Australian Rail, Tram and Bus Industry Union-New South Wales Branch v Bowmans Rail Pty Ltd

[2020] FWC 426

[2020] FWC 426

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Rail, Tram and Bus Industry Union-New South Wales Branch
v
Bowmans Rail Pty Ltd
(C2019/3960)

COMMISSIONER PLATT ADELAIDE, 31 JANUARY 2020

Dispute about matters arising under the 2018 Agreement – Public Holidays – Duty Free Day – interpretation of clauses 17.7 and 26.2 concerning payment on Public Holidays – employees entitled to an additional payment of 7.6 hours on top of salary.

[1] On 27 June 2019, the Australian Rail, Tram and Bus Industry Union (ARTBIU) lodged a Form F10 Application, under section 739 of the Fair Work Act 2009 (Cth) (the Act), concerning a dispute with Bowmans Rail Pty Ltd (Bowmans) over the terms of the Bowmans Rail Train Crew Enterprise Agreement 2018 1 (the 2018 Agreement).

[2] The Application was initially allocated to Deputy President Bull who conducted two Conferences which did not resolve the matter.

[3] The dispute concerns the rate of payment for a Public Holiday not worked pursuant to clause 26.2 of the 2018 Agreement. Clause 26.2 provides a table which describes the entitlement to payment on Public Holidays.

[4] Clause 17 of the 2018 Agreement deals inter alia with rates of pay and provides for what is known as an annualised salary. Clause 17.7 provides details of what is included in that salary.

[5] The ARTBIU contend that an employee who does not work on a Public Holiday, which is a duty free day, is entitled to a payment of 7.6 hours pay in addition to their salary. Bowmans contend that there is no entitlement to an additional payment.

[6] On 8 October 2019, Deputy President Bull issued Directions concerning the filing of material and a Hearing was scheduled on 5 December 2019 in Sydney. On 31 October 2019, Bowmans requested that the matter be heard in Adelaide on the basis that a number of witnesses were in Adelaide, Bowmans is located in Adelaide, most of the operations occur in Adelaide and counsel is in Adelaide.

[7] The matter was subsequently allocated to my Chambers and Deputy President Bull’s Directions were varied to provide that the Hearing would now be conducted in Adelaide by me.

[8] The matter proceeded to Hearing on 5 December 2019. Mr Warnes represented the ARTBIU. Mr Powell of counsel represented Bowmans with permission being granted pursuant to s.596(2)(a) of the Act.

[9] There was no dispute that I had the requisite jurisdiction to arbitrate the matter and make a determination that is binding on the parties pursuant to clause 8(d) of the 2018 Agreement.

The Agreement

[10] The 2018 Agreement provisions relevant to this matter are reproduced below:

“Clause 17.2

Full time employees will be paid on the basis of an average of 76 ordinary hours per fortnight, on rates appropriate to their classification as prescribed by Schedule 3 of this Agreement. Part time employees will be paid in accordance with Schedule 3 for time actually worked.

…

Clause 17.4 Penalty rates and overtime

Apply when:

(a) Hours are worked in excess of:

(i) 12 ordinary hours per shift

(ii) 76 ordinary hours per fortnight.

(b) As per Clause 18.2

All conditions will be paid using the overtime rate prescribed by Schedule 3.

…

Clause 17.1 Matters included in determining base rates of pay

The rates of pay prescribed will be inclusive of all payments, inclusive of shift & weekend penalties, annual leave loading, public holiday payments, casual loading where applicable, takes into account all responsibilities for each classification, the workplace conditions and other factors associated with the required duties, the location of the work and related environmental factors. It covers payment for all worked ordinary hours and any allowances which might otherwise be applicable to the work unless additional allowances are set out in the Agreement.

…

Clause 18.5 Duty free days

18.5.1 Employees will receive four (4) duty free days per fortnight. At least two (2) of these will be consecutive. Employees may be requested to work one (1) duty free day and may elect to make him or herself available for more;

18.5.2 Where a duty free day stands alone they shall be of the following durations:

(i) A minimum of 35 hours from sign off on one shift to sign on for the next;

(ii) A minimum of 30 hours in duration where the shift finishes before midnight on one day to commencing at 06:00 the day following the duty free day.

18.5.3 Multiple duty free days shall be 35 hours for the first day and 24 hours for subsequent days from the sign off time.

18.5.4 Duty free days will not be infringed upon by the provisions of clauses 18.3.4 unless agreed with the employee concerned.

18.5.5 If the roster is amended and impacts employees designated duty free days, this change will only be made in consultation and agreement with the employee affected. The employee can choose the following;

(a) elect to work on their duty free day for standalone overtime rates; or

(b) elect to work on a duty free day at ordinary rate, and elect an alternate duty free day.

18.5.6 If an employee is required to work on an Available day, Bowman’s Rail will contact the employee as soon as reasonably able to the Available Day to confirm shift requirements. If the employee has not worked 76 hours in the fortnight, and is requested to work on an Available day, however refuses to work, then the employee is not guaranteed to be paid 76 hours. If the fortnightly roster has already been issued and an employee submits a request for leave for time off during that roster, this leave will only be approved in consultation with the employee, and there is no guarantee the leave will be approved.

…

Schedule 1 – Definitions

“Duty Free Day” refers to a day upon which the employee is not rostered to work. An employee can elect to make themselves available to work on their duty free day(s), however, this is entirely the employee’s decision.

…

“Stand alone” means the hours paid will not be included in the calculation of the seventy-six (76) hour fortnight.”

[11] The 2018 Agreement replaced the Bowmans Intermodal Train Crew Enterprise Agreement 2013. 2 The negotiations for the 2018 Agreement were protracted and on one occasion an agreement was made but the approval application was withdrawn as a result of concerns in relation to the meeting of pre-approval requirements.3

Evidence

[12] The ARTBIU provided statements and documents from:

•  Mr Kevin Pryor (Organiser) 4

•  Ms Kaye Brown (Branch Organiser for SA/NT) 5

[13] Bowmans provided witness statements from:

•  Mr Scott McKay (Chief Executive Officer until 15 October 2019) 6

[14] The evidence of the witnesses was largely consistent. The main issue of contention was the understanding of statements made by Bowmans during the negotiation of the Agreement and the statements made to employees in relation to the explanation of the proposed Agreement, in so far as they indicated the intent of the disputed provision.

Principles of Interpretation

[15] The question of the proper construction of an industrial instrument such as an award or enterprise agreement “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose ...”. 7 In Transport Workers’ Union of Australia v Linfox Australia Pty Ltd8 Tracey J summarised the principles relevant to the proper construction of industrial instruments as follows:

“[30] In dealing with the construction of awards in Kucks v CSR Ltd [1996] IRCA 166; (1996) 66 IR 182 at 184 (Kucks) Madgwick J observed that:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.”

[31] This passage was quoted with approval by two members of the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005)222 CLR 241 at 271 ... per Kirby J, at 282–3 per Callinan J. Shortly afterwards these principles were restated by French J in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 ... at [57]:

“[57] It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities — City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378–9 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned — see eg George A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503–4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

“Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.”

[32] In Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 Northrop J expressly agreed with what had been said by Madgwick J in Kucksand held that Madgwick J’s observations had even stronger application to certified agreements than they did to awards.

[33] These principles have application to the construction of the Agreement which is presently in dispute.

[34] Guidance as to the construction of industrial instruments may also be obtained by reference to principles which courts apply to the construction of commercial contracts. Commercial contracts should, as Kirby J held in Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd [2000] HCA 20; (2000) 170 ALR 579 ... ‘be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction’. An interpretation which accords with business common sense will be preferred to one which does not: see Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437.

[35] In determining whether a commercial document imposes contractual obligations regard is had to the intention of the parties: would a reasonable person conclude that the person making the alleged binding promise intend to be contractually bound by that promise. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 ... at [40] the High Court summarised the position as follows:

“[40] ... It is not the subjective beliefs or understanding of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe ... That, normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.” (citations omitted)

[16] These principles were also discussed and summarised in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd 9 and in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited. 10

[17] The Full Bench in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited 11 set out the following principles:

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

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

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

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

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

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

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

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

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

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

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

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

Consideration

[18] The 2018 Agreement was the end result of a protracted negotiation process. In my view the negotiations for each of the proposed Agreements including those where the Agreement was not made or made but not approved should be regarded as a single continuum.

[19] Schedule 3 of the 2018 Agreement contains the rates of pay and nominates an “Annualised rate” for each Classification together with weekly and hourly rates.

[20] Clause 18.1 of the 2018 Agreement provides that the ordinary hours of work are 76 hours per fortnight.

[21] Clause 18.4.2 of the 2018 Agreement provides that each employee’s fortnightly roster shall identify a duty free day, a day upon which a Train shift has been allocated and days when the employee has not been allocated work but must make themselves available if rostered. Provisions concerning duty free days are detailed in clause 18.5 but do not appear to deal with the interaction of duty free days and Public Holidays.

[22] Clause 17.7 of the 2018 Agreement read in isolation indicates that the rates of pay contained in Schedule 3 the Agreement include all payments including Public Holiday payments. It appears that the rates of pay in question are the Annualised rates of pay as detailed in Schedule 3.

[23] Clause 26 of the 2018 Agreement solely concerns Public Holidays and at line 1 of the Table contained in clause 26.2, it appears to provide that Full or Part Time Train Crew if not working on a Public Holiday due to it being a duty free day (which is defined in Schedule 1 as ‘a day upon which the employee is not rostered to work’) will be entitled to a stand alone payment of 7.6 hours and that the hours do not count towards the duty cycle hours. The term ‘stand alone payment’ is defined in Schedule 1 of the Agreement and means that ‘the hours paid will not be included in the calculation of the seventy-six (76) hour fortnight’. Clause 26 read in isolation appears to confer an additional payment of 7.6 hours in such circumstances. Clause 26.2 line 4 appears to be consistent with line 1 of clause 26.2 (other than Casual Train Crew). Clause 26.2 line 4 appears to reinforce the entitlement to a separate stand alone payment.

[24] A literal reading of clause 17.7 of the 2018 Agreement would render clause 26.2 superfluous.

[25] It is clear to me that clauses 17.7 and 26.2, read together, are uncertain, inconsistent and/or ambiguous.

[26] Clauses 17.2, 17.3 and 17.6 of the 2013 Agreement are identical in operation to clauses 17.2, 17.4 and 17.7 of the 2018 Agreement. Duty free days are dealt with at clauses 18.8, 18.9 and 18.10 of the 2013 Agreement in a manner replicated in clauses 18.51, 18.5.2, 18.5.3 and 18.5.4 of the 2018 Agreement.

[27] Clause 26 of the 2018 Agreement is markedly different to clause 26 of the 2013 Agreement. Whilst clause 26.1 contemplated payment, at the rate of 7.6 hours per day, for employees who were rostered off on a Public Holiday, which would not count towards the 76 worked hours, the 2018 Agreement expended of the working scenarios and payments by the insertion of the table at clause 26.2 of the 2018 Agreement.

[28] The 2013 Agreement does not contain a definition of ‘duty free day’ or ‘stand alone payment’.

[29] Where the language of an agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstances will be admissible to aide the interpretation of the agreement Some of the conduct of the parties in the negotiation of the 2018 Agreement is relevant on this point.

[30] The ARTBIU witnesses gave evidence of negotiations of claims to revise clause 26 Public Holidays during the negotiations that led to the 2018 Agreement and the exchange of documents provided by Mr McKay and the provision of a document to employees explaining the Agreement prior to the vote. The ARTBIU contend that this information supported their position on the interpretation of the meaning of the disputed clauses.

[31] Bowmans contend that clause 17.7 has the effect of providing a salary which includes compensation for Public Holidays which were not worked. Whilst this may be so, this position reads down the provision of the clause which does not mention that the compensation excludes Public Holidays which are worked.

[32] Bowmans contend that they intended that clause 26.2 would not vary clause 17.7 of the 2018 Agreement. 12 Bowmans contend that the interaction between clause 17.7 and 26.2 was not discussed during negotiations and the inclusion of clause 26.2 was not seen as concerning an additional benefit.13

[33] Bowmans contend that line 1 of the table in clause 26.2 refers to the payment of 7.6 hours being included in the remuneration detailed at clause 17.7. 14 They further contend that stand alone does not mean ‘in addition to’ but means that the 7.6 hours do not count towards the 76 hours to be worked before overtime is paid. This is supported by the definition of ‘stand alone’ in Schedule 1 of the 2018 Agreement.

[34] Mr McKay was cross-examined on a document which was attached to the statement of Mr Pryor (KP-5). 15 The document was titled ‘Benefits to be added to the EBA – as at 10 April 2017’. Mr McKay said he provided the document to the Union on 11 July 2017. The document was drafted by Mr McKay and a person named Melinda. Mr McKay believed that the document pertained to the 2016 draft of the agreement.

[35] The document contains a table and the first column is titled ‘Description of Benefit’. At line 10 of the table it states:

“Employees are now paid for public holidays not worked, previously was inclusive of their annualised salary.”

[36] It was put to Mr McKay that this statement reflected the ARTBIU’s claim. It appears from the transcript 16 that Mr McKay initially thought the provision read ‘Employees are not paid ….’ (emphasis added).

[37] Mr McKay subsequently contended that this statement was a reflection of the status quo but accepted that the use of the word ‘now’ inferred a change from the status quo. Mr McKay then contended that the sentence was poorly worded.

[38] As the document was not provided to all the employees who voted on the Agreement, I am cautious about regarding it as evidence of common intent. I do note, however, that the description is consistent with a change in the status quo, which is consistent with the insertion of the table in clause 26.2 of the 2018 Agreement and accords with the bargaining claim made by the ARTBIU.

[39] On 17 August 2018, Mr McKay sent an email to ‘All train crew’. The email advised that a further proposed agreement was being distributed as a result of the pre-approval deficiencies in the previous agreement. The email provided a summary of benefits (in dot point form) contained in the proposed agreement. Those benefits included:

“Amendments to Duty free days could result in more overtime being paid

Hours works greater than 7.6 hours on a public holiday will be paid those hours at 170% (sic)

Minimum hours worked / paid for public holidays”

[40] In his evidence Mr McKay suggested that this change only applied to casual employees. 17 I do not accept this explanation; the third column of the table at clause 26.2 clearly states that the provision does not apply to Casual Train Crew.

[41] In my view these representations suggest changes to the status quo with respect to the matters contained in clause 26. The last dot point is also consistent with a change to the treatment of Public Holidays as reflected in line 1 of the table at clause 26.2 and consistent with Mr McKay’s Description of Benefits table provided to the ARTBIU on 11 July 2017.

[42] Mr McKay contended that this statement was a mistake. I do not accept his explanation; it was a representation that a positive change had occurred with respect to Public Holidays. It is consistent with the position that the changes to clause 26.2 increased the payment to employees in the case of Public Holidays, it is inconsistent with the position that the Public Holiday provisions in the 2018 Agreement were the same as the 2013 Agreement.

[43] The representations described in [39] were also reflected in the Form F17 Employer’s statutory declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement) but in this case it was on the basis of improvements compared to the relevant Modern Award for the purposes of the better off overall test. I do not see a basis upon which those representations can be relied upon to interpret the disputed clauses.

Conclusion

[44] Having considered the evidence presented in line with the approach dictated in the authorities previously referred to, I find that clause 26.2 in the 2018 Agreement was intended to provide additional benefits over the 2013 Agreement.

[45] I find that line 1 of the Table contained in clause 26.2 of the 2018 Agreement should be interpreted as providing a payment of 7.6 hours in addition to the salary provided for in clause 17.7 and that those hours do not count toward the 76 duty cycle hours for the purposes of calculating overtime. This was a benefit not contemplated in the 2013 Agreement and is consistent with the ARTBIU’s claim and the representations made by Mr McKay on behalf of Bowmans on 11 July 2017 and in the Agreement summary provided prior to the vote on the 2018 Agreement.

[46] I find that under the 2018 Agreement, employees who do not work on a Public Holiday which falls on a duty free day are entitled to receive an additional payment of 7.6 hours on top of the salary paid in accordance with clause 17.7 of the 2018 Agreement.

COMMISSIONER

Appearances:

T.Warnes on behalf of the Applicant.

J.Powell of counsel on behalf of the Respondent.

Hearing details:

2019.

Adelaide:

December 5.

Printed by authority of the Commonwealth Government Printer

<PR716214>

 1   [2019] FWCA 1063

 2   [2013] FWCA 6205, see also clause 3 of the 2018 Agreement

 3   See Statement of Mr Pryor paragraphs 5-12

 4   Exhibit A1 and Exhibit A2 (Reply Statement)

 5   Exhibit A4 and Exhibit A5 (Reply Statement)

 6   Exhibit R1

 7   Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241, 246

 8 (2014) 318 ALR 54

 9   [2014] FWCFB 7447

 10   [2017] FWCFB 3005

 11   [2017] FWCFB 3005

 12   Bowmans submission paragraph 8

 13   Bowmans submission paragraph 9

 14   Bowmans submission paragraph 10

 15   Transcript 5 December 2019, PN207-PN238

 16   Transcript 5 December 2019, PN229

 17   Transcript 5 December 2019, PN292