Australian Municipal, Administrative, Clerical and Services Union v Electricity Retail Corporation T/A Synergy

[2015] FWC 587

[2015] FWC 587

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Municipal, Administrative, Clerical and Services Union
v
Electricity Retail Corporation T/A Synergy
(C2014/3286)

Electrical power industry
COMMISSIONER WILLIAMS	PERTH, 30 JANUARY 2015

Application to deal with a dispute.

[1] This matter concerns an application made by the Australian Municipal, Administrative, Clerical and Services Union (the ASU or the applicant) under section 739 of the Fair Work Act 2009 (the Act). The respondent is the Electricity Retail Corporation T/A Synergy (Synergy or the respondent).

[2] The application concerns a dispute which the applicant has raised under clause 25 − Dispute Resolution of the Synergy Enterprise agreement 2012 [AE894900] (the Agreement).

[3] The parties have jointly provided an Agreed Statement of Issues in Dispute which identifies the issues as follows:

1. The applicant contends that the respondent is at all times required to pay the applicable ‘Base’ rates (Base Rates) set out in Annexure 1 of the Agreement and not the total fixed remuneration rates (TFR Rates) set out in Annexure 1 of the Agreement. The respondent contends the respondent is at all times required to pay the applicable TFR Rates, and not the Base Rates.

2. The applicant contends that compulsory superannuation contributions must be paid by the respondent with respect to the employees covered by the Agreement in addition to the Base Rates. The respondent contends that, pursuant to clause 7 of the Agreement, compulsory superannuation contributions must be deducted and paid by the respondent with respect to the employees covered by the Agreement from the TFR Rates.

3. The applicant contends that, at the time the Agreement was made, the parties jointly intended, or in the alternative agreed, that the respondent would fund statutory increases in compulsory superannuation contributions. The respondent contends it was never agreed nor was it jointly intended by the parties that the respondent would fund statutory increases in compulsory superannuation contributions.

4. The applicant contends that in the absence of any agreement or joint intention between the parties at the time the Agreement was made, the legislation was designed to operate in a way that would not result in a reduction in employees’ Base Rates. The respondent contends that the legislation is silent as to the intended impact of the superannuation increases on employees’ Base Rates.

5. The respondent contends the applicant’s application in this matter amounts to an ‘extra claim’ under the Agreement. The applicant contends that the applicant’s application in this matter does not amount to an ‘extra claim’ under the Agreement.

The terms of the Agreement

[4] Clauses and other provisions of the Agreement relevant for the purposes of this matter are set out below.

“3. Definitions and Interpretations
...

Total Fixed Remuneration means the remuneration for the position, as determined by the job classification, and is inclusive of base pay, plus payment for reasonable additional hours worked and superannuation. It excludes allowances, performance related bonuses, commissions or incentives (if applicable).”

“7. Payment of Salaries

7.1 Remuneration

The minimum salary that applies to each job classification is contained in Annexure 1 of this Agreement.

The Employee will be paid on a fortnightly basis directly into the Employee's nominated bank account.

The Employee’s Confirmation of Terms and Conditions of Employment Letter will advise the Employee of their job classification and Employee's Total Fixed Remuneration. The Employee's Total Fixed Remuneration has been set to reflect the full requirements of the Employee's position and is inclusive of base pay, plus payment for reasonable additional hours worked (even if the Employee is not required to work any reasonable additional hours) and superannuation.

7.2 Payment of allowances

Allowances specified in this Agreement will be paid in addition to the Employee's Total Fixed Remuneration.

Allowances described in this Agreement will be adjusted by 4% annually commencing 28 February 2013 and each year thereafter.

7.3 Other Payments

The Employee’s Total Fixed Remuneration does not include performance related bonuses, commissions or incentives (if applicable).”

“8. Hours of duty
...

8.2 Reasonable Additional Hours

The Employee may also be required to work additional hours from time to time in order to meet Synergy's operational requirements and the Employee agrees that working additional hours on this basis is reasonable (“reasonable additional hours”) ...

(b) Reasonable Additional Hours Thresholds

(i) Reasonable additional hours should not exceed more than 5 hours in any individual week, 10 hours in any individual month, or a total of 40 hours in a financial year. If the Employee's hours of work exceed any one of these thresholds, they will be entitled to Overtime, as described in clause 8.6.”

“15. Superannuation Contributions

15.1 Choice of fund

Synergy makes Employee superannuation contributions in compliance with the choice of fund requirements under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Legislation Amendment (Choice of Superannuation Fund) Act 2004 as replaced or amended from time to time.

If the employee is, and chooses to remain, a member of the Government Employees Superannuation Board Gold State Fund, Synergy will continue to make the employer contribution, and any subsequent increases to the employer contribution, as required by that fund, in accordance with the rules of that fund.”

“Annexure 1

”

Submissions

The applicant

[5] During the negotiation of the Agreement and at all times subsequent to its approval, it has been the understanding of the ASU that the agreed 4% increases would apply to base salary which would then attract the legislated superannuation guarantee (SG) charge percentage to calculate the TFR.

[6] The ASU remains of the view that the 4% increase is guaranteed by the Agreement and the TFR in Annexure 1 would need to be amended upward to reflect the appropriate SG charge percentage.

[7] Synergy informed its employees that as of 1 July 2013, Synergy will pay the 0.25% SG charge percentage increase over and above the rate provided in Annexure 1 of the Agreement. The effect is to nominally increase employees’ TFR by 0.25%. The ASU agrees with this position.

[8] In February 2014, Synergy made further written statements that as of 28 February 2014, the date from which the next 4% increase took effect, that Synergy will instead only be making a 3.75% increase. Synergy has stated that its reason for reducing the 4% increase to 3.75% is because the 0.25% SG charged percentage is to be absorbed by and, therefore reduces, the employees’ base pay by 0.25%. In the event that the respondent continues to incorrectly apply the Agreement, the next pay cut is due to take effect on 1 July 2014.

[9] The applicant contends that base pay in Annexure 1 represents an employee’s minimum salary as defined by the Agreement and any amendment that seeks to reduce that minimum is in breach of the Agreement.

Application of the Law to the Facts of this case

Step 1 — The ordinary or usual meaning

[10] It is submitted regard can be had to the ordinary and natural meaning of the terms “Base” and “Base Rate” as those terms are defined in their respective dictionary definitions.

[11] The Macquarie Australian Dictionary has the following definitions:

“Base — the bottom of anything, considered as its support; that on which a thing stands or rests”

“Base rate — 2. the regular rate of pay of an employee for a fixed or specified time, excluding extra pay for overtime or other premiums, but used as a basis on which such premiums are calculated”

[12] The Australian Oxford Dictionary has the following definition:

“Base — a part that supports from beneath or serves as a foundation for an object”

[13] The inclusion of a base rate in the Agreement was intended by the parties and is intended to be the rate below which rates of pay cannot fall.

[14] This ordinary and usual meaning is reinforced by the definition of “base rate of pay” provided in section 16 of the Act.

[15] Furthermore it is submitted, the claim that a “base rate of pay” must be the minimum salary payable to an employee for his or her ordinary hours of work is reinforced by section 206 of the Act, which provides that the base rate of pay payable to an employee under an enterprise agreement cannot be less than the base rate of pay payable under an applicable Modern Award.

[16] By definition, the employees’ base rates of pay cannot be reduced.

Step 2 - Industrial definition as a term of art

[17] The term base rate was chosen by the parties advisedly, having regard to the industrial context and to the well-known meaning of that term in that industrial context.

Step 3 — Particular Context of Superannuation

[18] Compulsory superannuation contributions have been a feature of the Australian industrial landscape since the early 1990s.

[19] There can be no dispute that the respondent was aware of its obligation to make compulsory superannuation contributions on behalf of its employees, in the appropriate amount in compliance with its statutory obligations.

[20] There exists some history of disputation between these parties on the effect that superannuation contributions have had on employees’ take home pay, and the resolution of that dispute for employee members of the GESB Goldstate Superannuation Fund Scheme (GESB scheme) was that the employees would not suffer a reduction in their take home pay as a result of increased superannuation contributions.

[21] The applicant submits, the same outcome is appropriate here and would flow as a consequence of the Commission determining that the construction contended for by the applicant is the correct one.

[22] The superannuation legislative framework makes it clear that the obligation to pay superannuation rests with the employer.

[23] Finally, and in the alternative, if (which is not admitted) there is sufficient ambiguity, then consistent with authority the Commission may have regard to extraneous matter.

[24] Both parties were aware of the potential for increases to compulsory superannuation contributions in negotiations for the 2007 and 2009 agreements.

[25] Base Rates have always been a fundamental component of an employee’s TFR, and are acknowledged by the respondent as such.

[26] The inclusion of a column in Annexure 1 of the Agreement which sets out employees’ Base Rates, whether ‘for clarification purposes only’ or not, strengthens the common position between the parties that Base Rates are a fundamental component of an employees’ TFR.

[27] It is submitted both TFR and Base Rates are minimum rates under the Agreement, where the respondent’s obligations change, either due to agreement between the parties or changes at law, neither of these rates can be reduced. Instead, the rates must be commensurately increased, as appropriate, in line with those increased obligations.

[28] Where an employer’s obligations to make minimum superannuation contributions on behalf of an employee increase, that increase cannot operate to lower either an employee’s Base Rate or his or her TFR. Instead, on the basis that the employer superannuation contribution is calculated with regard to Base Rate and then added to it to form the TFR, the TFR must be increased.

[29] Sections 19(1) and 23(2) of the Superannuation Guarantee (Administration) Act 1992 (the SGA Act) define the formula for calculating the minimum contribution that an employer must make to superannuation on behalf of an employee.

[30] The effect of these sections of the SGA Act, read with the Superannuation Guarantee Charge Act 1992 (the SGC Act), is to require an employer to identify an employee’s ordinary time earnings (OTE) and then multiply this amount by the charge percentage for the employee for the quarter. The resulting figure is the minimum level of superannuation that an employer must contribute on behalf of an employee.

[31] An employer’s minimum superannuation contribution for an employee, must be based on that employee’s OTE.

[32] It is submitted the respondent’s current method is to establish an employee’s TFR, and then to arrive at a figure for an employee’s OTE that would result in the OTE plus superannuation (which is, itself, OTE multiplied by the charge percentage) equalling the TFR.

[33] Given that the respondent calculated the TFR figures in the Agreement on the assumption that the superannuation guarantee charge would remain at 9%t, the respondent subtracts the increases in the minimum superannuation contributions introduced by the Superannuation Legislation Amendment (Stronger Super) Bill 2012 from the employees’ OTE.

[34] The result of the respondent’s methodology is a reduction in the employees’ Base Rate, and therefore take-home pay, to the extent of the increase in the minimum superannuation contribution required by section 19(2) of the SGA Act.

[35] Rather than an employer providing superannuation contributions on behalf of an employee in addition to the employees’ OTE, the respondent’s employees are effectively required to contribute the gap between 9 per cent and the increased charge percentage out of their Base Rate. By 2019-2020, provided that the current provisions of the SGA and SGC Acts continue, the respondent’s employees will incur a 3% reduction in their Base Rate by virtue of the respondent’s methodology.

[36] The applicant submits that the respondent’s methodology and its consequences for the respondent’s employees are contrary to SGA and SGC Acts for the following reasons.

[37] Firstly, and as outlined above, the respondent’s methodology explicitly calculates minimum superannuation contributions on the basis of TFR rather than on the basis of OTE as required by section 19(1) and 23(2) of the SGA Act.

[38] Secondly, the methodology defeats the purpose and function of the SGA and SGC Acts in requiring employers to provide minimum superannuation contributions on behalf of their employees.

[39] The applicant submits that the Agreement must be interpreted to require that TFR be increased such that increases to minimum employer superannuation contributions are fully paid by the respondent, rather than being deducted from the Base Rate of the respondent’s employees.

The respondent

[40] Clause 7.1 of the Agreement provides that “The minimum salary that applies to each job classification is contained in Annexure 1 of this Agreement...”.

[41] This is identical to the wording that was used in clause 7.1 of the Synergy Collective Workplace Agreement 2007 [AC309972] (the 2007 Agreement) and the Synergy Collective Workplace Agreement 2009 [AE871319] (the 2009 Agreement).

[42] Clause 3 − Definitions does not contain a definition of “minimum salary” or “salary”. However, Annexure 1 of the Agreement includes a table with the heading “Minimum Salary (Total Fixed Remuneration)”.

[43] Clause 3 of the Agreement also provides that, for the purpose of the Agreement, TFR means “the remuneration for the position, as determined by the job classification, and is inclusive of base pay, plus payment for reasonable additional hours worked and superannuation.”

[44] This definition is then replicated in Annexure 1 of the Agreement.

[45] Therefore, it is submitted, when clause 7.1 is read in the context of the entire Agreement, a reasonable interpretation is that the term “Minimum salary” in clause 7.1 means “Total Fixed Remuneration”, despite the inconsistency of expression.

[46] As such, it is reasonable to interpret the Agreement as placing an obligation on the respondent to (as a minimum) pay each employee to whom the Agreement applies the TFR allocated to their classification as set out in Annexure 1 of the Agreement.

[47] It is noted that Annexure 1 of the 2007 Agreement and the 2009 Agreement contained only TFR rates. Neither the 2007 Agreement nor the 2009 Agreement contained a column in Annexure 1 setting out the anticipated “Base Rates” allocated to each classification.

[48] As such, under the 2007 Agreement and 2009 Agreement, “Minimum salary” can only have meant the TFR Rates of pay set out in Annexure 1 of those Agreements.

[49] There is no evidence that the Applicant ever previously advised the respondent that it understood “Minimum salary” to mean something other than TFR.

[50] It is noted that the Agreement was drafted by non-lawyers. It is submitted that to apply an interpretation that the words “minimum salary” mean something other than TFR would be to take a narrow and pedantic approach to construction which is inconsistent with the accepted rules of interpretation of industrial instruments.

[51] Clause 7.1 and Annexure 1 of the Agreement clearly state that the employees’ TFR is inclusive of superannuation.

[52] Annexure 1 of the Agreement includes, under the columns of the table in Annexure 1 labelled “TFR’”, the words “+4%”. It is reasonable to interpret this as requiring the respondent to increase the amounts shown in the column titled “TFR” by 4% each year. The applicant’s submission that “Annexure 1 provides for three annual increases of 4% on the base rate of pay” is disputed and cannot be reconciled with the express terms of Annexure 1 of the Agreement.

[53] The Agreement does not include any express provision which requires the respondent to increase the employees’ TFR to fund any increases to compulsory superannuation contributions under the SGA Act.

[54] The respondent submits that, when considered as a whole, the Agreement is clear and unambiguous on its terms that the Agreement does not place an obligation on the respondent to increase the TFR of employees to account for increases in compulsory superannuation contributions under the SGA Act.

[55] No evidence has been provided to suggest that it was ever agreed or jointly intended that the respondent would increase the employees’ TFR to fund increases to compulsory superannuation contributions under the SGA Act.

[56] No evidence has been provided to support the Applicant’s submission that, during negotiations for the Agreement and at all times subsequent to its approval, the applicant understood that the agreed 4% increases would be applied to the employees’ Base Rate and not the employees’ TFR.

[57] On the other hand, the respondent has provided evidence that:

(a) the respondent intended that the negotiated 4% increases under the Agreement would always be applied to TFR; and

(b) the respondent never intended that the negotiated 4% increases would be applied to the Base Rates, and superannuation would then be paid on top of this.

[58] The Commission cannot reasonably interpret the Agreement as requiring the respondent to increase the employees’ TFR to fund increases to compulsory superannuation contributions under the SGA Act in the:

(a) absence of any evidence of a shared intention by the parties to this effect; and

(b) face of the respondent’s evidence that it never agreed or intended to fund the compulsory superannuation contributions under the SGA Act.

[59] The fact that the applicant included in its log of claims a request that superannuation be removed from TFR indicates that the applicant knew that the TFR approach to remuneration could result in the employees’ experiencing a reduction in Base Rate or “take home” pay if compulsory superannuation contributions were increased. It is disingenuous for the applicant to now suggest otherwise.

[60] This is further supported by the evidence of the applicant’s witness Ms Juanice Lawson (Ms Lawson) that “the parties continued to disagree over the operation of TFR in relation to superannuation throughout the negotiations for the 2009 and 2012 Collective Agreements” 1.

[61] The evidence is that the applicant requested that superannuation be removed from TFR during the negotiations for the Agreement, and this claim was rejected by the respondent.

[62] There is evidence that the anticipated Base Rates were included in Annexure 1 at the request of the ASU, and the parties jointly intended this inclusion to operate as a “guide” for clarification purposes only. There is evidence that this is why the words “*for clarification purposes. Employees are paid on a TFR basis as per clause 7. Remuneration” were included in Annexure 1 of the Agreement.

[63] There is no evidence that the applicant ever challenged the inclusion of the words ‘*for clarification purposes. Employees are paid on a TFR basis as per clause 7. Remuneration” in the Agreement.

[64] It is noted that the Agreement was signed by Mr Pat Branson, Assistant Brach Secretary, for and on behalf of the applicant. The Applicant is also covered by the Agreement 2.

[65] The respondent submits that the previous agreement by the respondent to administratively increase the TFR of employees who paid superannuation pursuant to the GESB scheme cannot be relied on as evidence that the respondent intended to increase the TFR of employees who paid superannuation pursuant to the SGA Act.

[66] The respondent submits that the applicant has not met the required burden of proof in this matter.

[67] The industrial context in which the Agreement was negotiated is relevant to its interpretation. In particular, it is relevant that:

(a) the respondent and its predecessor historically remunerated the employees on a TFR basis;

(b) agreed incremental wage increases have historically been applied to TFR and not Base Rates; and

(c) at the time the respondent agreed to include the column titled “Base’ in the draft Agreement, the amendments to the SGA Act had not yet been passed (meaning the increases to superannuation under the SGA Act were not, at that time, guaranteed).

[68] Taking into account this industrial context, it is reasonable to interpret the Agreement as requiring the respondent to pay the employees the TFR Rates set out in Annexure 1.

[69] It is also reasonable to interpret the Agreement as requiring the respondent to apply the agreed 4% incremental pay increases to TFR and not the employees’ Base Rates.

[70] It is also reasonable to interpret the industrial purpose of remunerating the employees by way of a TFR structure as being that it allows the respondent to assess the total value of remuneration for each classification included in the Agreement.

[71] The respondent submits that, when read in its industrial context, a reasonable interpretation of the Agreement is that the industrial purpose of including the column titled “Base” in the Agreement was to give the employees some clarification as to what the anticipatedbase component of their TFR would be, prior to the changes to the SGA Act being passed.

[72] The respondent submits that:

(a) the GESB scheme utilises a very different contribution model to the SGA Act, with significantly higher compulsory contributions than those required under the SGA Act; and

(b) only a small number of long serving employees of the respondent are covered by the GESB scheme.

[73] The respondent therefore submits that the industrial context of the GESB scheme is irrelevant, as the circumstances in relation to the GESB scheme are very different to those in relation to the SGA Act.

[74] The respondent is a statutory authority which exists pursuant to, and is governed by, the Electricity Corporations Act 2005 (the EC Act).

[75] The respondent is required to act in accordance with prudent commercial principles and endeavour to make a profit, consistently with maximising its long term value, see section 61 EC Act.

[76] In light of this industrial context, it is reasonable to assume that if the respondent had intended to increase TFR to fund the increases to compulsory superannuation contributions made pursuant to the SGA Act (which is denied), it would have done so by clear words and/or action.

[77] The respondent’s interpretation of Appendix 1 of the Agreement promotes consistency and transparency in how the Agreement is to be applied and TFR is to be calculated and paid.

[78] If the respondent’s interpretation of the Agreement is preferred, the employees will continue to receive the negotiated 4% annual incremental pay increases, calculated on the employees’ TFR rates, each year.

[79] No evidence has been led that any employee will suffer undue financial hardship if the respondent’s interpretation of the Agreement is applied.

[80] On the other hand, if the applicant’s interpretation of the Agreement is applied, there is evidence that this will cause a significant increase in the respondent’s labour costs.

[81] There is no evidence that the respondent ever misled the employees or the applicant in relation to statutory superannuation contributions.

[82] To the contrary, there is evidence that the respondent has taken all reasonable steps to:

(a) communicate with the employees and advise them of the changes to compulsory superannuation contributions, and the impact this will have on the employees’ take home pay going forward; and

(b) as a matter of good faith, assist the employees with meeting the increased compulsory superannuation contributions by administratively providing 0.25% of the 4% increase to the employees early, on 1 July 2013.

[83] This application amounts to a claim for increased TFR. It is clear on the face of the Agreement that the parties intended the Agreement to be a comprehensive statement of the parties’ rights and obligations with respect to TFR and superannuation, with no avenue for extra claims to be made by the employees during the life of the Agreement. It would be unfair and unjust to allow the applicant to now pursue a claim which was rejected by the respondent during bargaining.

[84] The correct interpretation is that the respondent is obliged to apply the agreed incremental increases to TFR and any increase in compulsory superannuation contributions under the SGA Act may be deducted from the employees’ TFR.

[85] The respondent’s interpretation of the Agreement is entirely reasonable and is consistent with:

(a) the overall drafting of the Agreement;

(b) the concept of TFR;

(c) the historical application of pay increases to TFR by the respondent;

(d) the industrial context in which the Agreement was negotiated; and

(e) the evidence in relation to the framers’ intentions at the time the Agreement was negotiated.

[86] The respondent is currently complying with its obligation to pay the TFR rates contained in Appendix 1 of the Agreement, and is not in breach of the Agreement.

[87] If the respondent’s interpretation of the Agreement is upheld, this will resolve the dispute fairly and effectively. The respondent’s interpretation of the Agreement addresses the point of contention between the parties without disturbing the industrial purpose and context in which the Agreement was negotiated.

[88] If the applicant’s interpretation of the Agreement is preferred, the Agreement will be fundamentally different to that which was agreed to by the respondent during the negotiations. This would be an unjust result and would undermine the collective bargaining process the parties engaged in when negotiating for the Agreement.

Findings

[89] Considering the evidence I find the following.

[90] Synergy has historically paid its employees on a basis of TFR and wage increases have historically been applied to this amount.

[91] The parties were aware of the potential for increases to compulsory superannuation contributions during negotiations for the 2007 and 2009 Agreements.

[92] Annexure 1 of the 2007 and 2009 Agreements only had columns for TFR, there were no columns headed Base.

[93] The Applicant included in its log of claims for the Agreement a claim that superannuation be removed from the TFR. This claim was rejected by Synergy.

[94] During the negotiations for the Agreement the parties were aware that the Federal Government might legislate for further increases to the compulsory superannuation contributions. The parties discussed the implications if such increases were legislated and Synergy did state that one possible outcome would be that employees would have to absorb the increase through a reduction in their take-home pay or alternatively Synergy may exercise its discretion and increase employees’ take-home pay.

[95] During the negotiations for the Agreement the employee bargaining representatives suggested that some employees were confused when they tried to compare the TFR Rate in the Agreement with rates offered by other employers who framed their offerings as base rates of pay.

[96] To deal with this concern the parties agreed to insert additional columns entitled “Base”into Annexure 1 and Synergy drafted the amendment including the notation “for clarification purposes. Employees are paid on a TFR bases as per clause 7. Remuneration” and calculated the amounts to be included in these new columns by deducting the superannuation rate applicable at the time of 9% from the corresponding TFR for its classification at the respective dates.

[97] Synergy informed its employees that as of 1 July 2013, Synergy will pay a 0.25% SG charge percentage increase over and above the total fixed remuneration rate provided in Annexure 1 of the Agreement. The effect was to nominally increase employees’ TFR by 0.25%.

[98] In February 2014, Synergy informed its employees that as of 28 February 2014, the date from which the next 4% increase in Annexure 1 took effect, Synergy would only be making a 3.75% increase. Synergy stated that its reason for reducing the 4% increase to 3.75% was because the 0.25% SG charged percentage is to be absorbed and therefore reduces the employees’ Base Rate by 0.25%.

[99] Synergy has on occasions increased the employer contribution it pays for its employees who are members of the GESB scheme which is a defined benefit fund. Only a handful of employees covered by the Agreement are members of the GESB scheme.

Principles of construction of agreements

[100] In the matter of The Australasian Meat Industry Employees Union
v Golden Cockerel Pty Limited 3 a Full Bench of the Commission provided guidance as to the principles to be applied by the Commission when interpreting agreements. The Full Bench set out those principles as follows:

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) 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;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

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

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

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

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is 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.

10. 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.”

Consideration

[101] Central to the issues in dispute is what amount the Agreement requires Synergy to pay its employees to whom the Agreement applies.

[102] Clause 7 of the Agreement deals with various issues of payments and is titled “Payment of Salaries.”

[103] Subclause 7.1 − Remuneration says:

“The minimum salary that applies to each job classification is contained in Annexure 1 of this Agreement.”

[104] Annexure 1 of the Agreement is titled “Job Classifications Salaries”.

[105] Annexure 1 is in the form of a table made up of a column of job classifications and six adjacent columns which include dollar amounts for each job classification.

[106] The table has the following major heading:

“Minimum Salary (Total Fixed Remuneration)
Includes Base Pay, payment for any Reasonable Additional Hours and Superannuation”

[107] At this point it should be noted that clause 3 − Definitions and Interpretations includes a definition of “Total Fixed Remuneration”, which means:

“...the remuneration for the position, as determined by the job classification, and is inclusive of base pay, plus payment for reasonable additional hours worked and superannuation. It excludes allowances, performance related bonuses, commissions or incentives (if applicable).”

[108] Beneath this major heading referred to in paragraph [106] above is a table with a column listing job classifications and an adjacent column headed “Base February 2012”, and then another column headed “TFR February 2012” and similar columns for the years 2013 and 2014.

[109] Immediately beneath the column headed “Base February 2012” there is the following:

“*for clarification purposes. Employees are paid on a TFR bases as per clause 7. Remuneration”

[110] Immediately beneath the column headed “TFR February 2012”there is the following:

“+4%”

[111] These words respectively appear beneath each similar column headed either “Base”or “TFR”.

[112] I note that the words “minimum salary” are not defined in clause 3 − Definitions and Interpretations of the Agreement.

[113] It is clear that the letters TFR are an abbreviation of total fixed remuneration.

[114] Considering these provisions of the Agreement it is quite clear when reading clause 7 − Payment of Salaries together with Annexure 1 that the words “minimum salary”used in the first sentence of subclause 7.1 − Remuneration are synonymous with the words “Total Fixed Remuneration”.The heading of Annexure 1 which has the words “Total Fixed Remuneration” included in brackets immediately after the words “Minimum Salary” is consistent with this as is the fact that the reference to “minimum salary” in clause 7 − Payment of Salaries is not repeated after the first sentence and the balance of the clause refers to an employee’s employment letter specifying the “total fixed remuneration” for their job classification and then explains what are the various components that make up “total fixed remuneration”.

[115] Considering clause 7, which is titled “Payment of Salaries”, and specifically subclause 7.1 which is titled “Remuneration”, it is clear that the salary to be paid (or the remuneration) for each job classification is the TFR contained in Annexure 1. This interpretation is consistent with the fact that the definition of TFR says it means “...the remuneration for the position, as determined by the job classification”.

[116] It is express from the definition of TFR contained in clause 3 that TFR “...is inclusive of base pay,..”.

[117] The corollary of this interpretation of clause 7 in paragraph [115] above is that the clause does not create any requirement for Synergy to pay the “...base pay”. The requirement of clause 7 is for Synergy to pay the respective TFR.

[118] Indeed there is no provision within the Agreement that imposes any payment obligation on Synergy with respect to “...base pay”.

[119] This is consistent with the fact that in Annexure 1 each of the columns headed “Base”has the following statement immediately thereunder, “*for clarification purposes. Employees are paid on a TFR bases as per clause 7. Remuneration”. These words in the Agreement need to be given effect to as a purposeful notation.

[120] The columns headed “Base” are additional columns included in the Agreement which were not in previous iterations of the parties’ agreement. The words immediately following “Base”in my view are to be interpreted as meaning that the purpose of this column of figures is to provide clarification that this column does not change the fact that employees are paid on the basis of TFR and employees are not paid the amounts in the Base column. Consequently there is in my view no ambiguity that arises due to the existence of the two sets of columns headed “Base” and “TFR”in Annexure 1 and the meaning of the Agreement can be found from the plain meaning of its words.

[121] The approach above considers the provisions of the Agreement together in context and is consistent with the industrial context being the history of the Agreement’s predecessor agreements.

[122] Turning to consider the particular issue of obligations with respect to superannuation under the terms of this Agreement, clause 15 − Superannuation Contributions provides that Synergy will make contributions in compliance with the choice of fund requirements under the superannuation legislation. Further if the employee is a member of the GESB scheme, Synergy will continue to make the employer contribution and any subsequent increases to the employer contribution as required by that fund. Finally the clause provides that employees may request that Synergy deduct additional contributions from their salary and Synergy will remit such sums to the employees’ nominated fund.

[123] The evidence is that on occasions as required Synergy has for the handful of employees who are members of the GESB scheme increased the employer contributions that are paid.

[124] Clause 15 does not deal with the background circumstances to this dispute where the Government makes changes to the superannuation legislation such that employers are generally required to pay an increased amount of superannuation. There is no other provision in the Agreement that deals with this situation.

[125] The applicant has put extensive submissions regarding their view as to the proper application of the superannuation legislation. The issue in dispute in short is that in response to increases by the Government in the amount of superannuation contributions Synergy is required to pay it has, other than on one occasion for a short period, met the increase in superannuation contributions by reducing the employees’ take-home pay and in this way it has maintained the TFR paid.

[126] It is clear from the various provisions in the Agreement, specifically the definition of TFR in clause 3, the references to the concept in subclause 7.1 and in the heading of Annexure 1 that the respective amounts of TFR for each job classification are inclusive of superannuation.

[127] There is no provision in the Agreement that suggests at all that the amount of any future increase in superannuation contributions is to be paid in addition to the TFR. It is obvious that to interpret the Agreement in this manner which the applicant proposes would be to ignore the ordinary meaning of both “total” and “fixed” which in this Agreement is further reinforced by using the words together. For the Agreement to be interpreted to mean that changes to superannuation contributions requires Synergy to pay additional remuneration above the amounts specified in the columns headed TFR in Annexure 1 is to render the words “Total Fixed ...” meaningless.

[128] There is nothing in the evidence of the surrounding circumstances including the negotiations of the Agreement and the subsequent actions of Synergy which demonstrate ambiguity or that support an alternative interpretation.

[129] I do not accept the evidence demonstrates that at the time the Agreement was made that the parties intended or agreed that Synergy would separately fund increases to compulsory superannuation contributions. There is no evidence that inserting the additional columns entitled “Base” into Annexure 1 was intended to change Synergy’s obligations under the Agreement. There was no common understanding to this effect and the words of the Agreement do not reflect this.

[130] Further the construction of the Agreement is not altered by the fact that Synergy has at times increased the employer superannuation contributions paid to employees in the GESB scheme nor by the fact that it did for a period from July 2013 pay increased superannuation until the date of the next 4% increase in the TFR in February 2014. The Agreement operates to set the minimum rights and obligations of the parties meaning that Synergy is able to pay more than the Agreement obliges it to at any time. There is no prohibition on this. However the fact Synergy has provided on occasions greater pay or conditions, at its discretion, beyond its obligations under the Agreement does not alter what those obligation are. These actions do not change the plain meaning of the Agreement 4.

Conclusion

[131] In conclusion applying this construction to the issues in dispute my decision is that Synergy is required to pay the applicable TFR, which is the total fixed remuneration, but there is no requirement to pay the “Base” amounts contained in Annexure 1.

[132] Compulsory superannuation contributions must be deducted and paid by Synergy with respect to the employees covered by the Agreement from the TFR Rates.

[133] It was never agreed or jointly intended by the parties that Synergy would fund statutory increases in compulsory superannuation contributions.

[134] The legislation is silent as to the intended impact of the superannuation increases on employees’ Base Rates.

[135] In the absence of evidence that the applicant pursued this application whilst privately acknowledging the respondent’s interpretation was correct there is no basis to interpret the application as something which was an extra claim.

COMMISSIONER

Appearances:

S Millman, solicitor for the applicant.

K Reid, solicitor for the respondent.

Hearing details:

2014.

Perth:

October 28

 1   Exhibit A2 at paragraph 22.

 2   [2012] FWAA 5337.

 3   [2014] FWCFB 7447.

 4   [2013] FWCFB 3491 at paragraph [17].

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