“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v EnergyAustralia Yallourn Pty Ltd
[2017] FWCFB 381
•24 JANUARY 2017
| [2017] FWCFB 381 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
v
EnergyAustralia Yallourn Pty Ltd
(C2016/6544)
SENIOR DEPUTY PRESIDENT DRAKE | SYDNEY, 24 JANUARY 2017 |
Appeal against decision [[2016] FWC 6120] of Commissioner Gregory at Melbourne on 13 October 2016 in matter number C2016/1116.
[1] This decision concerns an application for permission to appeal and an appeal against a decision 1 of Commissioner Gregory handed down on 13 October 2016. The decision of the Commissioner arose from an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers Union (AMWU) for the Commission to resolve a dispute over the rate to be paid to casual employees working overtime under the EnergyAustralia Yallourn Enterprise Agreement 2013.
[2] The dispute arose in circumstances where casual employees are required to perform overtime, being work that extends beyond the 36 ordinary time hours each week provided for in clause 10 of the Agreement. The AMWU submitted to the Commission at first instance that the 25% casual loading provided for in clause 5.3 of the Agreement “must first be accounted for to establish the employee’s ordinary time rate of pay before double-time can be calculated.” EnergyAustralia disagreed and submitted that it was only obliged to pay a casual employee twice the rate of pay applicable for the employee’s classification level as set out in Appendix 1 of the Agreement.
[3] Commissioner Gregory correctly noted that the task before him was to identify the common intention of the parties at the time they made the Agreement.
[4] Commissioner Gregory determined that the relevant words of the agreement did not have a plain meaning because the clause failed to clarify what the “ordinary time rate of pay” was. 2 He therefore had regard to the surrounding circumstances as an aid to the interpretation of the Agreement.
[5] Commissioner Gregory had regard to the provisions contained in the underlying award namely the Electrical Power Industry Award 2010 3 which excluded the casual loading when calculating overtime for casual employees4.
[6] Commissioner Gregory also had regard to “what appears to be the common understanding about how the previous Agreement was to be interpreted and applied.” 5
[7] He then found that that the casual loading was not to be included in the calculation of overtime and dismissed the application.
Grounds of Appeal
[8] The AMWU submitted that:
1. The Commissioner erred in his interpretation of clause 5.3 of the Agreement. 6
2. The Commissioner failed to correctly apply the established principles for the interpretation of agreements in so far as he departed from the plain and ordinary meaning of the words used in the Agreement. 7 Alternatively if there was ambiguity, he took into account an irrelevant consideration namely the provisions of the underlying award8 and the submission that there was a common understanding that this was how the predecessor agreement had been applied when there was no evidence to that effect.9
3. The Commissioner failed to correctly consider and apply relevant authorities. 10
4. The Commissioner failed to give sufficient reasons for his decision. 11
[9] The AMWU submitted that it was in the public interest that permission to appeal be granted because:
1. It is in the public interest that enterprise agreements are applied and interpreted correctly in accordance with established principles of interpretation. 12
2. The correct interpretation of the agreement is of particular importance as it goes to a fundamental term of employment. The clause in question governs the remuneration for a significant number of employees including current and future employees. 13
3. The agreement applies to a site in regional Victoria and if the interpretation put forward by the AMWU is a correct then there will be an increase in the take-home pay and spending power for the affected employees with a consequential economic benefit within the local region. 14
Submissions of the AMWU
[10] The AMWU relied on the submissions made at first instance that there was no uncertainty or ambiguity in clause 5.3 of the Agreement. 15
[11] It submitted that the ordinary time rate of pay for casual employees is the amount derived by taking the relevant weekly rate of pay for the classification in question and dividing it by 36 and adding a casual loading of 25%. 16
[12] It is this ordinary time rate of pay that is the base figure for calculating double-time as the phrase is used in paragraph 6 of clause 5.3. 17 It submitted that there was nothing in the text of the Agreement as a whole, the place and arrangement of clause 5.3 or the legislative context under which the Agreement was made which would serve to contradict the plain and ordinary meaning of the words used in clause 5.3.18
[13] Further, the AMWU submitted that the Commissioner took into account an irrelevant consideration namely the provisions in the Electrical Power Industry Award 2010 in circumstances where the Award did not apply to the employees covered by the agreement. 19
[14] Further, it submitted that the Commissioner’s conclusion that there was a common understanding that the previous agreement had been interpreted and applied in the manner set out by EnergyAustralia was made in error because there was no evidence to that effect before the Commission. 20
[15] The AMWU further submitted that the Commissioner had failed to give adequate reasons for his decision. 21
[16] The AMWU submitted permission to appeal should be granted because the decision was not a discretionary decision and that the decision is attended with sufficient doubt as to warrant reconsideration.
[17] Further, it submitted that if the decision is wrong it is in public interest that it be corrected otherwise a manifest injustice will have occurred. 22 Further it submitted that it would be contrary to the public interest for the clause to be applied incorrectly.23 It further submitted that it would be in the public interest as its interpretation would lead to higher remuneration for casual employees and this would have a flow on effect with a consequential benefit to the local region.24
Submissions of EnergyAustralia
[18] EnergyAustralia submitted that permission to appeal should be refused. It submitted that the decision does not manifest any error nor is it attended by sufficient doubt to warrant reconsideration. It submitted that the matter does not raise any issue of importance or general application; there is no diversity of decisions at first instance such that guidance from an appellate court is required; the decision at first instance does not manifest an injustice; the result is not counterintuitive and the legal principles applied are not dispute harmonious when compared with recent decisions dealing with similar matters. 25
[19] It submitted that the case concerned a narrow question of the interpretation of a particular clause in a particular enterprise agreement and even if the decision is wrong the calculation of overtime occasionally worked by 10 to 15 employees is hardly a central one. EnergyAustralia submitted in response to the AMWU’s claim about an impact on the local economy, that any impact would be negligible at best and would not attract the public interest.
[20] EnergyAustralia submitted that the Commissioner did not err in his interpretation of clause 5.3 of the Agreement and he did not fail to properly apply the relevant principles of construction. It submitted that it was clearly open for the Commissioner to determine that the phrase double-time in clause 5.3 had more than one meaning as the clause does not expressly state whether the casual loading should be included or excluded from the calculation of overtime.
[21] EnergyAustralia submitted that the use of the words “for working ordinary time” in clause 5.3 means that the only time the casual loading is paid is when the employees is working ordinary time. 26 It submitted that the use of the word “plus” before the casual loading suggests that this is a separate component of a casual employee’s wage and not part of an all-purpose rate of pay.27 It submitted that the expression ordinary rate of pay in the paragraph 6 of clause 5.3 means the hourly rate of pay without the casual loading.28
[22] EnergyAustralia relied upon its submissions at first instance and submitted that clause 5.3 makes clear that the casual loading is paid in lieu of paid leave entitlements and other attributes of full time and part time employment. It submitted that weekly employees accrue various forms of paid leave on the basis of the average number of hours of ordinary time they are contracted to work and not on hours worked in excess of hours of ordinary time worked i.e. overtime. 29 It submitted that its submission that the casual loading is only payable on ordinary hours of work is consistent with this purpose.
[23] EnergyAustralia submitted that if overtime is a “penalty rate” then clause 5.3 makes it clear that it is paid at the ordinary rate of pay and that means the casual loading is excluded. 30 It submitted that the casual loading was not included when penalty rates were calculated.31 It was conceded that there was no evidence before the Commissioner or the Full Bench about how penalty rates were paid.32
[24] EnergyAustralia accepted that clause 5.3 does not expressly state what the double time applies to. 33 Having determined that the relevant words did not have a plain meaning the Commissioner correctly had regard to the surrounding circumstances.34 in particular the awards relied on by the parties and that the predecessor agreement had been interpreted and applied in a manner consistent with how EnergyAustralia says the Agreement should now be interpreted and applied.35
[25] EnergyAustralia submitted that despite the underpinning award no longer applying the Agreement necessarily has a relationship to it. 36 The legislative context in which the Agreement was made requires the drafters to have regard to the equivalent provisions in the Electrical Power Industry Award. It submitted there was no evidence of any intention to improve on the terms of the Electrical Power Industry Award in relation to the calculation of overtime payments for casual employees. It submitted that the Statutory Declaration provided by EnergyAustralia in support of the approval of the Agreement made no mention of the provision in relation to overtime for casuals being more beneficial than that provided in the underpinning award.37
[26] The Statutory Declaration relied upon to support this contention was not before the Commissioner at first instance. EnergyAustralia submitted that if there had been a mutual intention to improve on the Electrical Power Industry Award there would have been evidence of a claim to that effect in the prior negotiations and there was no such claim. 38
[27] EnergyAustralia submitted that the Electrical Power Industry Award excluded the casual loading from the calculation of overtime and that this was an objective fact that was in the contemplation of the parties at the time when they were negotiating the Agreement. 39 It submitted that the absence of a clearly expressed intention to depart from how the Electrical Power Industry Award deals with overtime weighs in favour of the Agreement being interpreted consistent with the Award.40
[28] It submitted that the unchallenged evidence of EnergyAustralia at first instance was that the wording of clause 5.3 was substantially the same as the wording of the equivalent clause in the predecessor agreement; the AMWU was party to that agreement; this agreement was applied in the same way and the AMWU had never challenged this interpretation. 41 EnergyAustralia accepted that it had more recently increased the number of casual employees it directly employs, however it submitted that this did not contradict its evidence about the application of the predecessor agreement. EnergyAustralia submitted that it was open for the Commissioner to accept this evidence as part of the surrounding circumstances to the Agreement and to infer that it appeared to be within the common contemplation of the parties.42
[29] At the hearing EnergyAustralia accepted that there was no evidence before the Commissioner at first instance or before the Full Bench about how casuals had been paid for any overtime worked under the previous agreement or if they did in fact work any overtime . 43
[30] EnergyAustralia submitted that Commissioner Gregory provided adequate reasons for his decision. 44
[31] Further it submitted that even if the decision was attended by error, it is nevertheless the correct decision. It submitted that the use of the term double time means double the employee’s base rate of pay for the overtime period exclusive of any other loadings, penalties or allowances. 45 It contends that the wording of the Agreement supports its construction that the casual loading is a separate component of the casual employee’s rate of pay and only payable during ordinary time. Had the parties intended otherwise one would have expected to see a reference to the casual employees “all-purpose rate” or “base rate inclusive of casual loading” or base rate for all hours worked. It submitted that its construction is supported by a similar provision in clause 5.2 in relation to part-time employees. EnergyAustralia further relied upon the wording in other clauses 18.4 and 18.5 of the Agreement to support its contention that, when the Agreement is looked as a whole, where the parties intended a payment to be included for other purposes it expressly said so.46
The AMWU in reply
[32] The AMWU submitted that the Full Bench should not receive the additional evidence relied upon by EnergyAustralia. It submitted that it was available at the time of the hearing before the Commissioner. Further it submitted that the Statutory Declaration is not evidence of the mutual intention of the parties as it was prepared after the Agreement was made. 47 Further it submitted that Statutory Declaration does not assist EnergyAustralia. Appendix 6 to the Statutory Declaration which sets out the more beneficial provisions says “Minimum engagement 8 hrs or full shift (c.f. minimum engagement of 3 hours) All OT paid at double time (c.f time and a half for the first 2 hours & double time thereafter)”. The letter to employees simply advised that “the casual loading application has been further detailed to identify that it is in lieu of all paid leave, paid personal/carer’s leave, compassionate leave, public holidays not worked, notice of termination and other attributes of full-time and part-time employment, nor are casual employees entitled to parental leave by the Fair Work Act.” It was submitted that these documents do not make out the submissions put by EnergyAustralia.48
[33] The AMWU submitted that the clause relied on by EnergyAustralia in relation to payments of penalties for casual employees raises the same issue. It also referred to clause 10.3 which provides that employees working certain shifts are paid a loading at of their normal rate of pay. It submitted that for the same reason when calculating penalty payments the casual loading is included. 49
Nature of the appeal
[34] Appeals brought pursuant to s.604 of the Act involve an appeal by way of re-hearing, and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. A person aggrieved by a decision may only appeal the decision with the permission of the Commission. There is no right to appeal. Section 604 of the Act provides:
“604 Appeal of decisions
(1) A person who is aggrieved by a decision:
(a) made by the FWC (other than a decision of a Full Bench or the Minimum Wage Panel); or
(b) made by the General Manager (including a delegate of the General Manager) under the Registered Organisations Act;
may appeal the decision, with the permission of the FWC.
(2) Without limiting when the FWC may grant permission, the FWC must grant permission if the FWC is satisfied that it is in the public interest to do so.
Note: Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400).
(3) A person may appeal the decision by applying to the FWC.”
[35] If we are satisfied that it is in the public interest to do so, we must grant permission to appeal.
[36] The test of assessing whether the public interest is enlivened is discretionary, involving a broad value judgement. In GlaxoSmithKline Australia Pty Ltd v Colin Makin 50, the Full Bench summarised the test for determining the public interest as follows:
“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]
[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
[37] Otherwise, the grounds for granting permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused 51.
[38] As the Full Bench said in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited: 52
“The nature of the decision that is the subject of this appeal depends on a consideration of the determinations the Commission was required to make. In this case the Senior Deputy President was resolving a dispute by arbitration by answering questions that involved interpreting the Agreement. There is no discretion involved in such a task. It follows therefore that, if permission to appeal is granted, we must determine whether the interpretation of the Agreement adopted by the Senior Deputy President is correct.” 53
Consideration
[39] Both parties accepted that the Commission should follow the approach set out in Golden Cockerel in regard to interpreting the Agreement and this was acknowledged by the Commissioner at first instance.
[40] Paragraphs 4, 5 and 6 of Clause 5.3 provides as follows:
“A casual employee for working ordinary time shall be paid per hour one thirty-sixth of the weekly rate prescribed in this agreement for the classification of work performed plus a loading of 25% of that weekly rate. A casual employee is entitled to penalty rates applicable to rostered shifts work by the employee based on the ordinary rate of pay.
The casual loading is in lieu of all paid leave, paid personal/carer’s leave, compassionate leave, public holidays not worked, notice of termination and the other attributes of full-time and part-time employment. Nor a casual employee is entitled to parental leave except in circumstances provided by the FW Act.
Casual employee shall be paid overtime for all hours worked in excess of ordinary hours on any day (i.e. eight hours/7 hours 12 minutes per day/ shift length). Except as provided by Clause 13 – Public Holidays of this agreement, all time worked which is in excess of ordinary daily as shall be paid at double time.”
[41] We are satisfied that the words in the Agreement are not ambiguous or uncertain. The clause sets out how you calculate the ordinary time rate for casual employees and that rate includes the casual loading. The Agreement provides that casual employees are entitled to double time for working overtime. We are satisfied that that double time means double the amount paid for working ordinary time. We are satisfied that, in the absence of express words excluding the casual loading from the calculation of overtime, on its ordinary meaning, the clause provides that the loading is included when calculating overtime payments.
[42] We do not accept the submission that paragraph 5 of clause 5.3 supports EnergyAustralia’s contention that the casual loading is not included in calculating overtime payments. That weekly employees do not accrue leave on overtime is not material. This paragraph does no more than describe the historical basis of the inclusion of the casual loading. For example such a provision is found in the Electrical Power Industry Award 2010 yet that Award expressly provides that the casual loading is not included when calculating overtime and penalty rates. 54 If the construction put forward by EnergyAustralia were accepted then this exclusion would be unnecessary.
[43] There is nothing in the clauses relied upon by EnergyAustralia that assists the interpretation of clause 5.3. One because the clauses 18.4 and 18.5 do not apply to casual employees and further the clauses both include and exclude certain payments.
[44] We therefore find that Commissioner Gregory erred when he found that the clause was uncertain.
[45] Even if the clause is uncertain we consider that Commissioner Gregory erred when he relied upon the Electrical Power Industry Award 2010 to support the interpretation put forward by EnergyAustralia. This is because the Agreement expressly excludes the Award and further the Award expressly excludes the payment of the casual loading from the calculation of overtime. So it is not a comparison of like for like. It could equally have been concluded that the parties were on notice of the need to expressly exclude the casual loading from the calculation of overtime and they did not.
[46] We also consider that Commissioner Gregory erred when he found that it was the common understanding of the parties that this was how the previous agreement had been interpreted and applied. We do so because there was no evidence before the Commission on which he could make this finding. We reject the submission that such a finding was able to be inferred from the evidence that the clause was in the same terms as the predecessor agreement; that the unions or the employees did not make any claim for the inclusion of casual loading in the overtime payment; and that this is how the predecessor agreement had been applied.
[47] Before Commissioner Gregory the parties made oral submissions in support of the written submissions filed. No evidence was called before Commissioner Gregory.
[48] In relation to the finding of Commissioner Gregory that there was a common understanding about how the previous agreement applied EnergyAustralia submitted at first instance that the relevant provision in predecessor agreement was in substantially the same terms. 55 The AMWU was a signatory to both agreements and EnergyAustralia was not subject to any claims from the AMWU or any other signatory unions during the previous round of enterprise bargaining in 2012/13 to extend the 25% loading on the classification rate for working ordinary time to being applied for ‘all purposes” as they are asking the FWC to interpret the current words now.56
[49] The AMWU submitted at first instance that the genesis of the dispute was that EnergyAustralia had not regularly employed casual employees but only recently started to do so more frequently, which had caused the clause to come under significant scrutiny. 57 EnergyAustralia accepted that it had not employed as many casuals as it currently did.58
[50] There was no evidence before the Commissioner that casual employees under the predecessor agreement worked overtime. There was no evidence before the Commissioner if they did work overtime what they were paid. There was no evidence before the Commissioner that the employees or the AMWU knew what the casual employees were paid under the predecessor agreement if they did in fact work overtime. It was not possible to conclude that there was any common understanding about how the clause was applied.
[51] We are satisfied that the decision at first instance is attended with sufficient doubt to warrant its reconsideration and we have decided to grant permission to appeal.
[52] It was put that if we found there was uncertainty or ambiguity, then Full Bench should either remit the matter or hear and determine it ourselves. EnergyAustralia submitted in that circumstance that the parties should be provided with a further opportunity to put additional evidence and submissions.
[53] However given our conclusion that clause is not uncertain or ambiguous we consider it appropriate to determine the matter ourselves without a further hearing.
Conclusion
[54] We are satisfied and find that the casual loading should be included in the calculation of overtime for casual employees for the reasons we have provided. The appeal is allowed. The decision of Commissioner Gregory is quashed.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr D Vroland for the appellant
Mr W Spargo for the respondent
Hearing details:
2016
Melbourne
December, 13
1 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers Union (AMWU) v EnergyAustralia Yallourn Pty Ltd[2016] FWC 6120
2 Ibid at [24] and [30]
3 MA000088
4 [2016] FWC 6120 at [39]
5 Ibid
6 Exhibit A1 at [12]-[13] and ground 1 of the notice of appeal
7 Ibid at [14] and ground 2 of the notice of appeal
8 Ibid at [15] and ground 3(a) of the notice of appeal
9 Ibid at [16] and ground 3(b) of the notice of appeal.
10 Ground 4 of the notice of appeal.
11 Ibid at [17] and ground 5 of the notice of appeal
12 Exhibit A1 at [9]
13 Ibid at [10]
14 Ibid at [11]
15 Ibid at [13]
16 Appeal book page 32 at [7]-[8]
17 Ibid page 33 at [11]
18 Ibid at [13]
19 Exhibit A1 at [15]
20 Ibid at [16]
21 Ibid at [17] and Transcript at PN 72
22 Exhibit A1 at [9]
23 Ibid at [10]
24 Ibid at [11]
25 Exhibit R2 at [9]-[12]
26 Transcript at PN 106
27 Ibid
28 Ibid at PN 111
29 Appeal Book at page 35
30 Transcript at PN 123
31 Ibid at PN 111
32 Ibid at PN 113
33 Ibid at PN 126
34 [2016] FWC 6120 at [17]
35 Ibid at [18]
36 Ibid at [21]
37 Ibid at [24]
38 Transcript at PN 146
39 Exhibit R1 at [24]
40 Ibid at [26]
41 Ibid at [29]
42 Ibid at [31]
43 Transcript at PN 113-117,123, 171-172
44 Exhibit R1 at [33]-[35]
45 Transcript PN 190
46 Ibid at PN 193-197
47 Ibid at PN 228-229
48 Ibid at PN 229-232
49 Ibid at PN 235-237
50 [2010] FWAFB 5343
51 Esso Australia Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) & Ors [2015] FWCFB 210 at [7]
52 [2014] FWCFB 7447
53 Ibid at [7]
54 MA000088 at clause 13
55 Appeal Book at page 36 at 1.11-1.12
56 Ibid at page 37 at 1.18
57 Ibid at page 13 at PN 16
58 Ibid at page 24 at PN 117-118
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