Australian Rail, Tram and Bus Industry Union v One Rail Australia Pty Ltd
[2021] FWC 3327
•29 JUNE 2021
| [2021] FWC 3327 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Australian Rail, Tram and Bus Industry Union
v
One Rail Australia Pty Ltd
(C2020/9116)
GENESEE & WYOMING AUSTRALIA PTY LTD (SA/NT) ROLLINGSTOCK MAINTENANCE ENTERPRISE AGREEMENT 2019
[AE506982]
Rail industry | |
COMMISSIONER HAMPTON | ADELAIDE, 29 JUNE 2021 |
Application to deal with dispute about matters arising under the enterprise agreement – contract over-agreement rate of pay – decision by employer to cease adjusting in line with increases provided in the enterprise agreement – whether dispute arises from the enterprise agreement and within jurisdiction – jurisdiction found on the basis of the contended dispute – found that enterprise agreement does not require the adjustment directly or indirectly – no contractual basis demonstrated so as to the create obligation linked to the enterprise agreement as contended – dispute determined.
1. What this decision is about
[1] The Australian Rail, Tram and Bus Industry Union (RTBU) has applied on behalf of its relevant members under s.739 of the Fair Work Act 2009 (the Act) for the Commission to deal with a dispute concerning a number of members who are engaged under the terms of the Genesee & Wyoming Australia Pty Ltd (SA/NT) Rollingstock Maintenance Enterprise Agreement 2019 (2019 Enterprise Agreement).
[2] The Respondent in this matter, and the employer covered by the 2019 Enterprise Agreement, is One Rail Australia Pty Ltd (One Rail). One Rail is the successor business to Genesee & Wyoming Australia Pty Ltd, the named employer party to the 2019 Enterprise Agreement.
[3] The dispute as framed by the RTBU involves the following:
“This dispute is about whether the relevant employees who have been put on a contractual pay rate higher than that which they would receive under the Agreement should continue to receive pay increases in accordance with the increases in the Agreement.” 1
[4] The employees concerned are paid on what is known within One Rail as the ‘NTC8 rate of pay’ which arises under their contract (Contractual Rate of Pay). The RTBU maintains that employees on this Contractual Rate of Pay are entitled to the 2% pay increase due under the terms of clause 16.3 of the 2019 Enterprise Agreement on 1 July 2021.
[5] In broad terms, One Rail maintains that these employees are not entitled to pay increases whilst their contractual rate of pay remains higher than the C8 rate provided by the 2019 Enterprise Agreement. Further, it contends that the Commission lacks the necessary jurisdiction to determine the dispute given the nature of the dispute and the terms of the 2019 Enterprise Agreement.
[6] Broadly speaking, the jurisdictional issue is whether the dispute, properly characterised, is a dispute arising under the 2019 Enterprise Agreement.
[7] Constructively, the parties have agreed a series of relevant facts that are set out below. However, the difference of view as to the Commission’s capacity to deal with the dispute has meant that they were unable to agree the question(s) to be determined by the Commission.
[8] A hearing has been conducted in this matter and ultimately, I have determined that:
• This dispute as properly characterised is whether One Rail is required to increase the wages of the employees paid the NTC8 rate (by 2 per cent), because of the contractual conditions and the fact that the wages under the 2019 Enterprise Agreement are to be increased by virtue of clause 16.3, in circumstances where the NTC8 rate remains higher than the equivalent agreement classification rate,
• The dispute, at least in part, arises from the 2019 Enterprise Agreement and to that extent the Commission has jurisdiction to determine the matter.
• A contractual basis for the Enterprise Agreement related adjustment of the NTC8 rate has not been demonstrated.
• The 2019 Enterprise Agreement does not directly or indirectly require that the wage adjustment provided in clause 16.3 be applied to the NTC8 rate.
[9] The basis for these conclusions and the formal determination of the Commission are set out in the Decision below.
2. The agreed facts and the competing question(s) to be determined 2
[10] Set out below is the statement of agreed facts, supplemented by extracts from some of the documents referenced in those facts and two facts subsequently agreed between the parties during the hearing of this matter. The competing question(s) to be determined proposed by the parties are also set out at the conclusion of the statement below.
“Statement of Agreed Facts
1. One Rail Australia Pty Ltd (Company) (previously Genesee & Wyoming Australia Pty Ltd) provides rail freight services in various states and territories of Australia.
2. Rail freight services are supported by a rollingstock maintenance function. Some of the employees that are engaged to perform rollingstock maintenance at the Berrimah Depot in the Northern Territory (Site) are members of the Australian Rail Tram and Bus Industry Union (RTBU) (Employees).
3. The employees’ employment has at all relevant times been covered by a collective or enterprise agreement.
4. In 2008 the employees’ employment was covered by the Downer EDI Rail South Australia and Northern Territory Maintenance Collective Workplace Agreement (2008 Downer EA), and they were engaged in the C8 classification.
5. In about July 2008, by variation to their respective contracts of employment, the employees each received an increase to their hourly rate of pay which was not provided for by the 2008 Downer EA. A copy of a variation letter for one such employee was attached and marked Annexure A (Downer EDI Variation Letter). Each employee’s contractual rate of pay (as varied by the Downer EDI Variation Letter) is referred to below as their Contractual Rate.
[11] The Downer EDI Variation Letter relevantly stated the following:
“13 February 2008
…
SUBJECT: RATE INCREASE
In accordance with wage level reviews specific to your permanent employment in Berrimah NT, the following percentage rate increase and adjusted hourly rates will apply from the first full pay period of:
Classified | 6/1/08 | July 08 | Jan 09 | July 09 | Jan 10 |
+4% | +2% | +4% | +2% | ||
Hourly Rate | Hourly Rate | Hourly Rate | Hourly Rate | Hourly Rate | |
NT C8 | $29.55/hr | $30.7832 | $31.34664 | $32.6005 | $33.2525 |
All other terms, conditions and benefits of your employment with Downer EDI Rail, will be applied as per the Downer EDI Rail South Australia and Northern Territory Collective Workplace Agreement.
Please confirm your acceptance of this rate review by returning a signed copy of this letter to the Human Resource Coordinator, Dry Creek, SA.
… … 3”
6. During the life of the 2008 Downer EA, the Employees received increases to their Contractual Rate at percentages which matched those applicable to the rates of pay prescribed under the 2008 Downer EA (set out at clause 29.3 of the 2008 Downer EA) and the Downer EDI Variation Letter.
7. On 16 March 2011, the Employees’ employment became covered by the Downer EDI Rail South Australia and Northern Territory Enterprise Agreement 2010 – 2013 (2011 Downer EA).
8. Clause 5.1 of the 2011 Downer EA incorporated the terms of the Manufacturing and Associated Industries and Occupations Award 2010 (Award) as it was in operation at 21 February 2011 (being the date the 2011 Downer EA was signed).
9. At 16 March 2011, when the 2011 Downer EA commenced in operation, the Award included a district allowance, which (by clause 32.6) was payable to employees who performed work in the Northern Territory (District Allowance).
10. Whilst their employment was covered by the 2011 Downer EA, the Employees received pay increases (on their Contractual Rate) on the dates and at percentages which matched those applicable to the 2011 Downer EA rates of pay (set out at clause 28.3.1 of the 2011 Downer EA).
11. On 7 August 2013, the Employee’s employment became covered by the Downer EDI Rail South Australia and Northern Territory Enterprise Agreement 2013 – 2016 (2013 Dower EA).
12. Clause 5.1 of the 2013 Downer EA incorporated the terms of the Manufacturing and Associated Industries and Occupations Award 2010 as it was in operation at 19 July 2013 (being the date the 2013 Downer EA was signed).
13. By virtue of this incorporation, the District Allowance was a term of the 2013 Downer EA, and payable to employees who performed work in the Northern Territory.
14. The District Allowance was removed from the Award with effect from 31 December 2014, but continued to be a term of the 2013 Downer EA.
15. Whilst their employment was covered by the 2013 Downer EA, the Employees received pay increases (on their Contractual Rate) on the dates and percentages which matched those applicable to the 2013 Dower EA rate of pay (set out at clause 28.3.1 of the 2013 Downer EA).
[12] It also now agreed 4 that on 25 November 2013, the employer sent a memo to the relevant employees which contained the following statement:
“… there is no guarantee that this rate will continue to be paid beyond the nominal expiry date of the Downer EDI Rail SA & NT Maintenance Enterprise Agreement 2013-2016.”
16. In 2014, the Company took over the maintenance work at the Site. The Company engaged a large portion of the Downer EDI workforce (including the Employees). The 2013 Downer EA continued to cover and apply to the Employees as a transferable instrument.
17. The Company’s letter of offer to each of the Employees, dated 31 March 2014, stated that its offer of employment was “made on terms that are no less favourable overall than your current terms and conditions”. The offer letter (Offer) included the following terms relied upon by the RTBU:
“… …
Offer of Employment
… …
The offer is made on terms and conditions that are no less favourable overall than your current terms and conditions of employment.
The Genesee & Wyoming group of companies (GW Group) is structuring the transfer of assets with Downer EDI so that a ‘transfer of business' will take place under the Fair Work Act 2009. If successful, this will mean that the current Downer ED/ Rail South Australia and Northern Territory Enterprise Agreement 2013-2016 (Downer EA) will cover GWA and your employment with GWA. The Downer EA contains many of your employment terms and conditions and GWA will apply these to your employment once you commence employment.
… …
Remuneration
You will continue to receive the same remuneration that you have been paid while working with Downer, at the rate you received immediately before you resigned from Downer.
… ... 5”
[13] It is now agreed that on 1 December 2014, the GW Group (One Rail) wrote to the employees in the following terms:
“… …
NORTHERN TERRITORY DISTRICT ALLOWANCE
As per your Offer of Employment dated 31 March 2014, your Downer EDI terms and conditions of employment transferred to Genesee & Wyoming Australia Pty Ltd (GWA).
This included a Northern Territory District Allowance outlined in the Manufacturing and Associated Industries and Occupations Award 2010 (Award).
I wish to advise that as per clause 32.6 (c) of the Award, the Northern Territory District Allowance will cease to operate on 31 December 2014.
If you have questions please do not hesitate to contact (Director Human Resources) on (phone number).
… … 6”
18. On or about 18 November 2016, the Genesee & Wyoming Australia Pty Ltd (SA/NT) Rollingstock Maintenance Enterprise Agreement 2016 (2016 GWA EA) began to cover and apply to the Employees and the Company.
19. On or about 20 January 2017, the Company wrote to the Employees about their rates of pay. A copy of this letter was attached and marked Annexure C and the relevant parts are outlined below:
“… …
Dear …
Review of `NTC8' rate
As part of the transfer of business between Genesee & Wyoming Australia Pty Ltd (GWA) and Downer EDI Rail (Downer), GWA has continued to pay you an "NTC8" hourly rate to honour an agreement made between yourself and Downer. The purpose of this inflated rate was to recognise the additional costs of living associated with the Northern Territory.
In the relevant memo dated 25 November 2013, received by you from Downer, it outlined the following provision; 'there is no guarantee that this rate of pay will continue beyond the nominal expiry date of the Downer EDI Rail SA & NT Maintenance Enterprise Agreement 2013-2016'.
GWA has reviewed this allowance and is pleased to advise that the allowance will continue to make up part of your current hourly rate of $44.48.
As your hourly rate is 14.7% above what is applicable to your classification as stipulated in clause 16.3 of the Genesee & Wyoming Australia Pty Ltd (SA/NT) Rollingstock Maintenance Agreement 2016 (Agreement), the agreed 2% increase will be absorbed by your hourly rate. Therefore, you will continue to receive $44.48 per hour until the allowance is reviewed again at 30 June 2017. There is no guarantee that it will continue to be paid beyond this date.
If you have any queries in relation to the content of this letter, please call (Human Resources Advisor) on xxx.
… … 7.
20. On or about the 10 April 2017, the Company again wrote to employees about their rates of pay. The relevant parts of that correspondence are set out below:
“10 April 2017
… …
Wage Increase
Genesee & Wyoming Australia Pty Ltd Genesee & Wyoming Australia Pty Ltd (GWA) has carefully considered your queries relating to the letter dated 20 January 2017.
Please be advised that GWA has decided to apply the following annual increases to your current rate of pay; 2% effective the first full pay period after 1 July 2016, and a further 2% effective the first full pay period after 1 July 2017.
Your new hourly rate is $45.37 and is effective as at 3 July 2016. You will receive your back pay in the pay run associated with the fortnight ended Saturday, 8 April 2017.
For clarification, any future pay increases that you may receive (with the exception of those outlined in this letter), will occur at the absolute discretion of GWA whilst your rate of pay continues to be above those rates of pay stipulated in the Enterprise Agreement applicable to your employment.
If you have any queries in relation to the content of this letter, please call, (Senior Human Resources Business Partner) on xxx.
… ... 8”
21. During the life of the 2016 GWA EA the Employees received pay increases (on their Contractual Rate) on the dates and at percentages which matched those applicable to the 2016 GWA EA rates of pay (set out at clause 16.3 of the 2016 GWA EA)
22. On 12 February 2020, the Genesee & Wyoming Australia Pty Ltd (SA/NT) Rollingstock Maintenance Enterprise Agreement 2019 (2019 GWA EA) began to cover and apply to the Employees and the Company. Clause 16.3 of the 2019 GWA prescribes the rates of pay and percentage increase for employees covered by the 2019 GWA EA.
23. In July 2019, the Employees received a 4% increase to their Contractual Rate. That percentage increase matched the percentage increase applicable to the 2019 GWA EA rates of pay (set out at clause 16.3.1 of the 2019 GWA EA).
24. In July 2020, the Employees received a 4% increase to their Contractual Rate. That percentage increase matched the percentage increase applicable to the 2019 GWA EA rates of pay (set out at clause 16.3.1 of the 2019 GWA EA).
25. The following table shows a comparison of the Contractual Rate and the C8 rate of pay as prescribed by the relevant enterprise agreement from 2014:
Year | Pay Increase | Contractual Rate of Pay | C8 Rate of Pay |
1 July 2014 | 4% | $41.92 | $35.8431 |
1 July 2015 | 4% | $43.60 | $37.2769 |
1 January 2016 | 2% | $44.47 | $38.0224 |
1 July 2016 | 2% | $45.36 | $38.79 |
1 July 2017 | 2% | $46.27 | $39.56 |
1 July 2018 | 0% | $46.27 | $39.56 |
1 July 2019 | 4% | $48.12 | $41.14 |
1 July 2020 | 4% | $50.05 | $42.79 |
1 July 2021 | 2% |
The Company has determined not to provide further increases to the Employees’ rate of pay until such time as the applicable rate of pay under the 2019 GWA EA reaches the higher Contractual Rate (which the Company currently pays the Employees).
Agreed Questions for Determination
The parties are unable to reach agreement on the Agreed Questions to be determined.
Applicant’s Question
Are Rollingstock Maintenance Employees who receive a Contractual Rate of pay entitled to receive wage increases to that Contractual Rate aligned with the increases in clause 16.3 of the 2019 GWA EA?
Respondent’s Questions
1. Does the Commission have jurisdiction to determine whether Rollingstock Maintenance Employees who receive a Contractual Rate of pay are entitled to receive wage increases to that Contractual Rate aligned with the increases in clause 16.3 of the 2019 GWA EA?
2. If the answer to (1) above is yes, are they so entitled?
3. If the answer to (2) above is yes, is the Company required, by operation of clause 16.3 of the 2019 Agreement (or as replaced by a future enterprise agreement in the same or similar terms), to increase the Employees’ Contractual Rate where that Contractual Rate remains in excess of the relevant Agreement Rate?”
3. The relevant provisions of the Enterprise Agreement
[14] The 2019 Enterprise Agreement defines its relationship with the relevant modern award in the following terms:
“6 INCORPORATION OF THE MANUFACTURING AND ASSOCIATED INDUSTRIES AND OCCUPATIONS AWARD 2010
6.1 This Agreement incorporates the terms of the Manufacturing and Associated Industries and Occupations Award 2010 (the Award) as varied during the life of this Agreement; provided that the terms of this Agreement will prevail where it is inconsistent with the incorporated terms of the Award.
6.2 This Agreement supersedes any other Award, agreement, memorandum of understanding, exchange of correspondence, work practice(s), arrangement(s), written or unwritten which applied prior to the introduction of this Agreement and which regulated the terms and conditions of employment of employees covered by this Agreement.
[15] The dispute resolution procedure (DRP) in the 2019 Enterprise Agreement provides as follows:
“41 DISPUTE RESOLUTION PROCEDURE
41.1 The objectives of the procedure are to promote the resolution of disputes by consultation and cooperation and avoid interruption to the performance of work.
41.2 The procedure apples to any disputes arising under this Agreement and/or the NES.
41.3 The procedure involves three stages of discussion, if resolution is not achieved at any stage, the discussions will proceed to the next stage, with a minimum of delay, subject to availability of the appropriate personnel.
STEP 1 – Initial discussions should be between the employee concerned and the supervisor/manager. The employee concerned has the responsibility for introducing the issue constructively and identifying the facts and relevant participants.
STEP 2 – If not resolved with the supervisor/manager by the close of shift on the next working day, discussions may then move to the next level and will include the National Manager.
STEP 3 – If unresolved at STEP 2, then the final stage of discussions involves an Executive of the Employer.
41.4 At any step in the dispute resolution process, a party may request the involvement of a representative of their choice for example, another employee, union delegate, or union official.
41.5 Throughout all stages of discussion all relevant facts will be clearly recorded.
41.6 Sensible time limits, where possible, of no more than one week will be allowed for completion of the various stages of discussion, subject to the availability of the appropriate personnel.
41.7 Emphasis is placed on a negotiated settlement but if the negotiation process is exhausted without resolution of the dispute the matter may be referred to the Fair Work Commission for conciliation and or arbitration.
41.8 Whilst these procedural steps are being followed, in accordance with the sensible time limits, employees will continue to work in accordance with safe working practices, this Agreement, their contract of employment, and Company Policies and Standard Practice Procedures.”
[16] It is not in dispute that the relevant processes set out the in the DRP have been followed leading to this present application.
[17] The classifications are set out in clause 15 of the 2019 Enterprise Agreement. There is a classification level 8 but the “NTC8”is not set out in the Agreement. It is common ground that the work performed by the relevant employees falls under the classification level 8 of the Agreement.
[18] The RTBU relied upon the wage adjustments that are provided by clause 16.3 in the following terms:
“16.3 Calculation of Wages
16.3.1 Wage levels and agreed increases over the life of this Agreement are as follows:
Classification | Establishment Wage | Wage Increases | ||
1/01/2019 | 1/07/2019 | 1/07/2020 | 1/07/2021 | |
4% | 4% | 2% | ||
C13 | $29.50 | $30.68 | $31.91 | $32.55 |
C12 | $31.44 | $32.70 | $34.01 | $34.69 |
C11 | $33.24 | $34.57 | $35.95 | $36.67 |
C10 | $35.97 | $37.41 | $38.91 | $39.68 |
C9 | $37.77 | $39.28 | $40.85 | $41.67 |
C8 | $39.56 | $41.14 | $42.79 | $43.64 |
SPNT | $37.33 | $38.82 | $40.38 | $41.18 |
SCM | $44.05 | $45.81 | $47.64 | $48.60 |
16.3.2 The rates in the above table will increase in the first full pay period after the nominated date.
16.3.3 Wage levels compensate fully for:
a) All competencies possessed and required to be exercised
b) Tool allowance
c) Disability allowances
d) Supplementary payment
e) Annual leave loading
16.3.4 Legitimate and unforeseen expenses not provided for in this Agreement and incurred in the course of company business will be assessed on a case by case basis and reimbursement of such expenses will be subject to the determination of the employee's manager.”
4. Does the Commission have the necessary jurisdiction to determine this dispute?
[19] One Rail contends that this dispute is beyond the jurisdiction of the Commission on the following grounds:
• The Commission exercises limited powers of conciliation and arbitration with respect to certain industrial disputes brought before it (of which enterprise agreement disputes are but one type). The boundaries of its dispute resolution jurisdiction and powers are threefold:
• first, as set out in the relevant FW Act sections enlivening that jurisdiction: here, sections 595 and 739. It is not a Chapter III court: it has no inherent jurisdiction, and it is incapable of exercising judicial power. Its jurisdiction and arbitral power is capable of extending only so far as its enabling Act – and (at least historically) its underlying constitutional power – allows. Although the Commission exercises private arbitration powers when dealing with enterprise agreement disputes, those powers must still be exercised within Chapter III bounds. That is, an applicant cannot draw a dispute which necessarily involves the exercise of judicial power – for example, a dispute seeking to enforce existing contractual rights – under the cloak of private arbitration under the FW Act. The Commission can, however, form an opinion as to the existing legal rights of the parties as a step in arriving at its ultimate conclusion regulating the future rights of the parties; 9
• second – where applicable – as set out in the dispute settlement term of the relevant industrial instrument. As the Commission exercises private arbitration powers when dealing with enterprise agreement disputes, its jurisdiction and power can extend no further than the scope of the dispute settlement provision itself. The construction of that term – as with the terms of the Agreement said to enliven the dispute – is governed by conventional principles of construction of industrial instruments; 10 and
• third – and critically for these purposes – as set by the bounds of the particular dispute referred to it by the parties. A dispute referred to the Commission must be properly characterised before powers conferred by a dispute settlement provision in an enterprise agreement are exercised. 11
[20] In that context, One Rail contends that clause 41.2 of the 2019 Enterprise Agreement defines a ‘dispute’ for the purposes of the DRP in clause 41 as “any disputes arising under this Agreement and/or the NES”. A dispute or claim cannot be said to “arise under” an industrial instrument unless it relates to the provisions of the instrument itself. 12 That is, whilst the nature of that relationship may vary between cases, one thing is clear: a dispute regarding increased over- agreement or over-award payments does not relevantly “arise under” that agreement or award.13
[21] Further, One Rail submits that the present ‘dispute’ notified to the Commission for resolution is unarguably a dispute about over-agreement payments derived from the Employees’ employment contracts. It posits that this fact is apparent on the face of the Form F10 application and the statement of agreed facts. At its highest, the dispute appears to assert that by failing to continue increasing the contractual rates of pay at percentages equivalent to those set out in the 2019 Enterprise Agreement, One Rail breached a representation made in its offer letter to the employees upon their transfer from Downer (to the effect that their terms and conditions would be no less favourable overall than their then-current terms and conditions). Whether such a representation could sensibly be construed as concerning the entire period of future employment (as opposed to the terms applicable at the transfer time) is highly doubtful. However, whether or not that dispute would be capable of amounting to a justiciable controversy in another forum is irrelevant; One Rail contends that it cannot enliven clause 41.
[22] One Rail further contends that the issues relied upon by the RTBU about the approval of the enterprise agreement by the employees take the matter nowhere. It was required under s.180(5) of the FW Act to explain to employees the terms of the 2019 Enterprise Agreement and the effect of those terms. As a result, One Rail posits that it had no obligation to explain its intentions with respect to over- agreement payments made pursuant to individual contracts of employment. Even if it did, the relevance (if any) of any failure to comply with that obligation would be confined to the 2019 Enterprise Agreement’s approval, it cannot bring a contractual dispute within the scope of s.739 of the FW Act.
[23] The RTBU contends that the Commission can and should determine the matter on the following basis:
• The dispute that has been referred to the Commission for resolution is about whether the 2 per cent pay increase stipulated in the Agreement aligns with the employees’ contractual rate of pay. A dispute of this characterisation can and does “arise under” the 2019 Enterprise Agreement.
• The scope of a dispute settlement procedure in an enterprise agreement should not be so narrowly constructed, as to do so would be the contrary of that agreement and its intention to facilitate a good relationship between the parties during the operation of the Agreement. All that is required is that “there must be a provision in the agreement that is at least relevant to the dispute” to be a dispute that can arise under the Agreement. 14 Clause 16.1 is not only relevant to the dispute, but it creates an obligation under the Agreement to pay percentage increase to employees.
• There is a sufficient nexus between the dispute and clause 16.1 of the 2019 Enterprise Agreement so that the dispute arises under that Agreement.
• The Commission is arbitrating a dispute pursuant to a dispute resolution clause and is exercising a power of private arbitration. It is not exercising judicial power as contended by One Rail.
[24] Given the jurisdictional objection and the particular nature of this application, it is appropriate to canvass the broader context in which the assessment of the scope and import of clause 41 of the 2019 Enterprise Agreement is to be determined.
[25] Conciliation and arbitration have been part of the institutional framework for the predecessors of the Fair Work Commission since the enactment of the Conciliation and Arbitration Act 1904 (Cth). Indeed, arbitration, in the sense that (interstate) disputes were determined by the Commission, was at the very basis of what became the award making and dispute resolution role for the Court of Conciliation and Arbitration, and subsequently the more recent predecessors of the Commission. There has also been an historic divide between the creation of rights by arbitration and the role of Courts to interpret and enforce such rights15 and this largely remains. However, since at least 2001 the Courts have expressly recognised that the statutes have provided the Commission with a much-expanded role, including under the FW Act, to arbitrate disputes about the proper construction and application of instruments by agreement between relevant parties. In that capacity, the Commission is conducting a “private arbitration”, a concept confirmed by the High Court in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission16 (the private arbitration case) and later reflected in the Act.
[26] In the private arbitration case, the High Court was dealing with the validity of s.170MH of the Industrial Relations Act 1988 (Cth), which provided the capacity for a Certified Agreement to enable the Commission to determine disputes, and the impact of s.89A, which had the effect of substantially limiting the general capacity of the Commission to arbitrate disputes. The High Court said:
“There is, however, a significant difference between agreed and arbitrated dispute settlement procedures. As already indicated, the Commission cannot, by arbitrated award, require the parties to submit to binding procedures for the determination of legal rights and liabilities under an award because Ch III of the Constitution commits power to make determinations of that kind exclusively to the courts. However, different considerations apply if the parties have agreed to submit 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.
Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.
To the extent that s 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of the parties to the Agreement, it merely authorises the Commission to exercise a power of private arbitration. And procedures for the resolution of disputes over the application of an agreement made by parties to an industrial situation to prevent that situation from developing into an industrial dispute are clearly procedures for maintaining that agreement. Parliament may legislate to authorise the Commission to participate in procedures of that kind. Accordingly, s 170MH of the IR Act is valid.”17
[27] Their Honours in the private arbitration case also held that, to the extent that provisions in a certified agreement extended beyond anything that might have been justified by the underlying industrial (constitutional) dispute, those provisions were effective as a matter of “general law” 18
[28] Sections 595 and 739 of the FW Act provide as follows:
“595 FWC’s power to deal with disputes
(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.
(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:
(a) by mediation or conciliation;
(b) by making a recommendation or expressing an opinion.
(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.
Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).
(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.
Example: The FWC could direct a person to attend a conference under section 592.
(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section
… …
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.”
[29] I observe that, leaving aside the import of the 2019 Enterprise Agreement, it is common ground that the parties have not authorised the Commission to arbitrate any matters under the terms of the employment contracts or any other written instrument. As a result, the Commission will only have jurisdiction to arbitrate this matter if it is authorised to do so under the terms of the DRP in the 2019 Enterprise Agreement as contemplated in s.739(2)(a) of the Act.
[30] The application of the above approach to s.739 of the Act was confirmed by the Federal Court in Energy Australia Yallourn Pty Ltd v Automotive, Food, Engineering, Printing and Kindred Industries Union19 where Bromberg J stated as follows:
“64. As submitted by the Unions, the legal consequences of a determination by the FWC pursuant to a dispute resolution clause and s 739 of the FW Act are clear and have been settled by the Full Court of this Court and by the High Court. In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305, Dowsett, Tracey and Katzmann J at [35] said this:
“Thus it is well settled that “arbitration” by FWC pursuant to a term in an enterprise agreement is a private arbitration, based upon the consent of the parties, and not upon the coercive authority of the Australian state.”
65. At [34], their Honours cited TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia (2014) 251 CLR 533, including [77]–[79] where the legal consequences of a private arbitration were explained by Hayne, Crennan, Kiefel and Bell JJ as follows (citations omitted):
[77] However, if parties do go to arbitration and the arbitrator makes an award, the making of the award has legal significance in respect of the parties' dispute and their rights and liabilities. As the plurality in Dobbs said: “if, before the institution of an action, an award was made, it [the award] governed the rights of the parties and precluded them from asserting in the Courts the claims which the award determined” (emphasis added). In such a case, the arbitrator's award governs the rights of the parties because “[b]y submitting the claims to arbitration, the parties confer upon the arbitrator an authority conclusively to determine them”.
[78] This gives rise to the general rule that an award made by an arbitrator pursuant to such authority is final and conclusive. Further, the arbitrator's making of an award in exercise of such authority both extinguishes the original cause of action and imposes new obligations on the parties in substitution for the rights and liabilities which were the subject of the dispute referred to arbitration. The former rights of the parties are discharged by an accord and satisfaction. The accord is the agreement to submit disputes to arbitration; the satisfaction is the making of an award in fulfilment of the agreement to arbitrate .
[79] It follows that when an arbitral award is enforced by curial process, the obligations sought to be enforced are those which are created by the award in substitution for the rights and liabilities which were the subject of the dispute referred to arbitration. A party may sue on an award as a cause of action or, in some cases, as in this case, seek enforcement of the award pursuant to the IA Act.
66. In that passage, their Honours approved the following statement by Rich, Dixon, Evatt and McTiernan JJ in Dobbs v National Bank of Australasia Limited (1935) 53 CLR 643 at 653 (citations omitted):
But if, before the institution of an action, an award was made, it governed the rights of the parties and precluded them from asserting in the Courts the claims which the award determined. By submitting the claims to arbitration, the parties confer upon the arbitrator an authority conclusively to determine them. That authority enables him to extinguish an original cause of action. His award will do so if it negatives the existence of liability. It will do so if it operates, not merely to ascertain the existence and measure of the original liability, but to impose a new obligation as a substitute, whether the obligation results from the tenor of the award or from an antecedent undertaking of the parties to give effect to the determination it embodies. The award given under authority of the parties operates as a satisfaction pursuant to their prior accord of the causes of action awarded upon.
67. The proposition to be derived from the above passages is that once an arbitration has been seen through to completion and a determination is rendered, that determination extinguishes the original dispute and replaces it with the determination. It is the arbitral determination that then determines the rights and obligations of the parties bound by it.”
[31] The general limit on the powers of the Commission to arbitrate disputes about or under collective agreements and the notion that parties may agree to give the Commission what amounts to private arbitration powers are reflected in the Act by virtue of ss. 595, 739 and related provisions. Broadly summarised, the combined effect of these provisions is that the Commission may only deal with such a dispute if it is expressly authorised to do so under or in accordance with another provision of the Act. Section 595(2) does provide such an express authorisation in relation to disputes, but non-consensual arbitration of those disputes is not included. Further, s.595(3) provides that the Commission may deal with a dispute by arbitration only if it is expressly authorised to do so under, or in accordance with, another provision of the Act.
[32] In general terms, this means that the Commission may conciliate or use other means of alternative dispute resolution to facilitate the resolution of general disputes occurring in the workplace that are properly the subject of a relevant application. However, the capacity for the arbitration of those matters depends upon whether there is specific agreement between the parties in a given matter or some other source of agreed authority to do so.
[33] It is common for dispute resolution provisions in approved enterprise agreements to include access to the Commission to determine (arbitrate) disputes and given the extensive coverage of these instruments this is in practice a significant role. This is the case with clause 41 of the 2019 Enterprise Agreement.
[34] Based upon decisions of the Court and the Commission, the following observations of relevance to this matter might safely be made about the provisions of the Act that provide for the determination of disputes under the terms of an enterprise agreement:
• In addition to authorising the Commission (or other independent persons) to conciliate or mediate disputes, the parties may also authorise the Commissioner to arbitrate. However, a valid dispute settlement procedure does not need to provide for arbitration;20
• The Commission is in effect conducting a private arbitration when utilising any agreed arbitration powers under the terms of an enterprise agreement;21
• The dispute resolution term can be drafted broadly and extend beyond dealing with matters arising under the Agreement to matters permitted in the enterprise agreement, subject to the requirements of the FW Act about dealing with disputes;22
• The scope of the private arbitration power is defined within the terms of the enterprise agreement itself;
• Unless the parties had complied with the necessary pre-conditions contained in the dispute settlement term prior to seeking arbitration, the Commission may have no jurisdiction to deal with the application;23
• Where the Commission is authorised to intervene under the dispute settlement term, the Commission may exercise any of the general procedures and powers it possesses, unless the Enterprise Agreement specifies otherwise;24
• The Commission’s role in a private arbitration is to make a determination that is binding on the relevant parties to the dispute, but it cannot make orders of the kind that a Court is empowered to grant;25 and
• The determination of the dispute cannot vary the terms of the Enterprise Agreement and must be consistent with those terms.26
[35] The immediate issue is whether the DRP of the 2019 Enterprise Agreement requires or allows the Commission to deal (by arbitration) with the dispute. That is, whether the dispute properly characterised falls within the scope of cluse 41. In that regard I respectfully adopt the following non-exhaustive summary of the approach to such an exercise as provided by Saunders DP in Davis and others v The University of Newcastle: 27
“[12] The scope of a dispute resolution clause in an enterprise agreement should not be narrowly construed; “to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.” 28
[13] In characterising the nature of a dispute the Commission is not confined to the application filed to deal with the dispute. 29The entire factual background is relevant, and may be ascertained from the submissions advanced by the parties on the question of jurisdiction.30 Further, a dispute may evolve during proceedings in the Commission. It may therefore be necessary in some cases when ascertaining the character of a dispute to have regard to both the nature of the dispute alleged in an originating application and the factual circumstances as they evolve.31
[14] It is also important to note that the character of the dispute is distinguishable from any relief which may be sought, or granted, following an arbitration of the dispute. 32 However, the relief sought may cast light on the true nature of the dispute in some cases.33
[15] If the Commission has jurisdiction to deal with the dispute, the nature of the relief that the Commission may grant in such circumstances will depend on the agreement of the parties as recorded in their enterprise agreement, provided that such relief is reasonably incidental to the application of the Enterprise Agreement to which the dispute relates. 34
[36] As stated earlier, this dispute as properly characterised is whether One Rail is required to increase the wages of the employees paid the NTC8 rate (by 2 per cent), because of the contractual conditions and the fact that the wages under the 2019 Enterprise Agreement are to be increased by virtue of clause 16.3, in circumstances where the NTC8 rate remains higher than the equivalent agreement classification rate.
[37] Is that dispute sufficiently linked to, or has a sufficient nexus with, the terms of the 2019 Enterprise Agreement to arise from those terms?
[38] As I will outline below, the 2019 Enterprise Agreement does not in its own right, require the disputed adjustment. However, it is the impact of the Agreement by virtue of clause 16.3 that is claimed to be the basis of the present claim. At that level, the dispute arises from the terms of the 2019 Enterprise Agreement and there is jurisdiction to deal with the dispute to that extent. The fact that the claim is also based upon the alleged contractual commitment, does not of itself mean that it fails to arise from the Agreement, because that basis is also linked to a term of the Agreement. In that respect, I would distinguish this from the nature of the issue dealt with in Alcoa as relied upon by One Rail. In Alcoa, the issue was a claim for an increase in an over-(award) payment, and to that extent this is common with this matter. However, it was not contended in Alcoa that the award in that matter had any relevance to the claim or its justification. 35
[39] Accordingly, I am satisfied that dispute is sufficiently linked to, or has a sufficient nexus with, the terms of the 2019 Enterprise Agreement to arise from those terms. This means that the Commission has the jurisdiction to determine the dispute under the terms of s.739 of the Act and the DRP of the Agreement, at least to the extent outlined above. Whether that nexus supports the application by the RTBU is a matter of merit discussed in the balance of this Decision.
5. The position advanced by the RTBU on the claimed wage adjustment
[40] The RTBU contend that the relevant Rollingstock Maintenance Employees who receive the Contractual Rate of pay (NTC8 rate) are entitled to receive wage increases to that Contractual Rate aligned with the increases in clause 16.3 of the 2019 Enterprise Agreement. The basis of that position may be summarised as follows:
• In or about 2008, the employees entered a contract with their previous employer, Downer EDI to receive the Contractual Rate of Pay which also stipulated that it would attract the pay increases stipulated in the Downer EDI Rail South Australia and Northern Territory Collective Workplace Agreement. The employees continued to receive pay increases on their Contractual Rate of Pay in accordance with the percentage increases in that enterprise agreement and every enterprise agreement that followed.
• In 2014 when One Rail took over the maintenance work at the Berrimah depot from Downer EDI the offer letter given to employees stated that “this offer is made on terms and conditions that are no less favourable overall than the current terms and conditions” and that ”you will continue to receive the same renumeration that you had been paid while working with Downer, at the rate you received immediately before you resigned from Downer.” This offer letter created a contractual obligation between the employees and the Respondent that this offer of employment was on the basis that no terms and conditions would be less favourable overall to the current terms and conditions. The current terms being that that their employment contract containing their Contractual Rate of Pay would increase with the percentage increases in any enterprise agreement. The offer letter also stated that the Downer EDI Rail South Australia and Northern Territory Enterprise Agreement 2013-2016 “contains many of your employment terms and conditions that GWA will apply these to your employment once you commence employment.” This created an enticement for employees to resign from their previous employer and take up employment with One Rail on the absolute certainty that no terms and conditions would be less favourable overall.
• This offer letter was provided to employees while they were still employed by Downer EDI. It was stipulated in the offer letter that acceptance of this offer would constitute resignation from their employment with Downer EDI.
• One Rail continued the practice of the previous employer when they took over the site in 2014 and applied the percentage increases from the enterprise agreement covering the employees at the time to their Contractual Rate of Pay. In fact, One Rail has provided 7 pay increases over a period of 6 years from 2014 – 2020 to employees on the Contractual Rate of Pay. All of which were aligned to the pay increases provided for in the Enterprise Agreement that covered them. The employees have received 16 pay increases on their Contractual Rate of Pay in the last 12 years up to July 2020. Of those, 9 were provided by the previous employer, and 7 were provided by One Rail.
• One Rail has unilaterally decided that the relevant employees who receive a Contractual Rate of Pay are not entitled to percentage increases in the future on their current rate until the C8 rate catches up to it. There is nothing in the Agreement or the employees’ contract that would permit them taking such unilateral action.
[41] The RTBU also contends that although this is primarily a contractual obligation, One Rail’s obligations under the Enterprise Agreement are also important. In that regard, it relies upon the fact that the employees were not informed when voting for the 2019 Enterprise Agreement that the pay percentages would not apply to their contractual rate. Further, One Rail could not contend that somehow the current enterprise agreement renders the contract (and the associated Contractual Rate of Pay and relevant increases from enterprise agreements that cover them) as “invalid”. A reasonable person would understand from the language used that all employees would receive the percentage increases under the new enterprise agreement if a majority of employees cast a valid vote. That is, these employees on a Contractual Rate of Pay voted on the enterprise agreements over the years having believed that the increases would apply to them based on the offer from One Rail that their conditions would be ‘no less favourable overall’ and its practice that was applied for many years.
[42] The RTBU posits that all of this bound One Rail to apply the Enterprise Agreement increases to employees’ Contractual Rate of Pay and that this obligation continues.
[43] The RTBU relied upon the statement of Mr Longstaff, one of the relevant employees, which was admitted by consent. This evidence confirmed that the NTC8 rate had until this point been adjusted in line with movements in the wages under the relevant enterprise agreement. Further, Mr Longstaff confirmed that there was no information provided to the employees at the time of the approval of the 2019 Enterprise Agreement regarding the employer’s intention not to pass on the enterprise agreement-based wage increases to the NTC8 rate.
6. The position advanced by One Rail on the claimed wage adjustment
[44] As to the merit of the dispute, One Rail contends that the relevant employees are not entitled to have the Contracted Rate of Pay increased by operation of clause 16.3 of the 2019 Agreement (or in the future by reference to a replacement enterprise agreement in the same or similar terms), where that Contractual Rate remains in excess of the relevant Agreement Rate.
[45] The basis of One Rail’s position may be summarised as follows:
• In asserting an entitlement to contractual rate increases, the RTBU wrongly elides (ignores) two distinct sources of the Employees’ entitlements; those arising under the 2019 Enterprise Agreement, and those arising under contract.
• The 2019 Enterprise Agreement sets enforceable minimum terms of the Employees’ employment. One Rail is entitled to provide contractual benefits (monetary or otherwise) over and above the Agreement terms. It did so here by paying a premium above the relevant agreement rate (a premium which, at least historically, reflected an allowance derived from a legacy incorporated award term).
• One Rail chose to align the increases to that contractual rate to those applicable to the relevant agreement rates of pay from time to time. That fact did not, however, result in the terms of the relevant enterprise agreement applying in any way to the higher contractual entitlement. The rate increases within clause 16.3 of the 2019 Enterprise Agreement are unambiguously expressed with reference to the minimum wage rates set out within that clause. So much is plain from clause 16.3 itself: the percentage increases (4 per cent and 2 per cent respectively) are applied to the minimum wage rates set out in that clause to produce a set of minimum agreement rates applicable throughout the 2019 Enterprise Agreement’s nominal life. Nothing at all in that clause suggests that it applies to any over-agreement rate of pay (nor is it apparent how it would do so).
• There is also no evidence to support an argument for a common intention to that effect. The evidence of Mr Longstaff does not establish any common intention concerning the effect of the 2019 Enterprise Agreement. At highest it establishes a unilateral expectation (on Mr Longstaff’s part) that One Rail would continue to increase his over-agreement contractual payments at percentages equivalent to those set out in the relevant enterprise agreement. It says nothing at all about the effect of the Enterprise Agreement itself. There is no evidence of any common intention (as between all parties covered by the agreement, or even as between all of its bargaining representatives) that the Contractual Rate would somehow be enforceable as an enterprise agreement term.
[46] One Rail also contends that any suggestion of a common intention concerning the Enterprise Agreement terms themselves is unsustainable on the face of One Rail’s correspondence prior to making the 2019 Enterprise Agreement including confirmation that the nominated adjusted rate was to apply and that all other conditions of the relevant enterprise agreement will be applied. It further contended that that correspondence makes plain that the increased rate was intended as a contractual entitlement, rather than an entitlement deriving from the collective agreement itself; and that other correspondence confirmed that the continuation of the NTC8 rate was an individual (rather than collective) and discretionary entitlement.
[47] As a result, by reference to its questions, One Rail contends that Questions 2 and 3 should each be answered “no”.
7. Consideration
[48] I commence with the terms of the 2019 Enterprise Agreement.
[49] The construction of provisions of an enterprise agreement begins with a consideration of the ordinary meaning of the words, read in context, taking account of the evident purpose of the provisions or expressions being construed. Context may be found in the provisions of the Agreement taken as a whole, or in their arrangement and place in the agreement. The statutory framework under which the Agreement is made or in which it operates may also provide context, as might an antecedent instrument or instruments from which a particular provision or provisions might have been derived. The industrial context in which an agreement is made and operates is also relevant. Thus, the language of an agreement is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. However, context is not itself an end and a consideration of the language contained in the text of the Agreement being considered remains the starting point and the end point to the task of construction. A purposive approach to interpretation is appropriate, not a narrow or pedantic approach. 36
[50] The nature of the present task has also been emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia37 in the following terms:
“[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:
‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’”
[51] According to its own terms, the direct application of clause 16.3 of the 2019 Enterprise Agreement is limited only to those classification and rates listed in the Agreement. This is, the clause expressly specifies the agreed wage levels and the agreed adjustments and contains no statement that would suggest that it is to be applied to classifications or wage levels not specified within its terms.
[52] As I apprehend their case, it is not suggested by the RTBU that clause 16.3 has the direct import to create the obligation to adjust the NTC8 rate. In any event, I observe that there is nothing in the context that would enable the ordinary and natural meaning of clause 16.3 as set out above to be applied more broadly. I will return to this aspect shortly. Rather, the RTBU fundamentally contends that it is the operation of that provision in the context of what it describes as the contractual obligation to pass on the agreement-based adjustments to the NTC8 rate. In that light, I will deal with the various propositions that are relied upon by the RTBU to justify that outcome.
Contractual term provided by the (former) employer
[53] I find that the payment of the NTC8 rate was originally a term of the relevant enterprise agreement. The NTC8 rate was, in effect, the classification level 8 from the Agreement with the addition of the Northern Territory allowance from the Award. The Award was incorporated into the relevant agreements by the equivalent of what is now clause 6 of the 2019 Enterprise Agreement. However, the adjustment of that rate (beyond any adjustment required by the Award) occurred in 2008 by virtue of a review and variation to the respective contracts of employment. 38 The nature of the adjustments was the same as applying under the relevant enterprise agreement and this established what became an ongoing practice. However, there was no express commitment to continue to apply that approach as part of the review or variation.39
[54] This practice continued throughout the period when Downer was the employer of the Berrimah Depot employees. As set out earlier, in 2013 Downer expressly stated in relation to the adjustment of the NTC8 rate, that there was “no guarantee” that this rate will continue to be paid beyond the nominal expiry date of the Downer EDI Rail SA & NT Maintenance Enterprise Agreement 2013-2016.
[55] Having regard to the above, and to all of the material that is before the Commission, there is evidence to support the notion that the NTC8 rate as adjusted from time to time formed part of the contractual obligation between the relevant parties during the period when Downer EDI was the employer. However, there is no evidence before the Commission establishing an express or implied contractual obligation to adjust the NTC8 rate in line with the agreement-based increases. This adjustment did take place but the RTBU has not established the factual basis for the claimed contractual obligation to do so.
[56] I observe for completeness that although the Northern Territory allowance was removed from the Award in December 2014, 40 the allowance itself remained a term of the then applicable enterprise agreement as the incorporated award was referenced to the Award existing at the time of the approval of the 2013 Agreement.41 This did not apply to subsequent enterprise agreements as the incorporated award did not contain the allowance.
The statement that the offers of employment were made on terms that were no less favourable overall than the current terms and conditions
[57] The relevant terms of the statement, which was provided as part of the engagement of the Berrimah Depot (and other) employees by the employer, has been set out earlier in this decision. Although it may be a statement of fact rather than a commitment, I have for present purposes treated the statement as being part of the commitments made, in effect, by One Rail as part of the engagement of the employees.
[58] Given my findings above, the import of this commitment was that the NTC8 rate became an employment condition. However, whilst there was an expectation that the rate would continue to be adjusted in line with agreement-based increases, there was no existing obligation to do so. That is, the adjustment of the NTC8 rate (beyond the requirement to at least match the minimum wages set out in the Enterprise Agreement) was a matter of discretion rather than obligation. This means that the no less favourable overall commitment, even taken at its highest, did not operate to create any such obligation.
The subsequent conduct and communications
[59] The agreed facts confirm that up until the recent position adopted by One Rail to maintain, but not adjust the current NTC8 rate, the NTC8 rate has been increased in line with the agreement-based increases. However, at various stages, One Rail has asserted in doing so that it has continued to “honour the agreement” between Downer EDI and the employees to pay the NTC8 rate, but that the adjustment was discretionary and that there was no guarantee that this would continue. 42 I accept the RTBU’s submission that the employer could not (without more)43 unilaterally change the contractual obligation on the basis of such statements. However, in the absence of a contractual obligation to adjust the NTC8 rate to match the agreement-based increases, the statement reflected the legal reality.
Context for the approval of the 2019 Enterprise Agreement and whether there was a common objective intention
[60] There is no suggestion that the circumstances associated with the NTC8 were agreed or considered at any length in the negotiations leading to the 2019 Enterprise Agreement or that any information about this issue was the subject of any disclosure to the employees as part of the employee approval process. As discussed above, at the time of the approval of the Agreement, there had been a long history of agreement-based adjustments being made to the NTC8 rate and a series of statements made by One Rail (and its predecessor) asserting that these adjustments were discretionary.
[61] In that context, the absence of any statement by One Rail as part of the 2019 Enterprise Agreement approval process indicating that the practice in relation to the NTC8 rate might or would change, is not significant and does not inform the common objective intention of the 2019 Enterprise Agreement. Further, the practice itself does not, given all of the circumstances outlined earlier in this Decision, provide the basis of a common contemplation or assumption that directly informs the objective intention of that Agreement. 44
8. Conclusions and determination
[62] I have found that this dispute as properly characterised is whether One Rail is required to increase the wages of the employees paid the NTC8 rate (by 2 per cent), because of the contractual conditions and the fact that the wages under the 2019 Enterprise Agreement are to be increased by virtue of clause 16.3, in circumstances where the NTC8 rate remains higher than the equivalent agreement classification rate.
[63] I have also found that the Commission has the necessary jurisdiction to deal with the dispute to the extent that it arises from the terms of clause 16.3 of the 2019 Enterprise Agreement.
[64] In making the assessment of the import of clause 16.3, I am not persuaded that a contractual obligation to maintain the adjustment of the NTC8 rate in line with agreement-based wage increases has been demonstrated.
[65] I have also found that clause 16.3 does not directly, or indirectly, required One Rail to maintain the adjustment of the NTC8 rate in line with agreement-based wage increases.
[66] Given this finding, it is not necessary to deal with the third question posed by One Rail to the extent that it references future enterprise agreements. I observe that subject to always meeting the minimum obligations of the relevant agreement, the review and adjustment of the NTC8 rate may itself be a matter for future bargaining between the parties.
[67] I also observe that as a result of this Decision, whether the 2 per cent adjustment is made to the NTC8 rate on 1 July 2021 remains a matter of discretion for One Rail.
[68] The application is determined accordingly.
COMMISSIONER
Appearances:
M Davis with D Phillips for the Australian Rail, Tram and Bus Industry Union.
A Pollock (of counsel) with S Rogers of Mills Oakley, with permission, on behalf of One Rail Australia Pty Ltd.
Hearing details:
2021
June 15.
Video Hearing.
Further Submissions;
18 June 2021 – One Rail.
21 June 2021 – RTBU.
Printed by authority of the Commonwealth Government Printer
<AE506982 PR730590>
1 RTBU initial outline of submissions.
2 Exhibit 1.
3 Exhibit 1, Annexure A.
4 Transcript PN147.
5 Exhibit 1, Annexure B.
6 Exhibit 3, Attachment R3.
7 Exhibit 1, Annexure C.
8 Exhibit 1, Annexure D.
9 Relying upon CFMEU v AIRC (2001) 203 CLR 645 (the Private Arbitration Case) at [34]; Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at [9] (Mason CJ, Brennan, Deane, Dawson and Toohey JJ).
10 Relying upon WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [197]; AMWU v Berri Pty Ltd[2017] FWCFB 3005 at [114].
11 Relying upon CEPU v Zinfra Group Ltd[2015] FWC 5025.
12 Relying upon Alcoa of Australia Pty Ltd v Amalgamated Engineering Union (1965) 7 FLR 180 (Alcoa) at 183 (Spicer CJ, Eggleston J). and Seven Network (Operations) Ltd v CPSU (AIRCFB, Marsh and Cartwright SDPP, Redmond C, 1 July 2003, [2003] AIRC 757) (Seven Network) at [29]-[30] and the cases therein cited.
13 Citing Alcoa at 183, Seven Network at [30] and Davis and ors v The University of Newcastle[2019] FWC 2282 at [19].
14 Relying upon Shop, Distributive and Allied Employees Association v Big W Discount Department Stores PR924554 at [23] Shannon Mountford v Ergon Energy Corporation Limited[2009] FWA 426, [18] and Alcoa of Australia Pty Ltd v Amalgamated Engineering Union (1965) 7 FLR 180, at 183.
15 For both constitutional and statutory reasons. See Amalgamated Society of Engineers v Adelaide Steamship Co. Ltd (1920) 28 CLR 129.
16 (2001) 203 CLR 645. See also Gordonstone Coal Management Pty Ltd v Australian Industrial Relations Commission (1999) 93 FCR 153.
17 203 CLR 194 at 657-658 [30]-[32]. A detailed discussion of this decision and the statutory context leading to that point was provided by the Full Federal Court in Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82 per North, Jessup and Reeves JJ at [18] to [25].
18 Ibid at [34].
19 [2017] FCA 1245.
20 Woolworths Ltd trading as Produce and Recycling Distribution Centre [2010] FWAFB 1464.
21 Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82.
22 Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia (2011) 63 AILR 101-308; [2010] FWAFB 8437.
23 Transport Workers’ Union of Australia v Skywest Airlines (Australia) Pty Ltd (2011) 63 AILR 101-430(7); [2011] FWA 5082 and Transport Workers' Union of Australia v Torrens Transit Services Pty Ltd[2013] FWC 7318.
24 S.739(3) of the FW Act.
25 Energy Australia Yallourn Pty Ltd v Automotive, Food, Engineering, Printing and Kindred Industries Union [2017] FCA 1245 and Duggan v Metropolitan Fire and Emergency Services Board [2017] FCAFC 112 at [94].
26 S.739(5) of the FW Act.
27 [2019] FWC 2282.
28 SDA v Big W Discount Department Stores PR924554 at [23].
29 AMWU v Holden Limited PR940366 at [47]; MUA v ASP Shipping Management Pty Ltd[2015] FWC 4523 (ASP) at [23].
30 AMWU v Holden Limited PR940366 at [47]; ASP at [23.]
31 ASP at [19] & [23]; R v Bain; Ex parte Cadbury Schweppes Australia Ltd (1984) 159 CLR 163 at 168; United Firefighters’ Union v Metropolitan Fire and Emergency Services Board PR973884.
32 MUA v Australian Plant Services Pty Ltd PR908236; ASP at [21]-[22].
33 United Firefighters’ Union v Metropolitan Fire and Emergency Services Board PR973884 at [20].
34 MUA v Australian Plant Services Pty Ltd PR908236 at [63]; Seven Network (Operations) Ltd v CPSU (2003) 122 IR 97 at [31]-[32].
35 Alcoa of Australia Pty Ltd v Amalgamated Engineering Union (1965) 7 FLR 180 (Alcoa) at 183 per Spicer CJ, Eggleston J).
36 WorkPac Pty Ltd v Skene [2018] FCAFC 131 at [197].
37 [2013] FWCFB 8557.
38 Agreed facts at 5.
39 Exhibit 1 Annexure A.
40 Principally due to the operation of s.154 of the Act which did not permit terms of a modern award to be determined by reference to State or Territory boundaries beyond a transitional period. See [2008] AIRCFB 1000 at [81] and [82] and 4 yearly review of modern awards - transitional provisions [2015] FWCFB 644 - largely based upon the consequences of s.154 of the Act. See also Four yearly review of modern awards--District Allowances [2019] FWCFB 8102 concerning an unsuccessful application to insert new district allowances into various modern awards.
41 Agreed facts at 14 and 15.
42 Annexure C to exhibit 1 as an example.
43 Such as an express process of offer and acceptance of any revised basis for the payment.
44 See generally the discussion at Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited[2017] FWCFB 3005 at [114] – 12.
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