Australian Rail, Tram and Bus Industry Union v Rail Corporation New South Wales

[2013] FWC 237

[2013] FWC 237

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application for the Fair Work Commission to deal with a dispute in accordance with a Dispute Settlement Procedure

Australian Rail, Tram and Bus Industry Union
v
Rail Corporation New South Wales
(C2012/854)

COMMISSIONER CAMBRIDGE SYDNEY, 17 JANUARY 2013

Dispute settlement procedure - interpretation of provisions of enterprise agreement - dispute as to entitlements to payment for travelling and incidental expenses - claim for payment of travelling and incidental expenses when working at a nominated home depot which is located at a significant distance from home residence which does not permit daily return to home residence - historical payment of claim - decision to cease payment - no obligation to make payment - notification requirement for removal of payment.

[1] This Decision is made further to an earlier Decision [PR531619] which dealt with a preliminary issue regarding representation by lawyers and paid agents. The substantive matter involves an application made pursuant to section 739 of the Fair Work Act 2009 (the Act), for Fair Work Australia, now the Fair Work Commission (the Commission), to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was lodged at Sydney on 25 July 2012. The application was made by the Australian Rail, Tram and Bus Industry Union (RTBU) and taken against Rail Corporation of New South Wales (RailCorp).

[2] The Commission is empowered to deal with the matter by virtue of a DSP found at Clause 9 of the RailCorp Enterprise Agreement 2010 (the 2010 Agreement). The question in dispute has primarily involved the interpretation and application of sub-clause 157.1 of the 2010 Agreement.

[3] The matter was the subject of unsuccessful conciliation and the arbitration of the substantive matter in dispute has involved a Hearing conducted on 4, 5 and 7 December 2012.

[4] The RTBU was represented by Mr B Edghill who adduced evidence from a total of 4 witnesses.Mr J Laughlin appeared for RailCorp and provided evidence from 3 witnesses.

Background

[5] In March 2012 RailCorp advised certain of its employees who worked at the Clyde Renewals Depot, which is located in the Sydney suburb of Clyde, that it would cease payment of travelling and incidental expenses made to individuals whose home residences were located at a distance that did not permit daily return between the Clyde Depot and residence.

[6] The RTBU challenged this decision of RailCorp and asserted that the terms of clause 157.1 of the 2010 Agreement established an obligation for the continued payment of travelling and incidental expenses to employees who resided at locations which did not permit daily commute with the Clyde Depot.

[7] The RTBU and RailCorp could not agree upon the interpretation and application of clause 157.1 which is in the following terms:

“Employees who are required to undertake work temporarily at a location away from their home depot and/or residence, which does not permit them to return to their home depot and/or residence daily, and who incur the expense of overnight accommodation, will be paid expenses based on reasonable and necessary costs incurred at the rates as set out at item 15 of schedule 5B per day:”

[8] The contested interpretation of clause 157.1 has extended beyond the specific circumstances of the particular employees at the Clyde Depot. The dispute which has subsequently emerged has potential general application for all employees of RailCorp. However the genesis of the dispute involves some considerable history of the circumstances which gave rise to the payment of travelling and incidental expenses to individuals who were doing no more than travel between their residences and a nominated home depot, in this case Clyde.

[9] For many years RailCorp and its predecessor manifestations, have established a nominated home depot or station for all employees covered by the 2010 Agreement and predecessor Agreements. Clause 45 of the 2010 Agreement is titled “Home Depot/Station” and it contains the following terms: “All Employees shall be allocated to a location which for the purposes of this Agreement shall be their ‘home depot’.”

[10] The specification of a home depot for employees of RailCorp is broadly synonymous with the concept of an ordinary start and finish location as would be usually understood in respect of most employment relationships. Consequently it would usually be assumed that all time spent travelling between residence and the usual place of employment was a matter involving the personal arrangements of an employee and would not attract payment for travelling and incidental expenses.

[11] Of course some types of employment can be far more mobile and have no fixed start and finish location. RailCorp employees such as those working from the Clyde Depot are engaged in infrastructure maintenance and will often be required to perform work at different locations. The establishment of a home depot allows for travel from that home depot, in this particular case Clyde, to a particular work location to occur as part of a paid engagement.

[12] There was no dispute that if any of the RailCorp employees at Clyde Depot or elsewhere, were required to perform work at a location which did not permit them to return to their home depot daily they would be entitled to the travelling and incidental allowances prescribed by clause 157.1 and other relevant clauses of the 2010 Agreement.

[13] Further, the 2010 Agreement and its predecessor Agreements in force since about 2001, provided for a means to establish that a return to a home residence became impermissible if it involved a total shift length of 14 hours or more including travel time to/from residence. This prescription is contained in the 2010 Agreement at Schedule 5D Rostering and Fatigue Management - Policy and Guidelines, clause 10 i. which reads: “Maximum Shift length - 12 hours (14 hours including travel time to/from residence)”. This provision is referred to as “the 14 hour rule”.

[14] The 14 hour rule was introduced in 2001 and it appears to create a prohibition upon the performance of work which involves a daily engagement that gives rise to an absence from residence of 14 hours or greater. This is an unusual provision because RailCorp has no capacity to control the location of any particular residence and every residence would have a different location and provide for a proliferation of individual circumstances which would be potentially caught by the 14 hour rule.

[15] At the time that the 14 hour rule was introduced there were a number of employees for whom the Clyde Depot was their home depot and who lived at locations which were sufficiently distant from the Clyde Depot to make daily commuting impermissible under the 14 hour rule. However, the introduction of the 14 hour rule did not present an immediate problem for these employees because on-site accommodation was made available at the Clyde Depot.

[16] A few years after the introduction of the 14 hour rule the on-site accommodation at the Clyde Depot was removed. Consequently those employees, who had utilised the on-site accommodation because their residences were significantly distant from their home depot (Clyde), were now subject to the 14 hour rule which meant they could not commute daily to their home depot. This dilemma was resolved when agreement was reached to utilise the predecessor Agreement provisions for travelling and incidental expenses which were in all material respects identical to the terms of clause 157.1 of the 2010 Agreement. The particular individuals made claim for the allowance and it was paid, initially without provision of proof of expenses incurred for overnight accommodation but subsequently employees have been required to submit receipts.

[17] The payment of travelling and incidental expenses as claimed by the relevant employees for whom the Clyde Depot is their nominated home depot, has continued for a period of approximately 8 years until RailCorp proposed its cessation and thus gave rise to the dispute in this matter.

The RTBU’s Case

[18] Mr Edghill who appeared for the RTBU, made oral submissions in amplification of an outline of written submissions which had been filed earlier. In summary, Mr Edghill submitted that clause 157.1 of the 2010 Agreement should be interpreted to provide for an entitlement to payment of travelling and incidental expenses in circumstances where the relevant travel was made between home residences and nominated home depot and involved a distance which did not permit a daily commute.

[19] Mr Edghill made submissions which involved an analysis of the words contained in clause 157.1 and included reference to the 14 hour rule as the basis upon which it was appropriate to establish that any daily commute would become impermissible. Mr Edghill also referred to the established Authorities which provided the basis upon which the meaning of particular terms of an industrial instrument should be determined.

[20] Mr Edghill acknowledged that there was potentially a multiplicity of circumstances which may need to be considered as part of any interpretation that would be given to clause 157.1 of the 2010 Agreement. However according to the submissions made by Mr Edghill, there were two clear competing interpretations which underpinned the dispute and required the Commission's arbitrary resolution.

[21] The submissions made by Mr Edghill sought to reject a particular proposition which appeared to be an unavoidable consequence of the interpretation urged by the RTBU. This proposition involved the suggestion that any employee of RailCorp could relocate their home residence at a sufficient distance from their nominated home depot as a means to attract the entitlement to payment of travelling and incidental expenses. Mr Edghill rejected this proposition on the basis that there had been no evidence of any individual choosing to move further away from their home depot in order to give rise to the entitlement to expenses.

[22] Mr Edghill submitted that the absence of any evidence which suggested that a person may have created circumstances to generate an entitlement to expenses was reflective of the intention which underpinned the meaning which should be given to clause 157.1 of the 2010 Agreement. In particular Mr Edghill said that an analysis of the history of a series of negotiated Agreements which contained provisions similar or identical to clause 157.1 of the 2010 Agreement demonstrated that there had been no practical problem associated with the application of the terminology contained in either clause 157.1 of the 2010 Agreement or the predecessor versions of that clause contained in earlier Agreements.

[23] The case advanced by Mr Edghill placed particular attention upon the operation of the 14 hour rule and the related work fatigue issues. Mr Edghill submitted that the parties to the 2010 Agreement and its predecessors, intended that a general obligation was to be placed on the employer to pay expenses when an employee worked in a location where they could not travel home daily within the 14 hour rule. Mr Edghill said that there had been a series of successive Agreement negotiations during which no concern had been raised about any problems associated with the application of the travelling and incidental expenses clauses. Consequently, according to the submissions of Mr Edghill, it was appropriate to interpret the provisions of clause 157.1 of the 2010 Agreement in a manner that reflected an historical application which provided practical support of the fatigue management priorities created by the 14 hour rule.

[24] Mr Edghill made further submissions which sought to identify four categories of employees whose circumstances would be potentially caught by the interpretation of clause 157.1 of the 2010 Agreement as proposed by the RTBU. The particular circumstances of the four categories of employees identified by Mr Edghill would, according to Mr Edghill, each be conveniently accommodated by the interpretation of the clause as urged by the RTBU.

[25] The first category of employees involved circumstances where those employees had relocated their home residence before the introduction of the 14 hour rule and then were subsequently caught by its operation. Broadly speaking this was the circumstance of those employees working from the Clyde Depot.

[26] The second category of employees involved those that initially had a home depot within close proximity to their home residence but then, for whatever reason, RailCorp moved their home depot so that the distance between home depot and residence activated the 14 hour rule. During the Hearing witness evidence was provided by individuals whose circumstances satisfied both the first and second categories as identified by Mr Edghill.

[27] The third category of employees as postulated by Mr Edghill involved circumstances where, after the introduction of the 14 hour rule an employee relocated their home residence at a sufficient distance from their home depot to activate the 14 hour rule. There was no evidence provided as an example of this particular category of employee. However according to Mr Edghill these employees would be entitled to the travelling and incidental expenses if RailCorp had been advised of the relocation of the home residence and commenced to pay expenses as a result of the changed circumstances.

[28] The fourth and final category of employees involved circumstances of an individual who relocated their home residence without the implied or actual consent of RailCorp and did so specifically for the purpose of endeavouring to attract the payment of the travelling and incidental expenses. Mr Edghill stressed that there was no evidence of anyone attempting to fit within this fourth category. However if such circumstances arose Mr Edghill conceded that this “is not a group that we can say was considered by the framers, that they had in mind”. 1

[29] Consequently, according to the submissions made by Mr Edghill, the first three of the identified categories of employees were clearly entitled to payment of travelling and incidental expenses prescribed by clause 157.1 of the 2010 Agreement. The fourth category of employees was a matter which Mr Edghill said required further discussion between the Parties to the 2010 Agreement.

[30] Mr Edghill summarised his submissions by stating that the interpretation urged by the RTBU should succeed because that interpretation was in line with the intention of the parties as was evidenced by the actual practice which had applied particularly to employees whose circumstances were identified as being within category one and category two. Mr Edghill submitted that there would be a perverse and unjust outcome if employees who, for a large number of years had been turning up to work, making expenses claims and being paid those claims in accordance with an established agreement, were through unilateral decision of RailCorp, to have those claims turned off.

The Case for RailCorp

[31] Mr Laughlin appeared for RailCorp and commenced his submissions by acknowledging that the factual circumstances of the case were largely not in issue. Mr Laughlin relied upon the respondent's written outline of submissions and he made further oral submissions.

[32] Mr Laughlin said that the substance of the dispute was whether clause 157.1 of the 2010 Agreement had application to employees in circumstances which he described as “home depot-based working”. RailCorp strongly rejected the interpretation as advanced by the RTBU that the terms of clause 157.1 of the 2010 Agreement should have application to circumstances involving work which starts and finishes at a nominated home depot.

[33] Mr Laughlin submitted that the provisions of clause 157.1 of the 2010 Agreement needed to be read in context and with regard for various other clauses within the 2010 Agreement including the 14 hour rule provision as set out in schedule 5D. In particular Mr Laughlin stressed that schedule 5D of the 2010 Agreement clearly provided mutual obligations on both RailCorp and its employees in respect to managing fatigue.

[34] The submissions made by Mr Laughlin focused upon the temporary nature of the work location which would give rise to a claim for travelling and incidental expenses pursuant to clause 157.1. According to the submissions of Mr Laughlin there was a fundamental incompatibility between working from a nominated home depot and that location being temporary for the purposes of a claim for travelling and incidental expenses.

[35] Mr Laughlin submitted that the mutual obligations established in schedule 5D of the Agreement placed an obligation on employees to reside at a place where they can reasonably travel to and from their permanent place of work which is their nominated home depot. Mr Laughlin submitted that if the interpretation of clause 157.1 as suggested by the RTBU was correct then employees could relocate their place of residence and an obligation would exist upon RailCorp to pay travelling expenses when an employee had chosen to create a circumstance where they could not commute daily to and from their home depot.

[36] Mr Laughlin made further submissions which rejected the proposition advanced by the RTBU that the absence of any identified concern about the application of the travelling and incidental expenses allowance during past Agreement negotiations operated as a basis for the interpretation of clause 157.1 as proposed by the Union. Mr Laughlin submitted that the travelling and incidental expenses clauses of the 2010 Agreement and its predecessors had broadly operated without controversy because it had not generally been applied in the manner discovered to be in operation in respect of the Clyde depot and as would apply if the RTBU interpretation was adopted.

[37] Mr Laughlin acknowledged that there was evidence of circumstances involving the historical payment of travelling and incidental expenses to particular individuals who worked from their home depot and this gave rise to some practical “legacy issues” which he said required resolution. Mr Laughlin suggested that the “legacy issues” as he described them should be dealt with as a separate process from the proper interpretation of clause 157.1 of the 2010 Agreement.

[38] In conclusion, Mr Laughlin urged that the Commission find that the proper construction of clause 157.1 of the 2010 Agreement does not permit employees to receive travelling and incidental expenses for home depot-based work.

Consideration

[39] The dispute in this case has not involved issues of significant factual contest. The matter in dispute is essentially confined to the interpretation and application that should be given to particular words which appear in an industrial agreement.

[40] Both Parties recognised that the approach to interpretation of industrial instruments is not a matter of strict statutory interpretation. Although the words in an industrial instrument may be given their plain literal meaning, the Parties recognised that it is appropriate to adopt a contextual and purposive approach when interpreting the provisions of an industrial instrument. Each of the Parties referred to various Authorities such as Kucks v CSR 2 which represent constituents in a line of decision making that is well summarised in a Decision of a Full Bench of Fair Work Australia inAMWU v Silcar Pty Ltd.3

[41] Clause 157.1 of the 2010 Agreement is one of several similar clauses contained within the 2010 Agreement each of which provide for travelling and incidental expenses. Similar provisions are found at clauses 69.1, 107.1, 128.1 and 189.1. In particular clause 189.1 is almost identical to clause 157.1 except for, the use of capital letters in the words “Home Depot”, the reference to the particular item were the actual rates are set out, and the use of a full stop rather than a full colon at the end of the clause. No apparent significance is attached to either the use of lower case in the words “home depot” in clause 157.1, or the use of a full colon rather than a full stop. Given the similarity in the wording of the various travelling and incidental expenses clauses contained in the 2010 Agreement any interpretation made in respect of clause 157.1 would have general application for all RailCorp employees covered by the 2010 Agreement.

[42] The terms of the various travelling and incidental expenses clauses contained in the 2010 Agreement appear as unremarkable. These clauses represent what might be considered as typical Agreement or Award provisions which provide entitlement to payment for expenses incurred by an employee when an employer requires that employee to perform work at a location which necessitates an overnight absence from the employee’s usual place of residence.

[43] Industrial provisions of this nature are established upon an underlying assumption that an employee’s usual place of residence would be located in reasonably close proximity with their usual place of employment. Interestingly, in this case, this assumption is reflected in the detail of the 14 hour rule which fixes a maximum shift length of 12 hours and adds 2 hours to comprehend travel time to/from residence. The implication being that a maximum of 1 hour travel time is assumed between residence and workplace.

[44] The unambiguous purpose of travelling and incidental expenses provisions of the nature under examination is to create an obligation on an employer to make payment to an employee when that employee has incurred expenses as a result of something that the employer has required which is outside of or beyond the established and understood arrangements for the employment. Highly mobile employment circumstances which involve no fixed or regular start and finish location are usually subject to a regime of different industrial prescriptions which include, for example, follow the job allowances paid in the building and construction industry.

[45] For convenience clause 157.1 of the 2010 Agreement is reproduced:

“157.1 Employees who are required to undertake work temporarily at a location away from their home depot and/or residence, which does not permit them to return to their home depot and/or residence daily, and who incur the expense of overnight accommodation, will be paid expenses based on reasonable and necessary costs incurred at the rates as set out at item 15 of schedule 5B per day:”

[46] The interpretation of the terms of clause 157.1 of the 2010 Agreement as asserted by the RTBU presents an obvious difficulty. It would be unusual for an industrial instrument to provide for payment of travelling and incidental expenses to employees when they were attending their usual place of employment. This difficulty is amplified by the provisions of clause 45 of the 2010 Agreement which establishes that all RailCorp employees will be allocated a home depot.

[47] However the inclusion in the various travelling and incidental expenses clauses of the terminology “and/or residence” introduces a degree of complexity which is compounded by the 14 hour rule and the mention therein of “to /from residence”. It is readily apparent that no difficulty with the operation of these clauses arises when a home depot and home residence are in reasonably close proximity. The use of the term residence must have some purpose. The location of an individual's home residence becomes one of the factors which may impact upon the operation of the travelling and incidental expenses clauses in circumstances where there is some significant distance between an individual's home depot and their home residence.

[48] There are in effect a limitless number of permutations involving the locality of a residence, a home depot, and a work location, which could provide for potential for entitlement or ineligibility for the payment of travelling and incidental expenses. One particular example would involve a work location which was closer to an employee's residence than the home depot. In such circumstances, the practical application of the additional mention of residence may provide for a disentitlement to the expenses when a particular individual could return to their residence whilst other employees who were required to travel further to their home depot, may become eligible for the expenses payments.

[49] Consequently the terminology used in clause 157.1 of the 2010 Agreement (and the other travelling and incidental expenses clauses in the 2010 Agreement), does not permit an interpretation that could establish any form of universal application. The particular circumstances surrounding each employee and the attendant logistical configurations would need to be considered in order to ascertain whether an entitlement to payment of the expenses existed.

[50] Importantly however, the reference to a residence can only have potential application to work at a location away from a home depot. This is because in the context of the 2010 Agreement and clause 157.1 in particular, all work would be performed away from a home residence. Therefore the use of the words “and/or residence” where first appearing in the clause are superfluous. It is only the use of the words “and/or residence” appearing for the second time in the clause after the words “which does not permit them to return to their home depot” which can have any practical application. These words allow for particular circumstances where the logistics associated with the work location other than at a home depot would need to be considered on a case-by-case basis.

[51] It follows that no entitlement to travelling and incidental expenses would arise when working at a home depot. In effect the terminology of the travelling and incidental expenses clauses including clause 157.1 of the 2010 Agreement, are confined in their operation to work undertaken at a location away from a home depot. Any reference in these clauses to a residence cannot be construed to provide for an entitlement to payment of the expenses in circumstances where the work is performed at a home depot.

[52] In other words, the precondition fundamental to any contemplation of the travelling and incidental expenses is that the work is performed at a location other than a home depot. Only when that precondition is met can there then be consideration given for any potential impact of the location of an individual's residence. A possible exception to this fundamental application of the travelling and incidental expenses provisions may arise if RailCorp unilaterally and unreasonably altered an employee’s designated home depot.

[53] Notwithstanding the fundamental interpretation that I have provided for clause 157.1 of the 2010 Agreement the particular historical circumstances of individual cases requires further contemplation.

[54] The prolonged period of payment of travelling and incidental expenses for particular employees when working at their home depot of Clyde represents something of a mystery. The evidence provided by both Mr O'Shea and Mr Williams established that they had each moved to country locations at significant distance from their home depot at Clyde. Both these men moved to country locations remote from their home depot for their own personal reasons. When the 14 hour rule commenced they were able to overcome their daily commute difficulties by utilisation of on-site accommodation provided by the employer.

[55] The evidence provided by Mr Williams about discussions that occurred at the time of the removal of the on-site accommodation at the Clyde depot was most revealing and in particular, during examination in chief, he provided the following testimony:

“Were any other options discussed? --- Well, from my understanding of what happened at the meeting was, in the interim, until they come up with a solution, we were to claim the living away expense.” 4

[56] Unfortunately, the interim arrangement has continued for a period of approximately 8 years. The momentum that has been created by this extended period of payment of travelling and incidental expenses has manifested as the underlying rationale for the case agitated by the RTBU in this dispute.

[57] In large part because of the failure of RailCorp Management to address this matter at a much earlier time the particular individuals who have been in receipt of the expenses payments have expressed an understandable degree of angst in response to advice of the removal of the payments with three weeks’ notice. In my view, in the absence of some agreed alternative arrangements, any cessation of payment of the expenses claims should be made with a minimum of six weeks’ written notice.

[58] The particular circumstances of Mr Brooker are clearly different to that of the arrangements that developed at the Clyde depot. Although the internal RailCorp management communications sought to establish that the change to Mr Brooker’s home depot would not involve any entitlement to ongoing payment of travelling and incidental expenses when working at his home depot, this information was not conveyed to Mr Brooker.

[59] Regrettably, RailCorp Management’s failure to properly advise Mr Brooker of the terms attached to the change to his designated home depot has mistakenly provided Mr Brooker with a benefit to which he has no entitlement. Mr Brooker has an understandable basis for complaint. However his circumstances should not be continued in a manner similar to the period of extended inaction in relation to the Clyde depot circumstances. In my view, in the absence of some agreed alternative arrangement, rectification of the circumstances attached to the alteration to Mr Brooker's home depot should be made by way of a minimum of six weeks’ written notice.

Conclusion

[60] The determination of this dispute has primarily involved the interpretation of particular words in clause 157.1 of the 2010 Agreement. The words contained in that clause must be interpreted having regard for the logical implications and assumptions which underpin payment of expenses provisions generally. Further, the interpretation of the words contained in the particular clause under examination should be made with cognisance of the context in which they operate as part of the totality of the terms of the industrial instrument.

[61] My consideration has led me to conclude that clause 157.1 of the 2010 Agreement does not establish an obligation on RailCorp to make payment of expenses in respect to work performed at an employee's home depot. An exception may arise in circumstances where RailCorp has unilaterally and unreasonably changed an employee’s designated home depot.

[62] In respect to the particular circumstances involving evidence where historically, particular employees have mistakenly received payments of travelling and incidental expenses when performing work at their home depot, rectification of such errors should be made by way of a minimum of six week's written notice.

[63] In view of the conclusions that I have reached, the application made by the RTBU is dismissed and the proceedings are concluded accordingly.

COMMISSIONER

Appearances:

Mr B Edghill on behalf of the RTBU;

Mr J Laughlinon behalf of RailCorp.

Hearing details:

2012.

Sydney:

December, 4, 5 & 7.

 1   Transcript of proceedings (7 December 2012) @ PN2196.

 2 Kucks v CSR Limited [1996] IRCA 166 (19 April 1996), 66IR182.

 3   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Silcar Pty Ltd [2011] FWAFB2555.

 4   Transcript of proceedings (5 December 2012) @ PN1268.

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