Australian Rail, Tram and Bus Industry Union v Pacific National (Queensland Coal) Pty Ltd T/A Pacific National Queensland Coal
[2023] FWC 2502
•27 SEPTEMBER 2023
| [2023] FWC 2502 |
| FAIR WORK COMMISSION |
| RECOMMENDATION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Rail, Tram and Bus Industry Union
v
Pacific National (Queensland Coal) Pty Ltd T/A Pacific National Queensland Coal
(C2023/216)
| COMMISSIONER SPENCER | BRISBANE, 27 SEPTEMBER 2023 |
Application to deal with a dispute
INTRODUCTION
A dispute application has been filed by the Australian Rail, Tram and Bus Industry Union (‘RTBU’ or ‘the Union’) pursuant to section 739 of the Fair Work Act 2009 (‘the Act’). The application is to deal with a dispute under the dispute resolution procedure in clause 38 of the Pacific National Queensland Coal Enterprise Agreement 2018 (‘the 2018 Agreement’). The Union submits that the dispute is in relation to the unpaid short-term incentive payment (‘STIP’) which is a component of the total remuneration package, which is set out in clause 19.2 of the 2018 Agreement. The Union states that this payment was to be paid by the employer, Pacific National (Queensland Coal) Pty Ltd T/A Pacific National Queensland Coal (‘the employer’ or ‘the Respondent’), which was due in the financial year 1 July 2021 to 30 June 2022. It was submitted that the employer objected to the payment, stating that it was clear between the parties that this payment was overtaken by the negotiations for the next agreement.
The Australian Federated Union of Locomotive Employees also sought to join the dispute and support the submissions of the RTBU in this matter. By consent of the parties, joinder of the other union was granted to the dispute. Those Unions are referred to collectively as ‘the Unions’ or ‘the Applicants’.
Two conferences by telephone were held in the matter and the parties then requested an in-person conference. At this conference, the parties raised their submissions on the full scope of the matters relevant to the issues in dispute. The parties also engaged in without prejudice negotiations at the conference in an endeavour to reach a compromise with regard to the payment of a quantum of STIP for the period in question. An agreement was not able to be reached between the parties.
The dispute resolution procedure provides for arbitration by consent. The employer did not consent to arbitration and accordingly, the Union at the final conference sought a recommendation from the Commission in this dispute. The parties agreed on consent directions and filed their submissions and evidence accordingly. Given the comprehensive nature of the telephone conferences and the discussions at the in-person conference, the parties saw that the matter be undertaken on the papers.
BACKGROUND
In summary terms, the Union argued that the short-term incentive payment was a provision that was payable for the 2021/22 financial year as part of the 2018 Agreement that remained applicable to the employees at the time of the 21/22 financial year. The 2018 Agreement had a nominal expiry date of 30 November 2021. The Respondent, in summary terms, submitted that during this 21/22 financial year, the following enterprise agreement was being negotiated between the parties and the finalisation of this agreement took longer than was anticipated. The 2022 Enterprise Agreement was approved on 28 October 2022.
The Respondent argued that in reaching the 2022 Agreement, a range of conditions were sought by the Applicant that provided additional costs and that to fund these claimed additional conditions, the employer submitted that they had stated during the negotiations, that the 2018 Agreement incentive payment would not be paid to enable the employer to agree to and the fund the applicants claims for the new agreement. In support of this submission, as evidence, the Respondent pointed to various workforce negotiations, updates, and documentation provided during the access period for the further Agreement. The employer set out that they had been transparent during the negotiations about the approach to fund the further conditions. Further, in regards to the removal of the incentive payment, the employer stated that the Applicant did not object to this course and that they recognised that the STIP provision would be removed in lieu of other conditions that were sought in the new Agreement. However, the Union denied that the communications updates in relation to the negotiations related to the non-payment of the STIP arising from the 2018 Agreement.
The STIP was a provision of the 2018 Agreement and at the time it became payable for the 21/22 financial year no further agreement affecting the application of the STIP was in force. At the time the 21/22 financial year payment became payable, no further agreement was applicable.
RELEVANT PROVISIONS OF THE ACT AND THE AGREEMENT
This dispute requires interpretation of clause 19.2 of the 2018 Agreement, and a consideration of the facts and circumstances in association with the disputed matter.
The STIP was a provision of the 2018 Agreement and, at the time it became payable, no further agreement affecting its application was in force. The Full Bench in AMWU v Berri Pty Ltd (‘Berri’)[1] set out the principles of interpretation for provisions of enterprise agreements:
“[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 and 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.”
The Union submitted a document that sets out the percentages and dollar amounts of the STIP that have been paid in relation to the classification levels under the 2018 Agreement for previous years.
THE DISPUTE
Clause 38 of the 2018 Agreement sets out the dispute resolution procedure for disputes under the Agreement. The clause stipulates:
“ 38 DISPUTE RESOLUTION
(a) If a dispute relates to:
(i) A matter arising under the agreement; or
(ii) The National Employment Standards;
This clause sets out procedures to settle the dispute.
(b) An Employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this clause.
(c) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the Employee or Employees and the relevant supervisor. Where initial discussions cannot resolve the dispute, the parties shall refer it to the next level of management for discussion. A matter that remains unresolved after further discussions can then be referred to the General Manager.
(d) If the forgoing discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to FWC. FWC will attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation;
(e) If the dispute remains unresolved following d), the process is exhausted unless all parties agree to have the dispute arbitrated by FWC to make a determination that is binding on the parties.
(f) Note: If FWC arbitrates the dispute, it may also use the powers that are available to it under the FW Act.
(g) A decision that FWC makes when arbitrating a dispute is a decision for the purpose of Div. 3 of Part 5.1 of the FW Act. Therefore, an appeal may be made against the decision.
(h) While the parties are trying to resolve the dispute using the procedures in this clause:
(i) an Employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health and safety; and
(ii) An Employee must comply with a direction given by Pacific National Queensland Coal to perform other available work at the same workplace, or at another workplace, unless:
1.The work is not safe; or
2.Applicable occupational health and safety legislation would not permit the work to be performed; or
3.The work is not appropriate for the Employee to perform; or
4.There are other reasonable grounds for the Employee to refuse to comply with the direction.
(i) The parties to the dispute agree to be bound by a decision made by FWC in accordance with this clause.”
Clause 19.2 of the 2018 Agreement states:
“19.2 Total Remuneration Package
(a) Employees are remunerated on a total remuneration basis. The Total Remuneration Package for Employees is made up of the following components:
(i)Base Salary;
(ii)Aggregate Penalty Multiplies (APM);
(iii)Short Term Incentives; and
(iv)Performance Bonus.
(b) The Base Salary is comprehensive and unless specified elsewhere in this Agreement includes provision for the payment of any allowances or payments that may otherwise be payable or have been payable to an Employee. The Base Salary does not include overtime payments.
(c) Base Salaries for each classification are set out in Schedule 1 to this Agreement. Base Salaries will be increased on the anniversary of the lodgement date as set out in Schedule 1. An Employee’s progression to a higher classification will in each case be subject to them satisfying appropriate performance requirements, as determined by Pacific National Queensland Coal acting reasonably and considering all relevant circumstances.
(d) Pacific National Queensland Coal is to pay Employees a Performance Bonus in recognition of an Employee retaining employment with it for the previous 12 months. It is paid in the first full pay period after each anniversary of the date of appointment as a Level 3 Advanced Trainee or above, under this Agreement. Employees who achieved eligibility for this Performance Bonus prior to the Commencement Date, will maintain their current anniversary payment date.
(e) Employees who, immediately prior to commencing employment with Pacific National Queensland Coal, were employed by a related entity will be granted continuity of service and will have all service-based entitlements recognised by Pacific National Queensland Coal.”
SUMMARY OF THE SUBMISSIONS AND EVIDENCE
The Applicant stated that the STIP was last paid in mid-2021, so the Applicant’s claim is for the period of 1 July 2021 to 31 July 2022.
The Applicant submitted that the STIP, as provided for in the 2018 Agreement, is not a discretionary payment, but one that forms a part of the total remuneration package. The Applicant acknowledged that there is an internal policy of the Respondent that discusses the STIP and states that it is discretionary, however submitted that this applies only to employees who do not fall under the 2018 Agreement.
The Applicant agreed with the Respondent that the STIP was bargained away for the 2022 Agreement; however, the Applicant submitted that there was no agreement between the parties that the STIP would not be paid retrospectively for the 2021-2022 financial year. Even if the bargaining team had agreed to this, the Applicant submitted that this agreement would be defective. The Applicant stated that such a variation would have required a ballot an application to the Commission pursuant to s.210 of the Fair Work Act 2009 (the Act), which did not occur.
The correspondence issued by the Respondent to employees during bargaining does not, in the opinion of the Applicant, demonstrate that the agreement to abolish the STIP was to be retrospective. The Applicant contended that such correspondence demonstrated that the changes were subject to the approval of the 2022 Agreement.
The Applicant submitted that the principles of Berri are relevant to the interpretation of the 2018 Agreement, in that the ordinary meaning of the relevant words must be considered in light of the Agreement’s industrial context and purpose, and the intention of the parties is to be identified by reference to a reasonable person’s understanding of the Agreement’s language.
The Applicant argued the STIP was not discretionary, as clause 19.2 of the 2018 Agreement exhaustively and unambiguously lists the four components that comprise an employee’s total remuneration package, and that this provides an employee with certainty about their entitlements for the life of the agreement.
Ultimately, the Applicant submitted that had the STIP been discretionary, the word “discretionary” would have appeared in the 2018 Agreement in relation to it. Furthermore, the Applicant contended that the STIP had not previously been treated as discretionary, and as it is not elaborated on further in the following clauses of the Agreement, there is no scope to import any additional conditions on it.
Statement of Bruce Mackie
Mr Bruce Mackie, a branch organiser with the Queensland Branch of the RTBU, made a statement concerning the negotiations for the most recent enterprise agreement.
Mr Mackie submitted that he attended all bargaining meetings in respect of the most recent agreement up until approximately August 2022,[2] and was present at the discussions regarding removal of the STIP in March and April of 2022.[3] Mr Mackie submitted that he was not present for the second round of bargaining, after being advised by his delegates that the Agreement had been voted down by the employees and the parties had returned to the bargaining table.[4]
Mr Mackie’s understanding was that the company had put forward a proposal whereby the relevant employees “would lose the STIP and employees at Coppabella would instead be paid a locality allowance” and that “the 28% aggregate penalty multiplier (APM) would be incorporated into the base-rate meaning that penalties would now be payable on it”.[5]
Mr Mackie submitted that at no point before August 2022 (at which point Mr Mackie’s presence at the negotiations for the new agreement had ceased) was there a discussion about the STIP payment being removed prior to the 2022 Agreement coming into effect.[6]
Statement of Ashley Mosedale
Mr Ashley Mosedale, an employee bargaining representative, provided evidence of the bargaining for the 2022 Agreement.
Mr Mosedale submitted that the STIP was discussed at approximately three bargaining meetings.[7] He stated that to fund two new initiatives, the STIP was to be abolished.[8] However, Mr Mosedale contended that there had been no “discussions about the removal of the STIP being of immediate or retrospective effect”, that bargaining in relation to it was for the 2022 Agreement, and that its abolition would only take effect upon the commencement of the 2022 Agreement.[9]
In relation to the STIP being characterised as “discretionary”, Mr Mosedale’s understanding was that the payment was discretionary only insofar as the specific amount paid to employees was variable. Mr Mosedale said that despite this, the payment was “always” made.[10] He explained that he had personally received STIP payments in each of the four years prior to the disputed period.[11]
The Respondent maintains that the STIP payment is discretionary and points to the lack of internal policy and documentation around its facilitation each year.
Evidence of Brendan Sellens and that on behalf of the Employer
Mr Brendan Sellens, Head of Operations of Queensland and New South Wales Coal, also gave evidence of the bargaining process for the 2022 Agreement.
Mr Sellens became involved in bargaining after the 2022 Agreement was initially voted down, whereby he understood the STIP had been removed to fund the higher cost claims of the union, not just for 2022 but indeed from the entire 2022 Agreement.[12] The removal of the STIP was characterised as a trade-off for other claims.[13]
Regardless of discussions had throughout bargaining, Mr Sellens was not aware of any internal STIP policy covering employees in the Queensland business. Mr Sellens was, however, aware of information setting out various components to measure the STIP, such as safety, operations, individual performance, and service delivery.[14] While these measurable criteria were not developed for 2022 due to a belief on behalf of the Respondent that the STIP was being phased out, the Respondent has nevertheless developed measurement criteria for the purposes of resolving this dispute. It is on a similar basis that Mr Sellens also proposes a STIP of up to 4% of the employees’ base rate of pay, based on the evenly weighted criteria of safety, operations, and the financial performance of the business.
The 2018 Agreement was applicable at the time the short-term incentive payment for the 21/22 financial year became payable. The Union argued that this payment was always part of the total remuneration package payable under the 2018 Agreement for each employee who fell under it. The Union also argued that the employer has treated this short-term incentive payment as discretionary and had refused to pay it for the 21/22 financial year or pay a pro-rata payment from 1 July 2022 to 3 November 2022.
The employer pointed out that whilst the STIP was a component of clause 19.2, the total remuneration package, that provision does not contain any further information on what basis the incentive payment is calculated or paid. The provision mirrors previous versions of this clause in the prior enterprise agreements, the first being the 2009 version. The employer, since the commencement of the implementation of this clause, has always treated it as a discretionary bonus. The employer states that this is supported by the variation in the amount of the bonus that is been paid annually based on Queensland Coal Pacific National and all the individual employee performance ratings. In addition, the employer contended that its review of the payment of this bonus in past years indicates that some employees did not receive a payment based on unsatisfactory performance. Accordingly, the employer argues that the long-standing practice supports that the payment is at the employer’s discretion and rejects that there is an ongoing obligation to pay this incentive bonus.
The Employer correspondence sent to the Union in December 2022 stating that during the negotiations for the 2022 Enterprise Agreement, they referred to communications made by the employer that this incentive bonus will be withdrawn to fund cost increases associated with the new benefits contained in the new agreement. The employer set out that this position was later communicated by the employer in memos and materials provided to the employees in the lead up to the vote. The employer stated that they were clear about their position, and, furthermore, that an understanding had been reached between the parties involved in the negotiation, and that that understanding was aligned with the STIP being a discretionary payment. In accordance with such, the employer stated that it was within the discretion of the company at any time to alter or cease its payment. In addition, the employer stated that the discussions held during the negotiations that this incentive payment was a discretionary payment reflected the discussions held during the previous Enterprise Agreement negotiations. On that basis, the employer stated that they maintained the decision to cease paying the STIP from the 21/22 financial year inclusive, and this was within the discretion of the company and was not in breach of the 2018 Agreement.
In response in not agreeing to this, a further argument was made by the Union that in representations made by the employer at the time of the approval of the agreement with reference to the better off overall test, the employer had presented the STIP as a benefit not provided by the relevant modern award, and therefore was a relevant component to be considered when approving the Agreement. This argument was rejected by the employer who said that they had never misrepresented the nature of the payment.
The employer, as a result of discussing the dispute with members of the negotiation team, set out that they would not be making the STIP for the financial year from 1 July 2021 to 30 June 2022, as the short-term incentive was used to fund other claims as part of the negotiation due to the significant costs of the deal that was reached. Furthermore, the employer stated that there were no conditions placed upon the deal by the Union delegates or representatives to apply a pro rata incentive bonus.
The Union argued that the employees are entitled to the STIP as of right, in terms of the provision of the total remuneration package under the 2018 Agreement. The base salary, the aggregate penalty multiplier, the short-term incentives, and the performance bonus form the four components of the total remuneration package.
It is clear that the 2022 enterprise agreement does not include the STIP payment. The employer’s evidence was that the STIP was negotiated away while bargaining for provisions that form that particular Agreement. In addition, it was set out that the 2022 agreement provided for backpay to 1 August 2022, which the employer considered a finalisation of any arrangements arising from the 2018 Agreement by the end of 1 August 2022, being the due date for the backpay.
It was not in dispute between the parties that the last time the STIP was paid was mid-2021. The Applicant’s specific claim in this dispute is for the payment of the STIP from 1 July 2021 to 31 July 2022, a period of 13 months.
There is nothing to suggest on the plain and ordinary meaning of the inclusion of the reference to the short-term incentive payment in the total remuneration package, that it is a discretionary payment in the sense that it is not required to be considered for payment in any sense as part of the total remuneration package. It is fair to set out that whilst the payment clearly forms part of the total remuneration package, and there must be consideration of such payment at the relevant time, the agreement, however, does not provide specific information as to how the payment is to be made. The Union made reference to an internal policy of the company that provides more detail around the payment. The employer submitted that that policy was only applicable to employees that were not covered by the 2018 or former Enterprise Agreements. The Union contended that there was a payment, commensurate with 4% of the base rate available to be paid to each employee with four components, used to measure 1%, each of that payment to make up the discretion for the employer as to whether it will be paid in full or otherwise.
Generally, the components that made up the 4% discretionary payment were based on: a payment for safety outcomes compared to the company targets. Secondly, company performance compared to company targets. Thirdly, customer satisfaction and individual performance and in the absence of individual disciplinary outcomes the 1% component was paid to employees. The Union argued that the components that made up the STIP were objectively measurable and included an example of the previous payment at paragraphs 17 and 18 of their written submissions, reproduced as follows:
“17. This means that the calculation for each employee is different. There are five classifications of Train Driver under the enterprise Agreement and each has a different pay rate upon which the 4% would be applied. They are:
a. Level 1 Trainee Driver
b. Level 2 Trainee Driver
c. Level 3 Advanced Trainee Driver
d. Level 4 Locomotive Driver; and
e. Level 5 Advanced Locomotive Driver.
18. By far, the largest cohort of employees to which the STIP was payable, was the Level 4 Locomotive Driver. The rate that applied to that classification in the period 1 July 2021- 31 July 2022 was an annual base-rate salary of $99,892.58 meaning that if all four measurable components of the STIP were met, that $3995.70 would be payable to each of the Level 4Locomotive Drivers. The following figures represent 4% of each of the base-rates for each classification levels above:
a. Level 1 Trainee Driver- $2210.02
b. Level 2 Trainee Driver- $2302.11
c. Level 3 Advanced Trainee Driver- $3196.56
d. Level 4 Locomotive Driver- $3995.70
e. Level 5 Advanced Locomotive Driver- $4275.40.”[15]
Evidence from Ashley Mosedale was given on this basis and whilst the Union concedes that they have no information on the company targets and all matters relevant to those specific payments, they argue that the payments can be applied by the employer.
Further, in relation to the submission by the employer that the STIP was bargained away for the purposes of the 2022 Agreement, the Union did not object to this insofar as it relates to continuing payments or the withdrawal of the STIP from the 2022 Agreement.
The evidence of the witnesses for the Union confirmed that their position was that there were no clear discussions during the negotiations for the immediate or retrospective removal of the short-term incentive payment from the total remuneration package for the 2022 financial year. The Union submitted that during the life of the 2018 Agreement it was never definitively understood what the quantum of the payment would be. The employer submitted that this aligned with the discretionary nature of the payment of the STIP. The practice was that the company would generally advise at the end of the financial year on the performance of the employer and the employee respectively, and that would then be used in terms of the four components of the short-term incentive payment for the calculation of a percentage of the payment for that year. For example, for the financial year ending June 2021, a 2% figure was paid for the STIP. For the year ending June 2020, 1.8% was paid. For the year ending June 2019, 4% was paid and for the financial year ending June 2018 4% was paid.
The evidence on behalf of the Union in relation to these STIP percentage payment figures was that the payments for the years 2020 and 2021 were affected by Covid-19, but that the employees had been consistently in receipt of a 4% payment prior to those years. In addition, the Union submitted that the 2022 financial year saw Pacific National return with excellent haulage and high coal prices, which provided them with the expectation that a full 4% would have been payable for the financial year ending June 2022. The Parties were clearly apart on the payment of the STIP and the amount further discussions were directed but this failed to resolve the matter. The additional submissions as directed have been taken into account.
The Respondent provided detail regarding the negotiations relevant to the 2022 Enterprise Agreement. The employer referred to the negotiations still being well underway in March 2022, and that the respondent made a decision related to the high-cost claims from the Unions not to pay the STIP for the 2022 financial year so that these claims relevant to the 2022 Enterprise Agreement could be funded. The employer set out in their submissions and the related evidence that, after the vote for the agreement went down in June 2022, a new deal was formed in October 2022. The current dispute, however, remained. The new deal was voted up and the current Agreement commenced. The employer submitted that from June 2022 to November 2022 the non-payment of the STIP for the financial year 2022 was not disputed or challenged in further bargaining meetings during this period. The employer went to great lengths to emphasise that they retained full discretion as per the provision in relation to the payment of the STIP. That is the employer held the discretion in relation to whether the STIP was paid or not, and what categories were used to determine and measure the payment, and, ultimately, the amount payable to the employees.
The submissions of the parties regarding the dispute in relation to the STIP are acknowledged as the concerted efforts that were made by the parties in endeavouring to resolve this dispute after a period of difficult negotiations, in forming the 2022 Enterprise Agreement.
The unilateral removal or decision by a party to an Enterprise Agreement not to observe a term cannot be authorised by the Commission and is outside the jurisdictional scheme for the approval and discharge of Enterprise Agreements. As referred to, if a party was seeking to amend a provision of the Agreement. the Act requires a procedure to be followed, and in relation to the approval of any variation, this has been referred to in the submissions of the Unions. I do not refer to this further given neither party has applied for it.
However, it is emphasised that the respondents have, in endeavouring to resolve this dispute, proposed a recommendation. In the submissions of the Respondent as a precursor to the recommendation, the Respondent clearly sets out that they consider that there was no opposition from the Unions that the STIP was a discretionary payment in terms of the amounts paid each year and the criteria applicable to those payments. However, the parties were in dispute that whilst the payment was discretionary, the Union submission was that the Respondent had an obligation to contribute a payment to the STIP as part of the total remuneration package. The employer’s response was clear that whilst employees engaged under the 2018 Agreement were eligible to participate in the STIP, it was at the full discretion of the employer how it was paid and indeed, whether it was paid at all. However, in an endeavour to resolve the dispute, the respondent proposed an STIP on a without prejudice basis that was consistent with previous years.
The proposed recommended resolution by the Respondent in this matter has been considered against the evidence and submissions provided on behalf of the parties, the relevant STIP provision in the 2018 Agreement and the associated payments during the period of that Agreement, the interpretation of the words of the STIP provision in accordance with the decision of the Full Bench in Berri, and the submissions in relation to the proposed recommendation.
On the balance of all the arguments of the parties and the circumstances, I consider the recommendation to resolve the dispute as set out by the Respondent in the table at paragraph 6 of its submissions which sets out the categories and weightings applicable to the proposed 2022 financial year STIP payment to employees (with the number of employees set out therein) subject to the associated eligibility criteria stipulated in the submission - the proposal provides a maximum 4% STP payment based on the categories of safety, operations and financial performance of the business. the proposal is reiterated after the further Directions.
This is proposed in circumstances where individual performance reviews were not undertaken for the financial year (in the circumstances as set out by the employer); the categories the employer states have been selected based on the reliance of real data, actual targets and real outcomes in the Queensland coal business.
The eligibility criteria for employees to satisfy to be in receipt of the STIP were set out by the Respondent in its submissions at paragraph 7 and under the applicable table for the recommended 2022 financial year STIP at paragraphs 6, 7 and 8 on page 102 of the DCB.
RECOMMENDATION, AMOUNT OF STIP AND DATE OF PAYMENT
The Unions reply submissions give significance to the component for the individual performance assessment to be included again in the STIP calculation. The fact is these interviews were not undertaken. Whilst the Unions do not agree with that course the situation with the interviews to be undertaken during that time, is not retrievable and was not raised with proximity to allow for that. The employer took this as approval of their view that in meeting the claims for the next Enterprise Agreement they considered the STIP was not payable and they submitted they had stated this between the parties (that the STIP was no longer was payable under the Prior agreement).
The Interim Directions communicated the determination that it remained an obligation arising from that Agreement and that it was required to be paid by the employer as a contracted provision. However, that STIP Agreement provision as set between the parties, provides minimal information in the manner and components of payment for the STIP and further, it is a discretionary payment.
In the circumstances of the agreed provision, having set out that the payment remains payable under the last Agreement as an obligated provision to be observed. However, it is recognised that the provision lacks specific detail and therefore there is a limit in relation to this Recommendation given the STIP is at the employer’s discretion. That is on the basis of the agreed provision the Commission has no jurisdiction to prescribe the components, the payment is based on or the quantum of the payment.
The Union’s argument in relation to past practice is noted, however, the employer was transparent in regard to the individual performance interviews not being undertaken during the relevant period and they indicated it was on the basis of meeting the claims and having to pay them in relation to the new Agreement.
The STIP is payable as a discretionary payment. However, even in circumstances if the employer was not going to pay anything in accordance with the STIP considering it is one of the four factors in the remuneration package, this would be difficult to defend, unless the components of payment could be specifically argued that at the rates identifiable on transparent calculations this resulted in no STIP payment. Whilst the provision does not authorise the Commission to dictate the components of the STIP or how it will be calculated, or the monetary outcome, the employer has raised definitive components relevant to the Queensland Coal business. The three components identifiable are relevant to the performance measures of the business.
The Recommended increase given the limitations on the power is based on the employers proposal; the eligible employees as set out by the employer forms the basis of this recommendation. That is each eligible employee is entitled to a maximum of 4% or $685 an amount representing the STIP.
It is Recommended that the payment be made on the basis of the components and the quantum proposed within four weeks from the date of this Recommendation.
I Recommend accordingly.
COMMISSIONER
[1] [2017] FWCFB 3005.
[2] Witness Statement of Bruce Mackie, [5].
[3] Witness Statement of Bruce Mackie, [6].
[4] Witness Statement of Bruce Mackie, [4].
[5] Witness Statement of Bruce Mackie, [7].
[6] Witness Statement of Bruce Mackie, [8].
[7] Witness Statement of Ashley Mosedale, [2].
[8] Witness Statement of Ashley Mosedale, [3].
[9] Witness Statement of Ashley Mosedale, [6].
[10] Witness Statement of Ashley Mosedale, [10].
[11] Witness Statement of Ashley Mosedale, [11].
[12] Witness Statement of Brendan Sellens, [8], [10].
[13] Witness Statement of Brendan Sellens, [11].
[14] Witness Statement of Brendan Sellens, [18].
[15] Applicant’s submissions, [17]-[18].
Printed by authority of the Commonwealth Government Printer
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