Australian Workers' Union, The v Vinidex Pty Limited
[2023] FWC 2351
•13 SEPTEMBER 2023
| [2023] FWC 2351 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Workers’ Union, The
v
Vinidex Pty Limited
(C2023/2135)
| DEPUTY PRESIDENT CROSS | SYDNEY, 13 SEPTEMBER 2023 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – blended rates – standard working hours – historical provisions.
Background
The Australian Workers’ Union (the AWU) referred a matter in dispute to the Fair Work Commission (the Commission) regarding remuneration of employees in the Fabrication department of Vinidex Pty Limited (the Respondent/Vinidex) pursuant to the Vinidex Pty. Limited Smithfield Site Enterprise Agreement 2021 [AE514731] (the Agreement).
Conciliation was not successful, and the Commission has jurisdiction to resolve the dispute by way of arbitration in accordance with clause 9.1 and 9.2 of the Agreement. On 29 May 2023, I issued directions for the parties to file and serve their evidence and an outline of submissions in preparation for a hearing on 3 and 4 August 2023.
On 29 May 2023, the parties agreed on a formulation of the questions to be determined by the Commission. They also agreed to accept the jurisdiction of the Commission. The agreed questions for determination are as follows:
(a)Under the terms of the Vinidex Pty. Limited Smithfield Site Enterprise Agreement 2021 (2021 Agreement), are employees in the fabrication department entitled to be paid a blended rate in full satisfaction for working the standard hours arrangement under Appendix 3. A3.4.1?
(b)If the answer to Question 1 is “yes”, what are employees in the fabrication department entitled to be paid on a fortnightly basis?
(c)If the answer to Question 1 is “no”, what are employees in the fabrication department entitled to be paid for working the standard hours arrangement under Appendix 3. A3.4.1 on a fortnightly basis?
The dispute arises in respect to the interpretation of the provisions of clause A3.4.1, Hours of Work, of Appendix 3 of the Agreement, and payments to which the Fabricators employed by Vinidex Pty Ltd are entitled.
It is therefore a dispute about the interpretation of the specific clauses within the Agreement and the operation of them. The relief the Union seeks is that a determination should be issued affirming the construction of the clause it has advanced.
Relevant Agreement Provisions
The structure of the Agreement is that the Agreement contains basic conditions which apply to all employees. There are then separate appendices which apply to each of the Extruded Products, Moulded Products, Distribution, Maintenance and Fabricated Products departments. The appendices represent “variations” to the basic conditions in the Agreement which have been negotiated in the different departments of the site. Clause A3.1 provides that the clauses contained in the appendices override clauses contained in the body of the Agreement for the specified department.
The Vinidex Smithfield site employs approximately 130 employees in manufacturing and under the terms of the Agreement. The employees in the Fabrication department are responsible for receiving PVC pipe and fittings feedstock and performing various operations and/or assemblies to produce custom designed products. Currently, there are 8 fabricators employed at the Smithfield site. Unlike trade qualified employees at the Smithfield site, fabricators do not require any formal qualifications to be appointed into, and perform, their roles. On the job training is provided, and there are some machinery related operations.
As outlined above, the dispute concerns the provisions of clause A3.4.1, Hours of Work, of Appendix 3 of the Agreement. The terms of that clause are:
A3.4. Fabricated Products
A3.4.1 Hours of Work
(a)Standard works hours will be carried out over five normal working days each week Monday to Friday, eight hours each day except Monday which will be twelve hours, 6.00am to 6.04pm including one midday meal break and 8.5 hours per day Tuesday to Friday inclusive of one midday. In the event of Monday being a Public Holiday, 12 hours will be worked on Tuesday. There is no Rostered Day Off (RDO) in this Agreement. To offset this, the RDO entitlement of 2 hours per week is paid at time and a half, with double time for the last hour.
(b)On Monday or other days when overtime is worked there will be no afternoon crib break. As a result, work will cease at 6.04pm, but the pay period will cease at 6.20pm
Under the basic conditions at Clause 5.2 of the Agreement, the provision for Ordinary Hours is outlined as follows:
5.2. Ordinary Hours (also refer Appendix 3)
An Employee’s ordinary working hours must average 38 hours per week, under the following conditions:
(a) This average will cover the full cycle of the Employee’s relevant work roster; and
(b) The method of implementing this average will be achieved by rostering Employees off on various days during a particular work cycle.
(c) An Employee’s ordinary working hours must not exceed:
• 8 during any consecutive 24 hour period; or
• 152 in 28 consecutive days.
(d) An Employee’s ordinary working hours may exceed:
• 152 in 28 consecutive days if an Employee’s roster allows for the weekly average of 38 hours to be
achieved over a longer period than 28 consecutive days.
Clause 5.3.1, regarding rostered days off, provides:
5.3.1. Where an Employee is entitled to a day off during this work cycle, the Employee will be advised by the Company at least 4 weeks in advance of the day to be taken.
Relevantly, clause 5.4 states the following:
5.4. Day Work Ordinary Working Hours (also refer Appendix 3)
5.4.1. A Day Worker’s ordinary working hours will be:
·Monday to Friday (inclusive); and
·between the hours of 6.00am and 6.00pm.
5.4.2. The Company may alter the ordinary hours of work for:
·an individual Day Worker, or
·a section of Day Workers, or
·all Day Workers on the plant, under the following conditions:
(a) Ordinary hours of work may only be altered by mutual agreement between the Company and the appropriate work area or providing seven days’ notice to the Employees concerned.
(b) Ordinary hours of work may only be altered in relation to:
·the daily hours prescribed, or
·starting times, or
·finishing times.
Clauses 5.14.2 and 5.14.3 contain the provisions relating to overtime. They relevantly state:
5.14.2. Overtime Definition:
Overtime is work which is performed:
· in excess of ordinary hours;
· outside ordinary hours of work;
· on a shift other than a rostered shift (unless swapped at employee’s discretion).
5.14.3. Overtime Rates (also refer to Appendix 3)
(a)Overtime rates will be:
·Time and one half for the first 3 hours overtime worked on any one day, and
·Double time until the completion of that overtime work.
(b)Each day will stand alone for the purpose of calculating overtime under this Agreement.
The appendices to the Agreement then dictate which employees are entitled to a rostered day off. Relevantly, in Clause A3.4.1, Fabricated Products, fabricators do not have any entitlement to a rostered day off. It is also relevant that the only provision in the appendices to the Agreement regarding the Fabrication department is the disputed clause, A3.4.1 Hours of Work.
Historical Background and Agreements
Since at least 1993, Fabricators employed at the Smithfield site have worked the same standard hours, being:
i. Monday, 6.00am to 6.04pm, with a 30-minute unpaid meal break; and
ii. Tuesday to Friday, 6.00am to 2.30pm, with a 30-minute unpaid meal break;
Since 1993, fabricators have not received any entitlement to a rostered day off, and they have not received any separate payment for the standards hours including the rostered overtime worked on Mondays. Before an enterprise agreement was first established, employees were given RDO’s. However, this practice was discontinued following the implementation of the 12-hour workday on Monday. To compensate for this, the RDO provision was amended to provide employees one hour paid at time-and-a-half and one hour paid at double-time per week in lieu of the RDO entitlement itself.
Vinidex were unable to locate the enterprise agreement made in 1993, that was referred to as the 1994 Enterprise Agreement (the 1994 Agreement).[1] The 1994 Agreement was apparently made under the New South Wales legislation. The 1994 Agreement contained a standard hours arrangement that was the same as the current clause A3.4.1, Hours of Work.
At least from 1997, the Vinidex Tubemakers Pty Limited Smithfield Site Agreement 1997 (the 1997 Agreement) provided that fabricators were paid an annualised base salary for the working of standard hours. The provision of the 1997 Agreement regarding Fabricators were as follows (In attachment C for the Fabrication Division):
(a) At page 12:
“HOURS OF WORK:
Standard works hours will be carried out over five normal working days each week Monday to Friday, eight hours each day except Monday which will be twelve hours, 6.00am to 6.04pm including one midday meal break and 8.5 hours per day Tuesday to Friday inclusive of one midday meal break. In the event of Monday being a Public Holiday, 12 hours will be worked on Tuesday. There is no Rostered Day Off (RDO) in this agreement. To offset this, the RDO entitlement of 2 hours per week is paid at time and a half. The extra 4 hours worked each Monday is paid at time and a half for the first three hours, with double time for the last hour.On Mondays or other days when overtime is worked there will be no afternoon crib break. As a result work will cease at 6.04 pm but the pay period will cease at 6.20 pm”; and
(b) At page 13 and 14 that fabricators were paid an annualised base salary and a first aid allowance and Emergency Team allowance on top.
The next relevant agreement was the Vinidex Tubemakers Company Pty Ltd Smithfield Site Enterprise Agreement 2000 (the 2000 Agreement). The 2000 Agreement also contained provisions with respect to Fabricators, as follows:
“A3.4.1 Hours of Work
Standard works hours will be carried out over five normal working days each week Monday to Friday, eight hours each day except Monday which will be twelve hours, 6.00am to 6.04pm including one midday meal break and 8.5 hours per day Tuesday to Friday inclusive of one midday. In the event of Monday being a Public Holiday, 12 hours will be worked on Tuesday. There is no Rostered Day Off (RDO) in the Agreement. To offset this, the RDO entitlement of 2 hours a week is paid at time and a half, with double time for the last hour.
On Mondays or other days when overtime is worked there will be no afternoon crib break. As a result, work will cease at 6.04 pm but the pay period will cease at 6.20 pm”.
As is apparent, a change to Appendix 3, Clause A3.4 was made in the 2000 Agreement with the removal of the words “The extra 4 hours worked each Monday is paid at time and a half for the first three hours, with double time for the last hour”, and the amendment of the terms relating to RDO’s of the words “To offset this, the RDO entitlement of 2 hours a week is paid at time and a half, with double time for the last hour”.
The 2000 Agreement was varied in 2001 and continued to apply. The provisions relating to Fabricators did not change, and the subsequent Vinidex Pty Limited Smithfield Site Enterprise Agreement 2002(the 2002 Agreement) and Vinidex Pty Limited Smithfield Site Enterprise Agreement 2004 (the 2004 Agreement) contained identical provisions relating to Fabricators as the 2000 Agreement. However, the 2004 Agreement expressed payment in terms of an hourly rate of pay rather than rates of pay for the standard hours as fixed salaries/weekly amounts.
The Vinidex Pty Limited Smithfield Site Enterprise Agreement 2006 (the 2006 Agreement), Vinidex Pty Limited Smithfield Enterprise Agreement 2007 (the 2007 Agreement), Vinidex Pty Limited Smithfield Site Enterprise Agreement 2009 (the 2009 Agreement), Vinidex Pty. Limited Smithfield Site Enterprise Agreement 2015 (the 2015 Agreement) and the Vinidex Pty. Limited Smithfield Site Enterprise Agreement 2018 (the 2018 Agreement) maintained the same provisions relating to Fabricators as contained the 2000 Agreement. It is apparent that the Agreement also maintains those provisions.
The AWU was a party to the applicable enterprise agreements from the 2007 Agreement.
From 1993 there was no change to the standard hours or the manner and amount of payment made to Fabricators.
THE EVIDENCE
The Applicant called four witnesses in the hearing being Mr Russell David Lowe, Mr Jason Vono Driver, Mr Joseph Curmi and Mr Martin Micallef. Each of those witnesses was a current Fabricator, and all but Mr Driver had been employed since before 1993. It was unremarkable that there was some general similarity between the evidence of those witnesses, and the evidence of Mr Lowe conveniently expressed the two principal concerns contained in the evidence of those witnesses. Mr Lowe deposed:
7. I understand that the Agreement sets out the hourly rates that employees are to receive for each hour of work undertaken.
8. The Agreement provides that:
A3.4.1 Hours of Work
…
9. Further, the hourly rates of pay are set out at clause A4.5.6 in the Agreement.
10. Under the Agreement, my hourly rate of pay is $53.32. However, throughout the duration of my employment with Vinidex, my payslips have detailed that I work 76 hours a fortnight and I am only paid for these hours…
And
15. Additionally, as per the Agreement, it was stipulated that we would not be granted an RDO. Instead, the Agreement specifies that we would receive compensation in the form of 1 hour paid at time and a half, and the last hour paid at double time per week to compensate for the absence of the RDO. However, this provision for compensation has never been implemented, as it does not appear on any of my received payslips to this day.
The Respondent called three witnesses being:
(a) Mr Wayne Burton, Acting Central Region Manufacturing Manager for the Smithfield site;
(b) Mr Mark O’Keefe, General Manager Infrastructure; and
(c) Mr James Huemmer, the Principal Consultant with an organisation called Shiftwork Solutions Pty Ltd (Shiftwork Solutions) who in 2002 and 2003 conducted a working hours review at the Smithfield site for Vinidex.
Mr Burton, having only been engaged by Vinidex since 1 September 2022, was restricted as to the extent of the evidence he could give. He deposed as to the operations of the Smithfield site, the 8 Fabricators in particular, and how Fabricators had been paid since 1993. Mr Burton outlined the history of the various agreements that operated at the site.
Mr Burton also relied on a Supplementary Witness Statement that attached various pay records for Fabricators in 1993 and 1994.
Regarding the impact on Vinidex if the AWU’s interpretation is correct, Mr Burton’s evidence was as follows:
The impact on Vinidex if the Union’s interpretation is correct
85. If the Union and fabricator’s interpretation of the 2021 Agreement is correct then they would be paid:
(a) 76 hours at the rates set out in Appendix 4.5.6 (consisting of 76 hours per fortnight at the rates in Appendix 4.5.6);
(b) for four hours each week for mandatory overtime on Mondays, at the rate of 6 hours paid at time and a half and 2 hours paid at double time of the rates set out in Appendix 4.5.6, totalling 8 hours per fortnight; and
(c) for 2 hours RDO each week, at the rate of time and a half for one hour and double time for the second hour of the rates in Appendix 4.5.6, totalling 4 hours per fortnight.
86. I undertook an analysis to understand what the impact of this interpretation would be relative to the rates of pay of other employees who are working day shift and who are employed under the terms of the 2021 Agreement. I used the rates of pay for all employees under the 2021 Agreement effective from 1 March 2023.
87. When I arranged the data from lowest to highest for ordinary pay rates per hour, paid over 76 hours a fortnight, then 6 of the 8 current fabricators’ roles rank higher than those for qualified trades such as fitters and electricians. Even toolmakers and an Electrician special class that requires a certificate in Electrical Engineering is paid lower than a Grade 6 Fabricator. The ranking in numerical value and charted is attached to this statement and marked as WB-34.
88. I then tabulated what the impact would be of the Union’s proposal to pay the rates in Appendix 4.5.6 over 84 hours and additional amounts for 4 hours to address the foregone RDO, per fortnight. I ranked the resulting effective rates of pay for every ordinary hour worked, which shows that if the Union’s proposal was to be adopted it would mean a 20% increase, and then 6 of the 8 current fabricators would be earning more per hour than all qualified trades on site (fitters, electricians and toolmakers), and a Grade 6 Fabricator would earn more than $7/hour more than an Electrician Special Class, a highly qualified trade. The information in numerical value and charted is attached to this statement and marked as WB-35.
89. Further, the fabricators would also have their other benefits, including overtime, leave and superannuation, calculated on the higher blended rate (which is not otherwise available to any other employee group at Smithfield).
Mr O’Keefe gave evidence regarding the 2002-2003 working hours review conducted by Mr Huemmer, where a Business Analysis Report of Mr Huemmer clarified that:
13. Page 63 of MO’K-1 clarified that:
(a) employees in the fabrication department were working
(i) a 12 hour shift on a Monday, between the hours 6 am and 6.00 pm;
(ii) 8 hour day shifts on a Tuesday to Friday between the hours 6 am and 2.30 pm;
(iii) an average hours of 44 hours per week; and
(b) that the extra hours were “included in hourly rate”
(Standard Working Hours Arrangement)
Mr O’Keefe also outlined the history of the various agreements that operated at the site.
Mr Huemmer’s evidence confirmed that his Business Analysis Report for the 2002-2003 working hours review recorded the standard working hours arrangement of Fabricators, and he confirmed that Fabricators were satisfied with their roster arrangements, and that the Fabricators and/or their then Union (the National Union of Workers) “generally accepted that they were being paid a loaded hourly rate for 76 hours each fortnight that included the overtime on Monday and the RDO”.
Submissions of the AWU
The AWU submitted that the Commission should find the answers to the agreed questions as follows:
(a) Yes (though this was clarified as “no”[2]), so far as the hourly rate set out in Appendix 4. A4.5.6 is intended to compensate employees for the in-built overtime component of work completed and other penalties (except for the Rostered Day Off (RDO) entitlement).
(b) The hourly rate set out in Appendix 4. A4.5.6 corresponding to the appropriate
employee classification for 84 hours of work completed fortnightly. The further
four hours of work completed payable at the rate of time-and-a-half for 2 hours
and double-time for 2 hours per fortnight (in compensation for the exclusion of
an RDO).(c) Not applicable.
The AWU submitted that this application was analogous to the matter considered by the Full Bench in Australian Manufacturing Workers’ Union v Berri Pty Ltd [3](Berri), particularly in that Berri involved the non-payment of a laundry allowance for 16 years, with the Respondent there arguing that an agreement had been reached 16 years prior to the formation of the existing agreement about that allowance not applying.
The AWU submitted that as outlined at [44] of Berri “...all words in an enterprise agreement must prima facie be given some meaning and effect.” In the Agreement, the hours outlined as “Standard Hours” for Fabricators are 87 hours and eight minutes. In addition, there is no rostered day off in the Agreement, and to offset this the RDO entitlement of two hours per week is paid at time and a half for the first hour and double time for the last hour.
The AWU submitted the interpretation advanced by the Respondent would result in words in the Agreement being given no effect. In particular:
(a)The second sentence of subparagraph A3.4.1(b), which provides that on Monday or other days when overtime is worked there will be no afternoon crib break. As a result work will cease at 6.04 pm but the pay period will cease at 6.20. Those words would have no effect if Fabricators were only paid 76 hours per fortnight, as opposed to the hours they actually work, as Standard Hours as set out in that clause; and
(b)That if the Respondent’s case were to be accepted, the RDO entitlement of two hours per week paid at time and a half for the first hour and double time for the last hour would be given no effect.
The AWU noted that the Form F17 filed in support of the Agreement by the Respondent expressly stated that the wages per hour with no penalties added were the same wages that appear in the Agreement. That representation was made to the Commission and understood by the employees. The Form F17 provided:
ATTACHMENT 1
Question 10 – does the agreement contain any terms or conditions of employment that are more beneficial than equivalent terms and conditions in the modern award(s) listed in your answer to question 8
| Condition | MAIOA | EA | Comments |
| Continuous shift work | INVOLVES CONSECUTIVE SHIFTS THROUGHOUT THE 24 HOURS OF AT LEAST 6 CONSECUTIVE DAYS WITHOUT INTERRUPTION EXCEPT FOR BREAKDOWNS OR MEAL BREAKS OR DUE TO UNAVOIDABLE CAUSES BEYOND THE CONTROL OF THE EMPLOYER (CLAUSE 17.3(B)) | Involves consecutive shifts throughout the 24 hours of at least 5 consecutive days without interruption (clause 5.1) | More beneficial The EA requires 5 consecutive days of work across the 24 hour roster cycle, while the MAIOA requires 6 consecutive days of work across the 24 hour roster cycle. This is more beneficial than the MAIOA |
| Wages (Per hour rates – no penalties added) | C14 Engineering/manufacturing employee – Level 1 $20.33 | Extruded Products – Introduction Grade $30.24 Extruded Products – Grade 1 $36.30 Moulded Products Day Shift – Grade 1 $28.61 Distribution – Grade 1 $26.47 Fabrication – Grade 1 $34.59 Maintenance Day shift Trades Assistant $34.30 Maintenance Day shift General Hand-Oil/Greaser $32.18 | More beneficial |
| C13 Engineering/manufacturing employee – Level 2 $20.92 | Extruded Products – Grade 2 $40.05 Moulded Products Day Shift – Grade 2 $29.01 Moulded Products 12 hour / 7 Day Shift – Grade 2 $40.05 Distribution – Grade 2 $28.82 Fabrication – Grade 2 $37.75 | More beneficial | |
| C12 Engineering/manufacturing employee – Level 3 $21.72 | Extruded Products – Grade 3 $41.60 Moulded Products Day Shift – Grade 3 $30.13 Moulded Products 12 hour / 7 Day Shift – Grade 3 $41.60 Distribution – Grade 3 $29.00 Fabrication – Grade 3 $39.18 | More beneficial | |
| C11 Engineering/manufacturing employee – Level 4 / Laboratory Tester $22.46 | Extruded Products – Grade 4 $44.12 Moulded Products Day Shift – Grade 4 $34.46 Distribution – Grade 4 $32.23 Fabrication – Grade 4 $43.33 | More beneficial | |
| C10 Engineering/manufacturing systems employee – Level 5 $23.67 | Fabrication – Grade 5 $49.40 | More beneficial | |
| C2 Principal Supervisor/ Trainer/Co-ordinator $30.67 | Extruded Products – Grade 6 $45.55 Moulded Products Day Shift – Grade 6 $47.56 Distribution – Grade 6 $35.41 Fabrication – Grade 6 $50.70 Moulded Products 12 hour / 7 Day Shift – Machine Operations Team Leader $47.45 | More beneficial | |
| Rostered Days Off Fabricated Products | An employer can make an agreement with the majority if employees in the enterprise about the arrangement of ordinary working hours (clause 17.5). | For the duration of this Agreement it is agreed between the Parties that a Rostered Day Off (RDO) per four weeks is the preferred method of effecting the 38 hour week. Further, it is agreed that in scheduling the RDO for any group and/or individual the Company is not encumbered in any way to meet its commitment to customers. An RDO may be taken by an employee through consultation with members of their manager with a minimum of twenty four hours’ notice of such absence. Not more than one employee of any one Team is to schedule an RDO on the same day without approval from his or her Manager (A3.5.3(a)) | More beneficial The EA provides a rostered day off which is not explicitly provided by the Modern Award |
While the primary submission of the AWU was that there was no ambiguity in the relevant provisions, the AWU submitted that if ambiguity were found, and it is then permissible to consider the evidence of surrounding circumstances as an aid to the task of interpreting the Agreement, such evidence is not admissible to contradict the language of the Agreement where it has a plain meaning, and cannot be used to disregard or rewrite the provisions in order to give effect to an externally derived conception of what the parties intention or purpose was.[4]
Contrary to the above outlined principles, the AWU submitted the Respondent in these proceedings is seeking that the terms of the Agreement be derived from facts and circumstances which are anterior to the Agreement, and that are not agreed. The Respondent’s case points to the historical manner in which Fabricators have been paid in order to establish that there was an agreement reached 30 years ago.
The AWU also noted that the Respondent relies on calculations to demonstrate that at the time an agreement was entered into in 1993/1994 regarding Fabricator’s hours and pay, that there was a substantial increase in the wages of Fabricators, and the Respondent’s case is at its very highest that this might indicate that there was some agreement reached in respect of the payment of wages and the way in which that would occur. The AWU denies any such agreement and submits that it cannot be relied upon to explain the words of the Agreement in 2021.[5]
The AWU submitted that the evidence of both Mr Burton and Mr O’Keefe did not establish an objective framework of surrounding circumstances because they were not employed at the time of the 1994 Agreement, and no objective evidence of the terms of the 1994 Agreement have been provided, and referred to paragraph [95] of berri, which provided:
[95] In circumstances where the parties to the 1999 and 2014 Agreements are quite different, and where the laundry allowance (and its payment or non-payment) was not discussed during the negotiation of the 2014 Agreement, it is difficult to see how an earlier agreement to forego the laundry allowance as part of the 1999 Agreement (assuming there was such an agreement) can reliably inform the interpretation of the 2014 Agreement.
Finally, in relation to post-agreement conduct, the AWU relied on [106], [107] and [108] of Berri, which provide:
[106] 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, consistent with the view expressed by Santow J in Spunwill, the post-contractual conduct must be such as to found a common understanding – a settled interpretation accepted by the parties.
[107] We also note that in Spunwill Santow J observed that in deciding on the weight to be given to extrinsic evidence of post contractual conduct as part of the surrounding circumstances, it was useful to refer to the following passage from the judgment of Lambert JA in the Canadian case of Re Canadian National Railways and Canadian Pacific Ltd:
‘In the case of evidence of subsequent conduct the evidence is likely to be most cogent where the parties to the agreement are individuals, the acts considered are the acts of both parties, the acts can relate only to the agreement, the acts are intentional and the acts are consistent only with one of the alternative interpretations. Where the parties to the agreement are corporations and the acts are the acts of employees of the corporations, then evidence of subsequent conduct is much less likely to carry weight. In no case is it necessary that weight be given to evidence of subsequent conduct.’
[108] In the present case, one of the parties to the 2014 Agreement is a corporation and, further, the post-agreement conduct amounted to little more than the absence of a complaint about the non-payment of a laundry allowance. Such evidence is insufficient to establish a common understanding. As Gray J observed in ALHMWU v Prestige Property Services Pty Ltd:
‘Care must be taken … to distinguish a common understanding from common inadvertence ... In order to have an understanding, it is necessary that there be a meeting of minds, a consensus. There can be no meeting of minds, no consensus, if no one has thought about the issue.’
Submissions of Vinidex
Vinidex submitted that, on the proper interpretation of the relevant provisions of the Agreement, the answer to Question 1 is “yes”, as the blended rate which is paid to Fabricators
is in full satisfaction for all of the hours which they work as a part of the standard hours under clause A3.4.1 of Appendix 3 of the Agreement. That interpretation is reinforced by the long-standing industrial history and application of identical provisions in the antecedent agreements
which have also applied to the Fabricators at the Smithfield site.
In answer to Question 2, Vinidex submits that the Fabricators have been correctly paid under the Agreement made with reference to the standard hours (as that term is defined), and Question 3 does not arise.
Vinidex submitted that the relevant provisions were ambiguous, and that ambiguity was disclosed by the varying interpretations advanced by the AWU at various times in the proceedings.
Regarding the principles that apply in construing industrial instruments, Vinidex submitted that while the starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, their interpretation turns on the language of the particular agreement, understood in the light of their industrial context and purpose. Words are not to be interpreted in a vacuum divorced from industrial realities.[6]
Vinidex submitted that reliance on the way that a particular provision has been applied in predecessor industrial instruments has long been employed in their construction, and observed that in Glover v Tip Top Bakeries[7], Layton J endorsed the following proposition:
“… Where a provision has appeared in an award or succession of awards for a lengthy period of time and been acted upon without challenge by parties in a certain manner, then if the award is reasonably capable of bearing such a meaning the court ought, in the normal course, to adopt it as its proper meaning (O’Donnell v Walter Buchanan Ltd [1947] NZLR 906 at 910). In the course of this case Fair J accepted the dictum contained in the earlier decision of Butler v Lepperton Co-operative Dairy Factory Co Ltd [1946] NZLR 434 to the effect that – ‘It has been held repeatedly by this court that if a custom is proved which is not necessarily inconsistent with an award, such award may be treated as having tacitly sanctioned the custom, and should be interpreted in the light of the custom…” (emphasis added)
Vinidex submitted that there were four reasons why the construction they advanced was the correct one. They were:
1. The context in the provisions of the Agreement;
2. The longstanding industrial history and the antecedent agreements which have applied to Fabricators at the Smithfield site with the same arrangements;
3. The circumstances of the blended or loaded rate and how it came into being, and the understanding expressed by all employees who gave evidence for the union’s case; and
4. The acceptance that in 1993, the Fabricators who gave evidence accepted that there was a change, and they started receiving a higher rate than the previous ordinary or base rate which they received.
Regarding the context of the provisions, a clear reading of clauseA3.4.1 of Appendix 3 discloses that it sets out the whole of the standard hours to be worked by Fabricators. It refers to additional amounts which are taken into account in respect of the standard hours and in lieu
of any entitlement to a rostered day off. In effect, on a proper reading of the clause, read in context, the blended rate which is “paid” to employees in the fabrication department is in full satisfaction for working the standard hours arrangement. There is no warrant nor basis to read into the clause additional words entitling the Fabricators to receive an additional payment for the rostered overtime component.
Regarding industrial context and history, Vinidex submitted that the standard hours arrangement had been in place since approximately August 1993. In each Enterprise Agreement there was no change to the standard hours nor the manner of payment made to the Fabricators. The industrial history and antecedent agreements all supported the construction urged by Vinidex as to the identical provisions in the Agreement.
Vinidex submitted that since 1993, Fabricators have worked consistent standard hours which is comprised of 38 ordinary, two hours which pre-1993 went towards the rostered day off, and then four hours rostered overtime on the Monday, and since that time Fabricators have also not received any entitlement or rostered day off, have not received any separate payment for the standard hours, including the rostered overtime, but they did receive separate payment for any additional overtime worked.
Vinidex submitted that even on the AWU’s evidence there is an acceptance that there was a loaded rate with picked up overtime in 1993. That was confirmed in the working hours review of Mr Heummer, in which there 13 Fabricators employed in 2002/2003, and responses were received from 13 Fabricators. That evidence supported that there was some level of engagement with Fabricators to consider the change in the spread of hours and to understand the impact on pay and what it meant for pay and that there was a continuation of the standard hours arrangement at the time.
Consideration
The task of enterprise agreement interpretation is directed at finding the common intention of the parties by reference to what a reasonable person would understand the parties intended from the words used in their agreement. The starting point is the ordinary grammatical meaning of the words followed by any contextual indicators from the agreement as a whole. In James Cook University v Ridd,[8] Griffiths and SC Derrington JJ held:
The relevant principles applicable to the interpretation of an enterprise agreement may be stated as follows:
(i) The starting point is the ordinary meaning of the words, read as a whole and in context (City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (City of Wanneroo v Holmes); City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 at [53] (City of Wanneroo v AMACSU); WorkPac Pty Ltd v Skene (2018) 264 FCR 536; 280 IR 191 at [197] (WorkPac v Skene)).
(ii) A purposive approach is preferred to a narrow or pedantic approach — the framers of such documents were likely to be of a “practical bent of mind” (Kucks v CSR Ltd (1996) 66 IR 182 at 184 (Kucks v CSR); Shop Distributive and Allied Employees Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16]; WorkPac v Skene at [197]). The interpretation “turns upon the language of the particular agreement, understood in the light of its industrial context and purpose” (Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; 138 IR 286 at [2]).
(iii) Context is not confined to the words of the instrument surrounding the expression to be construed (City of Wanneroo v AMACSU at [53]). It may extend to “… the entire document of which it is a part, or to other documents with which there is an association” (Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518; 46 IR 128 at 134 (Short v FW Hercus); Australian Municipal, Administrative, Clerical and Services Union v Treasurer of the Commonwealth (1998) 82 FCR 175 at 178; 80 IR 345 at 346-347).
(iv) Context may include “… ideas that gave rise to an expression in a document from which it has been taken” (Short v FW Hercus at 518; 134).
(v) Recourse may be had to the history of a particular clause “Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form …” (Short v FW Hercus at 518; 135).
(vi) A generous construction is preferred over a strictly literal approach (George A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504; City of Wanneroo v AMACSU at [57]), but “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties” (City of Wanneroo v Holmes at 380).
(vii) Words are not to be interpreted in a vacuum divorced from industrial realities but in the light of the customs and working conditions of the particular industry (City of Wanneroo v Holmes at 378-379; WorkPac v Skene at [197]).
It is clear from the respective positions of the parties that they assert that the Agreement is susceptible to more than one meaning, and I accept the submission of Vinidex that the ambiguity in the relevant provisions of the Agreement is disclosed by the varying interpretations advanced by the AWU at various times in the proceedings, and the existence of a contrary but arguable interpretation advanced by Vinidex.
In Berri, the Full Bench, after drawing focus to the ordinary meaning of the words used and the context of the agreement as a whole, at Principles 7 and 10 emphasised that ambiguity in a provision within an enterprise agreement must be identified before one is to have regard to evidence of the surrounding circumstances. However, principle 8 makes it clear that, in determining whether ambiguity exists, one may have regard to evidence of the surrounding circumstances. That is, such evidence can be used to identify and resolve any ambiguity.
An important contextual consideration in the interpretation of the relevant provisions of the Agreement is the historical origin of the provisions. The terms of the Agreement are actually of considerable antiquity and predate by approximately14 years the involvement of the AWU in enterprise agreements at Vinidex. Mr Lowe, Mr Micallef and Mr Driver have only been members of the AWU for about one year. That period of absence of involvement by the AWU in negotiations on-site in general, and in the representation of Fabricators in particular, cuts two ways. The AWU cannot directly assist in the intention of the parties to the 1994 Agreement. However, the AWU cannot be seen to be part of the application of any common understanding from 1993 to recent times.
This is certainly a matter where recourse may be had to the history the relevant clauses, such clauses having been produced and thereafter repeated over a significant period of time, and the circumstances allow the conclusion that the clauses in the Agreement are the product of a history.
The available evidence regarding the events of 1993 and 1994 is, quite understandably due to the effluxion of time, less than comprehensive. What evidence is available, however, supports the conclusion that the standard working hours arrangement for Fabricators was entered into at that time. In particular:
(a) Mr Lowe’s evidence at the Hearing, which was consistent with that of Mr Curmi (also extracted below), and Mr Driver and Mr Micallef, was:[9]
All right. Now, you talk of the standard hours in paragraph 5 and at 6, you say that these are the only hours you’ve worked since – is it 1993?--- Correct.
And since 1993, there has been a blended rate which has been applied? --- Blended rate is a term I only heard a year ago. I have never heard that term blended rate before.
Have you heard the term loaded rate? I think that’s a term that you use, is it? --- Yes.
All right. So in other words, well, I will come back to that. But this loaded rate, and I will refer to it as that as well, this loaded rate was implemented in 1993 at the time that the new work arrangements were implemented? The standard hours?--- Sorry, I - - -
Sorry, I apologise if I am being a bit clunky. The loaded rate?--- Yes?
That we just spoke of? --- Yes?
That came in at the same time as the standard hours were implemented in 1993? --- Yes. Yes.
And what the loaded rate meant was that you were paid a rate higher than what was your earlier base rate of pay? --- Yes.
Yes. And your leave entitlements were also being paid based on the loaded rate, not the – not a lower base rate? --- That’s right. Yes.
And no other department has a loaded rate which compensates for overtime? --- I don’t have a great deal to do with other departments?
Sorry, I - - -? --- I just don’t have anything to do with other departments. So I don’t know. I don’t think so.
All right. You don’t think so. You will accept though, that this particular arrangement, this is particular to the fabrication department? --- Yes.
It does not apply to any other department? --- No. Not as far as I am aware.
Yes, and it’s been in place since 1993? --- Yes.
And it’s been applied under successive industrial instruments or agreements since 1993? --- Yes.
All right. And this loaded rate, and if I use blended rate referring to, I think that you’ve designated a loaded rate or – this factored in overtime? --- It’s - - -
It factored in overtime? --- What sort of overtime?
Well, perhaps if I can ask you to explain that. In paragraph – so of your reply statement at paragraph 7, 8, I think. So see at paragraph 7, sorry, last sentence, ‘Other departments may have loaded rates, however, these do not compensate for mandatory overtime.’ Do you see that? --- Mandatory overtime. Yes.
Yes? --- Yes.
So by this, you mean, or what you are saying is that your rate compensates or picks up from mandatory overtime? --- Mandatory overtime. Yes.
Yes. So the loaded rate factors in the mandatory overtime? --- Yes.
Yes. And you are aware aren’t you, that where you work overtime in addition to the mandatory component, you get separate payment for that? --- Sorry, can we - - -
So you’ve got your standard hours? --- Yes.
Which will include four hours mandatory overtime? --- A week?
Yes? --- Yes.Now, if you work overtime in addition to that? --- Yes.
You get a separate payment for that. That’s right? --- Yes, yes, correct.
All right. And so what happened in 1993 and subsequently, was when you have the loaded rate applying compared to other departments which didn’t have the loaded rate picking up mandatory overtime. Your base rate was increased relative to what people in other departments were getting for this – for their ordinary hours? --- To be honest, I don’t know what other departments – again, it’s none of my business. I have never - - -
But you know that their rates don’t pick up or include any mandatory overtime complaint? --- No, no. That’s right. Yes.
All right. Now, it was also in 1993 when RDOs or Rostered Days Off for the fabrication department, stopped? --- Yes.
And the loaded rate also picked up the rostered day off component? --- Allegedly.
All right. Was it your understanding that it would pick it up? --- It - - -
Just, I want to understand what you mean by allegedly? --- It – I wasn’t a part of a lot of the negotiations because my plan was not to remain with the company. So I only really got interested in it, when I decided to remain with Vinidex long term. I was not planning to stay at Vinidex. I wasn’t a part of the negotiations and what was said.
(b) Mr Curmi’s’s evidence at the Hearing was:[10]
I understand. Yes. All right. Now, at paragraph 5, you talk about the standard work hours which you had been working - - -? --- Yes.
- - - in the fabrication department, and you say that these started applying in 1993? --- Yes.
When an enterprise agreement came into operation. So I think you say that in paragraph 6. The roster came into effect when the first enterprise agreement came into force in Vinidex. That’s right? --- Yes, yes.
Yes. And at the time that you started this new roster or work - standard work hours, as they were called. You started receiving a loaded rate? --- Sorry. I didn’t - - -
You start - you see - you received a different hourly rate when you started working the new standard hours? --- Yes.
And that was a loaded rate? --- Yes. What I can understand you, yes.
Sorry? --- I said what I can understand you, yes.Yes? --- They include everything.
Yes. What do you mean - so going back to 1993, they gave you this loaded rate which you said includes everything. That’s right? --- Yes.
Yes. All right. By that, you mean it includes - there was a compulsory four-hour overtime as a part of the standard hours. It includes that? --- Yes.
It also includes payment for a rostered day off - - -? --- Yes.
- - - because before 1993, you used to get a rostered day off? --- That’s right.
But after 1993, you no longer did? --- No longer.
Yes because on your understanding, this was picked up by the loaded rate? --- Yes.
(c) The evidence of Mr Barton in his Statement, his Supplementary Statement and in his cross-examination, where his evidence was that around the time of the introduction of the standard working hours arrangement for Fabricators, they received hourly pay increases of between 28% and 48%, as shown in the below table (With Mr Curmi being “Person 1”, Mr Lowe being “Person 2”, and Mr Micallef being “Person 4”):
(d) While Mr Burton candidly conceded that he could not state categorically why the above pay increases occurred, and that he had only limited supporting documentation outlining various pay rates at particular times, there is no doubt that at the time the standard working hours arrangement for Fabricators was implemented, significant increases to the standard hourly rates for Fabricators followed by way of the use of blended/loaded rates. That interpretation is supported by the subsequent conduct of the parties for 30 years accepting payment of the blended/loaded rates in full satisfaction of wages of Fabricators for standard hours pursuant to clause A3.4.1, Hours of Work, of Appendix 3 of the Agreement.
I note that caution is expressed regarding the availability and use of subsequent conduct of parties in resolving ambiguity in the interpretation of agreements. In Shop Distributive and Allied Employees’ Association v Woolworths Ltd,[11]Gray J. held:
Counsel for the applicant contended that the past conduct of the parties could be relied upon as an aid in the construction of the Certified Agreement. There is authority that, if a provision has appeared in a series of agreements between the same parties, and if they can be shown to have conducted themselves according to a common understanding of the meaning of that provision, then it can be taken that they have agreed that the term should continue to have the commonly understood meaning in the current agreement. See Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Assn (1958) 1 FLR 248 at 251 per Spicer CJ, at 254 per Dunphy J and at 257 per Morgan J, and Printing and Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 452–3. It is necessary to take great care in the application of this limited principle, to avoid infringing the general principle that the conduct of parties to an agreement cannot be taken into account in construing the agreement. For the limited principle to operate, there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons, such as common inadvertence to its true meaning. [Emphasis added]
In Berri, the relevance of subsequent conduct was addressed at Principle 15, where the Full Bench observed:
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 matter the subject of these proceedings stands in contrast to the facts in Berri. In Berri, there was no evidence as to why the laundry allowance had stopped being paid in 1999, and the 1999 and 2014 Agreements were quite different.[12] In this matter there are consistent terms across each agreement applying at Vinidex, and clear evidence of the agreement to implement the standard working hours arrangement for Fabricators in 1993.
I note that the AWU referred to the Form F17 filed in support of the Agreement stating that the wages per hour with no penalties added were the same wages that appear in the Agreement. That statement, while containing some infelicity of expression, also informed Fabricators that there were no changes made to the provisions relating to Fabricators. I do not consider that the Form F17 could have misled the Fabricators.
I have seen no need to refer to the 2002 – 2003 Working Hours Review, or the evidence of Mr O’Keefe and Mr Huemmer, in forming my conclusions, as the matters relied on for such conclusions are of considerably more weight. I note, however, that such evidence is consistent with my conclusions.
Conclusion
On a proper reading of clause A3.4.1, Hours of Work, of Appendix 3 of the Agreement, read in context, the blended/loaded rate which is paid to employees in the Fabrication department is in full satisfaction for working the standard hours arrangement.
The questions posed by the parties should be answered in the following terms:
(a) Question 1: yes;
(b) Question 2: Employees do not receive any additional or differently calculated payments relating to the standard hours; and
(c) Question 3: does not arise.
DEPUTY PRESIDENT
Appearances:
For the Applicant, Ms Doumit, S and Ms Hawach, R of the AWU.
For the Respondent Mr Rauf, B (counsel) from State Chambers, instructed by Ms Barrat, K from HFW Legal
Hearing details:
2023
04 August
Sydney (in person)
[1] Transcript PN 1618.
[2] Transcript PN 1667.
[3] (2017) 268 IR 285.
[4] Berri at [65].
[5] Berri at [84].
[6] WorkPac Pty Ltd v Skene (2018) 264 FCR 536.
[7] (1984) 8 IR 308 at 311.
[8] [2020] FCAFC 123, 278 FCR 566, 298 IR 50 at [65] per Griffiths and SC Derrington JJ.
[9] Transcript PN276 to 308.
[10] Transcript PN 421 to 434.
[11] (2006) 151 FCR 513.
[12] Berri at [83], [84] and [95].
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