Australian Federation of Air Pilots v Regional Express Holdings Limited
[2011] FWA 1465
•8 APRIL 2011
[2011] FWA 1465 |
|
DECISION |
Workplace Relations Act 1996
s.170LW - pre-reform Act - Application for settlement of dispute (certified agreement)
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 10 - Application to vary transitional instrument to remove ambiguity
Australian Federation of Air Pilots
v
Regional Express Holdings Limited
(C2010/741)
Regional Express Holdings Limited
v
Australian Federation of Air Pilots(AG2011/5480)
REGIONAL EXPRESS PILOTS’ AGREEMENT 2005
Airline operations | |
VICE PRESIDENT WATSON | SYDNEY, 8 APRIL 2011 |
Dispute concerning interpretation of clauses of agreement - whether additions to salaries adjusted - whether extension allowance extends to check and training pilots - application to vary agreement to remove ambiguity or uncertainty - Workplace Relations Act 1996 - s 170LW - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Schedule 19; Schedule 3, Item 10.
Introduction
[1] This decision concerns two applications involving the Regional Express Pilots’ Agreement 2005 (the Agreement). The first is an application by the Australian Federation of Air Pilots (AFAP) to have a dispute resolution procedure conducted in relation to a dispute with Regional Express Holdings Limited (REX) in accordance with the Agreement and pursuant to s 170LW of the Workplace Relations Act 1996 (the WR Act) (the dispute settlement application).
[2] The dispute settlement application concerns two disputed interpretations of the Agreement relating to the adjustment of check and training pilots salary additions and the application of a different allowance to check and training pilots.
[3] By virtue of Schedule 19 to the Fair Work (Transitional and Consequential Amendments) Act 2009 (the Transitional Act), the WR Act continues to apply to disputes relating to the Agreement and Fair Work Australia (FWA) may exercise relevant powers vested in the Australian Industrial Relations Commission (AIRC) under the WR Act and the Agreement. The Agreement provides that disputes concerning the proper application of the Agreement may be referred to the AIRC for arbitration. The procedure states that any decision of the AIRC must not create additional obligations beyond those set out in the Agreement.
[4] The second application is an application by REX pursuant to Item 10 of Schedule 3 of the Transitional Act to vary the Agreement to remove an ambiguity or uncertainty (the REX application).
[5] Item 10 of Schedule 3 of the Transitional Act is set out below:
“10 All kinds of transitional instrument: variation to remove ambiguities etc.
(1) On application by a person covered by a transitional instrument, FWA may make a determination varying the instrument:
(a) to remove an ambiguity or uncertainty in the instrument; or
(b) to resolve an uncertainty or difficulty relating to the interaction between the instrument and a modern award; or
(c) to remove terms that are inconsistent with Part 3-1 of the FW Act (which deals with general protections), or to vary terms to make them consistent with that Part.
Note: For variation of a transitional instrument to resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards, see item 26.
(2) A variation of a transitional instrument operates from the day specified in the determination, which may be a day before the determination is made.”
[6] Conciliation was conducted between the parties and the matter was not able to be resolved. At the hearing of the matter on 28 February 2011 Mr L Cox represented the AFAP and Mr D Trindade of counsel, represented REX.
[7] The REX application seeks an alternative outcome to the dispute settlement application and therefore the applications are conveniently considered together. The AFAP contends that the check and training allowances in clause 64 should be adjusted in accordance with clause 62 of the Agreement. REX submits that this was not the intention of the parties to the Agreement and any ambiguity over that issue should be removed by an amendment to clause 62.
[8] Further, the AFAP submits that check and/or training pilots are entitled to the benefit of the extension payments in clause 40.2.4 where a period of duty is extended. REX contends that check and training captains are not entitled to the extension payments.
[9] The second dispute also concerns competing interpretations of the Agreement. Both disputes therefore primarily relate the proper interpretation of the relevant clauses of the Agreement.
The relevant clauses of the Agreement
[10] The dispute settlement application concerns clauses 40.2.4, 62 and 64 of the Agreement. The REX application seeks to vary clause 62 of the Agreement. The relevant clauses are set out below.
[11] Clause 40.2.4 provides:
“40.2.4 A pilot whose duty period is extended either before sign on, during or after sign off, in accordance with clause 40.2.1 or by mutual consent shall receive a payment of $75(Captain)/$50 (First Officer) per hour for the time a duty period is extended with a minimum payment of one hour. This allowance will increase by CPI annually commencing on 1 July 09.
In the case of a pilot who has accepted a tour of duty in accordance with clause 39.7 or 41.10 28 - the payment shall be at the rate specified in clause 39.7 with a one hour minimum.
A Pilot whose Duty Period is extended or changed in accordance with clause 40.2.1 (b), (c) or (e) is not entitled to this duty extension payment. A pilot whose Duty Period is extended in accordance with clause 40.2.1 (a) is not entitled to this duty extension payment unless the extension is caused by aircraft substitution for operational reasons not associated with the pilots rostered duty and the substitute aircraft is not available prior to scheduled departure time or arrival operating crew whichever is the later.
The method of calculating and administering such payments shall be agreed between the RexPC and the company”
[12] Clause 62 provides:
“62 SALARIES
The following base salaries and additions will apply from the first pay period after the commencement of this Agreement and will be increased by 2% plus the 12 month CPI figure based on the weighted average of eight capital cities as at March of each applicable year and as published by the Australian Bureau of Statistics. (Where the CPI figure is negative no decrease in salary shall occur.) The increases will be effective annually on 1 July 2009, 5 July 2010 and 30 June 2011.
...”
[13] Clause 64 provides:
“64 ADDITIONS TO SALARY
64.1 In addition to the salaries specified in clause 62, the following payments will be made:
64.1.1 A Training Captain will receive a pro rata allowance each month equivalent to $14,500 p.a for each month that they are appointed to perform training duties.
64.1.2 A Check Captain Grade One will be paid an annual allowance of $20,000 p.a. The allowance will be paid in fortnightly instalments with salary.
64.1.3 A Check Captain Grade Two will be paid an annual allowance of $32,000 p.a. The allowance will be paid in fortnightly instalments with salary.
64.2 A Check Captain Grade three will be paid an annual allowance of $40,000 p.a. The allowance will be paid in fortnightly instalments with salary.
64.3 Pilots in receipt of additions pursuant to clause 64.1 will be required to remain current from the right hand seat of the aircraft and may be rostered as such”
Adjustment to Additions to Salary
[14] The parties adopt conflicting interpretations of Agreement. The AFAP contends that the Agreement requires the application of the percentage increase and CPI adjustment in clause 62 to the additions to salary contained in clause 64 of the Agreement.
[15] The AFAP submits that clause 64 provides additions to salary and that clause 62 provides a mechanism for the adjustment of the payment. It submits that the definition of salary in clause 3.35 describes the relevant clauses and their relationship to each other. Clause 3.35 reads:
“ ‘Salary’ will mean base salaries and additions to base salaries prescribed by clauses 62, 63 and 64 of this Agreement.”
[16] The AFAP submits that there is no ambiguity or uncertainty created by the wording in clauses 62 and 64, and that the definition of salary in clause 3.35 makes clear the intent that the additions to salary in clause 64 are to be regarded as part of the salary and subject to adjustment in accordance with clause 62. The AFAP submits there is no ambiguity or uncertainty and that to grant the variation in the terms sought would alter the intent of the Agreement to provide an annual adjustment to payments under clause 64. It submits that varying the Agreement as sought by REX would also be against the public interest and leave it open to parties to make further claims once negotiations have been settled.
[17] REX submits that the check and training allowances in clause 64 of the Agreement are not subject to the increases in clause 62 of the Agreement.
[18] REX contends that the words “and additions” in clause 62 give rise to an ambiguity and uncertainty in that it does not identify the “additions” to which the clause is intended to apply. The REX application seeks the removal of those words.
[19] Both parties led evidence concerning the events leading to the Agreement including communications between them during the negotiation process. REX led evidence from Mr James Davis, Managing Director and Mr Chris Hine, General Manager of Flight Operations and Chief Pilot of REX, both of whom were involved in the negotiation of the Agreement. The AFAP led evidence from Captain Brad Dean a check pilot involved in the Agreement negotiations.
[20] Mr Davis gave evidence that the negotiations for an increase to allowances for check and training pilots was substantially negotiated between himself and Captain Dean. He said that the Management Committee decided to allocate $300,000 per annum for check and training increases in the Agreement, and that it was envisaged that this would be a lump sum applicable each year over the life of the Agreement.
[21] In September 2008 during the negotiations, a copy of a draft email that was to be sent to check and training pilots outlining the changes to the Agreement that related to check and training pilots and recommending pilots accept the offer was sent by Captain Dean to Mr Davis for his comments. 1 Some changes to the email were made to the draft email by Mr Davis.2
[22] Captain Dean’s draft relevantly said: “This will be your Check and training allowance for the financial year 2008/2008 and will increase as per the pilots EBA (Currently being negotiated) in subsequent years.”
[23] Mr Davis recommended that the sentence be changed to read: “This will be your Check and training allowance for the financial year 2008/2009 and will increase in accordance with what is negotiated in the pilots EBA for subsequent years.”
[24] Mr Davis contends that these changes were made to clarify the position of REX in relation to the check and training allowance in clause 64 and that he wanted to make it clear that REX had not agreed to increase the check and training allowance.
[25] The negotiations over the Agreement occurred at the same time and spread over the course of 2009. The Agreement was ultimately finalised in mid 2009. At one point Mr Cox, suggested that the check and training allowances should be salary rather than allowances. Mr Davis rejected this and said they should remain as allowances. The words “and additions” in clause 62 were inserted by Mr Gravitis on behalf of the Pilots Committee in June 2009. The change did not arise from any communication or discussion with REX. The Agreement was subsequently reviewed by REX and voted on (unsuccessfully) at the end of June 2009 but this change was not noticed by Mr Davis. The Agreement was voted on and agreed in its current form in December 2009.
[26] Captain Dean gave evidence that the negotiations surrounding an increase to the check and training allowances in clause 64 of the Agreement followed an approach by this group of pilots seeking an increase due to significant workload increases. He submitted that the original amount sought by the pilots was rejected by REX and a lesser amount was approved by the Management Committee. Captain Dean submitted that he understood from the amendment made by Mr Davis to his September 2008 email to the check and training pilots that the amounts would be adjusted after 2008/2009. 3 Captain Dean denies that he was told that the figure of $300,000.00 was a lump sum that would apply each year over the life of the Agreement.
[27] It is well established that industrial agreements, often not drafted by lawyers, should be interpreted in a practical and common sense way without too much regard to technicalities or narrow pedantic interpretations. The context of the Agreement is important as is the need to read the document as a whole. Nevertheless the words of the Agreement are the primary consideration, and in the event of ambiguity to strive to give effect to the intention of the parties to the Agreement.
[28] The approach of Mason J, as he then was, in Codelfa Construction v State Rail Authority of NSW 4 has often been applied to the interpretation of industrial agreements. It provides particular guidance to interpreting ambiguous provisions and the ascertainment of the presumed intention of the parties from an objective review of the facts concerning their negotiations. Importantly, evidence of subjective intentions is not relevant unless it forms part of the objective facts leading to the making of the agreement and thereafter. In other words, the parties may have had different subjective intentions in reaching their agreement. In the case of a dispute over interpretation, the task of a court or tribunal is not to seek to give effect to subjective intentions, but to endeavour to adopt an interpretation of the presumed mutual intention of the parties by an objective review of their communications and surrounding circumstances.
[29] The indexation provision relied on by the AFAP is contained in the Salaries clause of the Agreement, clause 62. It provides that the indexation formula will apply to “The following salaries and additions”. The table then sets out a salary for the two pilot classifications and higher amounts depending on the year of service. The additions in contention in this case are contained in a separate clause, clause 64. They are expressed as flat dollar amounts.
[30] There are two competing interpretations - one that the reference to additions in clause 62 is a reference to the service increments in clause 62 and nothing further. The other interpretation is that the term ‘additions’ includes the additions in clause 64. It appears that the expanded definition of salaries in clause 3.35 does not advance the matter to a significant extent.
[31] In my view the better interpretation of these provisions is that the term ‘additions’ has application to the additions in clause 64. The use of the same word is a strong factor supporting this interpretation. I do not consider that in the context of this clause and the nature of industrial instruments that the location of the contested additions in a separate clause is a strong countervailing factor. However as the matter is not free from doubt I believe that it would be appropriate to have regard to the evidence about the negotiations that led to the Agreement.
[32] In my view the evidence shows that the parties may well have had different subjective intentions as to the indexation of the Check and training additions. There was no express written or oral agreement that the additions would be indexed, beyond the disputed terms of the Agreement itself. However it is significant in my view that in September 2008 the parties expressly communicated that the additions would be indexed in accordance with what was agreed in the negotiations, and that the wording adopted from June 2009 expressly included the reference to additions in clause 62. Both parties rely on these events. In my view they objectively favour the pilots’ interpretation because they establish the origin of the words from the Pilots Committee and were not objected to on their insertion in June 2009 or at any further time up to and including the successful vote in December 2009.
[33] I therefore determine that the proper interpretation of the Agreement is that the additions in clause 64 are to be indexed in accordance with the formula in clause 62. In the light of this conclusion I dismiss the REX application to vary the Agreement. Even if the clause is ambiguous the variation sought is not consistent with the proper interpretation of the Agreement.
Extension Payments
[34] In relation to clause 40.2.4 of the Agreement the AFAP submits that there is nothing in the Agreement that excludes the check and training pilots from the payments. It submits that where a change in work hours occurs for check and training pilots the extension allowance compensates for inconvenience and any additional costs incurred should be compensated in the same way as for a line pilot.
[35] REX submits that the allowance was not intended to apply and does not apply to check and training pilots. Mr Davis gave evidence that an extension of duties for check and training pilots are not due to operational reasons or disruptions. Rather, they occur as part of the normal course of duties for this pilot group and are covered by the substantial increase to allowances for check and training pilots.
[36] In my view there is no basis as a matter of interpretation to exclude check and training pilots from the application of the clause. However the question will always arise as to whether the circumstances contemplated by the clause apply in any given case. It is clear that the nature of check and training pilots is different to operational pilots. The intent of clause 40 appears to be to provide an obligation to accept changes in duty periods for the specified reasons in clause 40.2.1 and a payment in circumstances where this occurs. The specified reasons are short-term operational issues. Changes to the duty period of a check or training pilot may be for quite different reasons, in which case the clause would not have application.
[37] I have considered all other arguments including the argument advanced by REX that the significant increases in allowances is ample compensation for changes of this nature. In my view it has not been established that those increases were intended to apply in lieu of other payments in the Agreement, such as the extensions payment. I would determine the dispute over clause 40.2.4 by concluding that the clause applies to check and training pilots.
Conclusions
[38] I determine the disputes as follows:
- The dispute over the indexation of additions for check and training pilots is determined by finding that the Agreement requires the additions in clause 64 to be increased in accordance with the formula in clause 62.
- The dispute over the application of the extensions payments in clause 40.2.4 is determined by concluding that the clause applies to check and training pilots.
[39] The application for variation to the Agreement is dismissed.
VICE PRESIDENT WATSON
Appearances:
L Cox for the Australian Federation of Air Pilots
D Trindade with J Davis for Regional Express Holdings Pty Ltd
Hearing details:
2011.
Melbourne
28 February
1 Exhibit T1, attachment JD5
2 Exhibit T1, attachment JD6
3 Exhibit T1, attachment JD6
4 (1982) 149 CLR 337
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