"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
[2011] FWA 7140
•18 OCTOBER 2011
[2011] FWA 7140 |
|
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
(C2011/3681)
The Australian Workers' Union
(C2011/113)
v
Electrolux Home Products Pty Ltd
SENIOR DEPUTY PRESIDENT O'CALLAGHAN | ADELAIDE, 18 OCTOBER 2011 |
Matter in dispute relates to pay-out of personal leave on death or retirement under the terms of an agreement -provisions of the agreement - intention of the parties in negotiating the agreement.
[1] On 18 March 2011 the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and The Australian Workers’ Union (AWU) (the unions) lodged identical applications pursuant to s.739 of the Fair Work Act 2009 (the FW Act), through which they sought the assistance of Fair Work Australia (FWA) in the resolution of a dispute with Electrolux Home Products Pty Ltd. This dispute related to the operation of the Electrolux Home Products Cooking Plant Enterprise Agreement 2010 (the agreement). Clause 9 of the agreement details the dispute settlement procedure and provides that an unresolved matter is to be referred to FWA for conciliation and arbitration if it is not resolved through conciliation.
[2] The applications were the subject of conciliation proceedings but no agreement was achieved. On 11 May 2011 the parties agreed that the matter should be the subject of an arbitration. A programme for the provision of written submissions was agreed and was complied with by the parties. At the request of the parties the matter was the subject of hearings on 9 and 18 August 2011. The parties then subsequently provided further written submissions over the following four weeks.
The matter in dispute
[3] The dispute between the parties relates to the operation of clause 35.4 of the agreement which states:
“35.4 Paid personal leave is cumulative and unused accrued personal leave will be paid out to the employee (or their nominated beneficiary) upon termination of employment for retirement, or death.”
[4] This clause was in the predecessor 2006 agreement in identical terms. There is no dispute that, over the duration of the 2006 agreement it was understood to operate such that unused accrued personal leave was to be paid out at the rate of pay at which the personal leave was accrued, consistent with a policy which Electrolux had applied since 1987.
[5] The matter in dispute is over whether, in the course of the negotiations which led to the 2010 agreement, Electrolux agreed to pay out accrued unused personal leave on death or retirement, at the wage rate applicable at that time. In other words, notwithstanding that there was no change to the provisions of clause 35.4, that provision should now be applied so that unused personal leave is paid at the rate current on retirement or death. The unions also assert that the plain wording of clause 35.4 supports this application.
[6] The evidence before me goes to the competing intentions and recollections of the parties in the negotiations for the 2010 agreement.
[7] The principles associated with the interpretation of agreements are well established. Before considering the substantial evidence provided to me in this matter, I have considered the extent to which clause 35.4 is capable of more than one construction.
[8] In Watson v ACT Department of Disability Housing and Community Services, 1 Lawler VP concluded:
“8 There are well established principles under the general law for the construction of contracts. Those principles are generally applicable in the construction of certified agreements. For example, in Community and Public Sector Union v Telstra Corporation Ltd a Full Bench of the Commission was concerned with applications to vary a number of certified agreements and, in the course of its decision, summarised the principles governing the resolution of ambiguity in a certified agreement:
"[33] The judgment of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW established widely accepted principles for resolving ambiguity in contracts. In that case Mason J stated the rule thus:
The true rule is that evidence of surrounding circumstance is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed
[34] In BP Australia Pty Ltd v Nyran Pty Ltd, Nicholson J distilled, by reference to Codelfa, the following points of principle for resolving ambiguity in contracts:
• it is necessary firstly to determine whether the contract has a plain meaning or contains an ambiguity;
• if the contract has a plain meaning, evidence of surrounding circumstances will not be admissible to contradict the language of the contract;
• if the language of the contract is ambiguous or susceptible of more than one meaning evidence of surrounding circumstances is admissible to assist in the interpretation of the contract;
•the concept of surrounding circumstances is to be understood to be a reference to the objective framework of facts. It will include:
• evidence of prior negotiations so far as they tend to establish objective background facts known to both parties and the subject matter of the contract;
• facts so notorious that knowledge of them is to be presumed;
• evidence of a matter in common contemplation and constituting a common assumption.
[35] After referring to the foregoing points of principle Nicholson J continued as follows:
From the evidence of that setting the parties' presumed intention may be taken into account in determining which of two or more possible meanings is to be given to a contractual provision. What cannot be taken into account is evidence of statements and actions of the parties which are reflective of their actual intentions and expectations. Objective background facts can include statements and actions of the parties which reflect their mutual actual intentions. That is, evidence of the mutual subjective intention of the parties to a contract may be part of the objective framework of facts within which the contract came into existence. It is the mutuality which makes the evidence admissible"
9 In Kucks v CSR Ltd Madgwick J held:
"It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning."
10 These remarks were made in the context of construing an award. However, Madgwick J's approach has been adopted in relation to the construction of certified agreements. In Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd Northrop J observed:
"The increase in the number of certified agreements gives rise to an area of possibly greater dispute as to the construction of provisions contained in the agreements. The parties may adopt a multitude of different structures and methods of terminology. No common pattern may develop. Nevertheless certified agreements are to be construed adopting the same methodology as that used in construing awards. In Kucks v CSR Limited (1996) 66 IR 182[PDF] Madgwick J, sitting as a judge of the Industrial Relations Court of Australia, at 184 expressed his opinion on the legal principles to be applied in construing awards under the Act. I agree with that statement of principles. They have even stronger application to certified agreements."
11 This view was approved by the Full Court of the Federal Court in Ansett Australia Ltd v Australian Licenced Aircraft Engineers' Association.
12 In United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board11 the Full Court of the Federal Court, in the context of construing a dispute resolution clause in a certified agreement, noted:
"The parties agree that the proper approach to the construction of industrial instruments was stated by Madgwick J in Kucks at 184. His Honour's statement of the principles was followed by a Full Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers' Association [2003] FCAFC 209 at [8] and by two Justices of the High Court in Amcor Limited v Construction Forestry Mining & Energy Union [2005] HCA 10 at [96] per Kirby J and at [130] per Callinan J. That was the approach which was adopted by the learned primary judge.
A narrow or pedantic approach is not to be taken. The intention of the framers of the document is to be ascertained objectively, bearing in mind that they are likely to have been people of a practical bent of mind. Their intention may well have been expressed in ways likely to have been understood in the relevant industry, rather than in "legal niceties or jargon."; see Kucks at 184.
Clearly enough, the language of the instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement: Short v FW Hercus Pty Limited[1993] FCA 51 (1993) 40 FCR 511[PDF] at 518. The context will include the statutory context in which the agreement is made."
(emphasis added)
13 In Short v FW Hercus Pty Ltd Burchett J, with whom Drummond J agreed, considered whether inter alia, with whether it is legitimate, for the purpose of construing a clause of an award, to look at the history of the provision. After considering a number of authorities, Burchett J observed:
"No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297[PDF] at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v Federated Engine-Drivers and Firemen's Association of Australasia (1913) 17 CLR 261[PDF] at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it."
The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.
... 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, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v R (1991) 172 CLR 1[PDF] at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.
But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions - and this is the other answer to the argument put - would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived. The judgment of Mason J. (with which Stephen and Wilson JJ. expressed agreement) in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337[PDF] at 347-353 contains an extended discussion of the principles upon which a court may take account, when construing a contract, of the circumstances surrounding the agreement of the parties upon those particular terms. In the course of that discussion, Mason J. suggested (at 350) that "perhaps ... the difference ... is more apparent than real" between the view that evidence is admissible only to resolve an ambiguity, not to raise it, and the view that extrinsic evidence is receivable both to raise and to resolve an ambiguity. He concluded (at 352):
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although ... if the facts are notorious knowledge of them will be presumed.
(emphasis added)"
"The fact is that words are frequently susceptible of more than one meaning. Paradoxically, ambiguity may be born of the reader's clarity of thought which perceives a potentiality for an alternative meaning. But in many cases only evidence of extrinsic facts can show that the potentiality has substance. The old case Macdonald v Longbottom (1859) 1 El and El 977 (120 ER 1177), to which Mason J. referred, is an example, since there is nothing necessarily ambiguous in the expression "your wool" (indeed Erle J. at 986 described it as "most explicit") — only evidence that at the time the vendor had both wool of his own growing, and also wool which he had bought in from others, could raise an ambiguity, while at the same time solving it once the other party was shown to have known the facts.
Mason J. returned to the subject in his dissenting judgment in K. and S. Lake City Freighters Proprietary Limited v Gordon and Gotch Limited (1985) 157 CLR 309[PDF] at 315, when he said:
Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.
This is a broad proposition, applicable to problems of construction generally, although it was put forward in the context of statutory interpretation. ... "
14 While Short v FW Hercus Pty Ltd was concerned with the proper construction of a clause in an award, it is clear it is equally applicable to the construction of certified agreements as illustrated by the reliance placed upon it by the Full Court in United Firefighters' Union of Australia in the passage set out above.
15 In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW) apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”
(endnotes deleted)
[9] The following specific circumstances are relevant to a consideration of clause 35.4:
● there is no dispute about the same terms in the 2006 agreement
● there is no dispute about the operation of the traditional Electrolux policy prior to the 2010 agreement, and
● the 2010 negotiations included an additional redundancy benefit (clause 15.4), in the following terms:
“15.4 In addition to the redundancy payment stipulated in clause 15.3, employees will receive all accrued personal leave, paid at the base rate of pay at the time of redundancy.”
[10] Absent these specific circumstances, clause 35.4 would generally have to be read as providing for payment, at current rates, at the time of retirement or death of untaken accrued personal leave. However, because of these specific circumstances, the plain words of the agreement cannot be taken as clearly expressing an agreed meaning. Hence, the determination of this dispute is not so much a matter of interpretation of the agreement terms as it involves a determination of the intentions and commitments of the parties in the agreement negotiation process. This is an inherently difficult assessment.
The Evidence
[11] Evidence in support of AMWU position was given by:
● Mr Short, the AMWU union bargaining representative during the 2010 agreement negotiations
● Ms Gilligan, an AMWU bargaining representative on the Electrolux agreement negotiating committee for the 2010 agreement
● Ms Harris, an AMWU bargaining representative on the Electrolux agreement negotiating committee for the 2010 agreement
● Mr Fenney, an AMWU official.
[12] Evidence in support of the AWU position was given by:
● Mr Mateos, the AWU union bargaining representative during the 2010 agreement negotiations
● Ms Nitschke, an AWU representative on the Electrolux agreement negotiating committee for the 2010 agreement
● Mr Barnes, an AWU representative on the Electrolux agreement negotiating committee for both the 2006 and 2010 agreements.
[13] Evidence in support of the Electrolux position was given by:
● Ms Hines, the Global Director HSE for Electrolux and the lead negotiator in the final negotiations which led to the 2010 agreement
● Ms Crisp, an Electrolux Human Resources Adviser and the minute taker for most of the negotiations for the 2010 agreement
● Mr Dunning, the Financial Controller-Manufacturing of Electrolux Home Products Pty Ltd
● Mr Bowering, a former Electrolux Human Resources Manager
● Mr Brady, the current Electrolux Human Resources Manager.
[14] Additionally, I have been provided with copies of a substantial amount of material going to the negotiation of the 2006 and 2010 agreements. In reaching my decision I have had regard only to the material authenticated by the witness evidence.
[15] I have also noted the written submissions provided by the parties subsequent to the hearings in this matter.
Background information
[16] On the evidence before me I have concluded that the identical predecessor to the clause at issue, namely clause 37.4 of the 2006 agreement, was included in the 2006 agreement so as to reflect the pre-existing Electrolux policy.
[17] I do not understand that this clause was contentious during the life of the 2006 agreement. The payment of unused personal leave on death or retirement was not identified as a claim associated with a 2010 agreement, although the pay-out of unused personal leave on redundancy was such a claim.
[18] The negotiation of the 2010 agreement was contentious. Negotiations occurred over at least 11 months. Electrolux agreement proposals were rejected by employees on three separate occasions over an eight-month period. The Electrolux negotiating strategy, the Electrolux negotiators themselves, and the matters upon which the negotiations were based, varied substantially.
[19] Protected industrial action was initiated in early 2010. Electrolux then again changed its negotiation team and its negotiating strategy. Ms Hines took over as the lead negotiator. She withdrew all the earlier Electrolux proposals and recommenced the negotiations on the basis of proposed changes to the 2006 agreement.
[20] Critical to this matter is whether, in the course of negotiations directed toward achieving agreement on a package proposal on 17 February 2010, agreement was reached for payment of what is now clause 35.4 at current pay rates. There is no argument that:
● Ms Hines commenced the negotiations by jettisoning the previously rejected Electrolux proposals
● The meeting on 17 February 2010 made significant progress toward an agreed position, yet the parties remained at loggerheads over the overall package
● At a subsequent meeting on 18 February 2010 Electrolux presented its "final position". This "final position" was summarised in a document 2 which did not refer to clause 35.4
● Further, clause 35.4 was not referenced in the later explanation of the agreement which was provided to employees before the vote which endorsed the agreement 3.
[21] The issue is whether or not Ms Hines agreed that Electrolux would pay out accrued, untaken personal leave on an employee's retirement or death at the then applicable rate and, if so, whether the agreement should be read in that context.
[22] The witness evidence in this matter is contradictory. In making this observation I do not suggest that any of the witnesses have set out to deliberately mislead me. I consider it more likely that their recollection of these contentious and complex negotiations reflects their objectives and intentions and that time has impacted on their accuracy. I have also noted that the witnesses commonly interchanged the concepts of personal leave and sick leave.
[23] Ms Hines’ recollections were flawed in a number of respects. She made assertions about the negotiation process, the minute taking process and the advice provided to employees which I am not satisfied are entirely accurate. For instance, the facts indicate that minutes of the February 2010 meetings were not typed and distributed to the negotiating committee. Additionally, I cannot describe the 1 April 2010 advice to employees about the agreed position as a "cut and paste" of the Electrolux "final position" document presented at the 18 February 2010 meeting. 4 However, these flaws do not mean that I have discounted all of Ms Hines evidence.
[24] The evidence of Ms Hines was that, in February 2010 she took over the conduct of the negotiations on the basis that previous proposals were withdrawn and the negotiations commenced with the 2006 agreement as a starting point. Ms Hines did not dispute that an earlier agreement proposal, rejected by employees, included payment of accrued personal leave on retirement and death at current rates. Ms Hines advised that the negotiations in February 2010 also considered the unions’ log of claims presented in September 2009. She asserted that, at the meeting on 17 February 2010 she discussed various proposals for the pay-out of sick leave accruals on redundancy, death and retirement. She asserted that as the meeting did not reach an agreed position, she advised that she would put a final Electrolux position on 18 February 2010.
[25] Ms Hines asserted that in the discussions on 17 February 2010 she remained committed to a 100% pay-out of sick leave on death or retirement. In this respect she differentiated between the entitlement itself and the payment for that entitlement. 5 She asserted that the payment calculation had been raised by the unions in the context of a claim for higher wages. Ms Hines agreed that the consequent discussions were complex6 but asserted that she did not concede a pay-out of personal leave at current rates on retirement or death.
[26] Ms Hines’ evidence went to the formulation and presentation of the final offer on 18 February 2010, the subsequent agreement in principle, and the drafting of the information document for employees and the agreement itself. She also explained her understanding of the meeting processes which then followed to advise employees of the agreement and which involved both union meetings and employee discussions with managers and supervisors.
[27] The only consistent notes taken of the negotiations for the agreement were those of Ms Crisp. I found the evidence of Ms Crisp to reflect the most reliable recollection of the February 2010 discussions and have relied heavily on her evidence about the negotiation process generally and the meeting of 17 February 2010 specifically.
[28] Ms Crisp’s evidence was that she was the minute-taker for the 2010 agreement negotiations. Whilst she generally typed such meeting minutes, she noted the meetings of 17 and 18 February 2010 by hand as her laptop computer was not operating.
[29] Ms Crisp confirmed Ms Hines recollections of the 17 February 2010 meeting and particularly, the extent to which there were discussions over a possible percentage reduction in payment for personal leave entitlement on retirement. Her position was that there was no agreement to pay untaken personal leave on retirement or death at current rates.
[30] Ms Crisp confirmed that the document dated 18 February 2010 7 which set out Electrolux's final position was tabled at the meeting of that date. She also confirmed her involvement with the preparation of the agreement explanation document.8
[31] Mr Short, the AMWU official who participated in the negotiation meetings did not take notes of those meetings. His recollection of the negotiation dates and key issues such as the number of rejected proposals was, in my view affected by time. He confirmed that negotiations had continued over a long period of time. Mr Short also confirmed that he had attended a meeting where claims for the pay-out of personal leave on redundancy and retirement could be reduced in order to allow for a higher wage increase. I have taken it that this meeting was the 17 February 2011 meeting. He recalls Ms Hines confirming that she would not accept a reduction in the sick leave being paid out on redundancy and retirement because she believed that employees who had looked after their sick leave should get the full benefit of it. 9
[32] Mr Short's recollection was that this was specified on the whiteboard used in the negotiation process. He referred to Ms Crisp’s notes 10 to support his recollection that the meeting had discussed a possible reduction in the pay-out of sick leave before Ms Hines said "Look, that is just going to be too hard, so it's best to pay it on the rate that the people finish on."11
Mr Short also acknowledged that the final Electrolux position put on 18 February 2010 did not provide for the pay-out of sick leave at current rates but confirmed his understanding that this had been conceded on the previous day. 12
[33] Ms Gilligan was an AMWU employee representative in the negotiation process. Her evidence was that:
“Ms Hines explanation that personal credits would paid out at the wage rate applicable at the time of cessation of employment in relation to clause 35.4 was clearly and unambiguously communicated by Ms Hines at feedback meetings to employees held prior to the employees voting in favour of the EA. This position was never at any time changed or retracted by the Respondent before the proposed EA was voted up.” 13 (sic)
[34] Ms Gilligan's evidence also reflected the duration and complexity of the negotiations. She was unclear about various details. Ms Gilligan advised that she could not find the notes she took of the meetings.
[35] I have concluded that Ms Gilligan was mistaken in her initial assertion that she was aware that another employee, Mr McIntyre recently retired with the pay-out of his accrued personal leave at his then current rate of pay. In this respect, Ms Gilligan's evidence was inconsistent with the evidence of the Electrolux Financial Controller, Mr Dunning and the documents provided to me.
[36] Ms Gilligan's evidence was:
“On or around the 18 February 2011 I distinctly remember Ms Hines’ explanation of how the Respondent proposed to calculate employee entitlements under clause 35.4 of the proposed EA in relation to credits of personal leave upon cessation of employment. She clearly stated that employees would be paid out this entitlement at the wage rate that applied at the time of cessation of employment.” 14
[37] I am not persuaded that Ms Gilligan's recollection is necessarily correct given all of the evidence about the discussions dealing with the pay-out of personal leave entitlements at the meeting on 17 February 2010. 15
[38] Finally, Ms Gilligan agreed 16 that the final proposal put to Electrolux employees for endorsement did not refer to any agreement to pay out accrued untaken personal leave on retirement or death at the rate that was then applicable.
[39] Ms Harris was also an AMWU employee representative in the negotiation process. Her evidence was that:
“Toward the end of the negotiations with Ms Hines, the matters pertaining to clause 35.4 of the EA were discussed in depth. I distinctly remember that Ms Hines used a whiteboard to explain the Respondent’s position regarding how it proposed to calculate employees’ entitlements to credits of personal leave entitlements at termination of employment. She say ‘it will probably be calculated and paid at the base rate that you are on at the time of leave.”” 17 (sic)
[40] Ms Harris did not take notes in the negotiation meetings. However, her evidence was that she understood that Ms Hines had agreed to the pay-out of personal leave on retirement or death at current pay rates. Notwithstanding this, Ms Harris’ recollection of the details of the 17 February 2010 meeting was "somewhat vague" 18 she agreed that it was possible that the final position proposed by Electrolux was that accrued sick leave would be paid out at the time of death at the accrued rate consistent with the pre-existing arrangement.
[41] Mr Mateos was the AWU official involved in the negotiation of the 2010 agreement. He did not keep notes of the various negotiation meetings. His evidence was that in the course of the negotiations, the matter of the rate for the pay-out of unused used sick leave was discussed in the context of the unions claim for this payment to be at the current rate. He recalled that at one meeting, which I have taken to be the 17 February 2010 meeting, Ms Hines agreed that payments would be at the current rate as the alternative was too onerous. 19
[42] Mr Mateos recalled that after agreement in principle, the two unions advised their members that Electrolux had agreed to the pay-out of personal leave at current rates so that employees voted for the agreement on that basis.
[43] In his evidence, Mr Mateos confused the concept of retirement and resignation and acknowledged he may have confused these concepts in talking to employees. 20
[44] Mr Mateos asserted that the pay-out of untaken personal leave at current rates was at the initiative of Electrolux. 21 He did not recall details of the meeting on 18 February 2010 when the final Electrolux position was put.22
[45] Ms Nitschke was an AWU employee representative who participated in the negotiations for the 2010 agreement. She attended the 17 February 2010 meeting and took limited notes. Those notes did not detail a proposed rate at which accrued untaken personal leave would be paid on retirement or death.
[46] Ms Nitschke's evidence was that:
“I recall that Theressa Hines agreed that sick/personal leave should be paid out upon retirement, redundancy or following death and that a clause to that effect in the Enterprise agreement would reflect this.
Theressa Hines mentioned that perhaps a percentage of sick/personal leave should be paid out upon redundancy. Theressa Hines named two possible percentages, namely 60% and 75%.
I recall that Theressa Hines Human Resources Manager started talking about how sick/personal leave accrued and she stated that a calculation could be based upon those accruals going back through the years.
Participants to this meeting debated this proposition.
The debate was lengthy. I believe that this could have been as long as 45 minutes.
I felt that Theressa Hines was being steadfast in her position and was trying to save the company money.
I recall that Jeff Barnes raised a concern about one Member who had commenced employment in 1965. Jeff Barnes had stated that the Member was initially paid in pounds, shillings and pence and he accrued sick/personal leave in that currency. Jeff Barnes raised the issue that any calculation based upon the years that accruals took place in would be exceptionally difficult.
I believe that there could have been a number of employees who had commenced their employment when the currency was in pounds, shillings and pence.
I believe this because presentations are held for the purposes of recognising the achievement of 25 years and 40 years of service.
I clearly recall that Theressa Hines Human Resources Manager raised her hands in acquiescence as if to gesture that it was getting too difficult to create a calculation for the paying out of sick/personal leave.
I clearly recall that Theressa Hines Human Resources Manager stated that it would be too hard to make up a calculation and that it would be easier to pay out accrued sick/personal leave at the hourly rates of pay at the time of departure.
I remember that Theressa Hines said that it will cost the company a lot of money, but we will pay it at the hourly rates of pay at the time of departure.
I understood this to mean that consensus was reached to include a clause in the agreement that would ensure that accrued sick/personal leave would be paid out to employees at their rate of pay at the time of departure for reasons of redundancy, retirement or death.
I understood that a clause in the agreement would reflect this consensus.” 23
[47] In her evidence, Ms Nitschke linked the earlier negotiated arrangements which were rejected by employees with arrangements negotiated by Ms Hines. 24 Ms Nitschke did not recall the meeting on 18 February 2010 at which the final Electrolux position was put, or the final documented Electrolux position. She was also unable to recall the basis for the discussions about reduced personal leave pay-out discussions.25
[48] Ms Nitschke agreed that the final explanation of the agreement proposal sent out to Electrolux employees did not commit to payment of personal leave at current rates.
[49] Mr Barnes is a long-standing AWU employee representative who was involved in the negotiation of the 2006 and 2010 agreements. His evidence was that, during the 17 February 2010 meeting, Ms Hines agreed that it would be too difficult to calculate sick leave pay-outs at the rate accrued and payment would be made at the current rate.
[50] Mr Barnes did not take notes of the negotiation meetings. He initially asserted that a Mr McIntyre had recently been paid his accrued personal leave on retirement at current rates of pay. However, when shown the calculation methodology, he conceded this was not the case.
[51] In terms of the 17 February 2010 meeting, Mr Barnes somewhat vaguely recalled the unions proposing less than 100% payment of accrued personal leave on redundancy in an effort to negotiate a higher wage increase. 26
[52] Mr Barnes only briefly recalled the 18 February 2010 meeting and did not recall the final Electrolux position paper.
[53] In addition to the witness evidence I have had particular regard to a number of documents provided to me. These are:
● Ms Crisp’s contemporaneous handwritten notes 27 of the meeting on 17 February 2010 which disclosed that the percentage at which the pay-out of accrued personal leave on retirement, death and, separately, redundancy would occur was discussed at some length in the various endeavours to reach an agreed position
● Ms Crisp’s contemporaneous handwritten notes 28 of the 18 February 2010 meeting which closely reflect the Electrolux final position document of that date
● The final Electrolux position of 18 February 2010. 29 I accept the evidence of Ms Crisp and Ms Hines that this document was tabled at the 18 February 2010 meeting which concluded on the basis of an agreed "in principle" position. This document states: “3 individual days sick leave per annum can be taken without medical certification. Accrued Sick leave to be paid out in full to employees on retirement or death (at rate accrued).” And further: “Payout of all accrued sick (personal) leave, at the current rate of pay, on termination of employment for redundancy.30
● The 1 April 2010 advice to Electrolux employees about the agreement to be voted on. This states: “inclusion of personal (sick) leave paid at rate applicable on termination date. This is a significant additional benefit.” 31 Significantly, it makes no mention of the personal leave payable on retirement or death
● The union's log of claims of September 2009 32 which sought the pay-out of sick leave on redundancy but did not request a change to the current agreement arrangements applicable on retirement or death.
Conclusions
[54] It is almost trite to comment that, had Electrolux adopted the practices which Ms Hines asserted had applied, namely the provision of meeting minutes to employee representatives after each meeting, this dispute may not have arisen and would, in any event, have been more easily resolved. Equally it is trite to comment, that, had the agreement content been thoroughly checked the current dispute could have been avoided.
[55] I am satisfied that the evidence is that Electrolux has applied the 2006 and 2010 agreements consistently such that the pay-out of sick leave on death or retirement has been at the rate at which the leave was accrued.
[56] To the extent that the union's position is founded on proposals to pay accrued personal leave on retirement or death which were put to employees and rejected earlier in 2009, I am satisfied that Ms Hines made it clear on 11 February 2010 that the negotiations were commencing anew and that earlier proposals were withdrawn. The evidence of Ms Crisp, Ms Hines and the employee representatives generally confirmed this.
[57] There is no doubt that the negotiations on 17 February 2010 became complex as the employee representatives and Electrolux sought to achieve common ground.
[58] I have concluded that it is likely that a significant element of that confusion related to whether the possible reduction of personal leave payments on termination of employment constituted a reduction in the accrued entitlements or a change in the rate at which those entitlements were to be paid.
[59] On the information before me, I am not satisfied that Ms Hines committed Electrolux to pay personal leave on retirement or death at the then current rate of pay. I have reached this conclusion on the basis of Ms Hine’s evidence but most particularly, of that of Ms Crisp and Ms Crisp’s notes of that meeting. That said, it is likely that Ms Hines made some statement which the employee representatives took as recognition that the payment of accrued personal leave in the event of death or disability could be at the current rate. I think this was an inadvertent comment and most likely reflected her inability to explain the application of the Electrolux policy. For the reasons set out below I have concluded that this comment did not reflect a formal concession or change in the Electrolux position.
[60] I am not satisfied that there was a logical basis for any formal concession (on the rate at which sick leave on death or retirement was) to be made. I have noted that the unions put no formal claims for increased personal leave payments on death or retirement and that this issue arose in the context of the negotiation process. It is clear that higher wage outcomes were being sought and that mechanisms to enable Electrolux to provide for improved wage increases were being proposed. In that context, an agreement to incur higher costs when employees died or retired, appears illogical.
[61] Of even greater significance in this matter is the fact that there is no dispute that an overall "in principle" agreement was not reached on 17 February 2010 and the meeting concluded on the basis that the final Electrolux proposal would be provided on the following day.
[62] The 18 February meeting was particularly significant in that Electrolux presented its final position. This position was comprehensively detailed and it modified earlier positions argued by Electrolux in a number of significant respects. That final Electrolux proposal was clear in its confirmation of the 2006 agreement position that employees were entitled to be paid accrued personal leave on death or retirement at the accrual rate. It was equally clear in expressing a different arrangement to apply in redundancy situations such that accrued personal leave was paid at current rates. Had Electrolux agreed to a different arrangement I consider the 18 February 2010 document and Ms Crisp’s notes of the meeting of that date would have made that clear as it would have involved a significant additional concession which would have been relied on to encourage agreement.
[63] The 18 February 2010 meeting resulted in an "in principle" agreement. Had the unions taken issue with the matter of payment of accrued personal leave in the event of death or retirement, I would have expected it to have been clarified at that stage.
[64] I am satisfied that this “in principle” agreement was substantially reflected in the agreement itself and the explanation provided to employees shortly after 1 April 2010. It is significant that neither the agreement, nor that information reflect the proposition that there was a major concession made on 17 February 2010. Accepting that the unions did not raise this issue at the meeting on 18 February 2010, there is no evidence that this issue was raised by the unions with Electrolux before the vote.
[65] I consider it likely that at least some employees were advised that the agreement they were voting on provided for the pay-out of untaken personal leave at current rates of pay. However, that advice simply does not reflect changes made to the agreement or the documented explanation of the terms of that agreement. The final union correspondence to employees does not endorse the position now put by the unions.
[66] As a consequence, I do not consider that Electrolux agreed, as part of the 2010 agreement negotiations, to pay-out untaken personal leave on retirement or death at the rates then applicable, or that the agreement should be read in such a manner.
[67] In its closing submissions the AMWU has argued, as an alternative position, that I should issue orders voiding the approval of the 2010 agreement. This was not the matter referred to me for determination. It was not addressed by the parties and a legislative basis upon which any such order could be made has not been established. I am not prepared to agree to that request.
[68] Consequently, for the reasons I have set out, I do not consider that a basis for reading the pay-out of sick leave on death or retirement provisions of the 2010 agreement differently to the agreed approach to these provisions in the 2006 agreement, has been made out.
SENIOR DEPUTY PRESIDENT
Appearances:
T Hardie for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).
J Hanson for The Australian Workers’ Union.
L Smith counsel for Electrolux Home Products Pty Ltd.
Hearing details:
2011.
Adelaide:
August 9, 18.
1 (2008) 171 IR 392
2 Discovered document no.34
3 Discovered document no.35
4 Transcript PN1149, 9 August 2011
5 Transcript PN1341-1348, 9 August 2011
6 Transcript PN1366-1382 and PN1536-1544, 18 August 2011
7 Discovered document no.34
8 Discovered document no.35
9 Transcript PN70, 9 August 2011
10 Exhibit E10 (SC1)
11 Transcript PN81, 9 August 2011
12 Transcript PN153-159, 9 August 2011
13 Exhibit AMWU3, para.7
14 Exhibit AMWU3, para.5
15 Transcript PN339-357, 9 August 2011
16 Transcript PN365-400, 9 August 2011
17 Exhibit AMWU4, para.5
18 Transcript PN514-527, 9 August 2011
19 Transcript PN904-910, 9 August 2011
20 Transcript PN932-939, 9 August 2011
21 Transcript PN944-946, 9 August 2011
22 Transcript PN959-979, 9 August 2011
23 Exhibit AWU2, paras.27-40
24 Transcript PN653-658, 9 August 2011
25 Transcript PN689-694, 9 August 2011
26 Transcript PN856, 9 August 2011
27 Exhibit E9 (SC1)
28 Exhibit E9 (SC2)
29 Discovered document no.34
30 ibid
31 Discovered document no.35
32 Discovered document no.29
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