Australian Workers' Union v Alcoa Portland Aluminium Pty Limited T/A Portland Aluminium
[2022] FWC 914
•26 APRIL 2022
| [2022] FWC 914 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Workers’ Union
v
Alcoa Portland Aluminium Pty Limited T/A Portland Aluminium
(C2021/8671)
| DEPUTY PRESIDENT MASSON | MELBOURNE, 26 APRIL 2022 |
Application to deal with a dispute under an enterprise agreement.
On 17 December 2021, The Australian Workers’ Union (AWU) applied to the Fair Work Commission (the Commission) to deal with a dispute pursuant to s.739 of the Fair Work Act 2009 (the Act) under the dispute resolution procedure at clause 19 of the Portland Aluminium (Operators) Enterprise Agreement 2021[1] (the 2021 Agreement). The Respondent in the matter is Alcoa Portland Aluminium Pty Ltd (Alcoa).
The dispute is in relation to changes proposed by Alcoa to the 2010 Victorian Operations Drug and Alcohol Policy (the 2010 Policy) which currently applies at the Portland Aluminium Smelter. The Applicant contends that the changes proposed to the 2010 Policy would effectively adopt the drug and alcohol policy that applies in Alcoa’s Western Australian Operations. It further contends that the proposed changes would “erode, undermine or disadvantage employees pay or entitlements” within the meaning of clause 6.4 of the 2021 Agreement and is therefore impermissible. Alcoa resists this contention.
Jurisdiction
Section 739 of the Act empowers the Commission to deal with certain disputes under enterprise agreement dispute settlement terms. The 2021 Agreement contains such a term, which is clause 19 ‘Avoidance of Disputes/Dispute Settlement Procedure’ (the DSP).
It was not contested that the question to be determined by the Commission, which is set out below, is capable of constituting a dispute over a matter arising under the Agreement. Nor was it in dispute that the steps taken by the parties to resolve the dispute constituted compliance with the DSP of the 2021 Agreement. Having regard to the information in the Form F10 application and the views of the parties, I am satisfied that the Commission has jurisdiction to deal with the dispute, including by arbitration as provided by clause 19.2 of the Agreement.
Conciliation before the Commission did not resolve the dispute and the matter is now to be determined by arbitration.
The Hearing
The matter was listed for hearing before me on Tuesday, 5 April 2022 in advance of which the parties filed statements and material on which they intended to rely in accordance with directions issued.
At the hearing, the Applicant was represented by Ms Leyal Aksu, Legal Officer of the AWU who called Mr David Thomas – Process Operator at the Alcoa Portland Aluminium Smelter to give evidence.
Alcoa sought and was granted permission to be legally represented pursuant to s.596(2) of the Act by Mr Mark Vallence of Heelan & Co, who called the following witnesses:
· Ms Courtney Alexander – Human Resources Manager at the Alcoa Portland Aluminium Smelter.
· Mr Nicholas Bacon – Human Resources Manager at the Alcoa Pinjarra Alumina Refinery.
Issue for determination
The parties agreed on the following question for determination by the Commission:
‘Will Alcoa Portland Aluminium’s proposed modifications to its Drug and Alcohol Policy “erode, undermine or disadvantage employees pay or entitlements” as stated at clause 6.4 of the Portland Aluminium (Operations) Enterprise Agreement 2021’
Agreement provisions
As stated above, the dispute is in relation to the meaning and effect of clause 6.4 of the 2021 Agreement. Clause 6 relevantly states as follows;
“6. NO DISADVANTAGE TO EMPLOYEES
6.1 This Agreement meets the requirements of the NES and any supporting regulations as well as other relevant provisions of the Act.
6.2 Subject to the application of Sections 29(2) and (3) of the Act, this Agreement prevails over State legislation to the extent of any inconsistency.
6.3 This Agreement will be stored electronically for employee access.
6.4 Company policies apply to employees covered by this Agreement. These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement. Without limiting the operation of other terms of this Agreement, newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage employees pay or entitlements. Such policies include, but are not limited to Drug & Alcohol, Parental Leave, and Long Service Leave and the Rehabilitation and Return to Work Policy.”
Both parties contend that in order to properly construe clause 6.4, if I form the view that there is ambiguity, it may be necessary for me to have regard to the history of clause 6. For the sake of completeness, I have also set out below the relevant clause in its earlier forms from prior agreements.
A version of the clause was first included in the Portland Aluminium (Operators) Agreement 2011[2] (the 2011 Agreement). Relevantly to the present dispute, clause 6(d) was in the following terms;
“6. NO DISADVANTAGE TO EMPLOYEES
…
(d) Company policies apply to employees covered by this agreement. These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement. Newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage entitlements under this Agreement. Such policies include but are not limited to Drug & Alcohol, Parental Leave and Long Service Leave.”
Flowing from negotiations for the Portland Aluminium (Operators) Enterprise
Agreement 2014[3] (the 2014 Agreement) changes were made to clause 6(d) which became clause 6.4 in the 2014 Agreement and stated as follows;
“6. NO DISADVANTAGE TO EMPLOYEES
…
6.4 Company policies apply to employees covered by this Agreement. These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement. Without limiting the operation of other terms of this Agreement, newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage employees pay or entitlements. Such policies include but are not limited to Drug & Alcohol, Parental Leave, and Long Service Leave.
The Victorian Operations Rehabilitation and Return to Work policy specifically applies as current on certification of this Agreement.”
Background and evidence
The drug and alcohol policy
Alcoa first introduced a drug and alcohol policy in its Victorian operations in 2003 (the 2003 Policy) which featured saliva testing for drugs and a blood alcohol concentration (BAC) threshold of 0.05%. According to Mr Thomas, the policy was developed in conjunction with AWU representatives[4]. In February 2010, Alcoa approached staff at the Portland Smelter and the AWU in relation to changes that it wished to make to the 2003 Policy. After negotiations between the parties, changes were made to the 2003 Policy, the most notable change being the lowering of the BAC threshold from 0.05% to 0.03%. The revised policy was reflected in the 2010 Policy which was issued in July 2010 and has remained unchanged since[5].
The key features of the 2010 Policy[6] may be summarised as follows;
· one expressed objective of the policy is that of the provision of education, awareness training and support for all employees to overcome the inappropriate use of drugs and/or alcohol;
· a further stated objective is that of ensuring an effective management, education and rehabilitation process is available to all employees with a drug and/or alcohol problem;
· the testing method to be used is that of saliva testing with the exception of alcohol testing which is to be undertaken via breath analysis;
· testing for alcohol is conducted against a BAC equivalent of 0.03 g/100ml and that test results at or above that threshold are deemed a positive result;
· substances tested for by saliva testing include amphetamines, barbiturates, benzodiazepines, cannabinoids, methadone, opiates with such testing to be undertaken in line with Australian Saliva Drug Testing Standards AS4760:2006;
· employees taking prescribed medication while not compelled, may declare their prescription medication to Alcoa;
· the forms of testing include; for cause testing, testing for suspected impairment, and periodic routine testing, introduction of the latter being subject to holding discussions with key stakeholders to review the policy prior to implementation of periodic routine testing;
· a “three strikes” approach to managing positive results is applied which includes the following steps;
1. after the first positive result, a formal warning is issued, the employee is required to participate in a 6 month testing program and it is suggested that the employee should seek medical and/or counselling help;
2. after a second positive result, a final warning is issued, the employee is required to participate in a 6 month testing program and the employee must undertake counselling and/or seek medical help and provide proof of same;
3. a third positive result may result in termination of employment;
· disciplinary records relating to positive results that are more than two years old will be removed from an employee’s personal file upon an employee’s request;
· the program will be subject to formal periodic reviews in which employees, their OH&S representatives and unions will be involved and that their views will be respected and taken into account prior to any decision to change the policy; and
· any dispute in relation to the policy is able to be progressed in accordance with the dispute resolution process of the relevant industrial instrument.
The changes now proposed to the 2010 Policy would, if implemented, align the Portland Smelter drug and alcohol policy with that applying in Alcoa’s Western Australian Operations as reflected in the Drug and Alcohol Policy (Western Australian Operations) (WAO)[7] (the WA Policy). The key proposed changes[8] to the 2010 Policy are as follows;
·drug testing to be undertaken by either urine and/or saliva testing plus confirmatory lab testing;
·the BAC testing threshold is to be reduced from 0.03% to 0.00%;
·prescription medication must be disclosed to Alcoa medical staff;
·the “three strikes” approach to managing positive results is to be removed and replaced by an approach that may result in disciplinary action up to and including dismissal for a first positive result;
·the testing program following a first or second test result under the 2010 Policy to be removed and replaced with a ‘Return to Work Program’ which would be set and co-ordinated by the medical centre and would apply to those employees that are not dismissed after a positive result;
·testing may be undertaken on a random, blanket and for cause basis as well as providing for testing of mobile equipment operators required to undertake periodic medical evaluations;
·testing to be introduced that may target employees working on high risk activities in addition to random testing; and
·the policy review process provided for in the 2010 Policy will be removed.
The AWU provided a document in the proceedings in which it identified a number of ‘detriments’ that would flow from the changes to the 2010 Policy[9] proposed by Alcoa. Ms Alexander who gave evidence in the proceedings, conceded during cross examination that if implemented, the proposed changes to the 2010 Policy would be perceived by employees as less favourable.
The ‘No Disadvantage to Employees’ clause
Mr Thomas gave evidence that he has been involved in negotiations for each of enterprise agreements since 2003 relevantly including negotiations for the 2011, 2014, 2018 and 2021 Agreements. He says that leading into the 2011 Agreement negotiations there had been ongoing concerns on the part of employees regarding Alcoa’s introduction of new policies or making changes to existing policies without proper negotiation or consultation[10]. Mr Thomas states that employees and the AWU wanted to address those concerns in negotiations for the 2011 Agreement, the preference being that the proposed ‘No Disadvantage’ clause would apply to all policies of Alcoa[11]. The scope of what was being sought by the AWU can be seen in an email sent to all AWU members by senior delegate Peter King on 3 March 2011 where the AWU’s proposed ‘No Disadvantage’ clause was set out, and which relevantly stated in respect of Company policy changes as follows;
“……Newly introduced or modified Company policies will not, in relation to the employees covered by the Agreement, or current conditions of employment, erode, undermine, or disadvantage entitlements or conditions of employment under this Agreement. Such policies include but are not limited to, EPSL, Drug and Alcohol, Parental Leave and Long Service Leave.”[12]
Mr Thomas acknowledged that Alcoa was unwilling to agree to the above proposed clause or to include a list of all policies in the 2011 Agreement but from employees’ perspective it was understood that the listed policies, including the 2010 Policy, would be protected in terms of the entitlements contained therein[13].
Mr Thomas went on to state that it was his belief that by inclusion of clause 6(d) in the 2011 Agreement, the listed policies would not be able to be changed without Alcoa negotiating with employees and the AWU. Further, if the listed policies were changed, they could not be changed such that they diminished existing rights or placed a more onerous burden on employees[14]. Mr Thomas states that he understood the term “entitlements” where it appeared in the 2011 Agreement to mean any ‘rights, conditions or benefits’[15]. Mr Thomas acknowledged that clause 6(d) in the 2011 Agreement fell short of what employees were seeking but was a ‘step in the right direction’.
During cross-examination in respect of the 2011 Agreement, Mr Thomas gave the following relevant evidence;
· an initial AWU claim that any new policies or policy changes proposed by Alcoa be subject to agreement was withdrawn;
· Alcoa was not willing to include all policies in the Agreement;
· the clause was directed at protecting conditions in the named policies and that employees when voting on the 2011 Agreement understood that to be the effect of the clause;
· he agreed that the word “include” where it appears in the last sentence of clause 6.4 of the 2011 Agreement meant that the obligations set out in clause 6.4 were not limited to the named polices;
· he could not recall why the AWU sought to include wording that protected both “entitlements” and “conditions of employment” or what the distinction between the two terms was when in his mind they had the same meaning;
· he accepted that there may be an inconsistency in the AWU position of having pressed for inclusion of the words “conditions of employment,” having withdrawn that claim and now contend that term has the same meaning as “entitlements;” and
· he accepted that a compromise position in the wording, that being “entitlements under this Agreement” was accepted by the AWU and employees.
Mr Bacon, who gave evidence for Alcoa, states that he participated in the negotiations for the 2011 and 2014 Agreements in his capacity as HR Business Partner. He says that when he commenced in January 2011 at the Portland Smelter, negotiations over the 2011 Agreement had already commenced. While there had at that point been discussion in relation to the introduction of a new clause dealing with the introduction of new or modified policies, the terms of the clause were not yet settled[16].
Mr Bacon says that the Company were prepared to include a term that would have required consultation with the AWU over new policy introduction or changes to existing policies. However, the AWU were seeking a much broader clause that would have had the impact of requiring agreement on the introduction of new policies or the variation of existing polices, not only in respect of entitlements but also conditions of employment[17]. Alcoa offered to include specified policies in the 2011 Agreement[18] but the parties did not agree to the incorporation of specific policies but rather, agreed to the wording found in clause 6(d) of the 2011 Agreement which Mr Bacon says;
(1)did not require the AWU’s agreement to the introduction of new policies or changes to existing policies; and
(2)the prohibition in clause 6(d) on erosion, undermining or disadvantage was confined to “entitlements under the Agreement” and not the broader “entitlements or conditions of employment under this Agreement” as had been sought by the AWU.[19]
Mr Bacon states that during negotiations for the 2011 Agreement it was stated to him that an employee concern that was driving the push for a ‘No Disadvantage’ clause was the potential for Alcoa’s global corporate office to make cost cutting decisions that impacted the Portland Smelter, that being linked to its announcement in or around 2009 that it would cut costs by 5%[20]. Mr Bacon further states that it was commonly recognised by the negotiating team that the protection afforded by clause 6(d) was limited to those items characterised as entitlements under the 2011 Agreement including;
· annual leave;
· personal leave;
· compassionate leave;
· jury service leave;
· income protection;
· part-time employment;
· meal breaks; and
· proportionate leave on termination of employment.
Mr Thomas states that during negotiations for the 2014 Agreement employees and the AWU sought to build on the 2011 Agreement in terms of the ‘No Disadvantage’ clause and achieved the removal of the words ‘disadvantage entitlements under this Agreement’ where it had appeared in clause 6(d) of the 2011 Agreement, to be replaced with the words ‘disadvantage employees pay or entitlements’. Mr Thomas states that the effect of the change was to remove any doubt that any rights conferred by the policies listed in clause 6.4 of the 2014 Agreement would be protected[21].
During cross-examination in respect of the 2014 Agreement negotiations Mr Thomas agreed that;
· employees and the AWU initially sought to replace the term “entitlements” where it appeared in clause 6(d) of the 2011 Agreement with the word “employees”, that change being sought on the basis of advice from the AWU, although he could not recall why the wording change was sought;
· the above-referred change was not agreed by Alcoa;
· Alcoa would not accept inclusion of the term “conditions of employment” but did agree to include the term “pay and entitlements,” which employees and the AWU accepted;
· that clause 6.4 in the 2014 Agreement was the best that employees and the AWU were able to achieve but those changes did not go as far as they wanted; and
· the changes made in the 2014 Agreement extended protection of pay and entitlements to matters not dealt with in the Agreement including for example NES entitlements.
Mr Bacon states that clause 6(d) of the 2011 Agreement was the subject of extensive negotiation during bargaining for the 2014 Agreement. He says that the content of what developed into clause 6.4 in the 2014 Agreement became increasingly contentious as negotiations progressed and it was one of the last issues resolved[22].
According to Mr Bacon, the initial claim of the AWU to replace the word “entitlements” where it appeared in clause 6(d) of the 2011 Agreement with the word “employee” was intended to expand the scope of protections for employees[23]. An ‘Outstanding Issues’ document prepared by the AWU as of 10 April 2014 sets out the AWU’s position on outstanding matters, including the ‘No Disadvantage’ clause[24].
Further drafts of clause 6.4 were provided by the AWU between April and 14 July 2014 including a draft on that later date which relevantly stated as follows;
“….Newly introduced or modified company policies will not, in relation to the employees covered by this agreement, erode, undermine, or disadvantage employees, including their entitlements under this agreement. i.e. Parental Leave, Drug & Alcohol, LSL Policy or Return to Work policies.”[25]
Mr Bacon states that the various drafts provided by the AWU in the above period were not acceptable to Alcoa because they would have significantly impacted Alcoa’s ability to implement change[26].
As of 17 July 2014, the AWU’s position in relation to the proposed wording for clause 6.4 had further evolved so that the relevant protections sought were in respect of “pay, conditions or entitlements” in lieu of “entitlements” where that term appeared in the 2011 Agreement. In an email from Matthew Gleeson (Employee Relations Director for Alcoa) to AWU Organiser Ronnie Hayden on 17 July 2014, Mr Gleeson expressed concern over the meaning of the term “pay, conditions, or entitlements” as sought by the AWU and stated that it was too broad[27].
The parties ultimately agreed to the wording reflected in clause 6.4 of the 2014 Agreement. The relevant changes made to clause 6(d) of the 2011 Agreement in clause 6.4 of the 2014 Agreement were as follows;
(a)the words “Without limiting the operation of other terms of this Agreement…” were included at the commencement of the second sentence of the clause;
(b)the words “….employees pay or…” were included before the word “entitlements” towards the end of the second sentence of the clause;
(c)the words “under this Agreement” at the end of the second sentence of clause 6(d) in the 2011 Agreement were removed; and
(d)the words “The Victorian Operations Rehabilitation and Return to Work policy specifically applies as current on certification of this Agreement” were included at the end of clause 6.4.
Mr Bacon states that he recalls the modified wording in clause 6.4 of the 2014 Agreement referred to above at [32](b) being modified for two reasons. The first reason was said to be because of employee concern at a pay freeze that had been imposed on staff not covered by the enterprise agreement in circumstances where the smelter was seeking to rein in costs. The second reason related to a concern that changes to the rehabilitation/return to work policy could impact pay and entitlements of employees[28].
Mr Bacon further states that the wording changes referred to above at [32](c) were to allow for the protection of entitlements that existed outside the Agreement, such as long service leave and to guard against changes to National Employment Standards (NES) entitlements that might be made by the then recently elected federal coalition government[29]. An explanation of the terms of the 2014 Agreement provided to employees in the period prior to the ballot for approval of the Agreement relevantly stated that the clause remained largely unchanged from the 2011 Agreement save for the agreed wording changes.
Mr Thomas states that negotiations for the 2018 Agreement led to the addition of the Rehabilitation and Return to Work Policy to the policies listed in clause 6.4. Other elements of clause 6.4 remained unchanged[30]. Clause 6.4 in the 2021 Agreement is in identical terms to the predecessor clause in the 2018 Agreement[31].
Case for the AWU
The AWU submit that the 2010 Policy confers specific benefits to employees covered by the 2021 Agreement and that if the 2010 Policy were varied to reflect the terms contained in the WA Policy, more onerous drug and alcohol policy obligations would be imposed on employees at the Portland Smelter. The AWU have identified a number of detrimental changes[32] that would flow from adoption of the WA Policy at the Portland Smelter including those changes set out above at [16].
The AWU contend that the ‘No Disadvantage’ clause initially sought by the AWU in 2011;
· sought to capture all entitlements without making any distinction between entitlements and pay, as evident by inclusion of the words “pay” in the 2014 Agreement and later agreements;
· the clause also sought to limit the relevant entitlements to only those contained within the 2011 Agreement; and
· following negotiation of the 2011 Agreement a version of the initial clause 6(d) has been included in all subsequent agreements.
The AWU submit that during negotiations for the 2014 Agreement they successfully negotiated removal of the words “under the Agreement” as it appeared in in the third sentence of clause 6(d) in the 2011 Agreement. This, the AWU says, had the effect of extending protections to “pay and entitlements” beyond the terms of the Agreement and the polices listed in clause 6.4 of the 2014 Agreement.
Clause 6.4 of the 2014 Agreement was then retained and subject to minor changes in the 2018 Agreement with the addition of a reference to the Rehabilitation and Return to Work Policy which the AWU contend was included to extend the protections of entitlements to those contained in that policy. The terms of clause 6.4 in the 2018 Agreement were then carried over in identical terms into the 2021 Agreement.
The AWU submit that through successive enterprise bargaining in respect of clause 6.4, the AWU and its members have sought, in a best case scenario to;
· prevent Alcoa from unilaterally introducing new policies or varying existing policies;
· protect and preserve all benefits relating to the employment relationship that were set out within policy; and
· fully capture and include in the agreement all workplace policies that applied.
The AWU also contend that they have sought, through negotiations, to accommodate Alcoa’s concerns and the outcome of those negotiations has been a ‘middle ground’ which;
· allows Alcoa to amend policies or introduce new policies subject to it consulting prior to the introduction of new or amended policies;
· prevents Alcoa from introducing new or modified existing policies which have the effect of eroding, undermining or disadvantaging employees; and
· protects and preserves those benefits set out in the policies that are specifically referenced in clause 6.4, including the drug and alcohol policy.
The AWU further contend that AWU members believed that clause 6.4 and its predecessor clauses in the 2018, 2014 and 2011 Agreements had the effect of protecting the benefits conferred by the listed policies and that those listed policies, including the 2010 Policy, would not be changed in any way that caused disadvantage to employees.
In support of its construction the AWU submit that the term “entitlement” where it appears in clause 6.4 of the 2021 Agreement should be given its ordinary meaning as defined in the Macquarie Dictionary;
“that to which one is entitled, as part of a contract, will, employment arrangement etc”
The AWU also submit that an ‘entitlement’ is synonymous with a right, claim or privilege and that antonyms of ‘entitlement’ include loss, hindrance, disadvantage and detriment.
The AWU submit that it is significant that the protections provided under clause 6.4 were broadened in the 2014 Agreement to include “pay and entitlements” as opposed to the previous narrower scope of “entitlements under this Agreement” which appeared in the 2011 Agreement. This, the AWU submit, gave effect to the broader meaning of the word “entitlements” rather than being limited to pay or specific minimum legal entitlements such as leave or allowances.
The AWU also contend that in order for the last sentence of clause 6.4, which refers to specific policies, to have any work to do, there must be some protection afforded to the terms of the specified policies. It poses the rhetorical question, what purpose is served by the current clause 6.4 specifically mentioning the Drug and Alcohol Policy if it was not intended to confer a benefit? The AWU answers that question by submitting that clause 6.4 was always intended to protect the entitlements set out in the specified policy documents, in the present case being the 2010 Policy.
The AWU argue that the plain and ordinary meaning of the term “entitlements” as defined and earlier set out should be preferred. Applying that plain meaning leads to a conclusion that the changes proposed by Alcoa to the 2010 Policy would erode, undermine or disadvantage employees in respect of that to which employees are entitled to under the terms of the 2010 Policy. Such changes the AWU contend are detrimental and are therefore impermissible under clause 6.4 of the 2021 Agreement. The AWU consequently submit that the answer to the question posed is “yes.”
Case for Alcoa
Alcoa submit that clause 6.4 of the 2021 Agreement includes two specific obligations, those being;
(1) Alcoa must consult with the AWU where it proposes to amend or replace a company policy that will result in changes that will affect employees covered by the 2021 Agreement; and
(2) without limiting the operation of other terms of the 2021 Agreement, newly introduced or modified policies will not, in respect of employees covered by the agreement, erode, undermine or disadvantage employees pay or entitlements.
Alcoa further submit that the relevant matters to be considered in answering the posed question is whether the terms and conditions of the 2010 Policy can be characterised as entitlements and if so, whether implementation of the new drug and alcohol policy will result in an erosion, undermining or disadvantage the pay and entitlements of employees covered by the agreement. Alcoa submits that when regard is had to the Agreement as a whole, the language included within the 2021 Agreement, and the ordinary meaning of the words used, the meaning of clause 6.4 is unambiguous.
Alcoa contend that the objective intentions of the parties as to the meaning of the word “entitlements” in clause 6.4 can be identified by reference to the use of the word “entitlements” as it appears elsewhere in the agreement. Alcoa identify multiple examples of the use of the term “entitlements” throughout the 2021 Agreement[33]. Alcoa argue that a thorough review of the terms of the 2021 Agreement reveal that references to “entitlement” or “entitlements” universally relate to rights to leave or breaks. Examples of the use of the terms “entitled” or “not entitled” are also pointed to by Alcoa[34].
Relying on the use and meaning of the word “entitlement,” where it appears in other clauses of the 2021 Agreement, Alcoa submit that use of the term “pay and entitlements” where it appears in clause 6.4 is directed at employment related benefits that are received in compensation for the performance of work.
Alcoa contend in the alternative that if the Commission is of the view there is ambiguity in the meaning of the word “entitlements”, regard can be had for relevant extrinsic material. Of particular relevance is the conduct of the AWU in prior agreement negotiations and that the content of clause 6.4 has changed over time.
Alcoa submit that the origins of the present clause are to be found in the negotiation of the 2011 Agreement, which reveals the following;
· during negotiations for the 2011 Agreement the AWU unsuccessfully sought a clause that required agreement on any amended or replaced policy that eroded, undermined or disadvantaged “entitlements or conditions of employment”;
· the AWU’s own claim in 2011 was to capture “conditions of employment” as well as “entitlements” which evidences the AWU accepting that “entitlements” was not broad enough to capture “conditions of employment” generally;
· the outcome of the 2011 Agreement negotiations was a clause that confined the no disadvantage protections to entitlements “under the Agreement”; and
· similar to the 2021 Agreement, the 2011 Agreement also expressly contemplated a range of entitlements[35].
Alcoa further submit that the AWU’s acceptance of the limited application of the term “entitlements” in the 2011 Agreement and that it did not deal with conditions of employment is reinforced by the conduct of the AWU during negotiations for the 2014 Agreement. This can be seen by the following;
· between 14 April and 14 July 2014 during negotiations for the 2014 Agreement, the AWU unsuccessfully sought to replace the word “entitlements” with “employees” in clause 6.4, which Alcoa resisted; and
· following Alcoa’s rejection of the above-referred wording the AWU then sought to include the words “pay, conditions or entitlements” in lieu of referring only to “entitlements,” which was also rejected by Alcoa.
According to Alcoa, the bargaining claims and behaviour of the AWU during negotiations for the 2014 Agreement reveal that it (the AWU) understood the limitations of the word “entitlements” as it appeared in the 2011 Agreement. This, Alcoa submits, explains why the AWU had pressed for an expansion of the protections afforded by clause 6.4 to include conditions of employment more generally. It is also significant according to Alcoa that the parties intention to apply the same meaning of the word “entitlements” in clause 6.4 of the 2014 Agreement as used in clause 6(d) of the 2011 Agreement is supported by the presentation given to employees in respect of the 2014 Agreement. The presentation confirmed that clause 6.4 in the 2014 Agreement was ‘largely unchanged’ from its predecessor except for specific changes which did not relate to the term “entitlements” where it appeared in clause 6(d) of the 2011 Agreement.
Consideration
The normal principles applying to the construction of enterprise agreement terms are well established and were set out at length in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Ltd[36] (Berri) and need not be re-stated, save for summarising what I understand to be the key principles enunciated by the Full Bench in that matter, those being;
· construction of the disputed clause begins with a consideration of the ordinary meaning of the relevant words, having regard to its context and purpose;
· it is first necessary to determine whether the agreement has a plain meaning or if it is ambiguous;
· if the agreement has a plain meaning, evidence of surrounding circumstances will not be admitted to contradict the plain meaning;
· if the language is ambiguous or susceptible of more than one meaning, evidence of surrounding circumstances will be admissible to aid interpretation;
· evidence of surrounding circumstances is limited to that establishing objective background facts which were known to both parties and may include;
§ evidence of prior negotiations;
§ notorious facts known to both parties; and
§ evidence of matters in common contemplation and constituting a common assumption;
· admissible extrinsic material may not be used to disregard or re-write the provision to give effect to an externally derived conception of what the parties’ intention or purpose was; and
· in some circumstances, subsequent conduct may be relevant.[37]
Construction of clause 6.4
Turning firstly to the wording of the clause, both parties contend that clause 6.4 has a plain and ordinary meaning, although each of the parties prefer a different construction, particularly in respect of the meaning of “entitlements,” to which I will return later in this decision.
The first point to be made is that clause 6.4 sits within Clause 6 which is titled No Disadvantage to Employees. That is an important context as it indicates a protective purpose of the clause. That protective purpose is reinforced by reference to the 2021 Agreement meeting the requirements of the NES (at clause 6.1), prevailing over any State legislation to the extent of any inconsistency (at clause 6.2) and being stored electronically for employees’ access (at clause 6.3).
It appears however that in terms of no disadvantage to employees, clause 6.4 is the key sub-clause and states as follows;
“Company policies apply to employees covered by this Agreement. These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement. Without limiting the operation of other terms of this Agreement, newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage employees pay or entitlements. Such policies include, but are not limited to Drug & Alcohol, Parental Leave, and Long Service Leave and the Rehabilitation and Return to Work Policy.”
Turning to the first sentence of the clause, it states that employees are covered by Company policies. Importantly, those policies are not incorporated as terms of the agreement and may be amended or replaced, subject to certain conditions being met to which I will shortly turn. As the policies are not incorporated into the 2021 Agreement, the terms of those policies cannot be enforced as terms of the Agreement, although clause 6.4 does constrain the rights of Alcoa to introduce or amend policies.
The second and third sentences of clause 6.4 are concerned with the amendment or replacement of policies that apply to employees covered by the agreement, such right of amending or replacing policies vesting with Alcoa. As stated above however, that right is not unfettered. The first constraint is found within the second sentence of the clause where in referring to the Company policies that apply to employees it states, “These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement.” The plain and ordinary meaning of these words is clear in my view. A new or amended policy proposed to be introduced by Alcoa must be the subject of consultation with the union before introduction if that new or amended policy would affect employees covered by the 2021 Agreement.
It also follows from the above that proposed changes to existing policies or introduction of new policies that do not affect employees covered by the Agreement does not require consultation with the AWU. A hypothetical example of a policy change that would not affect employees covered by the 2021 Agreement might be a salary freeze imposed on staff at the Portland Smelter that are not covered by the 2021 Agreement. While employees covered by the 2021 Agreement might be apprehensive as to the implications of such a decision, the particular policy decision would not affect them and as such no consultation obligation arises. Unarguably, the proposed changes to the 2010 Policy would affect employees covered by the 2021 Agreement and consequently enliven the consultation obligations under clause 6.4.
It is clear on a plain reading of clause 6.4 that introduction of new policies or changes to existing policies that affect employees can only be implemented following consultation with the AWU. That is the case even where the change is beneficial as the obligation to consult is not conditioned by the policy introduction or change being detrimental. The only condition that enlivens the consultation obligation is that employees covered by the 2021 Agreement are affected by the new policy or policy change. It is relevant to note that compliance of Alcoa with the consultation obligations in respect of changes proposed to the 2010 Policy was not challenged in the determination of the dispute.
Moving to the third sentence of clause 6.4, a second constraint is imposed on Alcoa’s capacity to introduce new policies or modify existing policies. That is, it is unable to introduce new policies or modify existing policies that “erode, undermine or disadvantage employees pay and entitlements.” It is clear enough by the use of the words “will not” in the third sentence that a new policy or a proposed modification to an existing policy cannot be introduced if it is detrimental in respect of the “pay and entitlements” of employees covered by the agreement.
It might be said that pragmatically, Alcoa and the AWU could agree to a policy change that was detrimental to the “pay and entitlements” of employees, although such an outcome seems unlikely. Such an agreement could not be enforced however as the terms of clause 6.4 specifically preclude a new policy or a change to an existing policy that is detrimental to employees in respect of “pay and entitlements.” There is no caveat on the protection provided by the third sentence of clause 6.4 such that the parties could agree and implement a policy change that was detrimental to employees in terms of their “pay and entitlements.”
It is not in dispute that “entitlements” of employees covered by the 2021 Agreement cannot be detrimentally impacted by the introduction of a new policy or a policy change. Rather, the central controversy in the dispute before me is the meaning of the word “entitlements.” In simple terms, the AWU contend a broad meaning should be given to the term such that it captures all conditions of employment including the policies listed in clause 6.4 whereas Alcoa argue a narrow meaning should be given to the word, such that it is limited to employment related benefits that are received in compensation for the performance of work.
The term “entitlements” is not defined within the 2021 Agreement and while Alcoa point to the term being used extensively throughout the Agreement in referring to particular benefits such as forms of leave, that does not persuade me that the term has a clear meaning. Nor am I assisted at this stage by the AWU’s reference to the dictionary meaning of “entitlement” as such definitions are divorced from the realities of bargaining and the objective intentions of the parties. Nor does the context within which clause 6.4 operates, that of protecting certain employment conditions and the rights of the AWU to be consulted, assist in establishing a plain meaning of the term “entitlements.” I am satisfied that there is ambiguity in the meaning of the term and that it is susceptible to more than one meaning. It will therefore be necessary to consider extrinsic material to aid construction of the term. I will shortly return to consider that extrinsic material.
Before considering the meaning of the term “entitlements” with the assistance of extrinsic materials, it is necessary to consider the final sentence of clause 6.4 which lists four particular policies, including the drug and alcohol policy. The AWU submits that the naming of those four policies has the effect in the context of clause 6.4 of protecting the terms and conditions contained within those policies. Moreover, the AWU contend that it prevents Alcoa from amending them in a manner that is detrimental to employees, which the AWU submit in the case of the proposed drug and alcohol changes would be clearly so.
In construing the meaning of the final sentence of clause 6.4 there are two key elements that bare scrutiny based on use of the words “Such policies include, but are not limited to….” Firstly, the reference to “Such Policies” appears to be a reference to policies where the term is used earlier in the clause. On one view the use of the term “Such policies” may be directed only to the immediately preceding requirement that policy changes not detrimentally impact “pay and entitlements.” That seems unlikely as to construe the use of the term in that manner would then ignore the consultation obligations referred to in the second sentence of the clause. The construction I prefer is that where the term “Such policies” is used in the final sentence of the clause, it is directed at capturing both the consultation obligation found in the second sentence of the clause and to the requirement that employee “pay and entitlements” not be detrimentally impacted by new policies or policy changes. Such a construction would be consistent with the protective purpose of the clause.
Contrary to the AWU submissions, the final sentence of clause 6.4 does not guarantee the preservation of the terms contained in those policies. Rather, in applying the plain and ordinary meaning of the words, the final sentence of the clause makes clear that changes to those policies can only be made subject to consultation and that any changes must not result in detriment to “employees pay and entitlements.” Subject to those conditions being met, Alcoa is able to amend those named policies and any other unnamed policies that affect employees.
Further, the listing of the four policies does not afford those named polices any greater protection than unnamed policies (be they new or modified) that may also affect employees. The four named policies in clause 6.4 are obviously policies that affect employees, but use of the term “includes” makes clear that they are not the only policies that are subject to the protections afforded by the clause. Their being specifically named in the clause does not elevate the protections afforded to those four named policies above those of unnamed policies that also affect employees. The AWU’s contention that the naming of the four policies effectively locked in the terms of those policies is simply not supported by a plain reading of the clause.
Were it the intention of the parties to lock in the terms of those policies, that could have been easily achieved by including a term that prevented any changes to those listed policies for the life of the 2021 Agreement other than where agreed by the AWU. The AWU also posit the question in support of their construction as to what the point is of including specific reference to the four policies if not to confer a benefit. That can be answered simply. On a plain reading of clause 6.4, the effect of the final sentence of the clause is to remove any doubt that any changes to those four policies can only occur subject to consultation with the AWU and subject to there being no erosion, undermining or disadvantage to employees’ “pay and entitlements.”
It follows from the above that the clause has a plain meaning save for the meaning of the term “entitlements,” to which I now return.
To assist construe the meaning of the term “entitlements” where it appears in clause 6.4 of the 2021 Agreement it is necessary to consider the history of negotiations. As previously stated, a form of the present clause 6.4 first appeared as clause 6(d) in the 2011 Agreement. It is also uncontroversial based on the evidence of both Mr Thomas and Mr Bacon that the claim for inclusion of the ‘No Disadvantage’ clause arose out of concerns of employees covered by the agreement that Alcoa might unilaterally introduce new or amended policies that disadvantaged employees.
The evidence of both Mr Thomas and Mr Bacon also confirm that during negotiations for the 2011 Agreement, the AWU were seeking to include a clause that provided broader protection of terms and conditions of employment than Alcoa were prepared to concede. See for example the email from Peter King to AWU members dated 3 March 2011[38] where he indicated that the AWU were still having difficulty with Alcoa in relation to wording around the policies clause. Mr King went on to set out the clause the AWU were seeking and highlighted the particular wording the AWU was seeking (highlighted below) that remained not agreed;
“5 A NO DISADVANTAGE TO EMPLOYEES
(a) This Agreement meets the requirements of the NES and any supporting regulations as well as other relevant provisions of the Act.
(b) Subject to the application of Sections 29(2) and (3) of the Act, this Agreement prevails over State legislation to the extent of any inconsistency.
(c) This Agreement will be stored electronically for employee access.
Company policies apply to employees covered by this Agreement. These may be amended or replaced by the Company from time to time, provided the Company consults and reaches agreement with the AWU prior to making changes which directly affect employees covered by this Agreement. Newly introduced or modified Company policies will not, in relation to the employees covered by this Agreement, or current conditions of employment, erode, undermine, or disadvantage entitlements or conditions of employment under this Agreement. Such policies include but are not limited to, EPSL, Drug & Alcohol, Parental Leave and Long Service Leave.” (emphasis added)
On 8 April 2011, the State Secretary of the AWU wrote to Alcoa setting out the union’s final position in relation to outstanding bargaining issues[39]. Relevantly, the AWU stated that its position in relation to the No Disadvantage to Employees clause was that four policies needed to be included in respect of the Portland Smelter, those being EPSL, Drug and Alcohol, Long Service Leave and Parental Leave.
On 15 April 2011, Alcoa responded to the AWU final position on bargaining and in respect of the No Disadvantage to Employees clause proposed the inclusion of the Drug and Alcohol Policy, Parental Leave Policy, Long Service Leave in the EBA for the nominal term of the agreement.
The parties ultimately agreed to include wording in clause 6(d) in the following terms;
“Company policies apply to employees covered by this agreement. These may be amended or replaced by the Company from time to time, provided the Company consults with the union prior to making changes that affect employees covered by this Agreement. Newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage entitlements under this Agreement. Such policies include but are not limited to Drug & Alcohol, Parental Leave and Long Service Leave.” (emphasis added)
Mr Thomas agreed that the wording accepted by the AWU represented a compromise on the position they had initially sought in bargaining. The AWU did not realise its bargaining objectives of including all policies in the agreement or the insertion of a requirement for AWU agreement on any new or amended policies. Mr Thomas could not recall why the AWU had sought the words “conditions of employment” in addition to the term “entitlements” in circumstances where he believed they had the same meaning. Tellingly, Mr Thomas could not reconcile his view that “entitlements” had the same meaning as “conditions of employment” given the negotiating conduct of the AWU whereby;
· the AWU initially sought inclusion in the clause of the words “conditions of employment” as well as “entitlements;”
· the AWU subsequently dropped the claim for inclusion of the words “conditions of employment;” and
· Mr Thomas now concedes that the AWU did not realise its bargaining objective and the final clause was a product of compromise.
For his part, Mr Bacon gave evidence that the parties understood that the term “entitlements” where it was used in clause 6(d) had a meaning that was confined to specific entitlements in the agreement, specifically leave and other benefits conferred by the agreement. It must be said however that the subjective opinions and views of Mr Thomas and Mr Bacon as to the meaning of the term “entitlements” is of no assistance in construing the term. What can however be established objectively on the evidence is that during the negotiations for the 2011 Agreement;
· the AWU made a claim for inclusion of a ‘No Disadvantage’ clause, which was in terms similar to that now found in the 2021 Agreement;
· that the claim for inclusion of the clause arose out of employee concerns over the unilateral introduction of new or amended policies by Alcoa;
· the AWU sought inclusion of a requirement that new or amended policies could only be introduced subject to consultation and agreement of the AWU;
· the AWU also sought that protection against any detriment to employees was in respect of “entitlements” or “conditions of employment” under the agreement;
· inclusion of the words “conditions of employment” was resisted by Alcoa as was the AWU’s claim that new or amended policies require agreement of the AWU before introduction;
· that the clause agreed did not include the words “conditions of employment” or that agreement of the AWU was required for the introduction of new or modified policies; and
· the final position reached between the parties was a compromise position that fell short of the AWU’s objective.
It is apparent that the bargaining conduct of the AWU during negotiations for the 2011 Agreement was directed at securing broader protection of terms and conditions in policies than was realised. The fact that the claim for inclusion of protection of “conditions of employment” was pressed and subsequently withdrawn as part of the compromise position reached is telling of the term “entitlements” having a different and/or narrower meaning than the term “conditions of employment.” The subjective opinion of Mr Thomas that the terms have the same meaning or that employees had that belief when they voted on the 2011 Agreement is not probative and is consequently of no assistance.
Reinforcement that the terms “entitlement” and “conditions of employment” have a different meaning can be seen in the subsequent bargaining conduct of the AWU during negotiations for the 2014 Agreement. It is clear from that bargaining conduct, which is set out below, that the AWU believed that the protection of “entitlements” achieved in the 2011 Agreement did not go far enough. That is evident from the following.
On 10 April 2014, the AWU set out the status of outstanding bargaining issues in respect of negotiations then underway for the 2014 Agreement, relevantly identifying that in respect of the wording of clause 6.4, it was seeking the removal of the term “entitlements” to be replaced with the word “employees”. The effect of that change, if made, would have resulted in the following wording in clause 6.4;
“………… Newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage employees under this agreement………………”[40] (emphasis added)
On the 11 June 2014, the AWU’s claim in relation to the No Disadvantage to employees clause had evolved such that they were seeking the following wording, with emphasis provided on the proposed changes sought to the existing clause;
“…………..Newly introduced or modified company policies will not, in relation to the employees covered by this agreement, erode, undermine, or disadvantage employees, including their entitlements (both current and future) under this agreement…….”[41] (emphasis added)
On 14 July 2014, the AWU provided a further clause for Alcoa’s consideration which included the following terms;
“……………Newly introduced or modified company policies will not, in relation to the employees covered by this agreement, erode, undermine, or disadvantage employees, including their entitlements under this agreement…….”[42] (emphasis added)
It is clear from the form of wording variously sought by the AWU at this stage of negotiations that the AWU were seeking to capture and prevent any form of detriment to employees that might arise from a new or amended policy. It is then apparent that by 17 July 2014 the AWU had proposed further wording that referred to their being no detriment in respect of “pay, conditions, or entitlements”. This is evident from Mr Gleeson writing to Mr Hayden of the AWU in the following terms;
“…
As far as the clauses that were discussed on Monday go, I am checking a few things, but generally speaking they look OK – however the real concern I still have is over the Company policies document. I am not clear what is meant by ‘pay, conditions, or entitlements’ and think this is too broad (i.e. what is a condition?). I am concerned about this so we need to go through it more.
…”
The use of the term “conditions” in the revised clause wording proposed by the AWU again indicates that the term “entitlements” has a different and narrower meaning than the term “entitlements and conditions.” The wording ultimately agreed by both parties and included in the agreement was in the following terms;
“…Without limiting the operation of other terms of this Agreement, newly introduced or modified company policies will not, in relation to the employees covered by this Agreement, erode, undermine or disadvantage employees pay or entitlements…”
It is plainly apparent on the basis of the objective evidence that the AWU pursued various wording changes to clause 6(d) of the 2011 Agreement during negotiations for the 2014 Agreement. The changes proposed by the AWU sought to broaden the protection of terms and conditions of employment under the ‘No Disadvantage’ clause. That the AWU sought amendments to clause 6(d) of the 2011 Agreement during the 2014 Agreement negotiations explicitly acknowledges the perceived shortcomings of the clause from the AWU perspective. That is also consistent with Mr Thomas’ evidence and submissions of the AWU that it sought through successive negotiations to improve the protection of terms in Alcoa policies that applied to employees covered by the agreements.
It is also apparent on the evidence that Alcoa were concerned about the breadth of protections sought and were resisting the AWU claims. So much is clear by the progressive iterations of the AWU’s proposed wording between April and July 2014 and the email from Mr Gleeson to Mr Hayden on 17 July 2014 where Mr Gleeson specifically raised concern over the meaning of the term “conditions” and the breadth of what was being sought by the AWU. As earlier set out, the final clause agreed included the following changes to clause 6(d) of the 2011 Agreement;
(a) the words “Without limiting the operation of other terms of this Agreement…” were included at the commencement of the second sentence of the clause;
(b) the words “…employees pay or…” were included before the word “entitlements” towards the end of the second sentence of the clause;
(c) the words “under this Agreement” at the end of the second sentence of clause 6(d) in the 2011 Agreement were removed; and
(d) the words “The Victorian Operations Rehabilitation and Return to Work policy specifically applies as current on certification of this Agreement” were included at the end of clause 6.4.
Significantly, the explanation of the terms of the 2014 Agreement provided to employees in the period prior to the ballot for approval of the Agreement relevantly stated as follows in respect of clause 6;
“Clause 6 – No Disadvantage to Employees
• This clause remains largely unchanged from the current agreement except for the following changes to clause 6.4:
• Additional wording “employees pay or” has been inserted before “entitlements.”
• The words “under this Agreement” after the reference to entitlements have been removed.
• The words “Without limiting the operation of other terms of this agreement” have been added at the start of the same sentence.
• A specific reference has been included to the Victorian Operations Rehabilitation policy to incorporate it in its agreed form at certification for the life of the EA.”[43]
The significance of the changes that were made in clause 6.4 of the 2014 Agreement in terms of the prohibition on erosion, undermining and disadvantage, was that it was made clear that the protections extended to both “pay and entitlements”. Further, the caveat that was included in the 2011 Agreement, that the “entitlements” protected were only those “under the Agreement” was removed. The latter change meant that “entitlements” derived from outside of the 2014 Agreement were, in the context of the introduction of new or amended policies, also subject to the no detriment effect of the clause. Importantly, the meaning of the term “entitlement” does not appear to have been discussed or disturbed as a result of the 2014 Agreement, save for the extension of protection to entitlements derived from outside the agreement terms. An example cited and accepted by both witnesses of an entitlement found outside the agreement was that of NES entitlements, where the circumstances in 2014 were that a new coalition government had been elected and there was concern in some quarters that the new government might legislate to reduce NES entitlements.
Tellingly, Mr Thomas also conceded that the final form of words in the 2014 Agreement were again the best that the AWU could achieve, reinforcing that the term “entitlements” where that word appeared in clause 6.4 has a different and/or narrower meaning than the term “conditions”. If as the AWU now contend, the meaning of “entitlements” is broad enough to capture all conditions of employment, including terms in the listed policies, no explanation is provided that reconciles that position with the AWU’s persistent efforts to include additional wording into clause 6.4.
It follows from the above that the construction advanced by the AWU as to the broad meaning of the term “entitlements” must be rejected. To find otherwise would be contrary to the AWU’s own bargaining conduct over several years. In my view, the AWU knew the term “entitlements” did not extend to all conditions of employment. This acknowledgement explains their attempts to remedy that perceived shortcoming through bargaining.
Having rejected the broad meaning of the term “entitlements” advanced by the AWU it remains necessary for me to construe the proper meaning of the term. Guidance can be found in the origins of the clause when it was negotiated for inclusion in the 2011 Agreement. As can be seen from the terms of clause 6(d), the no detriment protection afforded to “entitlements” of employees covered by the agreement were not to “entitlements” generally but to “entitlements under this Agreement”.
The phrase “entitlements under this Agreement” clearly describes benefits conferred to employees under the terms of the agreement to which employees have a legal right that can be enforced. It is useful at this point to also consider the use of the term “entitlements” where that term is used throughout the agreement. As I have previously stated, use of the term “entitlements” where it appears throughout the agreement (other than in clause 6.4) is not decisive of the meaning of the term where it is used in clause 6.4. However, the use of the term in the 2011 Agreement and successor agreements is supportive of it having a meaning that describes a benefit for the performance of work and that the benefit is enforceable as a contractual, legislative or statutory instrument right. All the “entitlements” (e.g., leave benefits) specifically described as such in the 2011 Agreement have that character.
The dictionary meaning put forward by the AWU also supports the above construction where it defines an entitlement as “…that to which one is entitled, as part of a contract, will, employment arrangement etc.” The definition advanced by the AWU speaks to a right of enforcement under contract or at law. It is clear that the 2011 Agreement conferred “entitlements” to employees that were enforceable rights.
Significantly, the meaning of the term “entitlements” was not apparently discussed or disturbed during negotiations for the 2014 Agreement, save for extension of the protections under clause 6.4 to “entitlements” derived from outside of the agreement. The fact that employees were not advised in the agreement explanation document that the term was to be given a different meaning to that applied to the term where it appeared in the 2011 Agreement, supports that the parties intended to retain the same meaning of the term.
Having regard to the above, the construction I prefer is that the term “entitlement” where it appears in clause 6.4 of the 2021 Agreement refers to a benefit conferred to employees for the performance of work, and that such benefit is enforceable under the terms of the agreement, award, statute or contract of employment. As I have previously found “conditions of employment” as sought by the AWU has a broader meaning, that being consistent with the general meaning ascribed to that term, which includes Company rules, requirements and policies that may apply.
Applying the above construction, a clearer distinction can be seen between an “entitlement” and a “condition of employment” in the context of the 2021 Agreement. Take for example the requirement that employers routinely impose on employees as a condition of employment, that being compliance with a code of conduct. Codes of conduct routinely impose obligations on employees to comply with specified behavioural standards as a condition of employment. They could not in my view be characterised as conferring “entitlements” or benefits to employees for the performance of work. Similarly, a disciplinary policy that sets out a regime for managing performance or misconduct could not in my view be characterised as conferring benefits for the performance of work, even where such policy specified a particular escalation of warnings or formal warnings for repeated conduct or performance issues.
The above does not stand for the proposition that under the 2021 Agreement a policy cannot confer an “entitlement”. Take for example the reference to the Long Service Leave Policy which is referenced in clause 6.4. That policy, to the extent that it provides conditions in excess of the Victorian state long service leave act, clearly confers benefits to employees for the performance of work. The accrual of a right to take long service leave is undoubtedly a benefit that accrues over time through the rendering of service by an employee. The same comments apply in respect of the parental leave policy to the extent that it provides for benefits in excess of the NES.
“Entitlements” may also be found in statute, the most relevant example being the minimum standards set out in the NES. Contracts of employment might also contain terms, both explicit and implied, that confer “benefits” for the performance of work, an example of which might be an incentive payment scheme set out in a contract of employment.
One can see from the construction I prefer that “entitlements” can be conferred by the 2021 Agreement, by an award if incorporated into the agreement, by statute, by Alcoa policies and through terms contained within individual contracts of employment. That is consistent with the evident purpose of removing the limitation on “entitlements” being only those found “under the Agreement” as existed under the 2011 Agreement. For the term to be properly construed in the 2021 Agreement, having regard to the history of negotiations, the term “entitlement” must be given a narrower meaning than the term “entitlements or conditions”. For the term to be given proper meaning in the context of the agreement as a whole it is necessary to define the term “entitlement” as a benefit that is conferred to an employee for the performance of work and that such benefit may be enforced as a right under the enterprise agreement, award, contract of employment or statute.
It follows from the foregoing that the construction to be given to clause 6.4 is as follows;
· Alcoa employees covered by the 2021 Agreement are covered by company policies as amended or replaced from time to time;
· the introduction by Alcoa of new or amended policies that affect employees covered by the 2021 Agreement may only proceed subject to consultation by Alcoa with the AWU occurring prior to the introduction of the proposed new or amended policy;
· new or amended policies are impermissible to the extent that they would erode, undermine or disadvantage employees’ (covered by the 2021 Agreement) pay or entitlements;
· policies specifically named in clause 6.4 attract the same protections afforded under clause 6.4 as unnamed policies that also affect employees covered by the 2021 Agreement; and
· the term “entitlements,” where it appears in clause 6.4, refers to benefits that are conferred to employees covered by the 2021 Agreement for the performance of work and that such benefits may be enforced as a right under the enterprise agreement, award, contract of employment or statute.
Applying construction to the question for determination
Returning to the question before me, it is necessary for me to determine whether the changes proposed by Alcoa to the 2010 Policy, would if implemented, “erode, undermine or disadvantage employees pay or entitlements”.
The first point to be made is that it is not in dispute that Alcoa have complied with the consultation obligation. It is therefore assumed for the purpose of answering the question before me that the first limb of clause 6.4 has been met. Turning to the second limb of clause 6.4, it is necessary to determine whether the terms set out in the 2010 Policy constitute “entitlements” the proposed alteration of which would “erode, undermine or disadvantage” such “entitlements”. My conclusion is that the terms of the 2010 Policy and the proposed modified terms do not constitute “entitlements” for the reasons that follow.
The 2010 Policy imposes a regime for drug and alcohol testing at the Portland Smelter site which applies to all employees, contractors and visitors. It contains several clauses including those dealing with the scope of application, methods of testing, management of positive test results, education and rehabilitation, consultation and dispute resolution. In my view the 2010 Policy does not confer benefits to employees but rather, imposes a condition of employment for employees and a condition of site entry for all other persons entering the site, including contractors and visitors. The imposition of such conditions in respect to drug and alcohol is no different in my view to the imposition of other occupational health and safety policies and procedures one would expect to see on a large manufacturing site.
An occupational health and safety policy imposed as a condition of employment or as a condition of site entry to the Portland Smelter is clearly distinguishable from provisions in the 2021 Agreement, the NES or other policies of Alcoa that confer “entitlements” for the performance of work. See for example annual leave entitlements under the 2021 Agreement, long service leave entitlements under the Long Service Leave Policy and various leave entitlements under the NES. The character of such “entitlements” is fundamentally different to that of occupational health and safety policies which are both conditions of employment in the case of employees and conditions of site entry for contractors and visitors.
The AWU characterise various terms of the 2010 Policy as “entitlements” including for example that the 2010 Policy includes;
· a regime of saliva testing only for drugs;
· a BAC threshold of 0.03%;
· provision for periodic routine testing subject to discussion with key stakeholders;
· provision for the voluntary declaration of prescription medication;
· a three strikes approach to management of positive results;
· for the removal of positive results from employee records after two years at employee request; and
· for the program to be subject to periodic review.[44]
I accept that the 2010 Policy imposes both a range of obligations and also includes several protective provisions directed at providing particular rights to employees, particularly in respect of methods of testing and management of positive results. If the provisions to which I have referred may be characterised as rights, I am not persuaded they are benefits conferred to employees for the performance of work. They are better characterised as conditions of employment rather than “entitlements” for the reasons previously set out above.
The last point to be made is that the 2010 Policy like other policies is not incorporated into the 2021 Agreement and as such its terms are not enforceable as a term of the agreement. Nor did the AWU lead any evidence that the terms of the 2010 Policy or any other policies were incorporated into employees’ contracts of employment such that they would be enforceable as terms of their contracts of employment.
Having found that the terms of the 2010 Policy and the proposed amendments to that policy do not constitute “entitlements” for the purpose of 6.4 clause it is unnecessary for me to determine whether the proposed changes would “erode, undermine or disadvantage” the conditions set out in the 2010 Policy. Undoubtedly the proposed changes would be seen as more onerous and less favourable than the terms found in the 2010 Policy, a point properly conceded by Ms Alexander. However, the fact that the changes may be viewed as more onerous or less favourable by employees is irrelevant to my answering the question having found the terms of the 2010 Policy do not constitute “entitlements”.
The fact that the terms of the 2010 Policy do not constitute “entitlements” does not relieve Alcoa of its consultation obligations that arise under the first limb of clause 6.4. That was conceded by Alcoa and as previously stated, compliance of Alcoa with its consultation obligations was not disputed in the formal proceedings.
Conclusion
It follows from the foregoing that the answer to the question posed for determination is as follows;
‘Will Alcoa Portland Aluminium’s proposed modifications to its Drug and Alcohol Policy “erode, undermine or disadvantage employees pay or entitlements” as stated at clause 6.4 of the Portland Aluminium (Operations) Enterprise Agreement 2021’
The answer is “No”
The matter is determined accordingly.
DEPUTY PRESIDENT
Appearances:
L Aksu for the Applicant.
M Vallence for the Respondent.
Hearing details:
2022.
Melbourne (By Microsoft Teams):
April 5.
Printed by authority of the Commonwealth Government Printer
<PR740521>
[1]AE513340.
[2] AE886507.
[3] AE409713.
[4] Exhibit AWU7, Witness Statement of David John Thomas, dated 2 March 2022 at [16]-[17].
[5] Ibid at [19]-[21].
[6] Exhibit AWU1, Alcoa 2010 Victorian Operations Drug and Alcohol Policy.
[7] Exhibit AWU2, Drug and Alcohol Policy (Western Australian Operations) (WAO).
[8] Exhibit AWU4, Proposed Changes to Drug & Alcohol Policy Oct 2021.
[9] Exhibit AWU6, The Australian Workers’ Union – Summary of differences/proposed changes to Alcoa’s Drug and Alcohol Policy and their consequences.
[10] Exhibit AWU7 at [24].
[11] Ibid at [34].
[12] Ibid, Attachment DJT-1, Email re EBA Discussions, dated 3 March 2011.
[13] Exhibit AWU7 at [45].
[14] Ibid at [48].
[15] Ibid at [49].
[16] Exhibit R1, Witness Statement of Nicholas George Bacon, dated 16 March 2022 at [7].
[17] Ibid at [9], Exhibit AWU7, Attachment DJT-1.
[18] Exhibit R1 at [11], Exhibit AWU7, DJT-3, Alcoa letter to AWU titled Portland Operations Agreement 2011 Negotiations – Company Proposal, dated 15 April 2011.
[19] Exhibit R1 at [12].
[20] Ibid at [13].
[21] Exhibit AWU7 at [53].
[22] Exhibit R1 at [15]-[16].
[23] Ibid at [17].
[24] Ibid, Attachment 2, Outstanding Issues 10/4/2014.
[25] Exhibit R1, Attachment 4, Email from Liam O’Brien to Matthew Gleeson dated 14 July 2014.
[26] Exhibit R1 at [21].
[27] Ibid, Attachment 5, Email from Matthew Gleeson to Ronnie Hayden, dated 17 July 2014.
[28] Exhibit R1 at [24].
[29] Ibid at [25].
[30] Ibid at [56].
[31] Ibid at [59].
[32] Exhibit AWU6.
[33] See for example; clause 3.2 reference to NES entitlements, clause 7.8(iv) reference to leave entitlements, clause 11.1 reference to meal break entitlements, clause 12.1(iv), 12.2(i), 12.2(ii), 12.3(i) 12.7 & 12.8(iii) references to annual leave entitlements, clause 13.1 reference to personal leave entitlement, clause 13.5 reference to public holidays and personal leave entitlements and clause 23.6 reference to maintenance of pay and entitlements of delegates on trade union training leave.
[34] Alcoa Outline of Submissions,Alcoa Outline of Submissions dated 16 March 2022, at [48].
[35] Ibid at [58]-[59].
[36] [2017] FWCFB 3005
[37] Ibid at [114]
[38] Exhibit AWU7, Attachment DJT-1.
[39] Exhibit AWU7- Attachment DJT-2.
[40] Exhibit R2, Attachment 2.
[41] Exhibit R2, Attachment 3.
[42] Exhibit R2, Attachment 4.
[43] Exhibit R2, Attachment 7, Overview of 2014 Agreement.
[44] Exhibit AWU-6.
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