“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v Fonterra Australia Pty Ltd

[2015] FWC 1486

[2015] FWC 1486

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
Fonterra Australia Pty Ltd
(C2014/5447, C2014/5449, C2014/5603, C2014/5614)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 4 MARCH 2015

Alleged dispute regarding implementation of a drug and alcohol policy - whether implementation of blood alcohol content limit of 0.02% was an extra claim which was precluded by the no extra claims provisions in the relevant enterprise agreements - implementation of the limit not found to be an extra claim.

[1] On 17 July 2014 the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) lodged two applications regarding disputes concerning the intention of Fonterra Australia Pty Ltd (Fonterra - the Respondent) to implement a drug and alcohol policy on 1 August 2014. The applications were made under s.739 of the Fair Work Act 2009 (the Act) and in accordance with the dispute resolution provisions of the Fonterra (Maintenance Services: Cobden, Cororooke, Stanhope and Darnum) Union Collective Agreement 2013 1 (the four sites agreement) and the Fonterra (Echuca) Agreement 2013 Part II2 (the Echuca agreement which together with the four sites agreement will be jointly referred to as the agreements).

[2] The ‘Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australia Manufacturing Workers’ Union (AMWU) lodged two separate applications under s.739 of the Act regarding the dispute on 28 July 2014.

[3] The Fair Work Commission (the Commission) convened a conference on 14 August 2014 which was unsuccessful in resolving the disputes. The conference concluded on the basis that the Commission was asked to determine the disputes. The applications were listed for hearing on 16 and 17 October 2014.

[4] Mr Kelvin Reidy appeared for the CEPU, Mr David Vroland appeared for the AMWU and Mr Jonathan Forbes of Counsel appeared with permission for Fonterra.

[5] Mr Damian King, an Organiser with the CEPU; Mr Greg Porter, an electrician at Fonterra’s Darnum site and CEPU shop steward since 2011; and Mr Ross Maxwell, an electrician at Fonterra’s Echuca site and CEPU shop steward since 2000, gave evidence for the CEPU. Mr Daniel Miller, an Organiser with the AMWU, gave evidence for the AMWU. Mr Rick Carpenter, National Human Resources Manager - Operations and Employee Relations; Mr Richard Raymond, Regional Manager - Milk Supply North; Ms Denise Bergles, Workers Compensation Manager Australia; Ms Kelli Sullivan, Human Resources Manager - East Region; Mr Derek Woodworth, Echuca Site Manager; and Mr Ted Eftimiadis, now semi-retired but previously employed by Bonlac Foods Pty Ltd from 1991 to 2001 in a human resources and industrial relations role, gave evidence for Fonterra.

[6] On 21 October 2014 after the Commission had reserved its decision, the CEPU sought permission to submit further material. The Commission handed down a decision declining to admit the further material on 3 November 2014 3.

[7] For the reasons set out below, I find that Fonterra’s decision to implement a drug and alcohol policy is not precluded by the agreements; does not constitute a claim for the purposes of the no extra claims provisions of the agreements; and is therefore not in breach of the no extra claims provisions of the agreements. Accordingly, I decline to make the orders sought by the CEPU and AMWU.

Background

[8] As noted above, the disputes concern the decision by Fonterra to implement a drug and alcohol policy which effectively provides that employees must not present for work with a blood alcohol content (BAC) of 0.02% or above. While neither the CEPU nor the AMWU object to a drug and alcohol policy per se, they both contend that the policy to be implemented by Fonterra is inconsistent with the premise on which the availability allowance payable to maintenance and electrical employees participating in an availability roster. The availability allowance is set out in the agreements and has operated since its negotiation and introduction in the 1990’s. Both the CEPU and AMWU submit that the availability allowance was predicated on employees maintaining a BAC reading of 0.05% or less.

[9] While Fonterra’s drug and alcohol policy had been under development for several years, it was only in March 2014 that Fonterra initiated consultations with employees and unions regarding the draft policy. Those consultations resulted in a number of changes being made to the draft policy, with the only unresolved issue relating to the BAC limit specified in the policy. Further, in August 2013 Fonterra’s parent company, Fonterra Co-operative Group Limited, finalised a policy which required all Fonterra business units to establish clear drug and alcohol requirements and guidelines within global parameters, with those global parameters effectively specifying a BAC limit of 0.02%

The CEPU’s Submissions

[10] The CEPU submitted that an availability roster had operated at each of the sites for over ten years, with employees on the roster receiving an availability allowance. The availability allowance, the CEPU submitted, was paid in consideration of the inconvenience and limitations placed on employees as a result of having to remain in proximity to their work site and in a fit state to return to work.

[11] The CEPU acknowledged that Fonterra had no written policy applying at the sites dealing with BAC limits for employees but submitted that the accepted understanding was that the BAC limit which applied to drivers in Victoria applied to employees, i.e. 0.05%. The CEPU further submitted that it was this limit that had always applied to maintenance employees while on the availability roster and was the limit accepted by Fonterra.

[12] The CEPU further submitted that Fonterra did not raise the drug and alcohol policy during the negotiations for the agreements, only disseminating its proposed policy in March 2014. The CEPU rejected the proposed policy on the basis that it constituted an extra claim which should have been raised by Fonterra in the context of the enterprise agreement negotiations. The CEPU characterised lowering the BAC limit from 0.05% to 0.02% as an extra claim, submitting that as a result of common understanding a BAC limit of 0.05% was a condition of employment. The CEPU added that Fonterra was prohibited from making extra claims due to the express wording of the no extra claims provisions in the agreements.

[13] Against that background, the CEPU sought a determination that Fonterra is prohibited from lowering the BAC limit during the operation of the agreements.

The CEPU’s Evidence

[14] Mr King’s evidence was that the availability call back roster was introduced at the Echuca site in 1999 and became a term of the enterprise agreement covering the site in 2001 (at the time Nestlé was the owner of the site). As to the Cobden, Darnum and Stanhope sites, Mr King attested that an availability roster was introduced in the early 1990’s and was included in enterprise agreements covering the sites in the 1990’s (Bonlac owned the sites at that time) 4.

[15] Mr King, who attested that he was involved in the negotiation of the agreements which introduced the availability allowance, stated that in negotiating the 2001 agreement covering the Echuca site, Nestlé acknowledged that one of the considerations underpinning the allowance was the requirement for an employee on the availability roster to remain below a BAC limit of 0.05%. This he said was recognised as a lifestyle restriction which extended beyond an employee’s ordinary hours of work. Mr King also attested that the same acknowledgement was made by Bonlac management in the 1990’s in the negotiations regarding the call back arrangements relating to its sites 5.

[16] As to discussions on the issue in the recent round of negotiations leading up to the four sites agreement, Mr King attested that in explaining the unions’ log of claims to Fonterra he indicated that one of the reasons warranting an increase in the availability allowance sought by unions was the lifestyle restriction associated with having to remain below a BAC reading of 0.05% at all times an employee was on the availability roster. Further, Mr King indicated that in responding to the unions’ claim Fonterra acknowledged that the requirement to stay below a BAC of 0.05% was a restriction but that adjusting the allowance in line with the wage increases provided for in the four sites agreement provided adequate compensation for this restriction. Unions ultimately accepted Fonterra’s approach on the claim 6.

[17] Mr King’s further evidence was that Fonterra’s intention to introduce a drug and alcohol policy was not raised in the negotiations for the four sites agreement 7. As to the policy itself, Mr King attested that in March 2014 Fonterra informed its maintenance employees of its intention to implement a drug and alcohol policy. At that time the draft policy provided for a BAC of 0.00%. Fonterra subsequently consulted with the CEPU about the policy and in July 2014 advised that its position on the BAC limit had changed and now was that “Workers are expected to maintain a 0.00 BAC with a tolerance of 0.02 ...” In other words, an effective BAC limit of 0.02%.

[18] Mr King also attested that in those consultations on the policy Fonterra had not cited any instances/incidents the explicit BAC limit was intended to address or justification for the proposed BAC limit on work health and safety grounds. Mr King stated that most other food industry workplaces do not have any arrangements which specify a particular BAC limit, though he did cite two examples of other food manufacturers who applied a BAC limit of 0.05% 8.

[19] Under cross examination Mr King:

(i) reiterated that in outlining the unions’ log of claims at the initial bargaining meeting for the four sites agreement in September 2013 he had indicated that the reason for seeking an increase in the quantum of the availability allowance was that people considered the requirements to stay below a BAC of 0.05% to be an onerous requirement on some occasions 9;

(ii) stated that the need to remain under a BAC of 0.05% had been acknowledged by company representatives and there has never been anything to the contrary suggested 10;

(iii) acknowledged that the Echuca agreement included a provision indicating that participation in the availability roster was voluntary, though the four sites agreement did not incorporate an equivalent provision 11;

(iv) did not accept that an employee who had a BAC reading under 0.05% is not necessarily fit to work 12;

(v) confirmed that the Memorandum of Understanding (MOU) from the early 1990’s reflecting the agreement reached on the availability roster/allowances issue did not explicitly refer to 0.05% on the basis that it was never considered necessary to do so 13;

(vi) acknowledged that all of the issues raised by the CEPU as part of consultations on the drug and alcohol policy were addressed with the exception of the level of the BAC limit 14; and

(vii) stated that in principle agreement on the four sites agreement was reached on 10 December 2014 15.

[20] Mr Porter 16 and Mr Hay17 both attested inter alia that tradespersons at the Darnum and Echuca sites understood that the requirement was that while on the availability roster employees were to stay below a BAC of 0.05% and there have been no problems. Mr Porter also attested that imposing a BAC limit of 0.02% would be an additional and greater restriction on his social life and that of other tradespersons on the availability roster. Mr Hay further attested that the availability allowance and related provisions in the Echuca agreement were negotiated and agreed on the basis of a BAC limit of 0.05%.

[21] Under cross examination both witnesses confirmed their understanding that the approach applying at Fonterra regarding alcohol and the availability roster was that “if you’re right to drive, you’re right to work”. Mr Porter also stated that he had never had a discussion with his supervisor or manager as to what BAC limit applies at Fonterra or about a BAC limit of 0.05% applying at Fonterra, acknowledging that there was no limit 18. Mr Porter further attested that at the Darnum site where he worked the expectation was that he would be on the availability roster and that throughout the period he had worked at the site all A grade electricians had participated in the roster19. Mr Hay attested that he had not had a discussion with his supervisor or manager as to what BAC limit applies at Fonterra, though he had had a discussion with his supervisor some 10-12 years ago while the Echuca site was owned by Nestlé during which a BAC limit of 0.05% was described as the accepted level20. Mr Hay confirmed that his participation in the availability roster was voluntary21.

The AMWU’s Submissions and Evidence

[22] The AMWU submitted that Fonterra’s decision to implement its drug and alcohol policy during the life of the agreements amounted to an extra claim on the basis that a requirement to adhere to the policy must be viewed as a condition of employment. The AMWU further submitted that whether or not there was a clear understanding that a BAC limit of 0.05% applied, prior to the drug and alcohol policy being implemented workers could go to work having had a drink and could have a BAC reading greater than zero and not be in breach of any workplace policy. The AMWU contended that that situation had changed as a result of the implementation by Fonterra of its drug and alcohol policy 22.

[23] Mr Miller’s viva voce evidence was that in the context of negotiations for the four sites agreement, Mr King outlined the unions’ log of claims at the initial meeting on 24 September 2013. One of the claims sought an increase in the quantum of the availability allowance paid to maintenance employees on the availability roster. Mr Miller stated that, in doing so, Mr King indicated that the increase being sought recognised the imposition on employees of having to be available and that reference was made to a BAC limit of 0.05%. Mr Miller also attested that by the subsequent bargaining meeting on 8 October 2013, which he did not attend, the unions had revised their claims and dropped the claim seeking an increase in the quantum of the availability allowance.

Fonterra’s Submissions

[24] Fonterra submitted that historically it had not had a drug and alcohol policy or standardised testing arrangements. Further, consultations with staff and unions on Fonterra’s proposed drug and alcohol policy commenced in early March 2014, with that policy amended as a result of feedback received. The finalised policy was implemented on 1 August 2014.

[25] Fonterra submitted that there were four main areas for determination by the Commission:

(i) Does the Commission have jurisdiction to deal with the dispute under either the Act or the agreements’ dispute settlement procedures (the jurisdiction issue)?
(ii) Is it a requirement of the call back provisions in the agreements that an employee is deemed to be ‘generally available’ for work and fit to perform duties if they remain lawfully able to drive a motor vehicle, i.e. stay below a BAC of 0.05% (the construction issue)?
(iii) Does Fonterra’s decision to implement a drug and alcohol policy, which specifies a BAC limit of 0.02%, constitute an extra claim which is in breach of the no extra claims provisions of the agreements (the extra claim issue)?
(iv) Does Fonterra’s decision to implement a drug and alcohol policy constitute an “unjust or unreasonable’ exercise of managerial prerogative warranting the Commission’s intervention (the XPT issue)? 23

[26] On the jurisdiction issue, Fonterra submitted that the unions’ applications in respect of the agreements should be dismissed for want of jurisdiction. More particularly, Fonterra submitted that in respect of the Echuca agreement, the dispute was not about the “... specific interpretation and/or application and/or process of implementation of a term or terms of this collective agreement including incorporated Award provisions” as required by the dispute settlement procedure of that agreement. Similarly, in respect of the four sites agreement, Fonterra submitted that the dispute was not about the “Any dispute or claim (whether such claim or dispute arises out of the operation of this agreement or not) as to wages or conditions of employment of any employees covered by the Agreement ...” as required by the dispute settlement procedure of that agreement.

[27] With regard to the construction issue, Fonterra characterised the unions’ case as relying on the premise that the call back provisions in the agreements contained an unspoken and unwritten prescription that being ‘generally available’ for work requires only that an employee remain below a BAC reading of 0.05% so as to be capable of driving a motor vehicle. Fonterra rejected that view on the basis that the agreements’ provisions were not so conditioned and never had been.

[28] As to the no extra claims issue, Fonterra submitted that the implementation of its drug and alcohol policy was a reasonable exercise of managerial prerogative in a legitimate area of concern which was not currently regulated by the agreement. Further, relying on Wagstaff Piling Pty Ltd v CFMEU 24 (Wagstaff), nothing in the agreement expressly prevented Fonterra from introducing and implementing a drug and alcohol policy and nor is any such constraint to be implied. Fonterra also submitted that its decision to implement a drug and alcohol policy is not the sort of action that no extra claims provisions are designed to prohibit. Accordingly, Fonterra submitted that the unions’ submissions that implementation of the policy was in breach of the no extra claims provisions of the agreements should be rejected.

[29] Finally, on the XPT issue, Fonterra submitted that its decision to introduce the drug and alcohol policy was well within its managerial prerogative to manage its business and was a reasonable exercise of that power. In support of that view, Fonterra referred to a number of factors, including the voluntary nature of participation on the availability roster, the fact that maintenance tradespersons are remunerated for nominating to participate in the availability roster and that its drug and alcohol policy applies universally, i.e. not only to employees on the availability roster.

[30] For all these reasons, Fonterra submitted that the relief sought by unions should not be granted in the terms applied for.

Fonterra’s Evidence

[31] Mr Carpenter’s witness statement 25 provided an overview of the consultation which occurred with employees and unions regarding Fonterra’s drug and alcohol policy and of the policy’s implementation.

[32] Key aspects of Mr Carpenter’s evidence under cross examination were that:

(i) while in principle agreement had been reached on the four sites agreement on 10 December 2013, the agreement was not finalised until April 2014 which, in his view, provided scope for the CEPU to raise concerns about the drug and alcohol policy in the enterprise agreement negotiating forum prior to the agreement being finalised 26;

(ii) he would not characterise the policy as a new claim 27;

(iii) breaches of the policy were likely to result in disciplinary action, noting that prior to the policy being implemented Fonterra could not attach a disciplinary action to a BAC limit as there was no policy in this area 28;

(iv) he accepted there was a greater restriction on how much an employee could drink with a BAC limit of 0.02% compared to 0.05% 29;

(v) the requirement to comply with company policies was a condition of employment 30;

(vi) the document Fonterra Guideline Alcohol in the Workplace 31(the Guide)could be taken to be a guideline for human resources purposes that indicated that there was an understanding of what the term ‘under the influence’ meant, though he had not previously sighted the document32; and

(vii) he did not agree that the Guide meant that Fonterra’s submission that there was no understanding about a BAC limit of 0.05% being the accepted limit was wrong 33.

[33] Mr Raymond’s witness statement 34 set out the history of the Echuca site and the history of call-back provisions and the availability roster and associated allowance at the site. More particularly, Mr Raymond stated that while he had not been involved in the negotiations for the 2001 agreement which first provided for the availability roster and allowance, he had been involved in the negotiations for the subsequent three enterprise agreements. In that regard, Mr Raymond attested categorically that nothing was ever said by either himself or by anyone on the management bargaining team about a BAC limit of 0.05% or the legal driving limit being in any way relevant to the question of whether or not someone was in a fit state to undertake a call-back.35 While Mr Raymond attested that he vaguely recalled having had several brief conversations with Mr Hay and another union delegate about alcohol and call-backs when the site was operated by Nestlé, he disputed the he had ever indicated that a BAC reading of 0.05% was acceptable36.

[34] Under cross examination Mr Raymond stated that he had not seen the Guide until the previous day 37 and had never used a number regarding a BAC level to set parameters around the availability roster38.

[35] Ms Bergles’ witness statement 39 provided a detailed history of the development of Fonterra’s drug and alcohol policy dating back to January 2011, attesting that the development of the policy was a response to a unanimous call from site level managers for greater guidance in responding to drug and alcohol related issues in the workplace40. Ms Bergles further attested that Fonterra’s parent company, Fonterra Co-operative Group Limited, requires that all Fonterra business units establish clear drug and alcohol requirements and guidelines within global parameters, with those global parameters effectively specifying a BAC limit of 0.02%41. Ms Bergles stated that as Fonterra did not have testing arrangements in place prior to August 2014 when its drug and alcohol policy was implemented, it did not have comprehensive records of drug and alcohol safety related incidents42.

[36] Under cross examination Ms Bergles acknowledged that Fonterra’s global standard was finalised in August 2013 43 and that the Guide would have been available to human resource managers and other staff with access to Fonterra’s intranet44.

[37] Both Ms Sullivan and Mr Woodward attested in their witness statements 45 that BAC tolerance levels were not discussed at any stage during the most recent negotiations for the four sites agreement46. Both also attested that during those negotiations they were aware that a drug and alcohol policy was under development, but that they had no sense of when the policy was to be implemented47. Mr Woodward in his witness statement also outlined the safety risks involved in maintenance work, stating that 18 critical/fatal risks had been identified for the Echuca site and 21 for the Stanhope site (which is covered by the four sites agreement).

[38] Key aspects of Ms Sullivan’s evidence under cross examination were that:

(i) employees voted on the four sites agreement on 17 April 2014 48;

(ii) the issue of a BAC limit of 0.05% as justification for an increase in the quantum of the availability allowance did not come up in the context of the negotiations for the four sites agreement 49; and

(iii) she could not point to any document or policy to say that employees were wrong when they thought the BAC limit applying at Fonterra was 0.05% 50.

[39] With regard to the Guide, Ms Sullivan’s evidence was that she had seen the document when inducted into the business in New Zealand. Further, Ms Sullivan accepted that the Guide had been in place since 2008 and that it dealt with the question of blood alcohol content as it provided that an employee is not impaired unless above the legal driving limit 51. Ms Sullivan also stated that she had no reason to refer to the Guide in her work as Human Resources Manager for Fonterra’s Victorian sites52.

[40] In discussing the Guide under cross examination, Mr Woodward stated that in New Zealand, where he worked with Fonterra before taking up his current role, Fonterra had a zero tolerance for drugs and alcohol in the workplace, noting that the requirement applying to dairy workers was set out in the collective agreement 53. Further, Mr Woodward conceded that drawing on the Guide an employee would be considered fit for work as long as they were below the legal limit for driving54.

[41] Key aspects of Mr Eftimiadis’ viva voce evidence were that:

(i) an availability allowance for Bonlac’s Cobden, Cororooke, Stanhope and Darnum sites was first raised in the mid 1990’s 55;
(ii) the availability allowance was provided for people to make themselves available and it was assumed that they would do so on the same basis as for their ordinary hours of work, i.e. they would have to be fit and proper for the job 56;

(iii) his recollection was that the availability allowance was sought on the basis of inconvenience and that there was no discussion of drinking and alcohol in the context of discussing the allowance 57;

(iv) he was unable to provide any insight into what may have been discussed between Mr King and Mr Peter Maren (Mr Eftimiadis’ predecessor at Bonlac) regarding the availability roster and allowance arrangements applying at Bonlac’s Dandenong site 58;

(v) he had never had a conversation about a 0.05% BAC limit because Bonlac knew that it had no way of actually establishing whether an employee was above or below that limit 59; and

(vi) he was never asked what BAC limit applied by any employee 60.

The Issues to be Determined

[42] Both the CEPU and AMWU characterised the issue to be determined as whether the implementation of the drug and alcohol policy by Fonterra was in breach of the no extra claims provisions of the agreements. Both submitted that, based on common understanding, a BAC limit of 0.05% was a condition of employment and that therefore any decision to lower the limit constituted an extra claim which was in breach the no extra claims provisions of the agreements.

[43] Fonterra on the other hand disputed the unions’ submissions, characterising the implementation of the drug and alcohol policy as a reasonable exercise of managerial prerogative.

[44] Against that background, the Commission needs to determine the following two threshold questions.

1. Was there a common understanding a BAC limit of 0.05% applied and that the availability allowance was predicated on that limit?
2. Is the implementation by Fonterra of a drug and alcohol policy in breach of the no extra claims clauses of the agreements?

I will deal with each of these questions separately.

1. Was there a common understanding a BAC limit of 0.05% applied and that the availability allowance was predicated on that limit?

[45] Both the CEPU and AMWU submitted that it was commonly understood that a BAC limit of 0.05% applied and the availability allowance was premised on that limit. Both further submitted that Fonterra and its predecessors had never disavowed employees of that view. Mr King’s evidence that the MOU reached with Mr Maren (the company representative at the time) in the early 1990’s involved a discussion on the BAC issue but that the resulting MOU did not explicitly refer to a BAC of 0.05% 61. The evidence lead by Fonterra disputed the existence of a common understanding and did not identify any instances of managers advising employees that a BAC reading of 0.05% was acceptable.

[46] The CEPU relied on Senior Deputy President Watson’s decision in SCA Hygiene Australasia v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australia Manufacturing Workers’ Union (AMWU) and Construction, Forestry, Mining and Energy Union 62 (SCA Hygiene) as providing guidance on the role of custom and practice in interpreting agreements. In particular the CEPU referred to paragraph 39 of that decision where Watson SDP cited Justice Gray of the Federal Court:

“[39] In relation to the specific role of custom and practice in interpreting agreements, in Health Services Union v Ballarat Health Services Gray J held that:

". . . There have been cases in which it has been held that a common understanding of a term used in an industrial agreement can be used to aid in the interpretation of that term. In those cases, the parties to such agreements have acted on a common understanding as to the meaning of terms in those agreements, and the terms have been repeated in successive instruments, so that it can be said that the parties have entered into the successive agreements on the basis of their common understanding of those terms. Care is needed in approaching any suggestion of a common understanding as to terms used. In the first place, there must be positive evidence of a common understanding. Ordinarily, a failure to advance an argument as to the effect of a particular provision will not constitute such evidence. A failure to advance an argument is consistent with inadvertence, and common inadvertence is not common understanding."” (Citations not included, underlining added)

[47] As noted above, it was disputed that there was a common understanding that a BAC limit of 0.05% applied. While Mr King’s evidence that in settling the MOU in the 1990’s that the BAC limit issue was discussed was not directly challenged, the absence of any evidence indicating that the BAC limit issue was explicitly discussed and/or communicated in the 20 or so years after the MOU was finalised diminishes the weight that can be attached to Mr King’s evidence. Against that background, and drawing on SCA Hygiene, there is no ‘positive evidence’ of a common understanding that a BAC limit of 0.05% applied. The absence of such positive evidence does not support a finding that the availability allowance was predicated on such a BAC limit.

[48] Further, Mr Eftimiadis’ evidence that Bonlac had no means of establishing whether or not an employee was above that BAC limit (see paragraph [41](v) above) begs the question as to why Bonlac would have agreed to a specific BAC limit in circumstances where it was of little or no real consequence.

[49] Much was made during the cross examination of Fonterra’s witnesses of the Guide. By way of background, the Guide states that “People will not return to work under the influence of alcohol.” It defines ‘under the influence’ in the following terms “As a guide, a person would be considered impaired to the point whereby they could not drive a motor vehicle and would be over the legal drinking limit.” The Guide applies to all Fonterra global operations, including Fonterra owned and controlled businesses.

[50] No evidence was led on extent to which the Guide had been promoted within Fonterra other than Ms Bergles’ evidence that it would have been available to human resource managers and other staff with access to Fonterra’s intranet (see paragraph [36] above). As to awareness of the Guide, other than Ms Bergles and Ms Sullivan, most of Fonterra’s witnesses attested that they were not aware of the document and/or had not previously seen the Guide or only seen it recently. Ms Sullivan stated that she had seen the Guide when inducted into the New Zealand business.

[51] More tellingly, however in my view, none of the witnesses for the applicants referred to the Guide in either their witness statements and/or under cross examination. This raises doubts as to what, if any, extent the document served to establish and/or reinforce maintenance employees’ understanding that a BAC limit of 0.05% applied, particularly as the Guide was developed in New Zealand and published on 9 July 2008, i.e. well after the availability roster/allowance had been negotiated and implemented. This arguably diminishes the weight that can be attached to it as supporting a proposition that the availability allowance was predicated on a BAC limit of 0.05%.

[52] Taken together, I am not satisfied that there was a common understanding that a BAC limit of 0.05% applied or that the availability allowance was predicated on a BAC limit of 0.05%. The absence of any such understanding, together with the absence of testing regime to enforce a BAC limit of 0.05% do not support a finding that the BAC limit was a condition of employment.

2. Is the implementation by Fonterra of a drug and alcohol policy in breach of the no extra claims clauses of the agreements?

[53] The no extra claims clause from the Echuca agreement is as follows:

“5. No Extra Claims

The parties to this Agreement agree that they will not, for the life of this Agreement, pursue any extra claims in relation to any matters except where consistent with the terms and conditions of this Agreement.”

[54] The no extra claims clause from the four sites agreement is as follows:

“33. No Extra Claims

The employees and their unions and the Company commit themselves to no extra claims in relation to wages and employment conditions including matters covered by this agreement for the nominal period of the agreement.”

[55] The parties a cited a number of authorities which went to the issue of further claims.

[56] Fonterra relied on Wagstaff which concerned a dispute about whether a union collective agreement enabled the employer to implement compulsory drug and alcohol testing of its employees. The agreement in Wagstaff was silent on the issue of testing but did state that an employee was not allowed to work under the influence of drugs and alcohol. At first instance the relevant Commissioner determined that as the agreement was silent on the issue of drug and alcohol testing an entitlement to undertake testing could not be read into the agreement. A Full Bench of Fair Work Australia overturned that decision on appeal, determining that the agreement did not prevent random drug and alcohol testing. It was this decision which the Full Court was asked to review.

[57] In their joint decision in Wagstaff, Justices Buchanan and Katzmann found:

“45 In any event, we are not satisfied that the Full Bench misconstrued the agreement. The agreement did not expressly prevent mandatory random drug and alcohol testing. Nor did it do so implicitly. It provided no mechanism for objectively ascertaining whether a worker was affected by drugs or alcohol. While the Policy may have emphasised the benefits of self-motivation and cooperation, it did not exclude coercive measures where necessary or desirable in the interests of safety. The Commissioner’s approach treated the content of Appendix I as both legally determinative (which it is clearly not) and an exclusive or exhaustive statement of the powers and discretions available to Wagstaff to manage drug and alcohol issues in the workplace (which it also is clearly not).

46 Cl 48 and Appendix I must be construed in the context of the agreement as a whole and in the relevant statutory context. These provisions had effect subject to the Occupational Health and Safety Act 2004 (Vic) (“OH&S Act”): WR Act, s 17(2). Indeed, the enterprise agreement itself stipulated in cl 16 that:

Nothing in this Agreement shall take precedence over the Occupational Health & Safety Act 2004 (as amended).

47 Section 21 of the OH&S Act imposes a duty on an employer, “so far as is reasonably practicable”, to provide and maintain for employees of the employer a working environment that is “safe and without risks to health”. .... Every employer also owes a duty of care to its employees to take reasonable care for their safety. The Policy acknowledged the risks to safety posed by employees affected by drugs or alcohol at a building site. In those circumstances, at least, an employer who took the precaution of first ascertaining whether drugs or alcohol have been imbibed as a step towards protecting the safety of employees at the workplace may be seen to be attending to its own obligations. Not only did the agreement not detract from its duty to do so, it recognised the paramount force of the statutes which confirm such obligations.

48 The CFMEU nonetheless relied on cl 50 of the agreement to support the contention that mandatory testing is excluded “by necessary implication”.

49 Cl 50 is in the following terms:

50. NO EXTRA CLAIMS
This Agreement is intended to deal comprehensively with all the matters which pertain to the employment relationship between the Company and its employees. The parties acknowledge and agree that the Agreement is in full and final settlement of all matters, claims and demands however described whether or not any matter, claim or demand is specifically addressed within the Agreement

The parties must not, during the term of this Agreement, pursue any further claims about any matter which pertains to the employment relationship. The parties further undertake to not, during the life of this Agreement, initiate any campaigns of direct industrial action intended to secure new and improved rates and conditions during the term of this agreement or at the end of this Agreement.

50 The problem with the CFMEU argument is that, despite cl 50, the agreement should not be construed as dealing comprehensively with all matters relating to the employment relationship (Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 287-288). Statutory instruments (such as awards and the agreement) operate concurrently with contracts of employment, but they do not entirely supplant them (Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 418-421, 456). Most importantly, it was not the intention of the agreement to inhibit either party taking steps to improve safety at the workplace. Cl 50 is to be read subject to cl 16.” (Underlining added)

[58] In his separate decision in Wagstaff, Justice Flick concluded that:

“71 For the reasons given by Buchanan and Katzmann JJ at paras [45] to [50], it is not considered that the Full Bench erred in its construction of cl 48. Nothing in that clause – or the Agreement as a whole – expressly prevents Wagstaff from applying a drug and alcohol testing regime. Nor is any such constraint to be implied.” (Underlining added)

[59] The AMWU submitted that one key difference between the circumstances in Wagstaff and those existing in these disputes was that the testing regime in Wagstaff did not affect the wages or remuneration of employees 63. While I do not accept that proposition given the absence of a common understanding that a BAC limit of 0.05% applied in these disputes, there are nevertheless similarities between the disputes presently before the Commission and the circumstances in Wagstaff. For instance, neither of the agreements in these disputes included provisions relating to and/or referring to drug and alcohol testing. Further, both agreements include no extra claims provisions.

[60] An examination of the agreements indicates only general references to safety, e.g. clause 8 of the four sites agreement states:

“8. Flexibility Commitment
The parties to this Agreement are committed to promoting flexibility in the workplace and increasing efficiencies. It is an expectation of both parties that these commitments be undertaken in the safest possible way, protecting both employees and Fonterra and ensuring that the law is complied with ...” (Underlining added)

[61] Further, Fonterra’s drug and alcohol policy states “The intent of the Drug and Alcohol Policy is to provide a safe place to work and to support this all workers are required to work free of impairment from drugs and alcohol.” 64

[62] Drawing on Wagstaff supports a finding that Fonterra’s decision to implement a drug and alcohol policy is not precluded by the agreements.

[63] Both Fonterra and the applicants relied upon the Full Federal Court’s decision in Toyota Motor Corporation Australia Limited v Marmara 65 (Toyota), which considered whether proposals by Toyota to vary the relevant enterprise agreement were in breach of the agreement’s no extra claims provisions. The CEPU highlighted that the Full Court in Toyota had endorsed the primary Judge’s decision regarding what constituted an extra claim, citing paragraph 37 of the decision (set out below). The AMWU similarly submitted that Fonterra’s decision to implement its drug and alcohol policy meets the definition of claim as set out in Toyota. On the other hand, Fonterra argued that there was no proposal by it to vary the outcome that had been arrived at through bargaining and nor did the implementation of its drug and alcohol policy advance Fonterra’s bargaining interests66.

[64] The Full Court made the following observations in Toyota.

“36 The primary Judge referred to Toyota’s reliance upon the observation of Dowsett J in Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2005) 147 IR 304, made in the context of the relevant employer having offered an employee the opportunity to make an Australian Workplace Agreement under the Workplace Relations Act 1996 (Cth). Dowsett J said (147 IR at 311-312 [27]):

The word “claim” applies [sic – implies?] an assertion of entitlement, moral or legal. An offer is not a claim. If an employer offers an AWA and an employee accepts, there is no claim. The clause has no relevance.

The primary Judge said that, in that passage, Dowsett J was “defining a claim as an assertion of an entitlement as a means of contrasting a claim from an offer”, and that the reference to “moral or legal” was intended to be an “illustrative rather than a comprehensive description of the nature of the entitlement which may be asserted when a claim is made”. His Honour added that Dowsett J did not regard the meaning of the word “claim” to be limited to an assertion of a legal right to an entitlement, as was made plain by the reference to “moral”, and that what Dowsett J meant by that descriptor was “the assertion of an entitlement regarded by the claimant as legitimate or, … an entitlement regarded as due or fitting.”

37 As a matter of ordinary language we accept that a proposal which requires the addressee’s assent, such as an offer to buy a block of land, would not normally be regarded as a claim. However, as the primary Judge considered, to deal with the problem at this level of generality would be to ignore context, which is of paramount importance in this area of the law. His Honour said:

In the context of the scheme for bargaining provided by the FW Act, where agreements are made in resolution of claims pursued through bargaining, a proposal by one party to vary the outcome arrived at in a way which advances its interests is apt to be regarded as a further claim. That is particularly so where the proposed variations are significant and suggest an attempt, as I consider is here the case, to strike a new bargain. Both the ordinary industrial meaning of “claim” and the scheme of the Agreement to which I have referred, are consistent with the construction of “further claims” in cl 4 as encompassing a proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement. Such a proposal is not merely a request or offer, it is also a “further claim” within the intended use of that expression in cl 4.

For reasons which follow, we agree with this passage, and his Honour’s conclusion on this aspect of the case.” (Underlining added)

[65] The question that arises out of Toyota is whether or not Fonterra’s decision to implement a drug and alcohol policy materially “changes the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement.”

[66] Relevant considerations in this regard are first that the agreements are silent on the issue of drug and alcohol issues and testing and my finding (see paragraph [52] above) that that there was no common understanding that a BAC limit of 0.05% applied and that the availability allowance was not predicated on a BAC limit of 0.05%. The issue of whether or not Fonterra’s drug and alcohol policy constituted a condition of employment was canvassed in Mr Vroland’s cross examination of Mr Carpenter. As noted at paragraph [32](v) above, Mr Carpenter’s evidence was that the requirement to comply with company policies was a condition of employment rather than the policies themselves being conditions of employment. Mr Vroland acknowledged the distinction during the hearing 67.

[67] Also highly pertinent is Fonterra’s submission that nothing was changing or being taken away from employees as a result of its decision to implement a drug and alcohol policy 68. For example, a maintenance employee employed under the four sites agreement and on the availability roster would on 31 July 2014 (the day before the policy took effect) be paid an availability allowance of $240.99 per week. The same employee would be paid exactly the same allowance on 1 August 2014 (the day the policy took effect).

[68] Taken together, these considerations do not support a finding that Fonterra’s decision to implement its drug and alcohol policy constitutes a claim for the purposes of the no extra claims provisions of the agreements.

[69] The AMWU also relied on Commissioner Wilson’s decision in Australian Municipal, Administrative, Clerical and Services Union v North East Water 69 (North East Water). That dispute concerned a decision by North East Water to alter its motor vehicle policy to phase out the limited private use category of vehicle. Under that policy some employees were able to use the employer’s vehicles for limited private travel.

[70] In his decision Commissioner Wilson stated:

“[61] The evidence in this matter leads to the view that provision of the vehicles for Limited Private Use amounted to one of the employees' "conditions of employment". Mr Piazza refers to the vehicle being provided to him "[a]s part of my promotion … without any reduction or trade-off in my terms and conditions of employment". His 2009 letter of appointment is consistent with this, referring as it does to a restructure, with the author stating he is "pleased to advise" of Mr Piazza's appointment to the new position. The evidence includes Mr Piazza's quantification of the value of the vehicle to him. Although his ascribed value is not agreed by North East Water, the point is that he saw the provision of the vehicle as having a value to him and that correspondingly the withdrawal of the vehicle would leave him worse off. Mr Kelly's evidence on these points is consistent with Mr Piazza's.

[62] While neither the Act or the Agreement define "conditions of employment", the Act provides that the "main terms and conditions of employment of an employee that are provided under this Act" are those set out in the National Employment Standards, a modern award, an enterprise agreement or workplace determination that applies to an employee and that other conditions may arise from other legislated sources. Employment of the adjectives "main" and "other" in the section and without further limitation plainly identifies that an employee's conditions of employment are not limited to the conditions granted by the Act or an agreement.

[63] The counter argument is that the change to Limited Private Use arrangements by North East Water is a desire on North East Water's part to modify an existing policy, with such modification being within its prerogative to make. The facts of this matter are distinguishable from the cases referred to by North East Water. The Full Court's finding in Wagstaff that the agreement was not an exclusive or exhaustive statement of the powers or discretions available to manage drug and alcohol issues, and that Wagstaff were entitled to implement testing as they saw fit, is a reference to the implementation of the detail of a broad and extensive policy contained within the agreement. While, of course, a decision to use random drug and alcohol tests in contrast to the alternatives is a matter of very important detail, it is nonetheless not at the level of being an alteration of the fundamentals of the conditions of employment. A similar distinction is to be drawn between this matter and that considered in Silcar and Kraft. Silcar concerned notifications about crewing changes within the context of a comprehensive agreement providing a structure of remuneration for employees who did work at the times sought by the company. Kraft concerned the rights of employees to wear their personal effects, but did not involve questions of remuneration.” (Citations not included, underlining added)

[71] In paragraph [63] of his decision, Commissioner Wilson distinguishes between the circumstances in Wagstaff and those before him. His observation that the introduction of a random drug and alcohol testing regime is “not at the level of being an alteration of the fundamentals of the conditions of employment” is equally relevant in the context of the disputes before me. Commissioner Wilson’s finding in North East Water that the change made by North East Water to its vehicle policy constituted an alteration of the conditions of employment are distinguishable from the circumstance existing in the disputes before me in a number of important respects. First, in North East Water the vehicle policy was in place and had been in operation for some time - that is not the case at Fonterra in respect of its drug and alcohol policy. Second, whereas access to a limited private use vehicle was found to be a condition of employment in North East Water on the basis that it was provided in return for the applicant agreeing to undertake additional duties, the absence of a common understanding that a BAC limit of 0.05% applied at Fonterra supports a finding that it was not a condition of employment.

[72] Accordingly, Commissioner Wilson’s decision in North East Water does not support a finding that that Fonterra’s decision to implement its drug and alcohol policy breaches the no extra claims provisions of the agreements.

[73] For the reasons set out above, I find that Fonterra’s decision to implement a drug and alcohol policy:

(i) is not precluded by the agreements;

(iii) does not constitute a claim for the purposes of the no extra claims provisions of the agreements; and

(iii) is not in breach of the no extra claims provisions of the agreements.

[74] In those circumstances I see no need to deal with the jurisdictional or XPT questions identified by Fonterra.

[75] Given my findings above, I decline to make the orders sought by the CEPU and AMWU.

Appearances:

K Reidy for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

D Vroland for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

J Forbes of Counsel for Fonterra Australia Pty Ltd.

Hearing details:

2014.

Melbourne:

October 16, 17.

 1   AE408070

 2   AE402558

 3   [2014] FWC 7874

 4   Exhibit CEPU1 at paragraphs 9 & 10

 5   Ibid at paragraphs 17 & 18

 6   Ibid at paragraph 19

 7   Ibid at paragraph 20

 8   Ibid at paragraphs 30-34

 9   Transcript at PN76

 10   Ibid at PN69

 11   Ibid at PN125-128

 12   Ibid at PN148

 13   Ibid at PN150-153

 14   Ibid at PN211

 15   Ibid at PN229-232

 16   Exhibit CEPU2

 17   Exhibit CEPU3

 18   Transcript at PN311 & PN358-361

 19   Ibid at PN316-325

 20   Ibid at PN386 and PN415-420

 21   Ibid at PN398

 22   Ibid at PN1552

 23   Outline of Submissions - Respondent at paragraph 1.3

 24 (2012) 222 IR 73

 25   Exhibit F1

 26   Transcript at PN498

 27   Ibid at PN501

 28   Ibid at PN509-515

 29   Ibid at PN537

 30   Ibid at PN556-560

 31   Exhibit F3 at Attachment DB3

 32   Transcript at PN572-581

 33   Ibid

 34   Exhibit F2

 35   Ibid at paragraph 26

 36   Ibid at paragraphs 29-35

 37   Transcript at PN710-711

 38   Ibid at PN726

 39   Exhibit F3

 40   Exhibit F3 at paragraph 6

 41   Ibid at paragraphs 31-38

 42   Ibid at paragraph 56

 43   Transcript at PN821-822

 44   Ibid at PN846-850

 45   Exhibits F4 and F5 respectively

 46   Exhibits F4 and F5 at paragraphs 5-10 and 41-45 respectively

 47   Ibid at paragraphs 17 and 46-48 respectively

 48   Transcript at PN883

 49   Ibid at PN903

 50   Ibid at PN951

 51   Ibid at PN991-993

 52   Ibid at PN1005-1011

 53   Ibid at PN1270-1281

 54   Ibid at PN1301

 55   Ibid at PN1045-1048

 56   Ibid

 57   Ibid at PN1053-1054

 58   Ibid at PN1106

 59   Ibid at PN1137

 60   Ibid at PN1157-1158

 61   Ibid at PN152

 62   [2014] FWC 249

 63   Transcript at PN1561

 64   Exhibit F1 at Attachment RC-8 at paragraph 1.2

 65 [2014] FCAFC 84

 66   Transcript at PN1494

 67   Ibid at PN560

 68   Ibid at PN1431

 69   [2014] FWC 6922

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