Australian Municipal, Administrative, Clerical and Services Union v North East Water

[2014] FWC 6922

[2014] FWC 6922

FAIR WORK COMMISSION

DECISION

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

Australian Municipal, Administrative, Clerical and Services Union
v
North East Water
(C2014/4291)

Water, sewerage and drainage services
COMMISSIONER WILSON	MELBOURNE, 6 OCTOBER 2014

Alleged dispute concerning implementation of changes in fleet policy.

[1] An application made by the Australian Municipal, Administrative, Clerical and Services Union (the ASU) on 2 May 2014 notified the Fair Work Commission (the FWC) of a dispute arising under the North East Water Enterprise Agreement 2011. 1 The dispute relates to changes sought to be made by North East Water to its Fleet Management Policy, which impacts on the limited private use some employees have for the motor vehicles they drive which are owned and maintained by North East Water.

[2] The application seeks the FWC resolve the dispute pursuant to s.739 of the Fair Work Act2009 (the Act) by making determinations that;

“a. That limited private use as defined by the First Policy falls within the terms and conditions of employment for employees of the Respondent who were offered, and accepted such use as part of their employment;

b. That the Respondent shall continue to afford the provisions of the First Policy to employees to whom the First Policy applied at 5 May 2014; and

c. Of any other orders that the Commission sees fit”. 2

[3] The references to the “First Policy” are references to a document attached to the witness statement of one of the ASU’s witnesses, and which is said to be the North East Water Fleet Management Policy prevailing in 2009. 3

[4] For the reasons set out in this decision, I have decided the dispute is within the Commission’s jurisdiction to deal with, and that;

• The claim by North East Water to withdraw from its Fleet Management Policy a category of vehicle use known as “Limited Private Use”, and to change employees’ conditions of employment withdrawing the benefit of vehicles for use in accordance with the category is a further claim within the meaning of clause 4 of the North East Water Enterprise Agreement 2011;



• North East Water is entitled to pursue further claims in relation to salary increases or conditions of employment within the framework of the Act; such as to seek a variation to the Agreement through the procedures set out in Part 2-4, Division 7 of the Act; or to bargain for a new agreement once the existing instrument has passed its nominal expiry date;



• In the absence of agreement of the parties either to change conditions of employment through variation of the existing agreement or bargaining for a new one, or through settlement of the dispute by other means, the North East Water Agreement 2011 does not provide authority to implement its claim in respect of “Limited Private Use”.

Background

[5] The North East Water Agreement 2011 was approved by Commissioner Roe on 31 July 2012 and expressed to have an operative date of 7 August 2012 and a nominal expiry date of 29 August 2014. 4 The Agreement covers the North East Water Corporation (which is referred to throughout this decision as “North East Water”) and all employees, and through the approval decision of Commissioner Roe, it also covers the ASU and the Association of Professional Engineers, Scientists and Managers, Australia.5

[6] Certain employees of North East Water have access to North East Water owned and maintained motor vehicles. This access is granted through various means, and controlled through a documented Fleet Management Policy, which has changed over time, and is now the subject of a further change intended by North East Water. Some versions of documents provided in the hearing refer to this policy as the “Fleet Policy” or the “Fleet Management Procedure”. The evidence indicates the arrangements for the use of these vehicles has, until the time of North East Water’s 2014 changes to its Fleet Management Policy, fallen into several categories;

• vehicles which are only driven for work-related purposes;



• vehicles which nominated employees are permitted to drive to and from their home, with no private use permitted (described as “Commuter Use”);



• vehicles which assigned employees may drive to and from their homes with permitted private use (described as “Limited Private Use”);



• vehicles assigned to executive employees with salary packaging arrangements and which have greater private use arrangements.

[7] The dispute now before the Commission particularly relates to a decision by North East Water to phase out the Limited Private Use category. This means that certain employees will no longer have access to a North East Water vehicle for purposes that may previously have been permitted. The evidence shows that prior to the decision that gave rise to this dispute, Limited Private Use meant use of the vehicle by the employee with travel distance in 2009 being “restricted to a 200 kilometre radius from the drivers base work location and to/from Melbourne unless otherwise authorised by the Chief Financial Officer”. 6

[8] The “First Policy” documentation provided by the ASU from 2009 shows there may originally have been no restriction on who may drive the vehicle, if permitted by the person responsible for the vehicle 7, whereas the North East Water documentation from 2006 shows the vehicles may only be driven by the employee and not family members or friends (except when the employee was in the vehicle with a non-employee driver)8. The context of this dispute does not require me to resolve this inconsistency.

[9] The Fleet Management Procedure from June 2011, being the “prevailing Policy subject to review” in March 2014 9 set out a more beneficial entitlement, at least in respect of the travel distance arrangements;

“Limited Private Use (Inclusive of administration pool vehicles)

Limited Private Use refers to NEW provided vehicles where a reasonable private use component includes up to a 250 kilometre travel distance from the driver's base work location and to/from Melbourne unless otherwise authorised by the Executive Manager Customer and Financial Services. Monitoring of the frequency of this use will be the responsibility of the Area Manager in conjunction with the Executive Manager Customer and Financial Services

As this category of use makes no formal contribution or sacrifice for the private use component it is not an entitlement associated with any particular level or band. It is approved by the relevant Executive Manager as reward for exceptional performance and is accordingly subject to periodic review.

• The benefit is for the exclusive use of the employee, and can't be delegated to any other person. An alternative driver is only permitted to drive the vehicle when the employee is in the vehicle.

• Vehicle must be made available for use in the vehicle pool if the person responsible is absent for more than one week - unless otherwise authorised by the Executive Manager Customer and Financial Services.

• Vehicles must be marked with the appropriate Corporation logos.

Vehicles must be available for use in the vehicle pool at all times, and may be required for use by other employee's for Corporation business, including overnight and extended work related purposes.” 10

[10] The ASU contends that the correct application of the North East Water Enterprise Agreement 2011 (the Agreement) requires North East Water to continue to provide the Limited Private Use category for some or all employees who previously received a benefit.

[11] The parties’ submissions relied upon the following provisions of the agreement as clauses relevant to the settlement of this dispute;

“4 No Further Claims

4.1. The parties undertake that for the life of this Agreement there shall be no further claims in relation to salary increases or conditions of employment sought or granted, except for those granted under the terms of this Agreement.

5 Monitoring and Consultative Committee

North East Water will establish a Monitoring and Consultative Committee to facilitate consultation with Employees and to adopt procedures appropriate to the size, structure and needs of the workplace.

5.1. The Committee's role will include:

5.1.1. Monitoring the implementation of the Agreement including reporting on the delivery of identified outcomes including the realisation of efficiency gains to support the wage increases provided for in clause 6.2;

5.1.2. Resolving concerns and I or issues raised by Employees relating to the Agreement;

5.1.3. Provide a forum for improved communication and consultation between Management and Employees on any issues affecting employees.

5.2. The first meeting of this Committee should take place within three (3) months after the Agreement commences operation and will determine future scheduling of meetings.

5.3. Six (6) months prior to the expiration of this Agreement, the Committee will dissolve and a new Monitoring and Consultative Committee will be established.

5.4. Such Committee will be composed of:

5.4.1. 2 x Management Representatives;

5.4.2. 2 x Indoor Staff Representatives;

5.4.3. 2 x Outdoor Staff Representatives consisting of one Northern Region staff and one Southern Region staff.

55 Consultation of Change

Employer to Notify

55.1. Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the Union, Employees who may be affected by the proposed changes and their nominated representatives.

55.2. Significant effects include termination of employment, major changes in the composition, operation or size of the Employer's workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of Employees to other work or locations and restructuring of jobs; changes to the legal or operational structure of the Employer or business; changes in technology; outsourcing.

Employer to discuss change

55.3. The employer must discuss with the Union and relevant Employees affected and their representatives, the introduction of the changes referred to in Clause 54.2, the effects the changes are likely to have on Employees and measures to avert or mitigate the adverse effects of such changes on Employees and must give prompt consideration to matters raised by the Employees and/or their representatives in relation to the changes.

55.4. The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 54.2.

55.5. For the purpose of such discussion, the Employer must provide in writing to the Employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed; the expected effects of the changes on Employees and any other matters likely to affect employees.

55.6. As soon as a final decision has been made, the Employer must notify the Union and the Employees affected and their nominated representatives, in writing, and explain the effects of the decision.

55.7. The Employer must act in good faith in relation to the consultation process provided in this clause.

55.8. In this clause 'Good Faith' includes obligations to meet, disclose relevant information, genuinely consider proposals and respond with reasons, and to refrain from capricious or unfair conduct that undermines consultation”.

[12] In addition to these clauses, the FWC, needs to have regard to the provisions of clause 58 (Dispute Resolution Procedure) of the Agreement, which is a term of an enterprise agreement providing a procedure for dealing with disputes. 11 Clause 58 provides;

“58 Dispute Settling Procedure

58.1 The parties to this Agreement are committed to good industrial relations practices and procedures based on consultation and goodwill. The employer shall ensure that they advise employees subject to this procedure that they may be represented by their union from the beginning of this procedure.

58.2 If a dispute arises about this Agreement or the NES the parties to this dispute will attempt to resolve the dispute at the workplace level. An employee who is a party to the dispute may appoint a representative, including a union representative, for the purposes of the procedure in this clause.

58.3 A representative appointed by an Employee, who is also an Employee of the company, shall have reasonable access to resources (including photocopier, telephone, fax machine, email and noticeboard) to perform their role.

58.4 A representative appointed by an Employee, who is also an Employee of the company, shall be released to perform their role on paid time.

58.5 Where a dispute occurs (whether any such dispute or claim arises out of the operation of this Agreement or not) regarding the wages and conditions of employment of any employee covered by this Agreement the following procedure shall apply:

58.5.1 Any dispute shall, in the first instance, be discussed between the Employee(s) concerned, their representative if requested, and the immediate line manager. The line manager or supervisor must make a genuine attempt to resolve the matter speedily.

58.5.2 If the matter cannot be resolved, it will be referred to the appropriate line manager who will attempt to resolve the matter speedily. The line Manager shall consult with a representative appointed by the employee when endeavouring to resolve the matter.

58.5.3 If the matter is still not resolved, the matter shall be immediately referred jointly, for discussion, to a manager with industrial relations responsibility, the employee(s) and their representative if requested.

58.5.4 If the matter cannot be resolved, it may be referred to a mutually agreed independent mediator (from an agreed list of mediators) who may exercise powers of conciliation or arbitration and whose decision will be binding subject to prior agreement by the parties.

58.5.5 Should the matter still be unresolved either party shall be entitled to refer it to Fair Work Australia for conciliation and, if necessary, arbitration. All parties will abide by any decision resulting from a matter being referred to FWA.

58.5.6 If arbitration is necessary, the parties agree that FWA shall exercise all powers as are necessary to make the arbitration effective.

58.5.7 While these procedures are being followed, both parties agree that on a ‘Without prejudice’ basis there will be no change to existing work or management practices or procedures, so that the status quo is maintained.

58.5.8 During the entire period of the dispute, from the time when the matter first arises until the time of its resolution (at whatever stage the resolution occurs) normal work shall continue, unless the performance of normal work would place at risk the health and safety of the employee(s) concerned.

58.5.9 If a dispute arises due to a change in work practices, then for the duration of the resolution procedure, the Employees will revert to work practices in place prior to the dispute arising and the union will not undertake any industrial action in relation to the dispute”.

[13] Section 739 of the Act provides for the FWC to deal with a dispute if a term such as clause 58 requires or allows such dealing. Subsection 739(6) requires that the FWC may only deal with a dispute on application by a party to the dispute, which threshold is met by the ASU’s application. In addition, s.739(3) requires the FWC not exercise any powers limited by the Dispute Resolution Procedure; and s.739(4) provides the FWC may arbitrate the dispute in accordance with the term if the parties agreed that such may be done. Subsection 739(5) provides the FWC must not make a decision that is inconsistent either with the Act or with the North East Water Agreement 2011.

[14] The material before the FWC in this matter consists of the outlines of submissions of both parties and witness evidence from two employees of North East Water giving evidence on behalf of the ASU, together with two employees of North East Water providing evidence on behalf of the Respondent.

[15] The persons who gave evidence on behalf of the ASU were Craig Piazza, who holds the position of Supervisor Electrical/SCADA (Zone 2), and Damien Kelly, employed as an Automation and Electrical Supervisor. Each of Mr Piazza and Mr Kelly are employees affected by North East Water’s change in policy, since both have had Limited Private Use vehicles available to them for some time. The evidence received on behalf of North East Water was from John Day, Executive Manager Operations and Rebecca Jhonston, Manager People and Culture.

[16] Ms Jhonston’s evidence was that the removal of the Limited Private Use arrangements was part of North East Water’s changes to its Fleet Management Policy which were;

“...mainly necessitated by legislative changes to FBT which dramatically increased the cost to North East Water of providing limited private use of corporation-owned vehicles to certain members of staff dependent upon their positions within the organisation.” 12

[17] Mr Day elaborated as follows in his statement on the background to the changes and how they came be to be adopted by North East Water;

“These changes were underpinned by the investigation and findings of a representative working group from the Senior Management Team (SMT), including:

• the consistency of principles applied to the usage of administration vehicles, with contributions sought for private use arrangements;



• the additional costs incurred as a result of the increase in FBT associated with maintaining limited private usage for team leaders and outdoor staff, where no contribution was currently being received. (The changes to FBT involved the cost to North East Water of providing new vehicles for private use nearly tripling, which could no longer be sustained by the organisation);



• the policy position on the use of private vehicles for Corporation business.” 13

[18] Mr Day’s evidence is that the changes made by North East Water were discussed in an executive meeting on 12 March 2014 and presented to an operations group meeting on 26 March 2014. His evidence is that at the close of the latter meeting it was agreed there would be a further meeting with the coordinators (who are substantially the group of people to be affected by the changes) and that at the following meeting it was intended there would be a discussion of the recent changes together “with possible compensation for loss of private use of the vehicles” 14.

[19] Mr Day’s evidence is that there was a dialogue between the management representatives and affected employees over the period of March to May 2014. According to Mr Day’s witness statement, the dialogue extended to possible compensation for the changes to be made. The parties negotiated around the “Bands” at which employees were classified 15 and the possible quantum of a one-off payment to be made by North East Water in return for the loss of Limited Private Use of a North East Water vehicle. By the end of May 2014 it was apparent to Mr Day that agreement was not going to be reached over the proposed changes and possible compensation for loss of benefit for at least Mr Piazza and Mr Kelly, who were indicating they “were still going to arbitration”16.

[20] Ms Jhonston provided in her witness statement what she describes as “a copy of the proposed amended Fleet Management Policy, with an issue date for April 2014”. 17 The Policy is expressed to have been issued on 4 April 2014, having been approved by the Manager Finance18 and relevantly provides the following arrangements in respect of vehicle use that is not strictly in relation to operational requirements;

“B.6. EXECUTIVE AND SENIOR MANAGER VEHICLE SCHEME

Executive and Senior Managers may have the option of being provided with a Corporation vehicle through a salary sacrifice arrangement. Executive and Senior Managers meet fringe benefits tax cost as per the statutory formula rate. Any decision to provide such vehicles will be at the discretion of the Managing Director having regard to the business needs of the Corporation.” 19

...

“B.7. COMMERCIAL OR OPERATIONAL VEHICLE USAGE

Commercial vehicles (utilities) are provided principally for the operational duties required in the field. The following section details the allowed use for commercial and operational vehicle usage.

B.7.1. Business Usage

Business Usage refers to a vehicle that is used during work hours and is parked at the depot overnight.

B.7.2. Commuter Usage

Commuter Usage refers to North East Water provided vehicles where the private use component is restricted to an employee's travel to and from North East Water and the employee's place of residence. This category is for staff with availability or call-out responsibilities as part of their role. The vehicle:

• is restricted to work related travel only, and non-work related use that is minor, infrequent and irregular (for example, on-call duties, or occasional use of the vehicle to remove domestic rubbish);



• is restricted to incidental travel in the course of performing employment-related travel;



• is only driven by the allocated responsible employee or other authorised Corporation staff;



• is marked with the appropriate Corporation logos; and



• is available for use in the vehicle pool at all times, and may be required for overnight and extended work related purposes by other employees for Corporation business.” 20

[21] There is no precise evidence before me about the policy that applied to either Mr Piazza or Mr Kelly at the time they started having access to a North East Water vehicle with “Limited Private Use” (which, in each case, was in 2009 21). Mr Piazza’s witness statement attaches a version which is contested by North East Water, and which he says was provided to him at the time he was appointed to the position of Supervisor Electrical.22 Ms Jhonston’s witness statement disputes that the document put forward by Mr Piazza was the one actually applying to him at the time, and instead puts forward 2006 and 2009 versions which she believes are the versions that actually applied.23

[22] Each of Mr Piazza and Mr Kelly gave evidence to the effect that they have worked in their present positions since 2009 and that when they were moved into the positions they now hold they were provided with Limited Private Use access to a North East Water motor vehicle. In the case of Mr Piazza, his evidence includes;

“As part of my promotion to this position, North East Water gave me limited private use of a car. I was given limited private use under the Fleet Policy without any reduction or trade-off in my terms and conditions of employment, but I was not re-banded or reclassified when I was promoted. ... Because I was getting the limited private use, I did not seek a reclassification or any re-banding when I began in the supervisor’s role.” 24

...

“I currently drive a Toyota dual-cab 4x4 Hilux 2012. I rely upon this vehicle to get around for work and personal travel, because my wife drives the only car we own. For us to make ends meet, she works three days a week in Wangaratta and doesn’t get home until nearly 7.00pm on her work days. On these days I use the North East Water vehicle to transport my children from after school care to home. Then I use it to take my two daughters to dancing classes on Tuesday nights at 6.00pm, and pick them up.

During Winter, my daughters play netball on Wednesday nights at 4.30pm and I take them there and come back to pick them up. I also use the vehicle on Saturday mornings to drive my son to Auskick. I use the vehicle on most Saturday afternoons to drive to the golf course for a round. As we could not afford to buy a second car, if the vehicle was removed as part of my employment conditions I would not be able to drive my children to their activities.” 25

[23] Mr Kelly’s evidence on this matter includes;

“As part of my position, North East Water gave me limited private use of a North East Water vehicle in March 2009. I currently drive a 2013 4x4 Dual Cab Ford Ranger. “Limited private use” is defined in a document titled “Fleet Policy & Procedures Manual”, which was the fleet policy in place before North East Water told employees that it would be changed.

A car with limited private use as part of my employment was part of North East Water’s acknowledgment of the extra responsibility I agreed to take on in progressing from an Automation Technician to an Automation Electrical Supervisor. When I agreed to the progression from Automation Technician to Automation Electrical Supervisor I did not receive a progression in banding. I believe that if I had not received a car with limited private use, I would have sought a higher banding in compensation for the higher and additional responsibilities.

I use the vehicle that North East Water has provided for personal travel and also as a secondary family vehicle for all day to day travel associated with family commitments (such as collecting my children from childcare) as well as to drive to and from work. I believe that this use is in compliance with the limited private use defined in the policy and in operation for many years before it was changed by North East Water.” 26

[24] Mr Piazza’s evidence was that in 2009 he had moved into the supervisor position owing to a restructuring and the retirement of an existing supervisor and that he took on some additional duties as a result of the change in circumstances. At the time he had been engaged on Band 7A which did not change as result of the new arrangement other than through the allowance on the part of North East Water that he could use a vehicle for Limited Private Use. This evidence is consistent with the documentation set out in the attachment to Mr Piazza’s witness statement. However that documentation is possibly incomplete since the letter of appointment appears to only be the first of perhaps two pages to the letter. Having made this indication it is entirely possible that the original correspondence comprised only the one page which is provided in these proceedings since North East Water did not provide an authoritative copy of the letter of appointment.

[25] Mr Kelly’s evidence on these matters also included that, as with Mr Piazza, in 2009 he had been employed on Band 7A and at the time he had been using a North East Water motor vehicle for which he was entitled to commuter use and that as a result of the change in his employment circumstances in 2009 the arrangement went to Limited Private Use. While Mr Kelly did not supply in these proceedings a copy of the letter provided to him at the time of appointment to his position, his evidence was that he had been provided with the same correspondence as Mr Piazza.

[26] The documentation that was provided by Mr Piazza and set out within his witness statement at attachment CP1 comprises of the extract of the letter of appointment, dated 5 March 2009, together with a single page letter of the same date relating to the provision of a North East Water vehicle. The letter of appointment sets out, in relation to Mr Piazza;

“Dear Craig

Automation/Electrical Supervisor (Zone 2)

As you are aware the Electrical Group has undergone small but important restructure resulting from the retirement of [name], Electrical Coordinator, and the impending retirement of [name], Automation Technician in April 2009. These departures have provided me with an opportunity to review the structure which I presented to Executive Management and received their endorsement on.

The position of Electrical Coordinator has been replaced with two Automation/Electrical Supervisor positions responsible for a "zone" of North East Water's region and which report directly to me.

Consequently I am pleased to advise you that you have been appointed to the position of Automation/Electrical Supervisor (Zone 2). This zone covers the primary towns of Wodonga, Tallangatta, Beechworth, Myrtleford and Mount Beauty and their surrounds as well as assistance to any other North East Water town as may be required from time to time. Your base location remains as Myrtleford.

The position remains within the Automation/Electrical Business Unit of the Information Systems Corporate Unit. Attached is the Position Description which contains the key responsibilities and duties and supersedes your current Position Description. The effective commencement date is Monday 9 March 2009.

The position is classified at Band 7 of the North East Water Certified Agreement (Variation 2008) with your own level remaining at Band 7 A at the current rate of $1,144.15 per week plus the applicable allowances. All other employment terms and conditions remain.

Assigned to the position is a Corporation vehicle which provides Limited Private Use as applicable under the prevailing Corporation Fleet Policy and as which may be varied from to time. Please refer to separate letter of Provision of Corporate Vehicle for your signature and the Corporation Fleet Policy as attached.” 27

[27] North East Water’s letter to Mr Piazza in respect of the provision of a North East Water vehicle sets out terms and conditions relating to the vehicle as follows;

“Dear Craig

Provision of Corporation Vehicle

Subject to your acceptance of the following, the provision of a company vehicle will be attached to the position of Automation/Electrical Supervisor (Zone 2) which is provided under the terms of the Corporation's Fleet Policy as well as the following terms and conditions:

1. The vehicle will be an "as per job requirement" type and will be available for Limited Private use in accordance with the Corporation's Fleet Policy unless otherwise approved by the Chief Financial Officer;

2. Subject to any Corporation internal review to the contrary, there is no employee monetary contribution required;

3. The vehicle remains with the position and does not attract the equivalent of any monetary value, cannot be “cashed-up” and is not included in any remuneration amount for the purposes of redundancy or redeployment;

4. Any reportable fringe benefit value will be declared according to prevailing ATO requirements;

5. Provision of a position related vehicle is subject to review at the discretion of the Corporation.

Please refer to the Corporation's Fleet Policy for a full description of terms and conditions.

Could you please acknowledge your understanding and acceptance of this provision, including those of the Fleet Policy, by signing and dating the bottom portion of this letter.

Yours sincerely” 28

[28] These conditions were acknowledged by Mr Piazza who signed them, stating that he agreed to “the provision of a company vehicle as provided above and the terms and conditions of the Corporation’s Fleet Policy.” 29

Consideration

[29] The North East Water Agreement 2011 clause 58 (Dispute Settling Procedure) provides for a procedure to be applied where a dispute occurs.

[30] The dispute is about the conditions of employment of up to 13 employees in addition to Mr Piazza and Mr Kelly 30 under the North East Water Agreement 2011 and continues to be unresolved on the evidence of the ASU witnesses.

[31] Subclause 58.2 of the Agreement, a component of the Dispute Settling Procedure, employs different language to subclause 58.5.

[32] Subclause 58.2 is a direction about what should occur at the workplace level in the event of a dispute. Both subclause 58.2 and subclause 58.5 stand as part of the overall Dispute Settling Procedure, however subclause 58.5 establishes a stepped procedure for the progressive escalation of disputes where they cannot be resolved, with the intention that progressively more senior and arguably more formal consideration might resolve a dispute that has been unable to be resolved at earlier steps of consideration. As such the steps within the procedure are within the context of the parameters established in the preamble of the subclause.

[33] That is, the actions within the steps are referable to disputes “regarding the wages and conditions of employment of any employee covered by the agreement” and “whether any such dispute or claim arises out of the operation of [the] agreement or not”. The powers of the FWC to conciliate and arbitrate are within that context. When sub-clause 58.5.5 refers to an unresolved matter being referred “for conciliation and, if necessary, arbitration”, and when sub clause 58.5.6 refers to the exercise of “all powers as are necessary to make the arbitration effective”, those references are plainly to the parameters established in the preamble of subclause 58.5.

[34] The evidence is that the change in the North East Water Fleet Management Policy came about through a desire on the part of North East Water to avoid increases in Fringe Benefits Tax costs which are, of course, determined externally to the workplace bargain that encompasses the enterprise agreement.

[35] The No Further Claims clause set out in clause 4 of the Agreement, prevents claims “in relation to salary increases or conditions of employment” except for those claims that might be granted under the terms of the Agreement. This is a similar phrase to that used in the stepped dispute settling procedure set out in subclause 58.5, which refers to dealing with disputes occurring “regarding the wages and conditions of employment” of employees.

[36] There are no provisions of the Agreement that deal directly with the provision of motor vehicles and so there is nothing to be taken account of in that regard. However consideration must be given to whether, as the ASU submits, the North East Water intended changes to the Fleet Management Policy are contrary to the No Further Claims clause.

[37] Section 739(5) of the Act requires that the FWC, when dealing with a dispute under that section, “not make a decision that is inconsistent” with the Act or the North East Water Agreement 2011. In the first instance, this requires the FWC to deal with a dispute in accordance with the processes and scope of the authority that has been established by the Agreement. It also requires, once the FWC is satisfied it is empowered to deal with a dispute and that it is only dealing with a dispute to the extent that it is permitted to do so, that the FWC ensures any decision it contemplates is not inconsistent with any provisions of the Agreement.

[38] The ASU’s submissions referred to the decision of the Federal Court at first instance in Marmara v Toyota Motor Corporation Australia Ltd (Toyota) 31, submitting that the language of Clause 4 of this Agreement was;

“...intended by the parties to reflect an Agreement which was “comprehensive, stable and enduring” and which resolved the entirety of claims, of any nature permissible under the legislative framework, that might otherwise have been made to advance (or change) employees’ terms and conditions of employment.

Consistent with His Honour’s reasoning in paragraphs 28-44 of Toyota, the ASU also submits that the plain and ordinary meaning of the term “claim” includes any claim by the Respondent to remove limited private use from the First Policy.

Moreover, the consensus reached between parties negotiating the terms and conditions of the Agreement was predicated, in good faith and as required by the terms of the Fair Work Act 2009, on no further claims being advanced for the life of the Agreement at a time when the First Policy extended limited private use to employees, had done so for a considerable period of time, and was not foreshadowed by the Respondent as being open to revocation or change at any later point.

The ASU submits that the clear and unambiguous meaning of Clause 4 of the Agreement, when examined in the entire context of employees’ terms and conditions of employment, does not permit a unilateral variation to the First Policy in the terms contemplated by the Respondent”. 32

[39] For its part, North East Water contended that neither the decisions of the Federal Court in Toyota or the decision from the appeal in that matter Toyota Motor Corporation Australia v Marmara 33, were relevant to this dispute34. The case did not deal with a change or variation to a policy and in contrast dealt with an enterprise agreement that was comprehensive and resolved the parties enterprise bargaining claims. Unlike the circumstances of Toyota, there is in this case;

“...no evidence or indication that the subject matter of workplace policies was part of any bargaining which led to North East Water's Enterprise Agreement being concluded and that therefore any variation to those policies would constitute a variation of the enterprise agreement itself”. 35

[40] North East Water submitted that in any event, the decision of the Full Court in Toyota Motor Corporation Australia v Marmara and the decision of Bromberg J in the first instance are not at odds with decisions of the Full Bench and the Full Federal Court holding that unless an enterprise agreement specifically deals with actual workplace policies sought to be introduced, implemented and/or varied by an employer, there is no legal impediment to an employer exercising management prerogative to do so: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, known as the Australian Manufacturing Workers’ Union (AMWU) v Silcar Pty Ltd (Silcar) 36; Wagstaff Paling Ply Ltd and another v Construction, Forestry, Mining and Energy Union37 (Wagstaff) or Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) v Kraft Foods Australia Pty Ltd38 (Kraft).

[41] In its consideration of Toyota on appeal, the Full Court held that the no further claims term in the relevant agreement was a permitted matter under s.172 of the Act 39 and was not an objectionable term under s.1240. However, the Full Court found that the clause suffered from repugnancy with the Act, for the reason it purported to constrain a right available under the Act;

“An enterprise agreement made under Pt 2-4 of the FW Act is not, of course, a regulation. But, as stated above, it is something more than a mere agreement in the way of a contract. It is a specific instrument made only under the detailed regime for which Pt 2-4 provides and enforceable only as provided by the FW Act. To this extent, we consider that the general principle applicable to the invalidity of regulations on account of repugnancy with their authorising statute is relevant to the issue presently for resolution. At base, the question which arises under that issue is essentially one of the rule of law. Parliament having said that an enterprise agreement may be varied, and that the employer may put a request to its employees in that regard, a term of the agreement which states, or has the effect, that the employer may not so proceed must necessarily be inconsistent with or repugnant to the FW Act to that extent. Subject to his view as to the significance of Toyota’s ability to initiate, and to carry through, a variation of the Agreement by removing the no further claims provision itself, the primary Judge took that view of the matter, and we agree with him”. 41 (emphasis added)

[42] The Full Court considered at some length the context of what might be a “claim” and approved the findings in the primary judgement, in which Bromberg J stated;

“In the context of the scheme for bargaining provided by the FW Act, where agreements are made in resolution of claims pursued through bargaining, a proposal by one party to vary the outcome arrived at in a way which advances its interests is apt to be regarded as a further claim. That is particularly so where the proposed variations are significant and suggest an attempt, as I consider is here the case, to strike a new bargain. Both the ordinary industrial meaning of “claim” and the scheme of the Agreement to which I have referred, are consistent with the construction of “further claims” in cl 4 as encompassing a proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement. Such a proposal is not merely a request or offer, it is also a “further claim” within the intended use of that expression in cl 4”. 42

[43] The Full Bench decision in Silcar involved consideration of an appeal against a decision in relation to an application for an order under s.418 of the Act together with an application pursuant to s.739 to deal with a dispute arising under an applicable enterprise agreement made under the Act. The Full Bench summarised the issues it was dealing with in this way;

“[2] Silcar provides maintenance services to BlueScope Steel at its Western Port site. Silcar operates a roster for a number of crews. Each crew works the same pattern or hours. Off site transfers and a resignation led to a situation where Silcar wanted to rebalance the mix of experience, plant knowledge and skills amongst the crews by reorganising the personnel allocated to each crew. The dispute relates to whether Silcar is prevented by the last dot point of clause 12(b) of the 2010 Agreement from undertaking that reorganisation unless it has first secured the agreement of the consultative committee.

[3] The s.418 application was based on Silcar’s contention that the employees who refused to move to a different crew as directed were engaging in industrial action. We note as an aside that the Senior Deputy President took the view that the provision in the dispute settlement procedure that required the preservation of the status quo while the dispute was addressed through that procedure meant that the employees could not be characterised as engaging in industrial action”.

[44] North East Water drew on the reasoning in Silcar to support the proposition that, in the absence of a term of an enterprise agreement provision to the contrary, there is a management prerogative to vary workplace policies. North East Water cite with approval the Full Bench’s consideration of the clause in the Silcar enterprise agreement dealing with “working hours, shift work and RDO’s”. One part of the clause, which is referred to in the extract cited by North East Water, stated that “[s]hift work for maintenance personnel will continue to operate as follows ...” (cl.(10)(b)). The Full Bench found the following in relation to this matter;

“[13] The opening words of clause 10(b) of the 2004 Agreement suggest that the parties intended to achieve continuity in the operation of shift work for maintenance personnel when the maintenance function was outsourced from BlueScope to Silcar. This draws attention to the prior shift arrangements for maintenance personnel at the Western Port site when the maintenance function was still performed by BlueScope employees. There was no evidence before the Senior Deputy President suggesting that BlueScope was constrained by any agreement or other binding instrument in relation to its capacity to move employees between crews. That is what may be described as the ‘usual’ state of affairs. That is, in the absence of any term of a binding industrial instrument that prevents an employer from making changes to shift arrangements, an employer has a managerial prerogative to alter both the pattern and structure of shifts and the particular shift worked by an employee. It is more likely than not that BlueScope had retained the capacity to move employees to a different crew/shift on the roster. Mr Terzic, to his credit, took instructions and acknowledged during the hearing of the appeal that while most such changes had been done by agreement with the consultative committee there were some such changes that were effected by BlueScope at its own initiative and without the agreement of the committee. If, as we are satisfied, it was the intention of the parties, objectively determined, that the 2004 Agreement effect a continuation of the roster arrangements that obtained when the relevant work was done by direct employees of BlueScope, Silcar would have retained a capacity to move employees between crews/shifts without the approval of the consultative committee.

[14] This history supports the conclusion of the Senior Deputy President and counts against the close textual analysis urged by the AMWU which tends, in this case, towards being a narrow and pedantic approach of the sort that Madgwick J cautioned against”. 43 (emphasis added)

[45] Wagstaff involved the application of a Fitness for Work policy to employees of the company which was a sub-contractor to Theiss Pty Ltd on a major construction project. 44 A drug and alcohol policy was included in the Wagstaff enterprise agreement45 which was consistent with an industry policy. However Wagstaff and Thiess applied a different regimen of controlling drug and alcohol use on the site, including through the administration of random testing. The question brought to the Commission for resolution included whether the Wagstaff agreement prevented Wagstaff from requiring employees to submit to random drug and alcohol tests.46 The Full Bench held that while the agreement was silent on the subject, its silence could not be interpreted as a prohibition,47 including for the reason that the scheme of the Agreement was for a cooperative and collective approach to the management of drug and alcohol issues;

“Other provisions of the Wagstaff agreement recognise the need for continuous change and improvement and the obligations on Wagstaff to advance workplace safety. The risks to employee safety posed by drug and alcohol use have long been recognised by this Tribunal and compulsory drug and alcohol testing is, of itself, not so extraordinary that it could not be argued to be a reasonable employer instruction or that it could be regarded as an extra claim for the purposes of clause 50 of the Wagstaff agreement.” 48 (reference omitted)

[46] In relation to the same matter, the Full Court of the Federal Court of Australia held in CFMEU v Wagstaff Piling 49 that the agreement was not an exclusive or exhaustive statement of the powers or discretions available to Wagstaff to manage drug and alcohol issues. The agreement did not expressly prevent mandatory random drug and alcohol testing.50

[47] The decision of Commissioner Gregory in AMWU v Kraft Foods Australia Pty Ltd 51 concerned attempts by an employer to introduce a new policy requiring employees to remove their wedding rings or bands whilst at work, for reasons associated with hygiene. The AMWU submitted the requirement was an extra claim and was in breach of the Agreement, acting to change the employee’s conditions of employment. Kraft submitted it was introducing a policy change that was “introduced in the interests of food hygiene and does not alter existing employment obligations or entitlements”.52 In finality, the Commission was not satisfied that what the employer wished to do was an extra claim in breach of the No Extra Claims clause.53

[48] The ASU put forward that North East Water are in breach of the No Further Claims clause for the reason that what is sought is a claim, and that it is not reasonably open to North East Water to amend its policy to prospectively exclude Limited Private Use, as defined, from affected employees’ conditions of employment whilst the Agreement continues to operate. 54 The context in this case is that North East Water wishes to withdraw something that has previously been provided to employees. If that thing is dealt with in the enterprise agreement, a request or desire or decision by one party to withdraw or change the operation of the agreement is likely to be a “claim” within the meaning of clause 4, No Further Claims.55 It could also be put forward that if the Agreement does not deal with the subject, if that subject relates to “salary increases or conditions of employment sought or granted” a change might also be a “claim”.

[49] Arising from this are several considerations;

• Whether North East Water’s intended change is a “further claim”



• If the change is a “further claim”, whether it is in breach of the no further claims provision;



• If the change is a “further claim”, whether any other aspect of the claim or the Agreement limit North East Water’s ability to implement the change.

[50] The proposition that what is proposed by North East Water is a “claim” or a “further claim” requires an examination of the circumstances of the proposal; its effect on employees; and the context of clause 4.

[51] What is to be introduced by North East Water is a change to how motor vehicles are allowed to be used by a limited number of employees, up to 13 employees in addition to Mr Piazza and Mr Kelly, although the number has been as high as 20. 56 The evidence shows that since at least 2006, if not earlier, approved employees have had Limited Private Use of a North East Water owned and badged vehicle and have been permitted to drive the vehicle for their own private benefit;

“… where the private use component is restricted to a 200 kilometre radius from the drivers base work location and to/from Melbourne unless otherwise authorised by the Chief Financial Officer.

As this category of use makes no formal contribution or sacrifice for the private use component it is not an entitlement associated with any particular level or band. It is approved by the relevant Executive Manager as reward for exceptional performance and is accordingly subject to periodic review.” 57

[52] As previously referred to, this version of the policy is different to that provided in Mr Piazza’s evidence, and continues that;

“Changes in the Vehicle Policy

Where a change in the policy, the scope of a position and or an organisational restructure impacts on the Authority's practice in regard to the provision of any vehicles or the terms of the provision, the changes will be communicated to the relevant employees.

Where the change of policy no longer entitles an employee to a private use component of a vehicle, be it full private use or commuter use, a reasonable period will be negotiated, (not more than 3 months) for the employee to make alternative arrangements. When this situation relates to an employee on a contract the employee's contribution to the vehicle will cease to be deducted from the total package and will form part of the employee's salary.” 58

[53] While there is a dispute between the parties about the authoritative version of the policy applicable in 2009, the documents provided by each have broad consistency, at least in terms of the extent to which the vehicle could be used, and that the provision of the vehicle and the terms on which it is provided might be the subject of review from time to time. 59 For example, the version tendered in Mr Piazza’s witness statement permits the following, with the principal difference appearing to be in relation to whether the vehicle may be driven by a person other than the employee60;

“Limited Private Use

• use restricted to 200 kilometre radius of Wodonga and to/from Melbourne unless otherwise authorised by the Chief Executive.



• May be driven by any person with the permission of the person responsible for the vehicle. The person responsible for the vehicle will accept all responsibilities and liabilities that may be incurred.



• Vehicle must be made available for use in the vehicle pool if the person responsible is absent for more than one week - unless otherwise authorised by the Chief Executive.



• Sedans/station wagons not required to be marked with the Authority logo”.

[54] While this is different from the policy North East Water argues was in operation at the time, and restricting use of the vehicle only to the employee and not family members or friends (except when the employee was in the vehicle with a non-employee driver) 61, the context of this dispute does not require me to resolve this inconsistency. This dispute relates to whether Limited Private Use should continue to be made available to employees working under the Agreement, rather than whether the terms of its provision should be changed.

[55] The further context of the change to be introduced by North East Water is that employees who are allowed Limited Private Use do not make a contribution to North East Water for their access to the vehicles, which is in contrast to executive employees who have full private use of a vehicle and “pay” for the private component use of the vehicle through salary sacrifice arrangements 62. The evidence is also that the change is motivated through an externality, being changes to the Australian Government Fringe Benefits Tax rules.

[56] The evidence of Mr Piazza and Mr Kelly was that access to Limited Private Use of a North East Water vehicle was a reward for them taking on additional supervisory responsibilities in 2009 and that provision of the vehicle was a benefit to them, and a monetary one at that. They did not move from one classification Band to another at the time they agreed to take on additional duties, although they have, over time, progressed through Band 7 for reason of the progression criteria set out in the Agreement. The various versions of the policies state that provision of the access to the vehicles was “as reward for exceptional performance and is accordingly subject to periodic review”. 63

[57] It is also relevant to take account of the way clause 4 is worded. There is not a restriction on the making of all further claims, but “further claims in relation to salary increases or conditions of employment sought or granted, except for those granted under the terms of this Agreement”. (emphasis added)

[58] North East Water referred in their submissions to the matter of Walsh v Greater Melbourne Cemeteries Trust (No 2) 64, in which the phrase “in relation to” was considered within the context of s.341(1)(c)(ii) of the Act, being the workplace right of an employee to make a complaint or inquiry “in relation to his or her employment”. In that matter, Bromberg J held the words are of wide import, identifying that a relationship between the subject matter and employment is required, and that the nature of the relationship need not be direct and may be indirect, and that “[w]here the subject matter of the complaint raises an issue with potential implications for the complainant’s employment, it is likely that the requisite nexus will be satisfied.”65 Potentially, in the context of this matter, there will be a nexus present when the subject matter of the further claim has implications, direct or indirect, for the enterprise agreement.

[59] North East Water’s reliance on this reasoning would be correct if the “further claims” so limited by clause 4 were only in relation to matters arising under or connected with the enterprise agreement; however this is not the case, since the phraseology of clause 4 is broader, being a relationship of the further claim to “salary increases or conditions of employment sought or granted”.

[60] There is a requirement to interpret industrial instruments in accordance with the natural and ordinary meaning of its words 66, read as a whole and in context.67 The task of interpretation avoids narrow or pedantic approaches68 and should not be in a vacuum divorced from industrial realities.69 An enterprise agreement is a statutory artefact with the legal efficacy of its terms arising under statute, not contract, being felt also by those who did not agree to them.70

[61] The evidence in this matter leads to the view that provision of the vehicles for Limited Private Use amounted to one of the employees’ “conditions of employment”. Mr Piazza refers to the vehicle being provided to him “[a]s part of my promotion … without any reduction or trade-off in my terms and conditions of employment”. 71 His 2009 letter of appointment is consistent with this, referring as it does to a restructure, with the author stating he is “pleased to advise” of Mr Piazza’s appointment to the new position.72 The evidence includes Mr Piazza’s quantification of the value of the vehicle to him. Although his ascribed value is not agreed by North East Water, the point is that he saw the provision of the vehicle as having a value to him and that correspondingly the withdrawal of the vehicle would leave him worse off. Mr Kelly’s evidence on these points is consistent with Mr Piazza’s.

[62] While neither the Act or the Agreement define “conditions of employment”, the Act provides that the “main terms and conditions of employment of an employee that are provided under this Act” are those set out in the National Employment Standards, a modern award, an enterprise agreement or workplace determination that applies to an employee and that other conditions may arise from other legislated sources. 73 Employment of the adjectives “main” and “other” in the section and without further limitation plainly identifies that an employee’s conditions of employment are not limited to the conditions granted by the Act or an agreement.

[63] The counter argument is that the change to Limited Private Use arrangements by North East Water is a desire on North East Water’s part to modify an existing policy, with such modification being within its prerogative to make. The facts of this matter are distinguishable from the cases referred to by North East Water. The Full Court’s finding in Wagstaff that the agreement was not an exclusive or exhaustive statement of the powers or discretions available to manage drug and alcohol issues, and that Wagstaff were entitled to implement testing as they saw fit, is a reference to the implementation of the detail of a broad and extensive policy contained within the agreement. While, of course, a decision to use random drug and alcohol tests in contrast to the alternatives is a matter of very important detail, it is nonetheless not at the level of being an alteration of the fundamentals of the conditions of employment. A similar distinction is to be drawn between this matter and that considered in Silcar and Kraft. Silcar concerned notifications about crewing changes within the context of a comprehensive agreement providing a structure of remuneration for employees who did work at the times sought by the company. Kraft concerned the rights of employees to wear their personal effects, but did not involve questions of remuneration.

[64] North East Water argued that, in this matter, there are important distinctions between the Agreement and others, including the circumstances of Wagstaff or Toyota. The Agreement does not contain workplace policies and North East Water is not seeking to vary the Agreement, which in any event does not deal comprehensively with the employment relationship. North East Water’s submissions in these regards included the following;

“Neither Bromberg J's decision nor the Full Court's decision overturning His Honour's decision, albeit only in relation to the two-step process required to vary the enterprise agreement, is relevant to this dispute. Furthermore, in no way does either Bromberg J's or the Full Court's decisions in Toyota overturn or water down the Full Court's decision in Wagstaff, as adopted by the Commission in the Kraft Foods decision. In this regard, it is pertinent to note that North East Water's Enterprise Agreement does not contain any provision dealing with workplace policies, as is the case with many other enterprise agreements. If the parties, in bargaining this Enterprise Agreement, had intended for there to be any fetters on North East Water's ability to vary its workplace policies, such as the Fleet Management Policy/Procedure, then such provisions would have been specifically included. Therefore, what North East Water is attempting to do, namely varying one component of its Fleet Management Policy, does not constitute a variation of the Enterprise Agreement itself, as was the case in Toyota. The Enterprise Agreement does not deal comprehensively with all matters touching on the employment relationship and operates concurrently with the relevant contracts of employment and workplace policies, in this case, the Fleet Management Policy (see Wagstaff at paragraph 50). The reference to " .... in relation to salary increases or conditions of employment sought or granted .... " in clause 4 of the Enterprise Agreement, can only, in the context of industrial bargaining and having regard to such decisions as Wagstaff and Toyota, relate to those conditions of employment which are covered by the Enterprise Agreement and which, if altered, would constitute a variation of the Enterprise Agreement.

 68   Kucks v CSR Limited (1996) 66 IR 182, at p184

 69   City of Wanneroo Holmes [1989] FCA 369; 30 IR 362, at [378]

 70   Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84, at [88] – [90]

 71   Exhibit A1, para 3

 72   Ibid, attachment CP1

 73   Fair Work Act 2009, s.43

 74   Exhibit R3, para 10 - 11

 75   [2013] FWCFB 2301

 76   Exhibit A1, para 12

 77   Exhibit R1, pp7 - 8

 78   Exhibit R2, para 11

 79   Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84, at [55]

 80   Ibid, at [56]

 81   Ibid, at [58]

 82   Ibid, at [59]

 83   Ibid, at [61]

 84   Ibid, at [97]

 85   Ibid, at [58]

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