Australian Aircrew Officers Association v Cathay Pacific Airways Limited
[2019] FWC 7703
•22 NOVEMBER 2019
| [2019] FWC 7703 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s 739—Dispute resolution
Australian Aircrew Officers Association
v
Cathay Pacific Airways Limited
(C2019/3407)
DEPUTY PRESIDENT SAMS | SYDNEY, 22 NOVEMBER 2019 |
Dispute about a matter arising under an enterprise agreement – Cathay Pacific airline pilots and air crew - interpretation and application of E-Learning clause in Agreement – Berri Principles – common and plain understanding of the words used – both parties agree words not ambiguous or susceptible to more than one meaning – dispute across international jurisdictions – disjunction between flying related and non-flying related training not accepted – words cannot be imported to give the clause other than a plain, ordinary meaning to the words used – Association’s submissions accepted – questions answered accordingly.
[1] On 3 June 2019, the Australian Aircrew Officers’ Association (‘AAOA’ or the ‘Association’) filed an application, pursuant to s 739 of the Fair Work Act 2009 (the ‘Act’), in which it seeks to have the Fair Work Commission (the ‘Commission’) deal with a dispute in accordance with the Dispute Settlement Procedure (‘DSP’) in an agreement. The Agreement is the Cathay Pacific Airways Limited Australian Based Aircrew Enterprise Agreement 2016 (the ‘2016 Agreement’) and the dispute concerns the interpretation and application of Cl11.2 which deals with E-Learning training modules undertaken by Cathay Pacific’s Australian-based Airbus Pilots. The clause was first considered during bargaining for a new agreement in 2014/2015 and ultimately became Cl 11.2 of the 2016 Agreement, which was approved by Commissioner Cambridge on 2 February 2016; see: Cathay Pacific Airways Limited [2016] FWCA 674.
[2] The E-Leaning clause is expressed as follows:
‘11 .2. E-Learning
11.2.1. The first two (2.0) hours of E-Learning per year will attract no credit. Thereafter payment will be at full value of the actual stated module completion time. Such payments will be paid but not credited and will be made in January for the previous year. In the event that modules exceed a total of four (4) hours in any year, then the Company agrees to review this formula.
11.2.2. For the purposes of payment in section 11.2.1, an Officers hourly rate will be calculated as Annual Salary plus HOP divided by one thousand and eight (1008). Payment will then be made as a proportion of that hourly rate. (e.g. if the Officers hourly rate is $100 per hour and the annual module completion time totals 2.5 hours, $50 would be payable to that Officer).
11.2.3. E-Learning modules are those specified as such by GMF.’
Schedule 2 to the Agreement is also relevant and I quote it below:
‘SCHEDULE 2 – CREDIT HOURS, HOURLY DUTY PAY (HDP) AND EXCESS FLYING PAY (EFP)
1. Credit Hours:
For payroll purposes the Credit Hours accrued by an Officer, at the behest of Cathay Pacific Airways, will be credited as follows, based on Home Base Local Time regardless of the departure/arrival location.
1. Flying Duty on flights with an operating crew complement of 2 crew members. | Sector Time multiplied by 1.14 |
2. Flying Duty on LRO flights or on flights where the FDP is Scheduled to be extended or is extended by the use of lnflight Rest, with an operating crew complement of 3 crew members. | Sector Time multiplied by 1.14 |
3. Flying Duty on flights where the FOP is not Scheduled to be extended by the use of lnflight Rest, with an operating crew complement of 3 crew members. | Sector Time multiplied by 1.07 |
4. Flying Duty on flights with an operating crew complement of 4 or more crew members. | Sector Time |
5. Delivering simulator instruction, undergoing recurrent training and any other simulator Duty that is not part of the Officer's syllabus training. | Scheduled simulator hours multiplied by 1.14 |
6. Ground School training including simulator training that is part of the Officer's syllabus training and required observation flights. | 3.86 hours per Duty |
7. Office Duty (for non management crew), including delivering ground school instruction. | 3.86 hours per Duty |
8. Crew positioning on CX or KA aircraft will be calculated on greater of scheduled or actual sector time. Crew positioning on other Airlines will be scheduled sector time | One half of the Sector Time |
9. Annual Leave (Vacation) | 2.0 hours per day |
10. Sickness on the published roster | 2.0 hours per day |
11. Reserve Duty at Home Base, either on the published Roster or assigned directly in place of an O day, totalling in excess of thirty (30) days in an Officer's Birth Year | 3.86 hours per Duty during which the crew member was not called out |
12. Reserve Duty, of greater than four hours' duration, while away from Home Base in accommodation provided by The Company. | 3.86 hours per Duty during which the crew member was not called out |
13. All Reserve Duty other than in 11 and 12 above | 0 hours per Duty |
14. Delivering instruction on an Authorised Examiner course (including preparation day, but excluding Authorised Examiner flight training workshop). | 4.56 hours per day |
15. Days assigned to distance learning defined in approved courses of syllabus training, excluding routine technical revision and administration. | 3.0 hours per day |
16. Study days assigned after completion of Maternity Leave | 2.0 hours per day |
[3] At this juncture I record that the subject matter of this dispute has had some history, both locally and internationally. A similar dispute application was filed by the Association in June 2018. At that time, and following claims made in November 2017 by Cathay Pacific Pilots for the payment of E-Learning courses during the calendar year of 2017, Cathay Pacific Airways Limited (the ‘respondent’, ‘Cathay’ or ‘Cathay Pacific’), objected to the Commission determining the dispute on jurisdictional grounds; namely, that the steps in the rather complex and convoluted Grievance and related Dispute Resolution Procedure in Cls 23 and 24, respectively, had not been complied with.
[4] The matter was reagitated in 2018 and a Grievance was raised in accordance with Cl 23 as to whether the A350-1000 Differences Module was E-Learning. The parties agreed to defer further consideration of the matter until after the Commission’s determination of the objection to the earlier dispute notification. Ultimately, on 10 January 2019, the Commission as presently constituted, upheld Cathay Pacific’s objection, and made no findings on the subject matter of the dispute.
[5] Meanwhile, in the United States (‘US’), Cathay Pacific’s US pilots through their Union, the United States Aircrew Officers’ Association (‘USAOA’), had sought arbitration in the System Board of Adjustment of a similar E-Learning clause in their Collective Bargaining Agreement (‘COA’). A decision was delivered in Washington D.C. on 17 June 2019 in which the Arbitrator, Mr JM Javits, determined that Cathay Pacific had ‘violated’ Schedule 2 of the COA by refusing to pay Pilots E-Learning credits for the E-Techlog training package. More about this later.
[6] This brings me to the current matter before the Commission. In accordance with my usual practice, I convened a conference of the parties on 17 June 2019, to explore settlement of the dispute. This proved unsuccessful. Directions were issued for a hearing of the merits of the matter, as no jurisdictional objections were raised.
[7] At the hearing on 9 August 2019, Mr J Kennedy, Solicitor, Hall Payne, appeared for the Association and Mr D Perry, Solicitor, Seyfarth Shaw, appeared for Cathay Pacific with permission having been earlier granted, for the parties to be represented by lawyers, pursuant to s 596 of the Act. The relief sought by the Association is for the Commission to answer the following questions:
(a) What is the meaning of the term ‘E-Learning’ under clause 11.2 of the Agreement?
(b) Is the determination of what is E-Learning under clause 11.2 at the sole discretion of the respondent?
(c) Does the A350-1000 Differences Module, performed in accordance with the direction by the respondent given on 23 May 2018, constitute E-Learning as contemplated by clause 11.2 of the Agreement?’
[8] It is common ground that the Commission has jurisdiction to determine this dispute, the questions posed are appropriate (although strictly not accepted by the respondent) and the legal principles to be applied are those set out in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005 (‘Berri’)(the ‘Berri Principles’).
THE EVIDENCE
Captain Peter Teutscher
[9] Captain Teutscher commenced employment with Cathay Pacific in May 1993 as a First Officer. From August 2002, he has been employed as a Captain, based at various times in Hong Kong, New Zealand and Australia. Captain Teutscher is a member of the AAOA and since April 2016, he has been the Association’s elected Honorary Chairman.
[10] Although Captain Teutscher was not involved in the negotiations for the 2016 Agreement, he is familiar with its terms and conditions. Captain Teutscher described the working arrangements for air crew under the Agreement. Schedule 1 sets out that the Air Crews’ base monthly salary is paid irrespective of the number of hours worked. Credit Hours are dealt with in Schedule 2; see: [2] above.
[11] Captain Teutscher said that the Credit Hours are a method of calculating Hourly Duty Pay (‘HDP’), typically assigned up to a threshold of 84 Credit Hours a month. Excess Flying Pay (‘EFP’) accrues above this level. Credit Hour multipliers apply to the flight sector time, based on the crew component on board. The fewer crew, the greater the Credit Hour multiplier. 3.86 Credit Hours also apply per duty for ground training and office duties. However, Captain Teutscher said the 3.86 Credit Hours do not reflect the actual training length and office duties, typically 8 hours or more. Credit Hours of half the time also accrue during passenger duty, for leave periods and time off for illness and duty periods of reserve and miscellaneous provisions.
[12] Captain Teutscher described when Credit Hours are not assigned as follows:
‘(a) the period prior to every flight for pre-flight preparation, typically in excess of an hour, but some additional hours if the route or airport is unfamiliar;
(b) updating the Company iPad applications prior to flight, and reviewing items such as Flight Operations Notices, emails, and technical bulletins;
(c) the time required for post flight duties, typically around half an hour;
(d) actual time spent away from home at the Company’s behest, which can be anywhere from three to eight days at a time;
(e) preparation for simulator training, which can typically take a day, or many days if the session contains multiple complicated scenarios;
(f) preparation for conversion courses which can take days, or weeks if the aircraft is a new or unfamiliar type;
(g) requirements to attend Annual Medical appointments and Passport Crew Visa interviews;
(h) further professional study such as route preparation and technical review;
(i) the first 30 days of Reserve assigned in a year; and
(j) all the time spent on Available Days, which is a form of Long-Call Reserve.’
He stated that Credit Hour values are not a measure of time worked. They are a method by which a portion of pay is calculated.
[13] Captain Teutscher described Company directed training as set out in Cl 11.1 of the Agreement and this training is assigned Credit Hours. However, routine technical revision and administration do not attract Credit Hours and is regarded as ‘professional discretionary studies’ undertaken in the Officer’s own time, such as re-familiarising oneself with an unfamiliar route or airport.
[14] Captain Teutscher claimed he understood the origins of Cl 11.2 of the Agreement concerning E-Learning. Until recent times, such training was undertaken on Company computers on Company premises and Credit Hours assigned. With the introduction of internet-based training technology, learning can now be conducted in an Officer’s own time at home.
[15] It was Captain Teutscher’s evidence that Officers are regularly required to undertake computer courses in their own time, but do not attract Credit Hours under any Schedule or other term of the Agreement. Such courses may be flying/duty related, such as Company policies or information on local employment laws. Officers are directed to perform such courses via a Notice to Crew (‘NTC’), now known as a Flight Operational Notice (‘FON’). These notices require the Officer to comply and undertake such training in their own time with no Credit Hours.
[16] Captain Teutscher described his raising of an E-Learning claim for the first time in November 2017 on behalf of a number of Officers. The claim was for the year 2017 and was to be paid in January 2018. It amounted to approximately 10 hours for each Officer when completing training on their own computer and internet. Captain Teutscher said the claim was raised in a meeting with the Company’s representative, Ms Sarah Megson on 23 November 2017. Ms Megson agreed to take the matter back to Management and responded as follows on 12 December 2017:
‘Outstanding Ops/AAOA Meeting items
1. Ops/AAOA Meeting dates for 2018 – We are reviewing dates and will communicate these with you shortly. The first meeting will be in February 2018.
2. SO Crew Complement Consultation Meeting date for January – Awaiting on dates from CX attendees.
3. Carer’s Leave and Personal Leave details being made available on PeopleCX – The Company is unable to implement this currently. (please not the following workplace information reference essentially making the availability of such information transparent: E-Learning Payment arrangements for January Payroll – Yes will be paid in January.
5. Carer’s Leave Application Procedure to support EA requirement for officers to contact Crew Control – The process is being reviewed within FOP.
6. HCM’s response to request for roster data for comparative analysis – We understand an email has been sent to HCR and is currently being reviewed.
7. Company Approved A Day submission deadline date to allow application of an A Day on the January 2018 roster – Over 30 applications have been received and approved and will commence from January rosters.
8. Comms from Stephanie Lawton advising of further developments of the issue of the Provident Fund Portability on taking a base – No further update from what was shared at the Opts meeting.
9. The lack of Christmas and New Year Leave slots for Australian based pilots – No update.’
[17] However, before communicating this advice to members, Ms Megson responded as follows on 18 December 2017:
‘Hi Peter
We have reviewed the E-learning item. Given all the learning is professional/flying related we won’t be paying any E-learning credit.
In relation to the meeting with Mark Hoey on SO Crew Complement, I will ask Kaman to share details of the time and location of the meeting on 29th January 2018.’
Captain Teutscher did not accept that Cl 11.2 referred to ‘professional/flying related’ or why this condition should be applied retrospectively. The issue was put into dispute and was the matter determined by the Commission’s decision referred to in [3] above.
[18] Captain Teutscher said that on 23 May 2018, Airbus Flight Crew were issued a FOP FON 2018/45 mandatory training package concerning an A350-1000 Difference Module. After inquiring with Ms Megson as to whether this training fell under Cl 11.2, Ms Megson replied on 7 August 2018, that ‘[t]his training had not been designated as E-Learning by GMF’. Captain Teutscher now understood that the criteria for the payment of Credit Hours for E-Learning was entirely at the discretion of the GMF, regardless of the character and practical features of the training. However, Captain Teutscher believed that a commonly held understanding of the definition of E-Learning should be applied.
[19] Captain Teutscher observed that there has not been one hour of E-Learning expressly designated as E-Learning, despite such training having been undertaken in the two years since Cl 11.2 was introduced. Captain Teutscher raised a Grievance about this matter in August 2018 and he set out the Grievance and DSP clauses; earlier referred to at [3] above. Finally, Captain Teutscher referred to the USAOA case in the United States. He believed the decision of the Arbitrator in that dispute supported the Association’s case here.
Mr Scott McEwan
[20] Mr McEwan is currently the Regional Head of People, Europe for Cathay Pacific, having been employed since October 2011. Mr McEwan had previously been Manager, Flight Crew Policy Development and a senior Flight Crew Manager responsible for the UK and Ireland. He is currently based in London, and was part of the negotiation team for the 2016 Agreement in Australia.
[21] Mr McEwan described the principle behind credit hours as a variable pay element that accounts for duties which pilots are rostered to perform. The credit factors as set out in Schedule 2, do not always relate to the actual time spent on something, but rather are paid for the duty performed, e.g. 3.68 hours are credited for office duties, irrespective of how long an Officer works in that duty. Credit hours are turned into Hourly Duty Pay (‘HDP’) and Excess Flying Pay (‘EFP’) and paid on base salary.
[22] Mr McEwan stated that a distinction can be drawn between professional training, and non-professional/non-flying training. Professional training is not credited as it is essential and assumed knowledge in order for the Officer to continue as a licensed Pilot. An E-Learning designated module is paid if it is not directly related to training, but may be specific company related education. Two such examples were a 2013 E-Learning module in relation to ‘Safety Management Systems; ‘Alcohol and Drugs’ and ‘Non-Discrimination of Disability in Air Travel’.
[23] Mr McEwan described the origin of the E-Learning claim in Canada in 2014 and later in Hong Kong in the same year. The current wording of Cl 11.2 was considered in both jurisdictions, but did not end up in either of those agreements. A similar claim was pressed in late 2014 for the Australian agreement. He recalled Cathay Pacific’s view that credit hours for professional training were compensated for in salary. However, the Pilots were unwilling to spend personal (unpaid) time on training related to corporate/HR type issues, such as discrimination training. Mr McEwan understood that the issue was not solely about pay, but Pilots wanted to ensure they were not required to spend their own time, undertaking non-flying training modules. The Pilots now have Company-issued iPads. Cathay was content to provide some form of payment, but unwilling to roster hours, due to operational difficulties.
[24] Mr McEwan contended that as an alternative to rostered training, Cathay Pacific proposed the existing Cl 11.2 to explain how payment would be made (11.2.2) and how E-Learning modules would be specified (11.2.3). Because E-Learning was variable, it was considered appropriate to have it determined on a ‘case by case’ basis. The General Manager Flying (‘GMF’) was considered to be the most appropriate manager to make the determination of whether such training would be paid for as E-Learning.
[25] Mr McEwan recalled that during negotiations, the parties discussed these arrangements. Prior to the vote for the proposed Agreement (after five years of negotiations), a document of agreed matters was provided to Pilots. The E-Learning clause was not marked as ‘tentatively agreed’. A series of questions and answers was compiled with the following Q28 related to E-Learning:
‘11.2.3 Please reassure me that the GMF could simply not ‘specify’ any learning as e-learning and assign hours and hours of unpaid learning simply because it isn’t ‘specified’ as an e-learning module.
…
No the intent here is to provide one point of clarity that is all. E learning could be a mixture of corporate type modules that all employees must complete or fleet specific. I am sure if GMF was seen to be ‘abusing’ this it would be brought up by the AAOA.’ (my emphasis)
[26] Mr McEwan deposed that the phrase ‘fleet specific’ arose as a direct result of an example in the United States, where Pilots on the Boeing 777 were required to undertake additional US-specific anti-discrimination training in accordance with US law. Such corporate-type training was not applicable to all Pilots, but only to those on a particular fleet. Such reference as ‘fleet specific’ or ‘corporate type’ modules were intended to capture training unrelated to flying or training necessary for a Pilot to maintain their license.
[27] Mr McEwan observed that a vote for the agreement in June 2015 was unsuccessful, and further negotiations were held until a further vote in December 2015 approved the Agreement. He said that during these negotiations the E-Learning clause was not raised by the Association and was subsequently left unchanged in the 2016 Agreement approved by the Commission in January 2016.
[28] In respect to Captain Teutscher’s statement, Mr McEwan set out the mandatory training modules Pilots were required to undertake in 2016, 2017, 2018 and 2019 being Annual modules and Annual Emergency Procedures. In 2017, 4.6 hours of training were undertaken on Performance Based Navigation with 2 hours on Fatigue Risk Management and in 2018, two 30-minute modules were required on an A350-1000 Differences Module and an A days Module.
[29] Mr McEwan rejected Captain Teutscher’s assertion that the definition of E-Learning is determined by the GMF. Rather, the GMF determines which particular E-Learning modules are specific E-Learning modules for the purpose of payment. The GMF does not define E-Learning. Mr McEwan confirmed that no E-Learning has been designated by the GMF since the clause was introduced. This is because the training which has occurred has been relevant to professional standards and/or ensuring a Pilot maintains their license. He believed it was wrong to submit any learning on a computer is E-Learning. The distinction is that directing an online training course does not mean it is an E-Learning module. It is a matter of identifying which training modules are required from a corporate/HR perspective, and Pilots are paid for completing such modules.-
[30] In a reply statement, Captain Teutscher denied that E-Learning has never been credited because it was never part of Schedule 2. Cl 11.2 assigns credit (separately to the Schedule) to E-Learning, irrespective of whether or not it appears in the Schedule.
[31] Captain Teutscher said that the legal maximum flying hours provision of 900 hours is at odds with Mr McEwan’s calculation of 1008 hours by multiplying the monthly 84 Credit Hours threshold by 12 months. This is relevant to addressing Pilot fatigue issues.
[32] Captain Teutscher disagreed with Mr McEwan’s approach of comparing flying hours to credit hours, because:
‘(a) Annual Leave and some periods of illness attract Credit Hours which are not flying duties.
(b) Credit Hours that I am assigned are simply a method under the EA by which a portion of my pay is calculated.
(c) The Flying Hours that I fly are not an accurate reflection of the totality of the hours that I work for the Company. They do not taking into account such things as pre-flight and post-flight duties, including updating the Company iPad and reviewing Company notices and flight planning material prior to flight. Actual Flying Hours also do not reflect the work I undertake in other areas, such as on days for which office days are assigned, attending Annual Medical examinations, attending to Crew Visa requirements, or preparation and briefing time for simulator duties.’
He rejected the implication that Pilots have plenty of free time to undertake unpaid E-Learning.
[33] Captain Teutscher deposed that he was unaware of the Company’s view that only non-professional/non-flying training could be E-Learning, until he received Ms Megson’s email on 18 December 2017; see: [17] above. Had he been aware of this view during bargaining, he would have sought to have it raised. Captian Teutscher disagreed that professional training is not credited, as it is essential and assumed knowledge. Items of regular professional training are credited and identified in Schedule 2; e.g. full type Conversion Courses, Annual Emergency Procedures, Recurrent Training and Proficiency Check Simulator events. There is no good reason why these items attract credit hours, but an E-Learning module on A350-1000 Differences Module does not.
[34] Captain Teutscher said that a NTC is not an agreement, but a method of notification. In respect to NTC 018/2013, Mr McEwan conceded the three E-Learning modules met the criteria for E-Learning. Captain Teutscher noted the NTC does not specify that E-Learning modules attract credit hours. It simply provides for a duty time provision for rest calculations. Further, the NTC does not refer to ‘professional training’, but rather to ‘self-study’ which is distinct from, and separate to learning that is directed by the Company and required to be undertaken.
[35] Captain Teutscher did not accept Mr McEwan’s reference to a Canadian arbitration as it was carried out under the Canadian Agreement that does not include an E-Learning clause. Whereas, both the US and Australian agreements contain essentially the same E-Learning clause.
[36] Captain Teutscher referred to the negotiations for the 2016 Agreement and disputed much of what Mr McEwan asserts was the rationale behind Cl 11.2. Nor was the interpretation of how the Clause would apply ever raised in the negotiations. The reference to courses as ‘fleet specific’ was intended to include professional training on subjects relating to operating aircraft. Mr McEwan’s mention of a connection to anti-harassment training in the United States on the Boeing 777, was never made at the time.
[37] Captain Teutscher’s understanding was that it was never the intention that the only courses which are paid are those determined by the GMF, without any reference to any criteria. The GMF’s discretion went to which training was conducted by the traditional means and which was undertaken as E-Learning.
Captain Paul Liistro
[38] Captain Liistro has been employed as a Pilot by Cathay Pacific since 2007. He was involved in bargaining for the 2016 Agreement. Captain Liistro referred to the origins of E-Learning. A pilot’s employment is governed by an Approved Flight Time Limitation Scheme (‘AFTLS’) and the Rostering Practices Policy (‘RPP’). The AFTLS sets the maximum number of Pilot flying hours in order to manage safety and fatigue. Both Cathay and the Pilots must track rest periods. The Scheme defines maximum flying hours, maximum Flight Duty Period and maximum cumulative Duty Hours. Duty is defined in Cl 7.1.7.5 as ‘Any task associated with the business of the Company. It includes Flight Duty, Positioning, Ground training, ground duties and reserve duty’.
[39] E-Learning began to increase from 2012 and it was not recorded as duty. Cathay was not providing rostered time and Pilots were not allowed to conduct these duties during domestic days off. This meant performing the work in their own time, without attracting any credit or payment and potentially in breach of the AFTLS.
[40] Captain Liistro did not accept that:
• a NTC draws a distinction between professional and non-professional training; or
• during bargaining there was a reference to E-Learning in Canada.
Rather, Captain Liistro believed that during negotiations, E-Learning was designed to address two questions:
1. How does Cathay intend to record E-Learning as a duty; and
2. Does E-Learning warrant credit hours for the calculation of Hourly Duty Pay (‘HDP’) and/or Excess Flying Pay (‘EFP’)?
[41] Captain Liistro referred to his notes of the negotiation meetings on 18 August 2014 and 21 August 2014. These discussions arose because at the time E-Learning was not being correctly recorded as duty and not triggering Credit Hours. Captain Liistro believed his notes make clear there was agreement for 2.5 hour E-Learning Credit Hours and the negotiations were about calculation and rostering. The Association had initially proposed that all mandatory E-Learning must be recorded as duty and provided a credit. Cathay had argued some E-Learning was already attracting credit, such as Attendance Instructor Lead Training. This formed the rationale for the non-payment of the first two hours per year reference in the clause.
[42] Captain Liistro said that at no time during negotiations did Cathay put a position which distinguished E-Learning in respect to professional and non-professional matters or that E-Learning was only payable for non-flying related training. He had understood the agreed position was that E-Learning, regardless of subject matter, would attract some credit. The disagreement was over payment calculations. This was confirmed in Q28 of the FAQ document which referred to ‘fleet specific’ training, meaning in relation to aircraft and flying related activity.
[43] Captain Liistro claimed that at no time did Cathay communicate a position that the GMF would have the sole discretion to determine which E-Learning module/courses attracted credit and which did not. An EA briefing document at the time, dated 15 December 2015 stated:
‘Clause 11 – Training
A new provision has been added to account for E-Learning. The first 2 hours of E-Learning will attract no credit.
Thereafter payment will be at the full value of the actual stated module completion time.
Payments will be made in January for the previous years’ training.
The Company has agreed to undertake a review of the formula if modules exceed a total of 4 hours in a year.’
Oral evidence
[44] In cross examination, Captain Teutscher accepted that his evidence in respect to negotiations for the 2016 Agreement came only from what other people had told him. Captain Teutscher disputed that Pilots’ base salary assumes 1008 hours – it is 900 hours under the AFTLS maximum. He conceded that in practice, Pilots fly significantly less than 900 hours. He accepted for the year ending June 2019 the average was 630 hours. However, this does not include time spent off flying duty.
[45] Captain Teutscher accepted that simulator training is training, but preparing for it is self-study. He agreed it relates to the skills and qualifications he has as a professional Pilot. He also accepted that conversion courses, route preparation and technical reviews are not given credits. Nevertheless, he believed self-study was training necessary to retain his skills and qualifications. Captain Teutscher described the differences of directed training in the office, sometimes on a computer, which may be E-Learning and E-Learning away from the office, at home on his own computer. Such later directed training should be credited. He denied there was no difference. He accepted that the difference did not relate to whether he used his own computer or the Company-supplied iPad.
[46] Captain Teutscher accepted that the training referred to in the NTC of 18 April 2013 being on Safety Management, Alcohol and other Drugs and Non-Discrimination of Disability in Air Travel, was designated as E-Learning and was not flying related. He accepted this was a distinction he claimed to have had no knowledge of four years later until Ms Megson’s email in late 2017.
[47] As to the Q28 in the FAQ document, Captain Teutscher understood ‘fleet specific’ meant aircraft type or flying related. He was not aware of the US connection to specific harassment training.
[48] Another question related to 11.2.3 as to what was intended, was that the GMF was the single point of clarity as to what constituted specific E-Learning training modules. He agreed some protections (for Pilots) were intended.
[49] In re-examination, Captain Teutscher explained the distinction between one form of training undertaken in the office on a Company computer for which Schedule 2 credit would apply (e.g. ground training), and training performed at home using his own computer. He did not accept that one type of training is paid and the other is not.
[50] In cross examination, Captain Liistro was asked about the notes he had taken in 2014 of the Agreement negotiation meetings. He acknowledged the notes were not taken by him, but by the Association’s Secretary, and they were not discussed with, or agreed to by Cathay representatives. They were not a complete record of everything said in these meetings. Captain Liistro explained that not all duty is paid time, but all duty must be recorded in accordance with the AFTLS. At the time, the Association was concerned with two related matters – the recording of duty and the payment for E-Learning. There were no concerns about the location of the E-Learning, or it being conducted on a Pilot’s own computer. However, there was some concern of Pilots who lived in areas with very poor internet speeds. This is not mentioned in the notes of the meetings at the time.
[51] Captain Liistro said that while there were some global negotiations at the time (2014), these ended without agreement and negotiations then continued in each jurisdiction, including Australia. He believed that at this time, Cathay had accepted that there should be payment for E-Learning. Captain Liistro also accepted that at these meetings there was no discussion of the definition of E-Learning. He had understood it had its ‘ordinary meaning’.
[52] Captain Liistro was referred to an Association document to inform members which attempted to set out the pros and cons of the proposal and which read in part ‘E-Learning does not include RT/PC/AEP/route* briefing modules as we understand it’. NB:
• RT – twice yearly Recurrent Training in Simulator;
• PC – Proficiency Check;
• AEP – Annual Emergency Procedures; and
• Route Training – learning of new routes.
[53] Captain Liistro agreed that these four topics were flying-related. However, he explained that while they involved E-Learning, they were not E-Learning for the purposes of payment and the management of these four items would continue as it had been to that point i.e. it was covered by Schedule 2 and attracted credit. He agreed other mandated training was delivered as E-Learning, such as Drugs and Alcohol training and Non-Discrimination of Disability in Air Travel.
[54] While Captain Liistro accepted that the clause gave the GMF the ability to specify certain training as mandatory E-Learning, it was only as a point of clarity. He disagreed that E-Learning would be decided on a ‘case by case’ basis. He recalled the Association had two concerns: the recording of duty and the payment for training. The parties had not negotiated a definition and the current cl 11.2 does not define the term. He did not accept that E-Learning was that specified by the GMF. He acknowledged the clause proposed by the Association was not that which was in the Agreement voted on by the employees.
[55] Mr McEwan, in cross examination, said that he had not been responsible for the Australia Pilots since the Agreement was approved in January 2016. Mr McEwan accepted the credit is not a form of measuring the work performed and does not work on an hour by hour basis; meaning one hour of credit does not equate to an hour of time spent. The purpose of credit hours is to calculate the HDP and EFP for Pilots. It was Mr McEwan’s understanding that professional, or flying related training, is not credited under the Agreement as this is ‘essential’ or ‘assumed’ knowledge. He accepted, however, that there are flight related training clauses in Schedule 2 which do attract credit e.g. recurrent training and annual emergency procedures. He agreed that the Company had looked to pay for other training which is corporate/HR related. Mr McEwan said he was unsure why some flying related training was paid and credited in Schedule 2, but all E-Learning flying related training is not.
[56] Mr McEwan agreed that the NTC to Pilots in 2013 did not specify that E-Learning attracts Credit Hours. It only deals with a duty time provision for risk calculations for the purpose of the AFTLS. He accepted that depending on the Schedule, an hour of duty does not necessarily equal an hour of credit time. This is to ensure completing E-Learning modules does not infringe on recovery periods. The 2013 NTC considered E-Learning to be duty and nowhere does it draw a distinction between flying related training and non-flying related training.
[57] Mr McEwan acknowledged that when E-Learning was first raised in August 2014, the Association was concerned about performing E-Learning training in their own time, without credit. The Company had wanted to treat E-Learning differently by relating it to non-flying E-Learning training and not crediting it under Schedule 2. The proposal for the first 2 hours of E-Learning not being paid arose because some of the corporate type modules at the time were of short duration – ~15-20 minutes. However, he could not source any document from the time, which reflected this position. Nevertheless, Cathay had held the position that flying related training could never be E-Learning; it was related to corporate type modules (non-flying related). Mr McEwan conceded this was a relatively simple proposition, but he could not say if it was communicated to pilots at the time and there was no document he could source which disclosed it had.
[58] Mr McEwan was asked about the Q&A document and the answer to Q28:
‘E-Learning could be a mixture of corporate type modules that all employees must complete or fleet specific.’
He acknowledged there was no reference to the US comparison about ‘fleet specific’ training and the Q&A had nothing to do with the US jurisdiction. He believed the answer drew a distinction between corporate type modules that all employees must complete or corporate type modules that are ‘fleet specific’. Mr McEwan denied this belief was an explanation to avoid the argument that E-Learning is not paid for flying-related courses. He accepted that nowhere in the Q&A document does it state that E-ELearning is not paid for flying related courses. However, he believed the Association had this understanding at the time.
[59] In re-examination, Mr McEwan stated that the training in Schedule 2 would be done either on the simulator or in the classroom and would not be electronic training (E-Learning).
SUBMISSIONS
For the applicant
[60] After setting out the background to the dispute, the relevant Agreement clause 11.2 and the principles of agreement interpretation (which I will come to later), the Association’s written submissions deal with the application of these principles to the present dispute.
[61] It was noted that the respondent maintains it has a complete and unfettered discretion to define E-Learning and determine what E-Learning modules are paid. This was despite its claim that E-Learning is only related to non-professional/corporate learning, even though some E-Learning is flight related and paid for.
[62] The Association observed that although E-Learning is not defined in the Agreement, it should be given its plain ordinary meaning; see: Berri, namely, it is computer-based training or learning that is required or directed by Cathay to be undertaken by an employee in their own time, using the employee’s own equipment and is not otherwise covered by Schedule 2.
[63] It was submitted that where employees are directed to do training in their own time, following a directed NTC, this plainly meets Cl 11.2.3 as modules specified as E-Learning. The plain industrial purpose of Cl 11.2 is to provide a beneficial entitlement to employees when required to perform work in the form of E-Learning. The Association’s interpretation avoids a narrow and restrictive interpretation, whereas Cathay’s construction creates no entitlement at all and the discretionary benefit is not referable to any objective criteria. Its specification is at the sole discretion of the GMF, meaning the content of the courses is irrelevant, the discretion could be exercised capriciously and result in perverse outcomes. This could not possibly have been the intent of the drafters of the clause. Further, had the parties intended to allow Cathay to require employees to perform endless amounts of training at home without pay, the Agreement would have surely said so. It does not.
[64] It was further submitted that if a benefit was to be entirely discretionary, it makes no sense to have it in the Agreement, without any enforcement. It might just as well be a Company policy. It was submitted that if the provision was to be entirely at the sole discretion of Cathay’s GMF, there would be no need to include a requirement that the first 2 hours of E-Learning attracts no credit or payment.
[65] The Association referred to the Arbitrator’s decision in the United States in which the Agreement there under consideration has the same wording as Cl 11.2.3. The Arbitrator found:
‘(a) the logic of the respondent’s interpretation of the words in clause 11.2.3 was ‘not compelling’;
(b) such an interpretation ‘would effectively render the provision meaningless’; and
(c) ‘[p]ermitting Company management to say ‘we will pay e-learning credit if we want to’ would short-circuit the entire provision of Schedule 2’.
It was put that the Commission can have regard to this decision, notwithstanding it was in a different jurisdiction.
For Cathay
[66] It was contended that the answers to the Association’s questions in respect to (a) and (b) should be ascertained by reference to the context of the negotiations for the 2016 Agreement and Cathay’s communications with the employees. The Association’s views are inconsistent with the express wording of the Agreement, the common intention of the parties and fails to take account of ‘surrounding circumstances’.
[67] Cathay rejected the US decision as being inappropriate. It was irrelevant to this Commission’s legislative functions and submitted:
‘(a) the decision of the US arbitrator was made in an entirely different jurisdiction and without regard [to] the Australian law or the well-established principles of interpretation in relation to enterprise agreements which exist in Australia;
(b) the approach of and evidence led by Cathay in these proceedings differs from that in the US arbitration; and
(c) in any event, Cathay contends that the arbitrator’s decision was contrary to the principle that an enterprise agreement should be read to “give effect to its evident purposes, having regard to such context, despite mere [inconsistencies] or infelicities of express which might tend to some other reading”.’
[68] Cathay argued that Cl 11.2.3 is plain in its intent in that the person tasked with allocating training to Pilots (the GMF), specifies which E-Learning modules are to be credited. This is done by an assessment of whether the training relates to professional knowledge, which Pilots are expected to maintain for the purposes of their profession (which doesn’t attract credits, save for the Schedule 2 exclusions), or whether it is corporate/non-professional training, which is designated as E-Learning.
[69] It was put that Cl 11.2 does not, as alleged by the Association:
(a) provide the GMF with the ability to ‘define’ E-Learning and accordingly, the ability to determine which training modules will be paid for, without any consideration of the content of the module itself;
(b) define E-Learning as ‘computer-based training or learning’ that Cathay directs its Officers to undertake, and that can be undertaken in their own time using the employee’s own computer equipment; or
(c) enable Cathay to require employees to do endless hours of unpaid training each year on the basis that such training is not E-Learning.
[70] In rejecting the Association’s construction of Cl 11.2, Cathay posited that there is no ambiguity as to the meaning of E-Learning; it is that which is specified by the GMF; see: The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447 (‘Golden Cockerel’) and Berri.
[71] It was put that to define E-Learning in any other way, such as computer-based training or learning, is both inconsistent with ‘surrounding circumstances’ and imports words into the Agreement which are not there. There is no gap in the Agreement which creates unfairness sufficient to be filled by implying terms not present in the clause; see: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Skilled Engineering Ltd [2003] FCA 260 at [18] and Ali v Christian Salvesen Food Services Limited [1997] 1 All ER 721.
[72] To the extent the definition of E-Learning may be ambiguous (which is not accepted) the Commission would be mindful of the Berri Principles. Conduct of the parties after an agreement is made is not a legitimate aid to construction; thus Captain Teutscher’s evidence as to events post the Agreement’s approval, would be rejected. On the other hand, Cathay’s evidence assists the plain meaning of Cl 11.2.3 which included:
(a) a Notice to Crew (‘NTC’) in 2013 setting out the understanding between Cathay and its Officers regarding which types of training modules are paid training;
(b) evidence of discussions had during negotiations between the parties in 2014/15 when the Agreement was being negotiated; and
(c) briefing documents provided to Officers during negotiations.
[73] Cathay submitted that the Q&A provided during negotiations makes clear it was never the intention that the GMF would exercise his/her discretion inappropriately, or unfairly or to the detriment of the employees.
[74] As to the current claim, it was submitted that as the A350-1000 Differences Module relates to flying, it cannot be E-Learning for the purposes of Cl 11.2. It was said that Pilots did not perform more than 10 hours’ training in 2017 and to put this in context, for the period 1 July 2018 to 30 June 2019;
(a) Australian Airbus Pilots were paid a salary for 1,008 flying hours, but on average only flew 630, and were otherwise given a credit of 821 hours; and
(b) Australian 747 Pilots were paid a salary for 1,008 flying hours, but on average only flew 498, and were otherwise given a credit of 730 hours.
Given this evidence, it could not be accepted that Pilots are not adequately compensated for their flying training.
In reply
[75] The Association rejected Cathay’s interpretation of Cl 11.2 and sub-s (3) in particular, in that it seeks to include words which are not there; namely: flying related training being excluded from E-Learning and that the GMF has a conferred discretion to decide what courses are not flying related. It was said that Cathay could not argue no ambiguity on the one hand and then ask the Commission to imply a distinction between flying and non-flying training – words that are not there. Neither the drafted clause nor the evidence supports this subjective opinion.
[76] The Association noted its evidence which demonstrated that at no time during bargaining in 2014/15 did Cathay communicate to the employees that:
(a) there was to be some distinction between flying and non-flying related E-Learning training, with only the latter being paid under clause 11.2; or
(b) the GMF maintained a discretion as to whether particular E-Learning training would be paid under clause 11.2.
This was a retrospective and self-serving attempt to attribute a meaning to Cl 11.2 which allows Cathay to avoid paying Pilots undertaking directed E-Learning. It should be rejected. Further, there is no reference in any of the bargaining materials to E-Learning only over being paid for non-professional courses and there was a distinction with flying-related training. The first time this was mentioned was when an E-Learning claim was rejected in 2017.
[77] It was submitted that the 2013 NTC and the FAQ document are not of assistance to Cathay’s argument. The history makes clear that as employees were being required to undertake increasing amounts of E-Learning training without payment, the notion of credit and payment arose. Further, there was a recognition that some E-Learning was already attracting payment and hence the proposal that the first two hours should not be paid. The result has been that no payment has been received by any employee since the E-Learning clause was first introduced in 2016.
[78] It was put that the false distinction between flying and non-flying training was further demonstrated by the fact Cathay already provides credit for such flying-related training under Schedule 2. There was no explanation for this false distinction.
[79] In respect to the GMF’s discretion, it was submitted that:
(a) there is no distinction between flying and non-flying training;
(b) there is no sound or rational basis for applying such a meaning;
(c) it could not have been the intention of the employees who voted to approve the Agreement;
(d) absurd outcomes would arise in that:
(i) Officers could be directed to perform endless hours of professional/non-flying related E-Learning, without credit or payment; and
(ii) Cathay’s submission about there being no intention to act to the detriment of employees, is beside the point. Employees are, and have been directed to perform training which they thought they would be paid for; and
(e) There was no ‘common intention’ of the parties that E-Learning would only be paid for non-flying related E-Learning; see: Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Services Pty Ltd [2006] FCA 11 and Health Services Union v Ballarat Health Services [2011] FCA 1256.
[80] Finally, the Association submitted that Cathay’s argument that the Pilots are well-paid and do not work many hours, is irrelevant and does not justify the interpretation of Cl 11.2 for which it contends. The Commission would pay little regard to this argument because:
‘24. First, the respondent’s arguments about the working hours of the pilots are inaccurate and wrongly equivocate flying time and credit hours with actual working hours. As the witness statements filed by the applicant demonstrate, this is a false comparison.
25. Second, the flying hours of the employees are, at least in part, governed by applicable regulation around the management of safety and fatigue, including the AFTLS.
26. Third and in any event, the fact that the employees might spend a certain number of hours flying does not mean the respondent has free reign to require them to perform E-Learning training in their own time for free. The fact is that clause 11.2 must have been intended to create an actual beneficial entitlement for employees. On the respondent’s restrictive interpretation, it doesn’t. An entitlement that is never payable is not an entitlement at all.’
Oral submissions
[81] Mr Kennedy opened the Association’s case by observing that both parties provided opinion evidence which the Commission would give appropriate weight to, in particular Mr McEwan who purported to give evidence as to what motivated the Association and the Pilots during the Agreement negotiations. He gave hearsay evidence of what was discussed, and by whom, during those negotiations.
[82] Mr Kennedy submitted that the Commission is being asked to determine what E-Learning means in the context of Cl 11.2 and whether Cl 11.2.3 leaves the specification of E-Learning entirely at the sole discretion of the GMF.
[83] As to the meaning of E-Learning, the Association (unlike Cathay), does not seek to import words to justify its case. The expression has a plain, ordinary meaning, supported by the context of the clause and to provide beneficial entitlements to Pilots. It could not have meant to be left at the GMF’s unfettered discretion, which could, and has meant no payment at all since the clauses’ inception. Mr Kennedy submitted that the distinction now advanced by Cathay between non-flying and flying-related training is a recent invention, not supported in any document. Mr McEwan’s evidence was that he could not recall if the Pilots were ever told of such a distinction. Both Captain Liistro and Captain Teutscher gave evidence that they could not recall, or had not been informed that the employees were told of Cathay’s position. Mr Kennedy described the recent timeline of when the first E-Learning claim was made on 23 November 2017, which included flying-related items. Three weeks later Cathay agreed to pay the claim in the following year. Five days later Cathay rejected the claim in part because it was, in its view, flying-related and therefore did not meet E-Learning. This was a pure invention to avoid paying the claim.
[84] As to the more recent claim made on 8 June 2018 for the A350 Difference Module, Mr Kennedy noted the claim was refused the same day as the GMF had designated it as not E-Learning. Further, while the 2013 NTC attached to Mr McEwan’s statement might refer to some non-flying related module, it goes no further and the presentation to staff in May 2015 makes no distinction in relation to flying/non-flying training. In addition, the FAQ document actually states E-Learning can be a mixture of ‘corporate type’ or ‘fleet specific’ training. On any view, ‘fleet specific’ training must be flying related and a reference to some obscure US course was irrelevant and unpersuasive. Further, the document given to employees prior to the successful vote in December 2015 makes no distinction between flying and non-flying related training.
[85] Mr Kennedy submitted it could not be seriously contended that if it was the intention of the parties to create an entitlement, it might never be paid. Nor could it be said that the Pilots intended to perform training in their own time and not be paid. Had it been the case, the Agreement would have surely said so. Mr Kennedy said the issue of hours worked by Pilots does not advance the matter anywhere. Credit hours have no relationship to hours worked and Pilots perform a range of duties outside of flying time. In any event, hours of flying time and fatigue are closely regulated. This issue cannot assist in the interpretation of the clause.
[86] Mr Kennedy observed that Cl 11.2.3 similarly makes no reference to flying and non-flying related training. Moreover, flying-related training does attract credit under Schedule 2, so Cathay’s interpretation is inconsistent with its own practices.
[87] As to the Association’s reliance on the US Arbitrator’s decision, and Cathay’s rejection of its relevance, Mr Kennedy said it was Cathay who created the connection when it asked for the present Grievance to be held in abeyance until the US case’s outcome was known. Now it has a ruling it does not like, it claims the decision is irrelevant.
[88] Finally, Mr Kennedy submitted that there would have been numerous instances of Pilots performing E-Learning, which has not been claimed for. The present dispute relating to the A350 Differences Module is being used in this case as a ‘test’ example.
For Cathay
[89] Mr Perry submitted that the Association has conflated the core question in this case, being what the definition of E-Learning is, with a bundle of other issues which relate to payment, credit hours and duty. However, these are separate matters. Mr Perry explained as follows:
• Pilots are paid a salary;
• Schedule 2 provides credit hours for different duties or functions;
• Once reaching the hours the salary is built on, additional payments are made based on Schedule 2. Some of this is specific hands-on conventional training, such as simulator training.
• Clause 11 deals with training generally which is not subject to credit because it is based on duties expected of Pilots to keep their skills current and their licences up to date.
• Cl 11.2 is an exception in respect to E-Learning with additional payments after two hours of E-Learning, subject to the training being designated E-Learning by the GMF.
[90] Mr Perry put that E-Learning in this context is a ‘term of art’ defined by Cl 11.2.3. The decision as to what is E-Learning is invested in the hands of the GMF. Mr Perry said the Commission would have little regard for the US Arbitrator’s decision as it is the application of the Berri Principles which is relevant in this case. The task is not to rewrite the language to produce a result that is fair; rather, the words make clear that E-Learning is that specified by the GMF. This was also the common intention of the parties.
[91] Mr Perry cautioned the adoption of an approach which gives weight to the opinion evidence of the witnesses. However, some aspects of the evidence are significant. For example, Captain Liistro accepted that the concerns of the Association were about duty and payment and not the definition. Other important documents were the 2013 NTC which showed the assumed state of affairs at the time a particular course was designated as E-Learning. The Q&A document was the most pertinent information provided to the employees. This specified how the clause would apply; being a mix of ‘corporate type’ modules or ‘fleet-specific’ training.
[92] Mr Perry said that other extrinsic evidence included Captain Liistro who had accepted four flying-related topics were not E-Learning. This rebutted the Association’s claim that the distinction was a recent invention. Mr Perry submitted that the Association’s two witnesses were essentially advocates in the cause. Further, the Association’s criticism of the distinction between flying and non-flying related training can equally apply to their definition that E-Learning is computer-based training performed on the Pilot’s own computer equipment. This would not accord with computer-based training undertaken in the office and seeks to import words into the Agreement which are simply not there. Further, there is no contemporaneous documentation or drafting which supports the Association’s construction.
[93] Mr Perry said the safest course for the Commission is to read the words in Cl 11.2.3 as they stand. This will inform the approach to the present dispute which relates to A350 Differences Module which is flying-related and therefore was not specified E-Learning by the GMF.
[94] Mr Perry also rejected any past Agreement history or conduct by the parties as being irrelevant to the interpretation issue, as is the US Arbitrator’s decision which is no more than an industrial connection, as Cathay is a global employer.
In reply
[95] Mr Kennedy said that Cl 11.1.1 applies to training directed by the Company or mandated by government and that is the type of training Schedule 2 applies to and which attracts credit – i.e. flying-related training. Cl 11.1.1 is not directed to personal self-study or preparation for flights. He reiterated that Cathay offered no explanation why flying-related training is recognised and paid under Schedule 2, but is not for the purposes of E-Learning. He observed that Cl 11.2.3 is not a definition at all (does not use the word ‘means’). The Clause must be given a practical application. Mr Kennedy said that Cathay’s case now that E-Learning is at the sole discretion of the GMF, was not even supported by Mr McEwan’s evidence about the discussions during bargaining. Further, the example of the 2013 NTC is unhelpful. The NTC did not arise from bargaining and it says nothing about the GMF’s discretion.
[96] Mr Kennedy added that the question and answer to Q28 is consistent with the Association’s case and not against it. It was further submitted that the distinction between E-Learning being conducted at home and that conducted in the office, arises from Schedule 2 in that such later training is credited under the Schedule.
[97] Mr Kennedy said that although not decisive, Ms Megson’s emails of late 2017 demonstrated that Cathay had been ‘all over the place’ in relation to responding to those claims. This is consistent with Mr McEwan’s evidence that he could not recall whether the distinction now relied on, was communicated to employees at the time (2014/15).
CONSIDERATION
Relevant principles
[98] Both parties appropriately relied on the ‘Berri Principles’ as being applicable to this matter. The ‘Berri Principles’ are 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.
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.’
[99] There is no doubt the ‘Berri Principles’ have as their foundation the long line of historic authority as to the approach to be applied by the Courts, Commissions and Tribunals when called upon to interpret the words in an industrial instrument. Prior to the preponderance of agreements and enterprise agreements, this was usually applied to Awards. Recent iterations of the legislative framework, necessitated a refinement of these principles in Golden Cockerel; but some of the basic fundamentals remain. I refer to some of these cases to make good this proposition.
[100] I refer back to some of the early well-known cases which dealt with the construction of Awards. In City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union [2006] FCA 813; 153 IR 426, French J said at [53]:
‘53 The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘... the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ – Short v FW Hercus Pty Ltd [1993] FCA 51; (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).’
[101] Then at paragraph 57, His Honour observed:
‘57 It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’’
[102] Madgwick J in Kucks v CSR Limited [1996] IRCA 1966 opined that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:
‘... [T]he 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.’ (my emphasis)
For a useful summary of the principles of Award construction see: Swissport Australia Pty Ltd v Australian Municipal Administrative Clerical and Services Union (No 3) [2019] FCA 37 per Rangiah J.
[103] As the legislative focus shifted towards agreement making, the same principles were recognised to apply to the interpretation of enterprise agreements. In Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (‘Amcor’), the High Court Gummow, Hayne and Heydon JJ:
‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.’
[104] In Amcor, His Honour Kirby J said:
‘However, certified agreements such as this commonly lack the precise drafting of legislation. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail - including possibly because such an endeavour would endanger the accord necessary to consensus and certification by the Commission.
. . .
The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:
‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.’ (references omitted)
[105] Again in Amcor, His Honour Callinan J said there was substance in the observations of Madgwick J in Kucks. His Honour then said:
‘An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties.’
[106] In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (‘Codelfa’) Mason J, as he then was, (and with whom Stephen, Aickin and Wilson JJ agreed) said:
‘The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.
Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.’
[107] In Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005[2008] AIRC 1074 at [17], 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.’
[108] The nature of the present task was emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia[2013] FWCFB 8557 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.’
[109] All of the above observations are concordant with the approach taken in Golden Cockerel and Berri. In short, the Commission’s task is to ascertain the objective intention of the contested words, based upon the language and terms of the 2016 Agreement, when read as a whole, having regard to its context and purpose.
[110] In my view, in essence there is really only one question which requires answering in this dispute; namely what is the meaning of the term ‘E-Learning’ in Cl 11.2 of the Agreement. The other questions posed by the Association will be answered as a consequence of that answer. The parties are ad idem that the words are unambiguous when one applies the Berri Principles, as of course I am bound to do. The competing positions, however, reveal a vast chasm between what the parties claim are the unambiguous words. In my view, only one approach can be right.
[111] For its part, the Association contends that on a common and plain understanding of the term E-Leaning, having regard for the context in which it appears in Clause 11.2 and the Agreement generally is:
‘computer-based training or learning that is required or directed by the respondent to be undertaken by an employee, that can be undertaken in their own time using the employee’s own computer equipment and that is not otherwise covered by Schedule 2 of the Agreement.’
[112] On the other hand, Cathay claim that the definition lies within the express terms of Cl 11.2.3, namely that:
‘a reasonable person would understand the intention of the clause is that the GMF is given the responsibility of specifying which modules are E-Learning for the purpose of clause 11.2. The only relevant definition of E-Learning is that is it as specified by the GMF.’
[113] In my opinion, the construction of the term ‘E-Learning’ pressed on me by Cathay suffers from a number of fundamental flaws as the correct approach to the interpretation of the words in an enterprise agreement. Moreover, it is inconsistent with its own submissions in the case. Cathay maintains that Cl 11.2.3 is clear and unambiguous on its terms, but then submits that the GMF exercises his/her discretion by importing an explanatory rider that the definition limits E-Learning as training which is not professional/flying related, as distinct to flying-related training, which is not credited.
[114] Not only is this rider inherently inconsistent with its own practices, but Cathay’s approach is obviously in breach of one of the fundamental principles of agreement interpretation; namely, words cannot be imported into an agreement to give the existing words a meaning which a party might prefer or to give a fair or result, or which stretch the words beyond a plain, common understanding of the express words used.
[115] As to inconsistency, the evidence makes plain that flying related training is found in Schedule 2 and attracts credit and payment. Cathay could not offer any logical explanation, or at all, why flying-related training in Schedule 2 attracts credit and payment, but flying-related E-Learning does not. I suspect no explanation was preferred because there isn’t one.
[116] As to Cathay’s purported distinction between flying-related and non-flying related E-Learning being a recent invention, I find that characterisation to be apt for the following reasons:
1. Captain Teutscher’s evidence was that at no time during bargaining in 2014/15 and up until the rejected E-Learning claim in late 2017, was this distinction communicated to the Association or the employees. Captain Liistro could not recall any such communication, and even Mr McEwan could not recall it having been done. One might have thought that a matter of some import would have been recalled by someone.
2. There is no document, note, memo or minutes of any meeting, from the relevant time where this distinction was identified as the Company’s approach.
3. The FAQ document and Q28 in particular makes no reference to the distinction.
[117] In my view, this evidence is compelling. Despite originally accepting the claim in November 2017, 3 weeks later, Cathay’s position changed and for the first time, this distinction was said to inform the GMF in the exercise of his/her discretion.
[118] That said, I consider the definition pressed by Cathay, that E-Learning is defined only as any training/course so designated by the GMF, is an absurdity, or at best inadequate, and must be rejected according to the principles of agreement interpretation. Such a definition says nothing about the nature of the training, how or where it is performed. In short, it defines nothing and is entirely unhelpful. Despite submitting that the GMF would not exercise the discretion capriciously or unjustly, in my view, this is exactly what might occur. There are no guidelines about the exercise of that discretion and seemingly no appeal from the decision, as on Cathay’s own submission, it is expressed in absolute and unfettered terms. It is difficult to accept that this was ever the intention of the drafters of the clause. Moreover, if Cathay’s construction was accepted it would make the other references in Cl 11.2 superfluous, such as the first two hours of E-Learning being unpaid and the payment formula at 11.2.2.
[119] In addition, I find myself in agreement with the US Arbitrator’s observations and his conclusions about the meaning of the same clause in the US Collective Agreement when he said:
‘The grievance in the instant case centers on whether the Company violated the e-learning provision of the parties’ Collective Bargaining Agreement by failing to pay pilots e-learning for completing the 777 E-Techlog training online and at home.
Schedule 2 of the parties’ Collective Bargaining Agreement provides the following:
E-Learning
The first two (2.0) hours of E-Learning per year will attract no credit. Thereafter payment will be at full value of the actual stated module completion time. Such payments will be paid but not credited and will be made in January for the previous year. In the event that modules exceed a total of four (4) hours in any year, then the Company agrees to review this formula. For the purposes of payment in accordance with this provisions an Officer’s hourly rate will be calculated as Annual Salary plus HDP divided by one thousand and eight (100*). Payment will then be made as a proportion of that hourly rate. (e.g. if the Officer’s hourly rate is $100 per hour and the annual module completion time totals 2.5 hours, $50 would be paid to that officer).
E-Learning modules are those specified as such by GMF [i.e. General Manager Flying]
…
The Company insists that the contract language in Schedule 2 of the parties’ CBA is clear, concise, and unambiguous. Given the unambiguous nature of the language used, the words must be accorded their plain meaning, the Company maintains. The contract language at issue in the instant case – “E-Learning modules are those specified as such by the GMF” – is clear and complete on its face. Every single word in this sentence is readily understood by the parties, the Company contends.
…
The Arbitrator, however, believes the Union’s argument that it makes no sense pilots would only receive pay credit for online training modules if the GMF personally and explicitly used the words “e-learning modules.” Such an interpretation would essentially permit the Company to avoid paying additional e-learning credit to pilots simply be claiming that an online training package that was assigned was not technically an “e-learning module.”
The logic of this particular argument is not compelling, as it would provide the Company with unlimited discretion to decide whether additional e-learning credit was payable, the Board notes. If the company chose, it could simply refuse to designate any online package an e-learning module and, as a result, avoid having to ever pay e-learning credit to pilots. To adopt the Company’s interpretation of Paragraph 3 of Schedule 2 would allow management to draw a distinction between an online e-learning package versus an e-learning module and would effectively render the provision meaningless.
It should be remembered that the role of the Board is not to create new contractual provisions between the parties, but rather its sole function is to interpret and apply the CBA as written. The Arbitrator should not act in a way that will impose obligations or responsibilities on either party that is over and beyond what was agreed to in the CBA. Where, as in this particular case, there is no clear definition as to what the parties meant when they agreed to Paragraph 3 of Section 2, the Board is required to review the entire contractual provision and attempt to give meaning to each respective paragraph. It is a fundamental rule of contract construction that an Arbitrator should attempt to give meaning to each section of a particular provision.
In reviewing all of Schedule 2, the Board believes that the construction of this provision more likely supports the Union’s interpretation of Paragraph 3. Schedule 2 appears to suggest that all online training is, in effect, e-learning and thus should be eligible for additional e-learning credit, the Board finds.
…
This is a decision that the Company may take, which will essentially determine whether or not Company pilots may receive additional e-learning pay for a training package. The Board believes that, once the Company has determined that a training package is to be taken online by Company pilots rather than in the classroom, then additional e-learning pay should be available.
To allow the Company to insist e-learning credit is not available to pilots unless and until the Company says so would render the entire provision ineffective. Permitting Company management to say “we will pay e-learning credit if we want to” would short-circuit the entire provision of Schedule 2, the Board finds. Had the Company wished to retain full and entire discretion over whether it should ever have to make additional e-learning credits available to Pilots, it could have included language to that effect.
…
The fact that both sides have assumed some sort of responsibility or mutual burden when they agreed to the e-learning provision suggests that the Company’s commitment to paying e-learning credit was not an empty one that it could otherwise avoid. To adopt such an interpretation would read out of the contract the hard-gained benefit obtained on behalf of Company pilots by the Union.
This would mean that the Company would have no real obligation to compensate pilots for online training since it could always decide not to designate online training as [a] learning module. If the GMF could still decide on any basis that an assigned online training package was not e-learning, this would have a far-fetched and harsh result. It is the Board’s belief that, once the Company has decided whether a training course should be conducted online or in person, the Company has an obligation to compensate pilots for the time spent completing ay online training package.
…
For the reasons outlined above, the Arbitrator finds that the Company violated Schedule 2 of the parties’ Collective Bargaining Agreement of the CBA by refusing to pay pilots e-learning credits for the E-Techlog training package. The Company is directed to award e-learning credit to pilots who completed the E-Techlog training package pursuant to the formula outlined in the e-learning provision. Therefore, the grievance is sustained in its entirety.’ (emphasis in original).
[120] Cathay argued that the US Arbitrator’s decision should be given little weight by the Commission because it was in a different jurisdiction and under a different legislative framework. While this is obviously true, the Commission is still able to inform itself in any matter it sees fit, pursuant to s 590 of the Act. In addition, Cathay’s position is again inconsistent on two fronts.
[121] Firstly, it was Cathay which sought to delay dealing with the present Grievance for the very reason the issue was squarely before the US jurisdiction. In a letter to the Association of 8 March 2019, Cathay said:
‘The company’s position in relation to e-Learning has not changed, however we would request that the parties hold this matter over in abeyance until the outcome of the e-learning dispute in the USA which is now close to a decision.
Presumably, if the Arbitrator’s decision had gone the other way, Cathay would have urged me to give it significant weight. Further, I note that Cathay’s arguments in the US, case are the same as they have run here; see: [119] above.
[122] Secondly, Mr McEwan’s ‘fleet specific’ reference in the FAQ document arose from a direct reference to an issue that had arisen in the United States where Pilots in a particular fleet (B777) were required to undertake additional specific anti-harassment training. It was said, that this demonstrated ‘fleet specific’ training was not flying-related. So an obscure US example was relied on by Cathay to persuade the Commission of its preferred construction of the clause, but a US Arbitrator’s decision about the clause generally, and based on similar arguments, was not relevant. This inconsistency and selectivity is breath-taking.
[123] In any event, I consider Mr McEwan’s interpretation of the expression ‘fleet specific training’ to be entirely misplaced. It is not supported by the common understanding of the words used. Fleet is defined, inter alia, in the Macquarie Dictionary, as ‘the vessels, aeroplanes or vehicles of a single transport company or undertaking’. ‘Specific’ is defined as ‘having a special application, bearing or reference; specifying, explicit or definite’. It is difficult to imagine how combining the two words together could mean anything but flying-related (training).
[124] Mr Perry submitted that the Association’s criticism of its case, namely, the importation of words to support its construction, could apply equally to it. However, in my opinion, the Association’s construction not only correctly defines E-Learning as electronic or computer-based learning, but ascribes a meaning which is consistent with the context of the clause itself and the Agreement more broadly, most particularly by the reference to E-Learning training appearing in Schedule 2, for which credit is attributed and payments made. In my assessment, the Association’s construction gives the definition a meaning and purpose consistent with the plain, ordinary meaning of the words and the context in which they appear in the Agreement, consistent with the Clause’s beneficial purpose.
[125] Accordingly, I would answer the questions posed by the Association as follows:
1. E-Learning is computer-based training or learning that is required or directed by the Respondent to be undertaken by an employee, that can be undertaken in their own time using the employee’s own computer equipment and that is not otherwise covered by Schedule 2 of the Agreement.
2. No.
3. Yes.
[126] The dispute is resolved accordingly.
DEPUTY PRESIDENT
Appearances:
J Kennedy, Solicitor, Hall Payne, for the applicant.
D Perry, Solicitor and R Brediceanu, Solicitor, Seyfarth Shaw, for the respondent.
Hearing details:
2019.
Sydney:
9 August.
Printed by authority of the Commonwealth Government Printer
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