Australian Municipal, Administrative, Clerical and Services Union v Royal Automobile Club of Victoria (RACV) Ltd

[2014] FWC 5652

[2014] FWC 5652

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.240 - Application to deal with a bargaining dispute

Australian Municipal, Administrative, Clerical and Services Union
v
Royal Automobile Club of Victoria (RACV) Ltd
(B2013/1567)

COMMISSIONER ROE MELBOURNE, 19 AUGUST 2014

Jurisdiction - s. 739 dispute following a s. 240 bargaining dispute. If matter is s. 739 dispute do the provisions of the RACV Roadside Assistance Centre Enterprise Agreement 2014-2017 permit the matter in dispute to be arbitrated.

[1] The Applicant, the Australian Municipal, Administrative, Clerical and Services Union (the ASU) seeks to have an arbitration conducted in relation to a dispute with the RACV Road Services Pty Ltd (RACV) by the Fair Work Commission (the Commission) pursuant to the RACV Roadside Assistance Centre Enterprise Agreement 2014-2017 (the Agreement) and Section 739 of the Fair Work Act 2009 (the Act).

Background to the dispute

[2] Pursuant to the directions issued by the Commission the ASU identified the matters in dispute which they seek to have determined as follows:

"The ASU seek that pursuant to section 739 of the Fair Work Act (2009) Cth and clauses 95 and 96 of the RACV Roadside Assistance Centre Enterprise Agreement 2014 - 2017 the Commission determine the matters set out below by arbitration:

1. The following aspects of RACV's proposal to change the annualised payment system:

a. Payment of public holiday penalty when a public holiday is worked. Shift penalty does not apply in addition to public holiday penalty under Clause 88.3.

b. An employee who takes leave without pay should have the ordinary rostered hours deducted. In some cases only 7.6 hours is currently deducted.

c. When an employee takes a day as long service leave the ordinary time taken off should be deducted.

d. There is no requirement to pay shift/weekend penalties for shifts which are not worked when on paid parental leave and/or long service leave.

e. There is no requirement to pay shift/weekend penalties for shifts which are not worked when on paid personal leave.

f. There is a requirement to pay as a minimum 17.5% annual leave loading when on annual leave. Where the shift or weekend penalty for the roster which would otherwise have been worked is greater the greater penalty should be paid.

g. The current shift and weekend penalties for the 21 day roster have been incorrectly calculated. The penalties should apply to all shift and weekend hours rostered not to just 7.6 hours of a shift.

2. RACV's proposal to remove the system where penalty payments are averaged over the cycle resulting in some fluctuation in weekly wages.

3. RACV's proposal to alter the deduction from paid personal leave entitlements when leave is taken under the 21 day roster.

4. In the event that RACV's proposal to change the annualised payment system is to be implemented the appropriate measures to ameliorate the detrimental impacts on employees."

[3] Clause 95 and 96 of the Agreement are as follows:

“Clause 95 Disputes Procedure

If a dispute arises about this Agreement, the National Employment Standards or any other work-related matter, the parties to the dispute will attempt to resolve the dispute at the workplace level.

An employee who is a party to the dispute may appoint a representative of their choosing for the purposes of this Disputes Procedure.

Grievances and disputes shall be dealt with in the following manner:

95.1 Should any matter arise which gives cause for concern to an employee the employee shall raise such matter with their line manager or Shop Steward who will consult each other with a view to resolving the issue.

95.2 If the matter is not satisfactorily resolved, the appropriate Human Resource Manager or other RACV management representative shall pursue the matter further in conjunction with the line manager/supervisor.

95.3 If the matter remains unresolved it may be referred to the branch Secretary of the Union (or accredited representative). This officer shall discuss it with a senior Human Resources representative of the RACV.

95.4 If the matter remains unresolved it shall be referred to such higher levels of the Union and Management as may be appropriate.

95.5 If the matter remains unresolved either party may refer the matter to Fair Work Australia for resolution in accordance with the powers available to it under the Fair Work Act 2009.

95.6 The parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this term,

95.7 The parties shall at all times confer in good faith and without undue delay.

95.8 While the above procedure is being followed, work shall continue normally and the status quo shall be maintained, except in cases where a bona fide safety issue is an immediate and dangerous situation to an employee. Provided that, where an employee ceases work in an immediate and dangerous situation such employee will be transferred to other duties.

95.9 If the provisions of sub-clauses 95.1, 95.2, 95. 3, 95.4 and 95.5 all fail to resolve the dispute, the parties reserve the right to pursue such action as considered necessary.

95.10 No party shall be prejudiced as to final settlement by the continuance of work in accordance with this clause.

Clause 96 De-annualisation of Penalties and Leave Accruals

RACV have advised their intention to change the annualised payment system. This particularly affects those who work the current 21 day roster cycle which includes 7 days off. Consistent with the provision of Clause 24(1ntroduction of Major Change) there will be further consultation about this proposed change. The following process will be followed:

(i) RACV will not introduce a change to the system prior to 1 May 2014.

(ii) Prior to 1 May 2014 conciliation concerning the matter will continue before the Commission at the request of RACV and/or the ASU.

(iii) Issues of difference which arise during this process may be subject to recommendation by the Commission. It may also be subject to arbitration where there is agreement between RACV and the ASU that the matter be arbitrated.

(iv) Absent agreement between RACV and the ASU the matter cannot be arbitrated pursuant to the disputes settlement procedure (Clause 95) unless it is a matter which is arising under the provisions of this Agreement, other than this provision, or under the National Employment Standards.”

[4] The bargaining dispute (B2013/1567) was first notified by the ASU on 13 December 2014. The notification followed a successful protected action ballot and a significant period of employee protected action. There were seven conferences conducted before the Fair Work Commission culminating in a Statement issued by the Commission on 27 February 2014 which led to a successful end to the bargaining and the making of an agreement which was approved by Commissioner Cargill on 11 April 2014. 1 The Statement followed a number of suggestions and recommendations from the Commission and set out the in principle agreement resolving the key matters which had been in dispute. One of those significant matters in dispute was the proposal of the RACV to change the annualised payment system. Point 9 of the Statement began as follows: “A process to resolve the annualised payment system issue will be included in the Agreement. That provision will be as follows, subject to fine tuning by agreement of the drafting”. What followed became Clause 96 of the Agreement. The only difference between the clause in the Statement and Clause 96 of the Agreement was the correction of the cross referenced clause numbers.

[5] On 14 April 2014 the RACV advised me that “the ASU and RACV wish to continue discussions before you in conciliation regarding RACV’s proposed de annualisation of penalties.” Further conciliation conferences were held on 2 May, 16 June, and 20 June 2014. At the conclusion of this process the Fair Work Commission was satisfied, and the parties agreed, that the matters in dispute could not be resolved by conciliation.

[6] The RACV advised that they had a number of jurisdictional objections to the arbitration of the matters the ASU had identified.

[7] The RACV provided submissions in support of their jurisdictional objections on 28 July 2014 and the ASU provided their submissions in response on 7 August 2014. I have considered these submissions together with the matters raised by the parties at the hearing on 13 August 2014.

Is the dispute to be determined pursuant to Section 240 of the Act or Section 739 of the Act?

[8] The RACV correctly point out that a dispute under Section 240 of the Act cannot be arbitrated except by consent. The RACV has not consented to arbitration. However, the ASU say that the dispute is a dispute pursuant to Section 739 of the Act and the disputes settlement Clauses 95 and 96 of the Agreement.

[9] I am satisfied that the matter continued at the conferences in May and June 2014 under B2013/1567 only as a matter of administrative convenience. I am satisfied that in fact those conferences were about the resolution of a dispute between the parties about the implementation of Clause 96 of the Agreement. The conferences were clearly jointly initiated by the parties in compliance with Clause 96(ii) of the Agreement. The RACV made clear that it was their continued intention to implement a change to the system as soon as possible following the conclusion of the process of consultation and dispute resolution set out in Clause 96 of the Agreement. The ASU made it clear that they were in dispute with the RACV concerning aspects of the RACV proposal although they were prepared, through the consultation and conciliation process set out in Clause 96 of the Agreement, to seek to resolve those issues.

[10] I am satisfied that the dispute about or arising under Clause 96 of the Agreement is a dispute pursuant to terms of an enterprise agreement as specified in Section 738(b) of the Act. The dispute settlement terms are Clauses 95 and 96 of the Agreement. The dispute has arisen under Clause 96 of the Agreement; however, the subject matter of the dispute may involve other clauses of the Agreement. Section 739 of the Act specifies how the Fair Work Commission can deal with such a dispute:

“739 Disputes dealt with by the FWC

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

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

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

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

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

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

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

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

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

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

[11] I am satisfied that the ASU has made an application to resolve the dispute pursuant to Section 739 of the Act notwithstanding the fact that the matter has been administratively dealt with as part of an earlier bargaining dispute (B2013/1567). I waive any technical requirements and rules to enable the matter to be dealt with as a Section 739 dispute pursuant to the powers provided by the disputes settlement Clauses 95 and 96 of the Agreement.

[12] It is not in contention and I am satisfied that conciliation of the dispute has been exhausted and that the appropriate earlier steps of the disputes settlement procedures in Clauses 95 and 96 have been followed by the parties.

What needs to be determined about Clauses 95 and 96 of the Agreement?

[13] I am satisfied that the conciliation at the conferences on 2 May, 16 June, and 20 June 2014 was conducted consistent with Clause 96(ii) of the Agreement. The Fair Work Commission made recommendations during the process consistent with Clause 96(iii) of the Agreement. There is no agreement between the parties for arbitration of outstanding issues pursuant to Clause 96(iii). One of the jurisdictional matters to be considered is whether or not Clause 96(iv) permits the outstanding issues to be arbitrated pursuant to the disputes settlement procedure Clause 95 of the Agreement.

[14] The RACV submits that Clause 95 does not allow for arbitration of disputes by the Fair Work Commission in the absence of agreement between the parties to arbitration. The RACV further submits that if I reject that submission Clause 96(iii) and (iv) prevent arbitration absent agreement unless the matters in dispute are matters which are arising under another provision of the Agreement or the National Employment Standards.

[15] The parties agree, and I am satisfied that, a relevant disputes settlement clause in the Agreement is Clause 95. I must first determine whether or not Clause 95 empowers the Commission to arbitrate any dispute in the absence of agreement between the parties. If I determine that the Commission has the power to arbitrate some disputes in the absence of agreement between the parties I must then determine whether Clause 96 places any other limitations on whether the dispute or aspects of it can be arbitrated pursuant to the process in Clause 95.

[16] The parties both referred to the High Court decision in Amcor Limited v CFMEU 2 as an authority to elucidate the approach to be taken to the interpretation of industrial agreements. The RACV also referred to the High Court Gordonstone decision as authority for the nature of the powers of the Commission to determine disputes by arbitration under a certified agreement.3

Does Clause 95 permit arbitration in the absence of mutual agreement?

[17] The RACV submits that Clause 95 does not permit arbitration in the absence of mutual agreement. It submits that:

a. The text of Clause 95 makes no mention of arbitration.

b. Clause 52 is the disputes settlement clause which is part of the RACV common conditions but which does not apply to the roadside assistance centre. Clause 52 explicitly provides for arbitration whilst Clause 95 does not mention arbitration. Clause 52 contemplates arbitration as the final step in the process subject only to appeal rights whereas Clause 95 contemplates that referral to the Commission under clause 95.5 may not resolve the matter and provides in Clause 95.9 that “the parties reserve their rights to pursue such action as considered necessary”. The RACV argues that this supports a finding that Clause 95 does not provide for arbitration.

c. Clause 61 specifically excludes Clause 52 from applying. If Clause 95 provided for the same arbitration powers as under Clause 52, Clause 95 and part of Clause 61 would be unnecessary.

d. If Clause 95 empowered the Commission to arbitrate then clause 95.9 would be unnecessary as all disputes would be resolved by binding arbitration pursuant to clause 95.5.

[18] Clause 52 of the Agreement provides as follows:

“Clause 52. Disputes Procedure

52.1 If a dispute relates to:

(a) a matter arising under the Agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

52.2 An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

52.3 In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

52.4 If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Australia.

52.5 Fair Work Australia may deal with the dispute in 2 stages:

(a) Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Australia makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

52.6 While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

52.7 The parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this term.”

[19] Clause 95.5 states that the matter may be referred to Fair Work Australia “for resolution”. The ASU submits that the term “for resolution” was used interchangeably with the expression “for arbitration” in the High Court Gordonstone decision to which I referred earlier. The ASU submits that the Court in discussing the distinction between agreed and arbitrated dispute settlement procedures noted that: “…different procedures apply if the parties have agreed to submit their disputes as to their legal rights and liabilities for resolution by a particular person or body and to accept the decision of that person as binding on them.” 4

[20] The ASU also refer to the Full Bench of the AIRC decision in SDA v Big W Department Stores 5 where the Full Bench found that the expression “for determination” did confer an arbitration power. The ASU submit that the expressions “for resolution” and “for determination” both embrace the notion of bringing finality to a dispute. If a matter has been resolved it has been concluded or determined.

[21] The RACV in response correctly point out that “for resolution” is not the same as “for determination”. In my view whether the two concepts are different depends upon the context. Dispute settlement clauses do not always allow for arbitration without consent. It has been found that clauses which do not provide for arbitration without consent can be provisions that require or allow for the settlement of disputes. However, I am satisfied that the general industrial meaning of the term “either party may refer the matter to Fair Work Australia for resolution” is that the matter can be resolved to finality by Fair Work Australia including by arbitration.

[22] Clause 95.5 provides “for resolution in accordance with powers available to it under the Fair Work Act 2009”. The power to arbitrate and the power to require the steps necessary to prepare a dispute for arbitration are powers available under the Act. The RACV correctly point out that there is no general power for the Fair Work Commission to arbitrate disputes under Agreements; the power only exists if the parties provide the Commission with that power in the Agreement. However, I am satisfied that in general industrial usage, unless the specific words or context suggest otherwise, the term “resolution in accordance with the powers available to it under the Fair Work Act 2009” is a term which means that the parties are through the disputes settlement procedure giving to the Commission all the powers and procedures available including arbitration. Although perhaps poorly drafted this expression is commonly found in agreements.

[23] Clause 95.6 which provides that “the parties agree to be bound by a decision made by Fair Work Australia in accordance with this term” can have no meaning unless there is a power to arbitrate. Without arbitration there cannot be a binding decision. When Clause 95.5 and 95.6 are read together it is difficult to see what the practical purpose of the words “in accordance with powers available to it under the Fair Work Act 2009” would be if it is not a reference to powers including arbitration and associated procedural powers. Clause 95.5 and 95.6 when read together mirror the two arms of the requirement for private arbitration power in Gordonstone quoted earlier; firstly, the agreement to submit disputes for resolution by a particular person or body, and secondly, the agreement to accept the decision of that person or body as binding on them.

[24] The ASU submit that Clause 95 should be read in the context of the immediately following Clause 96. The relationship is close. Both clauses are about dispute resolution. Clause 95 is about general dispute resolution and Clause 96 is about how a dispute which was not finally settled during the negotiation of the Agreement is to be settled. Clause 96 provides that “absent agreement between RACV and the ASU the matter cannot be arbitrated pursuant to the disputes settlement procedure (clause 95) unless…” Clause 96 envisages that clause 95 contains the power to arbitrate where there is not mutual agreement to do so. If Clause 95 does not provide for arbitration in the absence of mutual agreement then there would be an inconsistency between Clause 95 and Clause 96. I agree with this submission.

[25] I am not satisfied that the fact that Clause 52 refers to “arbitration” whilst Clause 95 refers to “for resolution” alters the proper construction of Clause 95. The plain words of Clause 95 are not ambiguous or uncertain. The Agreement clearly envisages that there may be different clauses about the same subject in Part A and Part B of the Agreement. Clause 61 makes clear where the clause in Part B applies to the exclusion of the related provision in Part A.

[26] I agree with the submission of the ASU that there are significant differences between Clause 52 and Clause 95 other than the use of the expression “for arbitration” rather than “for resolution”. Clause 95 provides for 4 steps in the procedure prior to the involvement of the Commission whilst Clause 52 refers to only 1 prior step. The matters which can be subject to the procedure are also differently defined. Clause 52 refers to “a matter arising under the Agreement” or “the National Employment Standards”. Clause 95 is more expansive in that it also refers to “any other work related matter.” Clause 95 has provisions concerning the status quo whilst Clause 52 does not.

[27] The RACV submit that Clause 95.9 would have no meaning or purpose if Clause 95 otherwise provides for disputes to be finally resolved by arbitration. The ASU submits that Clause 95.9 simply confirms the right of the parties to pursue other action, such as instituting legal proceedings, they consider necessary. In some cases the Commission is unable to resolve a dispute because it lacks the power or jurisdiction. This may be the arbitrated outcome of the dispute. Clause 95.5, which is referred to in Clause 95.9, might technically resolve the dispute in this circumstance but it would not resolve or finalise the substance of the dispute or the underlying matter in the subjective view of a party. I do not consider that Clause 95.9 is a part of the procedural steps; rather, it is located with a number of provisions which apply to the disputes settlement procedure as a whole. I accept that Clause 95.9 may have limited meaning and application, however, I am not satisfied that Clause 95.9 alters the meaning of Clauses 95.5 and 95.6 read together and in context.

[28] I am satisfied that a plain reading of Clause 95 in context of the surrounding clauses and Clause 96 in particular and in the context of the Agreement as a whole, is that Clause 95 provides for disputes which fall within its scope to be arbitrated by the Commission (pursuant to sub clauses 95.5 and 95.6) without the consent of both parties.

Does Clause 96 limit what can be arbitrated using the procedure in Clause 95?

[29] As there is no agreement between the RACV and the ASU to arbitrate the outstanding issues (Clause 96(iii)) I am satisfied that the outstanding issues can, pursuant to Clause 96(iv), be arbitrated if, and only if, the matter(s) in dispute “is a matter which is arising under the provisions of this Agreement, other than this provision, or under the National Employment Standards.”

[30] The ASU contends that the dispute is a matter arising under Clause 27.1(d) of the Agreement which provides:

“Employees' wages may be averaged to cope with flexible business demands. Employees' whose wages are averaged will be paid a set wage according to the average ordinary hours worked in any particular wage pay period. This means that an employee can be paid more or less than the actual hours worked in a particular pay period. No employee will be paid less than the actual hours worked over any particular year.”

[31] The ASU also contends that the dispute is also a dispute arising under Clause 94, “no extra claims”. Clause 96 clearly contemplates that the RACV may pursue its proposal to implement changes to the averaging or annualisation of salaries so this is not an extra claim. It is possible however that the method for changing the averaging or annualisation of salaries proposed by the RACV might alter the operation of other provisions of the Agreement in a manner which could be said to constitute an extra claim.

[32] The ASU also contend that the dispute is about Section 96 of the Act, the National Employment Standard concerning the entitlement to 10 days of paid personal/carers leave for each year of service which accrues progressively during a year and which accumulates from year to year. This appears to relate to the following disputed matter “RACV’s proposal to alter the deduction from paid personal leave entitlements when leave is taken under the 21 day roster.”

[33] In MUA v Patrick Stevedores Holdings Pty Ltd the Commission when considering a jurisdictional objection about the power to arbitrate found that the term “application” is as broad as “arising under”. 6

[34] During the hearing on 13 August 2014 I put a series of questions to the parties, in the event that the Fair Work Commission were to find that the dispute is a dispute pursuant to a disputes resolution provision of the Agreement under Section 739 of the Act and that Clause 95 is a disputes resolution provision which provides (after the relevant steps have been followed) for disputes within its scope to be resolved by arbitration without the consent of both parties. I have set out the questions in the following table together with a summary of the responses given. The ASU emphasised that its responses were about the jurisdictional issues and should not be interpreted as qualifying the ASU’s fundamental opposition to the de-annualisation proposal.

QUESTION	ASU ANSWER	RACV ANSWER
1. Does Clause 96(iv) prohibit arbitration without consent of the parties of the RACV proposal to implement changes to the annualised payment system unless it is a matter which is arising under a provision of the Agreement (other than Clause 96) or the NES?	Yes. But replace words “prohibit arbitration” with “provide no power for arbitration”	Yes
2. Would it be consistent with Clause 27.1(d) for FWC to make a decision to require the employer to average wages?	No	No
3. To what extent does Clause 27.1(d) allow the RACV to implement and withdraw averaging at its absolute discretion? (Item 2 of the ASU statement of matters in dispute)	There can be arbitration about the manner in which the discretion is exercised and it is subject to compliance with the other provisions of the Agreement and the NES.	Absolute discretion subject only to the manner of implementation being in compliance with the other provisions of the Agreement and the NES.
4. If Clause 27.1(d) allows the RACV at its absolute discretion to implement and withdraw averaging can matters to ameliorate impacts on employees such as the timing and implementation process be the subject of determination by arbitration? (item 4 of ASU statement of matters in dispute)	Yes	No
5. Is an arbitration about Clause 27.1(d) an arbitration about the RACV proposal to implement changes to the annualised payment system and therefore not a separate matter which is arising under a provision of the Agreement other than Clause 96? To the extent that this is the case does Clause 96(iv) prevent the Commission arbitrating a dispute about Clause 27.1(d) without consent?	No Clause 27.1(d) is a separate clause of the Agreement and arbitration about this clause is not precluded by Clause 96(iv). Matter arising or about is a broad concept.	Yes Clause 96(iv) prevents an arbitration about the particular averaging dispute by reference to Clause 27.1.
6. To the extent that the proposed changes to the averaging arrangements affect the implementation or interpretation of other provisions in the Agreement or the NES such as personal leave, annual leave, shift penalties, annual leave loading, and shift penalties on annual leave is the dispute also about these clauses? For example to what extent is: a. Item 1a (of the ASU statement of the matters in dispute) a dispute about Clause 88.3 b. Item 1b a dispute about Clause 40 c. Item 1c a dispute about Clause 26 d. Item 1d a dispute about Clause 26 and Clause 17 and the NES e. Item 1e a dispute about Clause 16 and the NES f. Item 1f a dispute about Clause 15 and the NES g. Item 1g a dispute about Clauses 87.2 and 88 h. Item 3 a dispute about Clauses 86.1 and 87.2 of the Agreement and its interaction with Clause 16 and the NES? Noting that the RACV intends to continue with the averaging of ordinary base pay pursuant to Clause 86.1 and 87.2 of the Agreement. To what extent is the dispute about the rate at which personal leave is deducted when taken a dispute about these matters?	Yes these matters are all relevant.	The RACV has not had time to consider these matters in detail. However, the RACV accepts that if any matters in the detail of the de-annualisation proposal affect other clauses then these matters can be determined to the extent this is possible under Clause 95. However, there is no power to fetter the discretion to implement de-annualisation.
To the extent that the dispute is about these other clauses is it consistent with Clause 96(iv) for the Commission to arbitrate provided that any arbitrated outcome is not inconsistent with those Agreement provisions or any other Agreement provision?	Yes	Yes (subject to power being available under Clause 95)

[35] Having considered the submissions, the authorities to which the parties referred and the responses to the questions posed, I am satisfied of the following:

● Clause 96(iv) provides that there is no power to arbitrate, without the consent of the parties, the RACV proposal to implement changes to the annualised payment system unless it is a matter which is arising under a provision of the Agreement (other than Clause 96) or the NES.
● It would not be consistent with Clause 27.1(d) for the Fair Work Commission to make a decision to require the employer to average wages. That is, there is no power for the Commission to make a decision which prevents the RACV from implementing a decision to remove averaged payments.
● To the extent that the proposed changes to the annualized payment arrangements affect the implementation or interpretation of, or are otherwise arising under, other provisions in the Agreement or the NES such as personal leave, annual leave, shift penalties, annual leave loading, and shift penalties on annual leave the dispute may also be arising under those clauses. Clause 96(iv) does not prevent arbitration of these matters to the extent that they are able to be arbitrated pursuant to the disputes settlement Clause 95. To the extent that the dispute is arising under other clauses it is consistent with Clause 96(iv) for the Commission to arbitrate provided that any arbitrated outcome is not inconsistent with those Agreement provisions or any other Agreement provision.

[36] I now turn to the issue of whether or not there is any scope to arbitrate a dispute concerning Clause 27.1(d) of the Agreement.

[37] Clause 27.1(d) allows averaging of pay and Clause 86.1 and 87.2 allow averaging of ordinary hours over a period. The RACV propose to retain the averaging of pay associated with the averaging of ordinary hours but to remove the averaging of penalties and to make other related changes including to the rate at which leave is deducted. For the ASU position to be accepted at least some aspects of the annualized payment system, which the RACV is seeking to change, must be enabled by Clause 27.1(d). Clause 27.1(d) describes the averaging system which is permitted as follows: “employees' whose wages are averaged will be paid a set wage according to the average ordinary hours worked in any particular wage pay period.” I am satisfied that an averaging system of this type can include the shift and weekend penalty payments applicable to those ordinary hours but it is not a requirement of such an averaging system that it include such penalty payments. I am therefore satisfied that the annualised payment system is at least in part an averaging system within the meaning of Clause 27.1(d). The RACV propose to change that averaging system but not to end it. In this respect the dispute is a dispute arising under Clause 27.1(d).

[38] The ASU refers to the decision of Tracey J in CEPU v Thiess Pty Ltd 7 (Thiess). Tracey J found that when considering the type of matters that fell within the scope of the disputes settlement procedure the term “application of the agreement” was a concept broad enough to extend to a dispute about Thiess’ decision to terminate the operation of the 4 on 4 off roster arrangement which had been in place. Tracey J also held that it is possible to have a dispute about the application of the agreement which is a dispute about the way in which an employer has exercised a power or discretion that it has, even if the agreement confers that power or discretion in unlimited terms.

[39] In the Thiess matter Tracey J characterized the relevant agreement provision as follows:

“31. By Clause 1.3 of Part 2 of Schedule 1A to the Agreement the respondents may terminate the implementation of the 4 on 4 off roster at their discretion. This was the power which they proposed to exercise. It appeared in these terms:

“The implementation of the 4/4 roster may be terminated by TD. Once terminated the 4/4 roster may be re-implemented in the manner provided for in Clause 7.5 of Division A of Part 2.”” 8

[40] I am satisfied that the RACV’s power to alter the averaged pay system pursuant to Clause 27.1(d) in the Agreement can be similarly characterized.

[41] Tracy J outlined that the CEPU had a number of concerns about matters which were a consequence of the proposal to alter the rostering arrangement. In particular the redundancies which were proposed to occur. The CEPU notified their concerns about the rostering changes and these consequential and/or related matters. In the circumstances of this case the ASU has in defining the matters in dispute listed a number of concerns about matters which are a consequence or an adjunct to the proposal to alter the annualized pay arrangements; for example, changes to the rate at which personal leave is deducted when taken and changes to the way annual leave is paid.

[42] Tracey J characterized the relationship to the disputes settlement procedure as follows:

“64. In my view the ordinary and natural meaning of the word “application” extends to a decision by the respondents, made under Clause 1.3, to terminate the operation of the 4 on 4 off rostering arrangement. In doing so they have made use of or applied the provision to bring about a change for which the Agreement provides.

68. When the CEPU so notified the respondents disputes arose which, in my opinion, attracted the operation of Clause 15.1 of the Agreement. The respondents’ decision to change the rostering arrangements was made under a power to do so which was conferred by the Agreement. It involved an application of the Agreement. Furthermore, the CEPU has expressed opposition to electricians being made redundant as a result of the change to roster arrangements.

69. These concerns fit comfortably within the concept of disputes and grievances. The dispute concerning the changes to rostering arrangements arose directly out of the application by the respondents of Clause 1.3 of the Agreement. It related to such application and could also be said to have arisen out of or in connection with it. The decision to enforce 160 redundancies was a consequence of the decision to change the rostering arrangements. It had a less direct connection with the application of Clause 1.3. Nonetheless it can be said to have arisen out of and been connected with that application.

70. I accept the respondents’ submissions that Clause 1.3 confers an unfettered discretion on them and that the right there conferred may not be abrogated against their will even if the dispute ultimately falls to be dealt with by arbitration. These considerations do not, however, compel the conclusions that Clause 15.1 is not intended to and does not operate in circumstances such as the present or that the processes mandated by Clause 15.1(b) lack practical utility. At each stage prior to a determination being made by the PDP there is scope for the respondents, should they be so minded, to reconsider the decision which has given rise to the disputes. If they do so they might choose to rescind it or to modify the process by which the decision is to be implemented. This could involve, for example, delaying or staggering the introduction of the roster changes or allowing more time for employees who are rendered redundant by the changes to make alternative domestic arrangements or obtain alternative employment. The respondents may be moved to take such ameliorative action, if in the course of negotiations, conciliation or mediation they become aware of matters of which they were previously unaware. Ultimately, however, they may not be so persuaded and, if so, they will be entitled, consistently with the Agreement, to implement their decision to exercise the power conferred on them by Clause 1.3 and to enforce redundancies subject to the requirements of the Agreement.” 9

[43] The ASU argues that the reversal of the averaging payment system pursuant to Clause 27.1(d) is the exercise of discretion, namely the RACV’s discretion to introduce or withdraw average salaries. That exercise of discretion gives rise to a dispute about the application of Clause 27.1 which is a dispute arising under the Agreement.

[44] I am satisfied that the situation in this case is analogous to the Thiess case in that the changes are an exercise of discretion, the dispute about the exercise of the discretion is properly regarded as a dispute about the application of the Agreement or arising under the Agreement and the dispute arose directly out of the exercise of discretion by the RACV which is permitted by the Agreement. The consequential changes in this particular case may mean that the dispute is also about other clauses of the Agreement.

[45] The RACV point to paragraph 70 of the Thiess judgment quoted above, and the first and final sentences in particular, in support of their contention that there is no scope to arbitrate in a dispute about the exercise of discretion pursuant to Clause 27.1. I disagree with this submission. Tracey J makes it clear that the matter can proceed to arbitration, however, the outcome of that arbitration cannot abrogate the right to exercise the power conferred on the employer under the clause. The subject matter of the dispute and the outcome of the dispute must be distinguished.

[46] Senior Deputy President Watson proceeded to conciliate and then arbitrate the dispute following the Thiess decision. 10

[47] SDP Watson found:

“The dispute before me concerns the proposal by TD to make redundant 160 electrical workers. The CEPU, relying on a related Federal Court of Australia decision, characterised the dispute as a dispute relating to any and all matters arising out of or in connection with the application or interpretation of clause 1.3 of Part 2 - Schedule 1A of the Agreement - the application by TD of its right to alter shift arrangements from the 4/4 roster to the 56 hour roster. In my view the disputes procedure in clause 15 of Part 1 of the Agreement does authorise Fair Work Australia to arbitrate the matters in dispute arising from the application of the Agreement and, in particular, the redundancies arising from the application of the right of TD to reinstitute the 56 hour roster.” 11

[48] In arbitrating the matter the Senior Deputy President found that it was not appropriate to grant some of the outcomes sought by the union. If the outcomes sought had prevented Thiess from exercising its power to change the rosters then such an outcome would have been beyond power to determine through arbitration.

[49] If this matter proceeds to arbitration the ASU will need to make clear exactly what outcomes it seeks. If those outcomes prevent the RACV from changing the averaging system, provided that those changes are otherwise consistent with the requirements of the Agreement and the National Employment Standards, then those outcomes will not be able to be the arbitrated outcome. This will need to be considered during the course of the arbitration should it occur.

[50] I now turn to the question: “Is an arbitration about Clause 27.1(d) an arbitration about the RACV proposal to implement changes to the annualised payment system and therefore not a separate matter which is arising under a provision of the Agreement other than Clause 96?” In other words, does Clause 96 preclude arbitration of a dispute about Clause 27.1(d) because a dispute about Clause 27.1(d) is no different from a dispute about Clause 96 which is not able to be arbitrated without consent.

[51] It is clear that Clause 96 modifies the scope of the disputes settlement procedure in Clause 95. The scope of matters which can be dealt with by arbitration without consent of both parties under Clause 95 is as follows:

“If a dispute arises about this Agreement, the National Employment Standards or any other work-related matter...”

[52] In contrast the scope of matters which can be dealt with without the consent of both parties under Clause 96(iv) is as follows:

“...a matter which is arising under the provisions of this Agreement, other than this provision, or under the National Employment Standards.”

[53] Clause 96 significantly reduces the scope of matters concerning the RACV proposal to remove averaging or to de-annualise even if I find that there is scope to arbitrate matters arising under Clause 27.1(d). For example, absent Clause 96, aspects of the dispute which are not specifically covered by the Agreement could be the subject of arbitration because they are a work related matter. The clause is therefore meaningful or has work to do.

[54] Clause 96 is about the annualized payment system and from the heading it is clear this includes leave accruals. Clause 27.1(d) is about averaging payments for ordinary hours. There is substantial overlap between the two subject matters but they are not identical.

[55] The plain words of Clause 96 do not exclude a dispute arising under Clause 27.1(d). There is nothing before me to establish that the mutual intention of the parties was anything other than the plain words of Clause 96. I am not satisfied that Clause 96 completely excludes a dispute arising under Clause 27.1(d).

[56] However, I am satisfied that the outcomes which can be achieved by arbitration, to the extent that the dispute is arising under Clause 27.1(d), are limited. The outcomes cannot prevent the implementation of a change to the averaging system provided that the changes and the manner of their implementation are consistent with the other provisions of the Agreement and the National Employment Standards. To act otherwise would be contrary to Section 739(5) of the Act. Clause 96 is about a process for finalizing the dispute concerning the proposed change to the annualized payment system. I doubt it would be consistent with the purpose of Clause 96 to unreasonably delay finalization. These considerations may particularly affect the possible outcomes in respect to Item 2 and Item 4 of the ASU statement of the matters in dispute.

[57] I am satisfied that, within the constraints I have identified, the dispute can be dealt with by arbitration.

[58] At the conclusion of the hearing I heard the submissions of the parties concerning the appropriate directions for the arbitration in the event that I found that there was jurisdiction. I consider that to be consistent with Clause 96 a more constrained timetable is required than that sought by the ASU. The directions are as follows:

1. The ASU is to provide its submissions and witness statements together with a draft order and a clear identification of the provisions of the Agreement upon which they rely by 2 September 2014.

2. The RACV is to provide its submissions and witness statements by 16 September 2014.

3. If there are any documents sought by either party the relevant request should be made directly to the other party at the earliest possible opportunity.

4. The ASU is to provide any matters in reply by 23 September 2014.

5. The matter will be listed for Hearing on Friday 26 September and Monday 29 September 2014.

COMMISSIONER

Appearances:

Mr Y Bakri appeared for the ASU.

Mr D Trindade appeared for the RACV.

Hearing details:

2014

Melbourne

August 13

 1   [2014] FWCA 2445.

 2 (2005) 222 CLR 241.

 3   Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) CLR 645. This matter is commonly known as the private arbitration case.

 4 (2001) 203 CLR 645, at para 30.

 5 (2002) AIRC 1376.

 6   [2014] FWC 2962.

 7 (2011) FCA 1020, at paras 64 and 70.

 8 (2011) FCA 1020, at para 31.

 9 (2011) FCA 1020, at paras 64, 68, 69 and 70.

 10   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Thiess Degremont Joint Venture[2011] FWA 6698.

 11   [2011] FWA 6698, at para 17.

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