Australian Maritime Officers' Union, The v DMS Maritime Pty Limited t/a Serco Defence

[2017] FWC 5201

[2017] FWC 5201

FAIR WORK COMMISSION

DECISION

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

Australian Maritime Officers' Union, The
v
DMS Maritime Pty Limited t/a Serco Defence
(C2016/7055)

Maritime industry
DEPUTY PRESIDENT SAMS	SYDNEY, 18 OCTOBER 2017

Application to deal with a dispute – maritime industry – parity of rates between Masters and Engineers – whether undertaking a matter arising under the Agreement or the NES – limitations of matters in disputes procedure – undertaking not a matter arising under the Agreement - written undertaking provided to the Union post the approval of the Agreement – whether Union’s claim inconsistent with No Extra Claim provision – other provisions do not assist the Union’s case – undertaking plain and clear in its terms – damage to relationship – Commission’s recommendation that Serco should honour its written undertaking.

[1] By application filed on 30 November 2016, pursuant to s 739 of the Fair Work Act 2009 (the ‘Act’), the Australian Maritime Officers’ Union (the ‘Union’ or ‘AMOU’) sought to have the Fair Work Commission (the ‘Commission’) deal with a dispute under the dispute settlement procedure (‘DSP’) found in the Serco Defence Maritime Collective Agreement 2015 (the ‘2015 Agreement’). The respondent to the dispute is DMS Maritime Pty Ltd t/a Serco Defence (‘Serco’).

[2] The dispute originated in the negotiations for the 2015 Agreement in which the Union had raised concerns that Masters on Serco vessels were being paid less that the Engineers they work beside, on the same vessels. It was said that in concluding the negotiations, Serco undertook to provide a written guarantee that Masters would be paid equal to, or more than the Engineers, they work alongside. That guarantee was provided in writing, some six months after the 2015 Agreement was approved by the Commission. This letter, being the focal point of the Union’s case, was provided by Mr David Thus, FMSC Project Director on 10 June 2016. It reads as follows:

“DMS Collective Agreement 2015

We refer to the above Agreement and to the negotiation process that led to the Agreement being made. During those negotiations your Union raised a concern about the issue of wage parity between AMOU members engaged as vessel masters and the engineers employed on those vessels. In particular your Union sought an undertaking that our company would ensure wage parity was achieved in practice on a day to day basis.

This letter confirms our undertaking that on vessels operated by our company under the Collective Agreement, wage levels will be implemented so that the master is paid equal to or more than the engineer ordinarily employed on that vessel. We note that on occasions there may be situations where because of the need for relief crew an engineer may join a vessel on a relief basis and wage parity cannot be achieved. Our company will ensure that only happens in relief situations and is therefore short term and temporary.” [emphasis added]

[3] The Union’s complaint is that Serco has failed, on numerous occasions, to honour both verbal and the written undertaking as set out in the preceding paragraph. It seeks the Commission’s assistance in resolving the dispute.

[4] In accordance with the Commission’s usual practice, the dispute was the subject of a number of conferences before me in an effort to resolve the matter. In addition, the parties have independently engaged in numerous discussions to achieve a satisfactory resolution; all to no avail. During the Commission proceedings, the Union was represented by Mr J Moran, Industrial Officer and Serco has been represented by Mr M Diamond Solicitor, and more recently by Ms E Ferrier and Mr G Phillips of K&L Gates.

[5] When the Commission was advised the matter was unable to be resolved, directions were issued for an arbitration of the dispute in accordance with clause 26.1(a) of the DSP. The parties were directed to confer as to the question the Commission was required to answer in resolving their dispute. However, as the parties could not agree on the question, the Commission decided for itself that the question should be:

“Does any provision of the Serco Defence Collective Agreement 2015 require a qualified master to be paid equal to or more than a qualified engineer working on the same vessel?”

[6] The parties did however, agree to have the question determined ‘on the papers’ and I propose to adopt that course.

[7] On the same day as the Union filed its reply submissions (9 June 2017), a Full Bench of the Commission published a decision in Australian Manufacturing Workers’ Union v Berri Pty Ltd [2017] FWCFB 3005 (‘Berri’), which modified the principles of enterprise agreement interpretation (the ‘Berri Principles’). Hitherto the principles applied by the Commission to such matters were those set out in the decision in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd[2014] FWCFB 7447 (‘Golden Cockerel’). A further Full Bench relied on the modified Berri Principles to uphold an appeal in an interpretation decision at first instance which had been determined before the publication of Berri; see: EnergyAustralia Yallourn Pty Ltd t/a EnergyAustralia v Construction, Forestry, Mining and Energy Union [2017] FWCFB 3574. This prompted me to invite the parties to put further submissions on the relevance and/or application of the Berri Principles to this matter. Accordingly, further directions were issued and the parties filed additional submissions on 26 July 2017.

The 2015 Agreement’s DSP

[8] As Serco has raised a jurisdictional objection to the Commission determining this matter, it is necessary to set out the terms of the 2015 Agreement’s DSP. Relevantly, the objection concerns whether the dispute is ‘about matters arising under the Agreement’. The full clause reads:

It is in the parties’ interest that disputes or grievances about matters arising under the Agreement (or about other matters such as the National Employment Standards) are resolved at the earliest opportunity by means of open discussion. Disputes or grievances that arise between the parties shall be dealt with as follows:

a. The matter should first be discussed with the Employee and the Employee’s Manager or Supervisor.

b. If a mutually satisfactory understanding is not reached after (a) above, and the matter or matters in dispute remain unresolved, the matter or matters will be referred to the relevant Business Unit Manager or Project Manager/Director in an attempt to resolve the dispute.

c. If the matter remains unresolved after the step at (b) above has been taken, the matter may then be formally referred to Human Resources in an attempt to resolve the matter or matters in dispute.

d. If the matter remains unresolved after the step at (c) above has been taken, the matter will then be referred to a Company General Manager and then the Managing Director if still unresolved.

e. If the matter remains unresolved after the step (d) above has been taken, the matter may then be referred to Fair Work Australia for resolution using any of its powers (including powers under section 739 (4)).

f. An Employee or Employees who are party to the dispute are entitled to be represented any time during the process by the relevant union or any professional representative they might nominate. (my emphasis)

SUBMISSIONS

For the Union

[9] Mr Moran set out the history of the negotiations for the 2015 Agreement. At the time, Serco had been represented by Mr Mark Diamond of Workplace Advisory Group and three maritime unions were involved - The Australian Institute of Marine and Power Engineers (‘AIMPE’), The Maritime Union of Australia (‘MUA’) and the Australian Maritime Officers Union (‘AMOU’). Towards the end of the negotiations it was identified that in some instances, Masters on Serco vessels were being paid less than Engineers they work with on the same vessel. This was despite a long standing internationally recognised principle that as the Master is ultimately responsible for the command of a vessel, that person should receive the highest remuneration. Mr Moran demonstrated this principle by referring to the wages structure in the Ports, Harbours and Enclosed Water Vessels Award 2010 [MA000052], which underpins the 2015 Agreement, and which provides the rate for Masters as $917.40 and for Engineers as $873.80 – a difference of 5%.

[10] Mr Moran put that rather than delaying the approval of the Agreement, it was agreed that Serco would provide a written guarantee to the AMOU that Masters on Serco vessels would be paid equal to, or more than the Engineers they normally work beside; (see: para [2]) Mr Diamond proposed a number of draft undertakings which essentially encapsulated the Union’s position. However, Mr Moran claimed that Serco had not complied with the verbal or the written undertaking.

[11] In answering the question posed by the Commission, Mr Moran submitted that Serco’s stated position, as later confirmed in the letter of 10 June 2016, and accepted by the employees as part of the Agreement negotiations, was a clear and deliberate policy intention of Serco. Mr Moran particularly relied on clause 2.6 of the Agreement which reads as follows:

“This Agreement is supported by policies, procedures and other employment related documents (e.g. letters of engagement; ‘Serco Employment Conditions and Benefits’) that may set out other employment conditions and benefits of Employees however where there is an inconsistency, the terms of this Agreement shall prevail.”

Mr Moran argued this clause is an enabling provision in the 2015 Agreement which requires Serco policy to be implemented. At the very least, the 10 June 2016 letter must be an ‘employment related document’ setting out other employment conditions and benefits. It followed that clause 2.6 of the 2015 Agreement requires Serco to comply with its policy and pay Masters equal to, or more than the Engineer they normally work beside. Orders were sought accordingly and any additional salary should be backdated to 1 January 2015.

For Serco

[12] Mr Phillips’ submissions firstly addressed the Commission’s jurisdiction to deal with the matter. It was put that the authorities make plain that the Commission only has power to deal with matters the parties themselves authorise the Commission to determine, as expressed in the DSP of the Agreement; see: Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16 (‘CFMEU v AIRC’). So it was said, the only matters the Commission has power to determine are those set out in clause 26, which limit disputes to matters arising under the 2015 Agreement and the NES. Given the matter in dispute concerns the enforcement of the 10 June 2016 letter, which is self evidently not a matter under the Agreement or the NES, (and the Union cannot point to any term in the Agreement that refers to the matter), the Commission has no jurisdiction to deal with the matter.

[13] Mr Phillips rejected as irrelevant, the Union’s purported claim of a long standing internationally recognised principle concerning the remuneration of the Master of a vessel and the Union’s reliance on the rates of pay under the Modern Award.

[14] Mr Phillips also rejected that Union’s reliance on communications between Serco’s representative and the Union as extrinsic material which could only be relevant in the context of construing the term of an enterprise agreement; see: Golden Cockerel, where the term is ambiguous. There is no clause dealing with the 10 June 2016 letter; let alone an ambiguity in a clause which does not exist.

[15] Mr Phillips observed that the Union’s submissions concede there is no express requirement in the Agreement that requires a qualified Master to be paid equal to, or more than a qualified engineer working on the same vessel. Moreover, the Union’s claim that clause 2.6 (see: para [11] above) ‘calls up’ the terms of the letter must be rejected because:

(a) Clause 2.6 does not incorporate, as terms of the Agreement, the documents referred to in the clause; and

(b) Even if cl 2.6 incorporates some external documents, the letter is not a policy, procedure or other employment related document.

[16] Furthermore Mr Phillips submitted that cl 2.6 is not ambiguous. By the use of the word ‘supported by’ evinces the intention that the documents operate external to the 2015 Agreement, in a supporting capacity. The clause merely acts as a pointer to other documents which may set out additional employment conditions or benefits. If the parties had intended such documents to form part of the 2015 Agreement, they would have used words to incorporate such documents in the body of the 2015 Agreement.

[17] It was also said that the 10 June 2016 letter is not a policy, procedure or other employment related document. It contains no specific conditions or benefits. Rather, it is a document of future intent as to comparative pay levels. Mr Phillips put that to the extent the terms of the 10 June 2016 letter might be relevant (which they are not), the letter was not a guarantee, but an intention of Serco as to relative pay levels at an unspecified future date.

[18] In addition, Mr Phillips noted that the 10 June 2016 letter post dates the approval of the 2015 Agreement. If the Union’s position was accepted, it would mean that an employer could create documents that impose obligations on employees after an Agreement had been approved. This would be a perverse result, and one which would be inconsistent with the Act.

[19] Finally, it was put that the Union is, in a de facto sense, seeking an order that Masters’ wages be increased. This is contrary to the No Extra claims clause in the Agreement (cl 12). For all these reasons, the question posed by the Commission should be answered in the negative and the Union’s application should be dismissed.

In reply

[20] Mr Moran noted that the Commission’s powers to deal with this dispute are broadly expressed at cl 26.1(e). They state that disputes or grievances which remain unresolved ‘may be referred to Fair Work Australia for resolution using any of its powers (including powers under section 739 (4)’. While the Union seeks an order in this matter, it was open to the Commission to deal with the dispute by making a recommendation.

[21] Mr Moran relied firstly on cl 6.3 of the 2015 Agreement which states, inter alia:

“These consultative mechanisms shall be the process for addressing any issues, which may give rise to disputes, with the objective of ensuring that the Company’s reputation for reliability of services is not damaged or undermined and that continuity of service to customers is maintained during any dispute or grievance.”

[emphasis added]

Secondly, cl 12(2)(e) which states: ‘Any concerns of Employees arising under this Agreement must be dealt with under the grievance and dispute resolution procedure’, and thirdly, he put that the dispute relates to the Classifications and Salary Rates in cl 20.

[22] Mr Moran rejected Serco’s submission challenging the relevance of the status and standing of Masters. In particular, he relied on the definition of Master under the Navigation Act 2012 (Cth) and various international conventions which make it clear that the Master, as the most senior person on the vessel, is paid the highest remuneration. This evidence provides context to Serco’s commitment to pay Masters equivalent to, or more than the Engineer they work beside.

[23] Mr Moran furthersubmitted that the 10 June 2016 letter was a Serco policy. He relied on the ordinary meaning of ‘policy’ from the Macquarie Dictionary to put that a policy ‘is a definite course of action’ that Serco intended to take. Mr Moran added that the letter simply provided more specific detail of employment benefits of employees in accordance with cl 2.6 of the Agreement.

[24] Mr Moran responded to Serco’s claim that as the 10 June 2016 letter post dated the Commission’s approval of the Agreement, it would follow that its incorporation into the Agreement would be inconsistent with the Act. He said that it was not the Union’s fault the letter was supplied post approval, as the Union had made many requests for the commitment in writing prior to, and post the approval by the Commission.

[25] Finally, Mr Moran rejected the argument that the Union’s case was inconsistent with the No Extra Claims provision in the 2015 Agreement. Mr Diamond, Serco’s representative, had described Serco’s commitment as a ‘deal’.

Further submissions as to the ‘Berri Principles’

[26] I set out the Berri Principles below:

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. 

For the Union

[27] Mr Moran relied on cl 2.6 as being significant because its placement in the Scope and Application of the 2015 Agreement indicates that the entirety of the employment conditions for employees may not necessarily be found in the Agreement. However, he acknowledged that the 2015 Agreement prevails to the extent of any inconsistency. He made particular reference to cl 17, Health and Safety, which also makes reference to company safety policies and procedures.

[28] Mr Moran relied on the evidence concerning the negotiations for the 2015 Agreement and submitted it was agreed, without question by all parties to the negotiations, that Serco would implement Master/Engineer pay parity. He again cited various documents, including communications from Mr Diamond, on behalf of Serco. Mr Moran also relied on communications to the employees before the vote for the 2015 Agreement’s approval that certain rates of pay would be altered so that Masters would be paid more than Engineers. Serco had no problem with these communications one of which stated: “Classifications SB01 and SB02 rates of pay are to be reviewed and discussed in relation to the rate for Engineer.”

For Serco

[29] Mr Phillips submitted that the ‘Berri Principles’ do not impact upon the:

(a) Commission’s lack of jurisdiction to deal with this matter;

(b) the appropriateness of the question posed by the FWC; and

(c) the correct approach to the status of the 10 June 2016 letter.

[30] Mr Phillips addressed each of the ‘Berri Principles’ as follows:

[31] Principle 1 - there is no term in the 2015 Agreement requiring a qualified Master to be paid equal to, or more than a qualified engineer working on the same vessel. Clause 2.6 does not support a construction which incorporates the 10 June 2016 letter. The 2015 Agreement unambiguously sets out the agreed paid rates in Schedule A. Having regard to legislative context, under the Union’s construction, employees would be liable to penalties for breaches of employment related documents that were not in existence at the time the 2015 Agreement was approved.

[32] Principle 2 - It was impermissible to effectively rewrite the 2015 Agreement by creating rates of pay which are inconsistent with the agreed rates in Schedule A.

[33] Principle 3 - The intention of the parties is clear. It was to classify employees and set out rates of pay in Schedule A. There is no need to go beyond the terms of the Agreement to objectively determine the parties’ intention.

[34] Principle 4 - An enterprise agreement may be inferred to establish binding obligations. However, that does not mean an agreement cannot include matters in the nature of statements of aspiration or commitment that may not be enforceable. Clause 2.6 is one such term.

[35] Principle 5 - Serco put that the 10 June 2016 letter to the Union cannot form part of an enterprise agreement, because agreements are made with the employees to be covered by the agreement (not the Union); see: s172(2)(a) of the Act. Moreover, the letter was not issued to employees as part of the voting process.

[36] Principle 6 - Modes of textual analysis may assist in the interpretation of enterprise agreements, but an overly technical approach should be avoided. Serco’s construction approach is to rely on the plain meaning of the Agreement when read as a whole.

[37] Principle 7 - Serco noted that the Union had not suggested there is any ambiguity in the Agreement’s terms.

[38] Principle 8 - Consideration of evidence of ‘surrounding circumstances’ cannot be called upon where no ambiguity exists.

[39] Principle 9 - Evidence of ‘surrounding circumstances’ will not be admitted to contradict the plain language of the Agreement. The Union seeks to rely on ‘surrounding circumstances’; namely the 10 June 2016 letter. The plain language would be contradicted by (a) the inclusion of a term that does not exist and (b) the no extra claims provision cl 12.2.

[40] Principles 10 – 14 - There is no ambiguity in the 2015 Agreement, nor is the language susceptible to more than one meaning. Therefore, evidence of surrounding circumstances is not admissible.

[41] Principle 15 - Subsequent conduct is not relevant, as no ambiguity exists.

CONSIDERATION

Jurisdiction of the Commission

[42] Given Serco’s submission that the Commission has no power to determine the question or resolve the dispute by arbitration, it is necessary to have regard to the statutory provisions and the terms of the Agreement’s DSP, in order to establish whether such a submission can be made good.

Relevant statutory provisions and principles

[43] Section 738 of the Act provides as follows:

“Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.”

[44] The Union’s application was made pursuant to s 739 of the Act. The section states:

“Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[45] Section 739 is to be read in conjunction with s595 of the Act. That section reads:

“FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation;

(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.”

[46] In Woolworths Ltd t/a Produce and Recycling Distribution Centre [2010] FWAFB 1464 the Full Bench considered the powers of the Commission when dealing with disputes and said at paragraph 19:

“The section is concerned with the powers the tribunal may exercise in dealing with disputes. Section 595(1) provides that Fair Work Australia may only deal with a dispute if it is expressly authorised to do so. Section 595(2) provides that the tribunal may deal with a dispute by mediation, conciliation, making a recommendation or expressing an opinion subject to the qualification that it may not deal with the dispute by arbitration. Section 595(3) permits the tribunal to arbitrate if it is expressly authorised to do so. Section 595(4) operates to confer procedural powers. It seems to us clear enough from the text of these provisions that the legislature intended that Fair Work Australia can deploy voluntary methods of dispute resolution without the consent of the parties to the dispute, provided the dispute is one with which it is authorised to deal, but can only arbitrate if it has been specifically empowered to do so.”

[47] The dispute resolution procedure of the 2015 Agreement confers jurisdiction on the Commission to deal with disputes or grievances in relation to ‘matters arising under the Agreement’. There is nothing in the dispute resolution procedure that would operate to limit the Commission’s powers, with respect to any particular matter arising under the 2015 Agreement.

[48] In Seven Network (Operations) Limited v CPSU, the Community and Public Sector Union (PR933766) a Full Bench of the Australian Industrial Relations Commission (AIRC) was considering an appeal against an Order issued by a single member. In allowing the appeal the Full Bench considered the process of determining jurisdiction and found (at paragraph 32) that:

“… to determine whether a dispute is over the application of the agreement requires a finding which characterises the dispute. This requires a finding as to jurisdictional fact. The first issue on appeal which the Full Bench must be concerned with is whether a dispute existed, on the evidence, over the application of the agreement. There is a need to characterise the dispute and then to decide whether the dispute, thus characterised, has nexus or sufficient nexus to the provisions of the agreement itself…”

[49] It is necessary to have regard to the nature of a dispute, said to arise under the terms of the 2015 Agreement, having regard to the original notification and the relevant factual circumstances as they evolve through the process of conciliation and arbitration of the dispute. Such a broad approach was endorsed by the Full Bench of the AIRC in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Holden Limited (PR940366) where the following is stated:

“[45] A dispute referred to the Commission must be properly characterised before powers conferred by a dispute settlement provision in a certified agreement are exercised. This is necessary in order to determine whether the dispute is ‘over the application of the agreement’ within the meaning of s.170LW of the WR Act. As noted by a majority of the Full Bench in Automated Reading Services (AMRS) v ASU, this expression has not been judicially considered. The majority went on to observe that:

“A relationship between the provisions of the relevant agreement and the subject matters in dispute would appear to be an essential element in the identification of any dispute over the application of the agreement. ...”

[46] We adopt these observations. Further, in our view the expression should not be narrowly construed. In this context we agree with the observation of the Full Bench in Shop, Distributive and Allied Employees Association v Big W Discount Department Stores that:

“...what comprises a dispute over the application of the agreement should not be narrowly construed; to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.”

[47] In characterising the nature of the dispute in this matter the Commission is not confined to the dispute notification document. The entire factual background is relevant, including matters such as the submissions advanced. In this context we note that in TWU v Mayne Nickless Ltd the Full Court of the Federal Court held that in determining whether an application calls on the Commission to exercise judicial, as opposed to arbitral, power ‘a court should review the entire factual background to properly characterise the claim and the power sought to be invoked.’

(Endnotes omitted)”

[50] More recently, in Construction, Forestry, Mining and Energy Union v Mt Arthur Coal Pty Ltd [2016] FWC 2959, Saunders C helpfully set out the relevant legal principles to be applied when considering the terms of a DSP in an enterprise agreement. I respectfully adopt the Commissioner’s approach, which I set out below:

‘[6] The test under s.739 of the FW Act is whether the dispute settlement procedure in the enterprise agreement “requires or allows” the Commission to deal with the dispute. It is therefore necessary to look at the text of the dispute settlement procedure, understood in light of its industrial context and purpose, to determine whether the dispute, properly characterised, falls within it.

[7] The scope of a dispute settlement procedure in an enterprise agreement should not be narrowly construed; “to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.”

[8] In characterising the nature of a dispute the Commission is not confined to the application filed to deal with the dispute. The entire factual background is relevant, and may be ascertained from the submissions advanced by the parties on the question of jurisdiction. Further, a dispute may evolve during proceedings in the Commission. It may therefore be necessary in some cases when ascertaining the character of a dispute to have regard to both the nature of the dispute alleged in an originating application and the factual circumstances as they evolve.

[9] It is also important to note that the character of the dispute is distinguishable from any relief which may be sought, or granted, following an arbitration of the dispute. However, the relief sought may cast light on the true nature of the dispute in some cases.

[10] If the Commission has jurisdiction to deal with the dispute, the nature of the relief that the Commission may grant in such circumstances will depend on the limitation in s.739(5) of the FW Act and the agreement of the parties as recorded in their enterprise agreement, provided that such relief is reasonably incidental to the application of the Enterprise Agreement to which the dispute relates.’ (Footnotes omitted)

[51] It is trite that the Commission can only determine matters which the parties, through the terms of their agreement, expressly empower the Commission to determine; s 739(5); see: CFMEU v AIRC. The Commission is not at large to deal with matters beyond those arising under the Agreement, the NES or other matters which might arise under the contract of employment, or incidental to it, including the employer’s policies. Obviously, matters which do not pertain to, or are incidental to the employment relationship are also not matters which the Commission can deal with.

[52] In returning to the jurisdictional issue, it is necessary for the following matters to be addressed for there to be a valid s 739 dispute application under the Agreement. These are:

(a) there must be a dispute, issue or grievance which can be properly identified and characterised; see: Construction, Forestry, Mining and Energy Union v Mt Arthur Coal Pty Ltd [2016] FWC 2959 at paras [6] to [10];

(b) the subject matter of a dispute, issue or grievance must be about ‘matters under this Agreement or the NES’;

(c) the parties must have followed the procedure in Steps (a)-(d) of cl 26;

(d) the Commission may determine the dispute, issue or grievance by conciliation and/or by arbitration: s 739(4);

(e) in determining the dispute, issue or grievance the Commission must have the necessary power to make the relief sought by the party requesting such relief; and

(f) the Commission would not ordinarily order the relief sought, if there is no practical utility in doing so; see: Schweppes Australia Pty Ltd v United Voice [2012] FWC 643 at [41].

[53] In my view, there is no doubt the Commission has the power under the 2015 Agreement to arbitrate disputes or grievances, without the requirement for the consent of both parties. I do no apprehend there to be any contest about that proposition. However, that power is limited to the matters expressly set out in cl 26.1. Thus, the DSP limits the role of the Commission to determining a dispute only:

(a) about matters arising under the Agreement and/or

(b) in relation to the NES (s 739(3).

[54] Notwithstanding the Union’s submissions concerning cl 26 (other employment related documents) which I will attend to shortly, I am satisfied that the letter of 10 June 2016 is not a matter arising under the Agreement. In my opinion, there can be little doubt that the dispute concerns the failure of Serco to honour its undertaking expressed in the letter of 10 June 2016. When viewed in this light and accepting that neither the letter, nor its terms can be found anywhere in the Agreement, meaning one does not get to whether the term is ambiguous or uncertain, the question posed in this case must be answered in the negative. But that is not the end of the matter.

[55] It is patently clear that the 10 June 2016 undertaking to the Union is expressed in clear, unambiguous and plain English language. It can only be read as providing a guarantee, that save for the incidental exception as to relief situations which are short term and temporary, the Master will be paid equal to, or more than the Engineer, ordinarily employed on the vessel. That this was the obvious intent of Serco was also made manifest by the exchanges between Mr Diamond and the Union in the final stages of the negotiations for the 2015 Agreement.

[56] Whether these exchanges are properly characterised as extrinsic material not permissible in considering the meaning of the clause, if no ambiguity exists, is not the point. As the Union correctly acknowledged, there is no clause in the 2015 Agreement dealing directly (or even indirectly) with wage parity between Masters and Engineers. Consequently, there is no provision to be interpreted, to which the Berri Principles would apply. Viewed in this way, I am doing no more than considering the plain intent of Serco when it engaged with the Union through Mr Diamond and subsequently it provided a written undertaking in the 10 June 2016 letter based on these exchanges. It follows that enterprise agreement interpretation principles can have little to do with my observations about the nature of this dispute.

[57] While I do not go so far as to suggest that the Union was duped by Serco, it is regrettable and disappointing that Serco has apparently not honoured its own undertaking. I do not understand that Serco seriously contends otherwise (nor could it). It is not clear to me why this is so - perhaps naively, the Union accepted the verbal and written communications from Serco and acted in good faith so as not to delay the 2015 Agreement’s approval. In my view, Serco’s reneging on its undertaking stands in contrast to the bona fides of the Union, which accepted Serco’s word and written assurances. I am sure the Union will not make the same mistake again.

[58] Unfortunately, I am bound to say that Serco’s position in this dispute does not reflect well on it. Its conduct may well have damaged the relationship it has with the Union. Of course, these observations do not answer the strict legal position as to the status of the undertaking. In my view, it would have been entirely open for the Union, during the Commission proceedings for the approval of the 2015 Agreement, to require Serco to give an undertaking, pursuant to s 190 of the Act, in similar terms to the 10 June 2016 letter. Such an undertaking would then become a term of the Agreement, pursuant to s 193 of the Act. This would have made the legal question of the status of the 10 June 2016 letter, ineluctable and beyond doubt. However, the correct legal position under the Fair Work Act and in light of the history, is rather less obvious.

[59] As I said earlier, it is accepted that there is no express Agreement provision which would provide sound grounds for finding that the dispute is about a matter arising under the Agreement, as required by the DSP.

[60] Nevertheless, the Union relied on cl 2.6 and posited that the 10 June 2016 letter was an ‘employment related document’ and therefore part of the Agreement’s terms. At first glance, that is not a submission without some merit. However, such a conclusion would mean that every policy, procedure, Company direction, personnel file, letter, memo, warning or disciplinary record related to an employee’s employment, would be, ipso facto, a term of the 2015 Agreement.

[61] I am unable to accept that clause 2.6 can be given such a wide and expanded meaning. That said, I note that many agreements include provisions that Company policies and procedures are to be read in conjunction with an agreement, or support the agreement and employees are bound to comply with such policies and procedures. However, that does not necessarily mean they become enforceable terms of the Agreement. It will very much depend on the language used as to whether a particular policy or procedure is a term of an agreement. I do not think it can simply be inferred. There have been many disputes in the Commission about the status and enforceability of such policies and procedures, but that does not assist the Union’s case here.

[62] In this respect, I refer to what Senior Deputy President Hamberger said in Construction, Forestry, Mining and Energy Union v Thiess Pty Ltd[2012] FWA 6985, where the words ‘supported by policies and procedures’ were found in a term of the Agreement there under consideration. At paragraph 10 His Honour said:

“In construing the effect of clause 5.2 one accordingly needs to read carefully the words used. The clause states that the agreement ‘will be supported by policies and procedures determined by the Company as amended from time to time.’ The use of the word ‘will’ implies that this is more than an ‘aspirational’ statement. It is a ‘substantive’ provision which amounts to a commitment that there will be policies and procedures which will ‘support’ the agreement. These policies and procedures ‘will not reduce substantive entitlements’ contained in the agreement ‘but provide guidelines for the fair and efficient administration of the employment relationship and operations of the Company ...’. A failure to provide such policies and procedures would be a failure to comply with the terms of the agreement. However the agreement is only to be ‘supported by’ these policies and procedures. In this context that would mean the agreement is to be ‘backed up’ or ‘assisted’ by the policies and procedures. That is quite different from saying those policies and procedures are incorporated into the agreement, such that a breach of those policies and procedures would amount to a breach of the agreement itself. Nor does clause 5.2 provide a binding commitment always to ‘fairly administer the employment relationship’ such that any allegation of unfair treatment would ipso facto amount to a dispute pertaining to the agreement. Rather there must be policies and procedures that provide guidelines for the fair and efficient administration of the employment relationship. (my emphasis)”

[63] Given that the crux of the clause His Honour considered - namely, the Agreement being supported by policies and procedures of the Company - is relevantly the same as cl 2.6 in the 2015 Agreement, I adopt the same approach as His Honour. Accordingly, I conclude that cl 2.6 cannot be read to incorporate the 10 June 2016 letter into the 2015 Agreement.

[64] The Union also relied on cl 6.3 of the Agreement (see: para [26] above) with its words ‘the process for addressing any issue which may give rise to disputes’, as demonstrating Serco’s breach of its undertaking was a matter arising under the Agreement. Regrettably, I cannot agree. Clause 6.3 must be read as a whole; see: ‘Berri Principles’. It is clear that it deals with ‘action which may disrupt the Company’s services to customers’. That is not the case here. There was no evidence of any action which had, or may disrupt the Company’s service to customers. Accordingly, cl 6.3 cannot be called in aid of clothing the Commission with jurisdiction in this matter.

[65] Similarly, reliance was had on cl 12.2(e) to establish the Commission’s jurisdiction. Clause 12 deals with ‘No extra claims’ and refers to any employee concerns arising under this Agreement. It reads as follows:

12. No Extra Claims

12.1 It is contemplated that the making of this Agreement between the Company and Employees will satisfy the parties in relation to rates of salary and other terms and conditions of employment. The parties agree that during the operation of the Agreement Employees will not pursue salary claims over and above those set out in this Agreement.

12.2 The parties to this Agreement shall not pursue any extra claims during the operation of this Agreement except as provided in Clause 19 Redundancy of this Agreement.

d. The Company will implement salary increases in accordance with the terms of the Agreement;

e. Any concerns of Employees arising under this Agreement must be dealt with under the grievance and dispute resolution procedure.

As I have earlier found a ‘concern’ must be about the term of the Agreement and as no such term exists, it is axiomatic that the undertaking cannot be dealt with under the DSP.

[66] That said, I consider it somewhat disingenuous for Serco to submit that the Union’s position amounted to a de facto ‘extra claim’ contrary to cl 12 of the Agreement, given its own preparedness to accept the proposition that Masters should be paid equal to, or more than Engineers, in its undertaking of 10 June 2016 and its earlier communications; see also my consideration of a similar submission in Transport Workers' Union of Australia v Qantas Ground Services Pty Limited[2017] FWC 4813.

[67] While I have concluded that the Commission has no power to make the orders sought by the Union, I do not feel under any constraint as to expressing an opinion or issuing a recommendation about the unfortunate position the Union has found itself in, as discussed earlier.

[68] Section 577 of the Act sets out the broad principles the Commission is to apply in the performance of its functions and exercise of its powers under the Act. The section reads as follows:

577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a)  is fair and just; and

(b)  is quick, informal and avoids unnecessary technicalities; and

(c)  is open and transparent; and

(d)  promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

[69] It is my strong recommendation, that in order to promote harmonious and cooperative workplace relations between the parties during the life of the Agreement; see: Shop, Distributive and Allied Employees Association re Shop, Distributive and Allied Employees Association v Big W Discount Department Stores[2002] AIRC 1376 at paragraphs 23-24, that Serco should take all necessary steps to ensure that its undertaking expressed in Mr Thus’ letter of 10 June 2016 is honoured during the life of the 2015 Agreement.

DEPUTY PRESIDENT

Appearances:

Mr J Moran, Industrial Officer for the Union.

Mr G Phillips, for Serco.

Final written submissions:

26 July 2017.

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