivalent to clause 28.2) provided an additional 6 days above what is provided for by clause 29.1 of the 2015 Enterprise Agreement.

[85] Devro submitted that the AMIEU’s contention as to the meaning of clause 28 exhibited a superficial approach to construction, that is misconceived and could not be accepted for a number of critical reasons, including:

a. Clause 28.1 is expressed as being “subject to this clause,” being all of clause 28;

b. Clause 28.1 does not in itself provide Shift Workers with 5 weeks annual leave. Following the qualification in clause 28.1, clause 28.1 states that “annual leave will be in accordance with the NES prescribed by the Act”. The relevant provision of the FW Act is s.87;

c. Section 87 of the FW Act does not in itself provide 5 weeks of annual leave to a Shift Worker, but allows for that where relevantly an enterprise agreement “defines or describes the employee as a shiftworker for the purposes of the National Employment Standards”;

d. Clause 28.1 does not define or describe an employee as a Shift Worker for the purpose the NES, and again clause 28.1 is expressed as being subject to the balance of the clause;

e. Clause 28.1 does nothing but confirm the NES as the source of annual leave entitlements, and which provides the 4 weeks of annual leave applicable to all employees, unless some other entitlement arises;

f. Clause 28.2, begins with the words “for the purpose of section 87 of the Act, in addition to the leave provided by clause 28.1, a shiftworker…”. In this respect:

i The only required “purpose” arising from s.87 is to define or describe an employee as a Shift Worker in order to be entitled to 5 weeks of annual leave, and that is what clause 28.2 in its terms does;

ii In context, that purpose follows from clause 28.1 being “subject to” the balance of the clause;

iii Clause 28.2 then provides that Shift Workers receive “six days in additional leave”, which in context and properly understood is 6 days in addition to the standard 4 week entitlement.

g. The AMIEU submission ignores the opening words in 28.2 “for the purposes of section 87” in attempting to make its case; and

h. In order to ascertain the proper meaning of the entitlement of Shift Workers to annual leave, all of the words of clauses 28.1 and 28.2 of the Agreement must be read together. The position contended by the AMIEU disregards such an approach and again is in error.

[86] I consider the interpretation advanced by Devro to be the correct interpretation of Clause 28 of the 2018 Agreement as it relates to the Shift Worker Issue. Devro’s interpretation focuses on the ordinary meaning of the relevant words having regard to their context and purpose, with particular focus on the text of the 2018 Agreement as a whole, and the legislative context under which the 2018 Agreement was made and in which it operates.

[87] While I consider that the 2018 Agreement has a plain and unambiguous meaning, and so there is no cause to consider evidence of the surrounding circumstances, I note that the AMIEU and Devro have made submissions regarding surrounding circumstances. While in no way influential to my above conclusion regarding the proper interpretation of clause 28 and the Shift Worker Issue, I consider the relevant surrounding circumstances confirm the correctness of that interpretation.

[88] Of particular importance is the Undertaking given at the time of approval of the 2018 Agreement. Both the AMIEU and Devro took active parts in assisting the Commission to understand that it could be satisfied that the 2018 Agreement met the better off overall test, in that it provided a sufficient entitlement to meet the requirements of the NES. The Undertaking, and the exchanges between the AMIEU and Devro leading up to the Undertaking, establish objective background facts known to all parties and the subject matter of the 2018 Agreement.

[89] The relevant industrial instruments prior to the 2018 Agreement have consistently contained comparable provisions for the accrual of annual leave for Shift Workers since at least 1979. The changes that have occurred have reflected the need to reference applicable legislation as changed from to time, but the core statutory entitlements have not changed across that period.

[90] I note that Devro accrues 200 hours of annual leave per year to provide for the entitlement for continuous Shift Workers, and has done so since 1983, being the time of the introduction of the 38 ordinary hour week. If the notional day approach adopted in Mondelez were to be adopted, 5 weeks of annual leave under the NES would only be 190 hours, or if it is taken that the leave entitlement of 6 additional days is intended to cover the Compulsory Rostered Overtime Shift, then the leave entitlement of 6 additional days is 198 hours. Devro’s accrual of 200 hours of annual leave is nonetheless sufficient to satisfy the terms of the 2018 Agreement.

Conclusion

[91] The proper construction of the 2018 Agreement is that annual leave be accrued at the rate of:

(a) 152 hours per year for Day Workers; and

(b) Either 190 or 198 hours per year for Shift Workers, which is satisfied by Devro’s practice of accruing 200 hours per year.

[92] It follows from the foregoing conclusions that I am unable to come to either conclusion advanced by the AMIEU. The application must therefore be dismissed.

DEPUTY PRESIDENT

Appearances:

Mr J Shultz appearing on behalf of the Australasian Meat Industry Employees’ Union.

Mr K Brotherson of Counsel, instructed by Thomson Geer Solicitors appearing on behalf of the Respondent

Hearing details:

2021
Sydney:
15 March and 26 April.

Printed by authority of the Commonwealth Government Printer

<PR731828>

 1   Transcript PN 22.

 2   See for example re Shift Workers Case 1972 (1972 AR 633)

 3 (2020) 297 IR 338.

 4 Mondelez at [45].

 5 (2018) 278 IR 395

 6   Ibid at [30] to [32].

 7   Ibid at [36] to [38].

 8   [2014] FWCFB 7447 at [41]