“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v Gruma Oceania Pty Ltd T/A Mission Foods
[2023] FWC 1453
•27 JUNE 2023
| [2023] FWC 1453 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739—Dispute resolution
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
Gruma Oceania Pty Ltd T/A Mission Foods
(C2023/976)
| COMMISSIONER BISSETT | MELBOURNE, 27 JUNE 2023 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]
On 24 February 2023 the AMWU notified a dispute to the Commission pursuant to s.739 of the Fair Work Act 2009 (FW Act) and in accordance with clause 34 of the Gruma Oceania Pty Ltd Enterprise Agreement 2021 (Agreement). The dispute is in relation to the calculation of overtime payments for employees in receipt of a shift loading.
The application was subject to conciliation before me on 15 March 2023. That conciliation failed to resolve the matter and so was referred for arbitration.
Prior to the hearing of the dispute I granted permission to Gruma Oceania Pty Ltd (Gruma or the Respondent) permission to be represented by a lawyer pursuant to s.596(2) of the FW Act.
JURISDICTION
The matter in dispute was subject to discussions at the workplace level prior to referral to the Commission. I am satisfied, on the basis of the evidence before me, that the terms of the dispute settlement procedure at clause 34 of the Agreement have been complied with.
Clause 12 of the Agreement deals with ‘shifts and rostered days off’. Clause 12.1 is headed ‘shift hours’, clause 12.2 ‘shift loadings’ and clause 12.3 ‘rostered day off arrangements’. Clause 13 of the Agreement is in relation to ‘overtime rates’.
The parties have agreed that the following question be addressed in arbitration:
With regard to subclause 12.2 and 13 of the Agreement, what is the correct calculation of overtime payments for shiftworkers?
Having regard to the terms of the Agreement I am satisfied that the matter on which the parties seek arbitration is a matter arising under the Agreement. The question in particular raises issues in relation to the interaction between clauses 12.2 and 13 of the Agreement.
Clause 34 of the Agreement sets out the dispute settlement procedure. That procedure relevantly allows either party to refer the matter to the Commission for conciliation and, if that does not settle the matter, arbitration if the dispute has not been resolved at the ‘management level’.
I am therefore satisfied that I have jurisdiction to arbitrate the matter.
THE AGREEMENT
As is relevant to the matters in dispute clauses 12.1, 12.2 and 13.1 are set out below.
12 SHIFTS AND ROSTERED DAY OFF
12.1 Shift Hours
Shift arrangements will operate on the following basis:
(a) Day shift may vary between the spread of hours of 6:00am to 6:00pm;
(b) Afternoon shift is any shift where ordinary hours of work commence at or after 2:00pm and finish at or before midnight;
(c) Night shift is any shift where ordinary hours of work commence at or after
10:00pm and finish at or before 6:00am.
These shift arrangements may be altered following consultation between the Employer and affected Employees and by agreement between the Employer and the majority of Employees on the relevant shift.
The Employer commits that it will not seek 12 hour ordinary time shifts for any
Employees during the life of this Agreement.
12.1A Without limiting the operation of clause 12.1, the parties record that as at the date of this Agreement, rosters operate as follows:
(a) Day shift: 6.00am to 2.00pm;
(b) Afternoon shift: 2.00pm to 10.00pm;
(c) Night shift: 10.00pm to 6.00am.
12.2 Shift Loadings
(a) An Employee working an afternoon shift will be paid a shift loading of 15% of his or her base rate of pay for hours worked. An Employee working a night shift will be paid a shift loading of 30% of his or her base rate of pay for hours worked.
(b) The shift loading that applies to an Employee's hours of work on shift is determined by reference to the ordinary hours the Employee is rostered to work (in accordance with clause 12.1) and is not affected by working overtime (whether before or after ordinary hours). For the avoidance of doubt, the applicable shift loading will apply to all hours the Employee works, including overtime hours.
(c) If an Employee who is usually rostered to work afternoon shifts or night shifts instead works on a day shift or afternoon shift at the request of the Employer for less than 5 consecutive shifts ("the temporary shift arrangement"), the Employee will receive a shift loading on his or her base rate of pay for the hours worked on the temporary shift arrangement as follows:
(i) An Employee usually rostered to work night shifts works on a temporary day shift arrangement - 30%;
(ii) An Employee usually rostered to work night shifts works on a temporary afternoon shift arrangement - 30%;
(iii) An Employee usually rostered to work afternoon shifts works on a temporary day shift arrangement - 15%.
(d) For the avoidance of doubt, sub-clause (c) of this clause 12.2 does not apply where the alternate shift is worked for 5 or more consecutive shifts or where, as permitted under the terms of this Agreement, the Employee has transferred to a different shift or roster arrangement.
…
13 OVERTIME RATES
13.1 Other than time that accrues towards an RDO, any time worked: (i) in excess of 38 hours per week; (ii) in excess of 8 continuous hours per day (exclusive of meal and rest breaks); or (iii) on a Saturday is considered overtime and will be paid at a rate of (a) 1.5 times the Employee's base rate of pay as set in clause 10.1 for the first 3.0 hours, and (b) 2 times the Employee's base rate of pay in clause 10.1 for any overtime in excess of 3.0 hours. Time worked on a Sunday is considered overtime and will be paid at a rate of 2 times the Employee's base rate of pay in clause 10.1. In computing overtime, each shift stands alone.
…
During the hearing of the application the AMWU also drew on the wording in clauses 9.3(c) and (d) (which deal with ‘flexible part-time employment’ arrangements. Those clauses state:
9.3 Flexible Part-Time Employment
…
(c) The Employer will post the next week’s roster on the noticeboard on the Monday of the prior week. Where a Flexible Part-Time Employee works time additional to this notified roster, that additional time is paid at the rate of 1.5 of his or her base rate of pay (150%). For the avoidance of doubt, this clause applies in addition to a shift loading (if applicable), but does not compound on the shift loading.
(d) Where a Flexible Part-Time Employee works:
(i) in excess of 36 hours per week; or
(ii) in excess of 8 continuous hours per day (exclusive of meal and rest breaks),
that time is considered and calculated as overtime pursuant to clause 13.1. For the avoidance of doubt, overtime for a Flexible Part-Time Employee is calculated on the Employee’s base rate of pay and the additional payment in clause 9.3(c) (where it might otherwise be payable) does not apply to any overtime hours.
As is also relevant and referenced in clause 13.1, the hourly rates of pay are set out in clause 10.1 (including the adjustment of those wages during the life of the Agreement). That clause specifies the rates of pay applicable on or after 5 December 2020 and the basis of adjustment in the following four years.
SUBMISSIONS AND EVIDENCE
In late 2022 or early 2023 the AMWU raised with Gruma the requirements of regulation 3.46(g) of the Fair Work Commission Regulations 2009 in relation to the requirement that payslips specify ‘any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based amount or other separately identified entitlement’. Following this matter being addressed (and presumably more information being included on payslips) the AMWU said that it became apparent there were conflicting interpretations as to the payment of overtime to employees in receipt of a shift loading.
The AMWU submitted that the words in clause 12.2(b) ‘For the avoidance of doubt, the applicable shift loading will apply to all hours the Employee woks, including overtime hours’ must be taken to mean that overtime is to be paid on the loaded rate (that is the rate of pay inclusive of the shift penalty) and not paid in the manner currently applied by the Respondent.
The AMWU submitted that its interpretation of how the clause should operate is supported by a review of clause 9.3(c) where the parties clearly specified that penalties payable should not compound:
For the avoidance of doubt, this clause applies in addition to a shift loading (if applicable) but does not compound on the shift loading.
[emphasis added]
The AMWU submitted that, if it was the intention that overtime payments would not compound on the shift penalty loaded rate, the parties would have made this clear in the clause. Clause 9.3(c) demonstrates that the parties had clearly turned their minds to the issue of when rates would not compound. That the parties did not specify that the shift loading and overtime penalty would not compound (as they did in clause 9.3(c)) supports a view that the rates should compound.
The AMWU provided uncontested details of how overtime is currently calculated for an afternoon shift worker as follows:
BASE RATE – F2 CLASSIFICATION $28.85 PER HOUR Base rate with afternoon shift loading of 15%: $33.17 per hour ($28.25 + 15%) Overtime loading of 50% (first 3 hours) calculated on the base rate excluding shift loading: $14.425 per hour of overtime ($28.25 x 50%) Total rate paid for each hour of overtime worked (first 3 hours) $47.595 per hour
The AMWU submitted that if the rates compounded as it says they should in accordance with clause 12.2(b) the amount paid for each hour of overtime for the first three hours would be $49.766 per hour.
On the same basis the AMWU said that the Respondent is paying for each hour of overtime that attracts a 100% loading at the rate of $62.02 whereas, if the penalties payable did compound, the applicable rate for such overtime would be $66.355 per hour.
With respect to the interaction between clause 12.2(b) and clause 13, the AMWU submitted that clause 12.2(b) deals with overtime and is a specific provision in relation to shiftworkers. It provides that the applicable shift loading will apply ‘to all hours worked’. It submitted that clause 13 is the general overtime provision. In accordance with the principle that the general provisions cannot override the specific provisions (generalia specialibus non derogani) the AMWU submitted that the specific provisions in clause 12.2(b) must prevail over the general provisions in clause 13.
The AMWU submitted that clause 12.2 deals in full with the payment of shift loadings and overtime penalties and clause 13 cannot be read to reduce the benefit otherwise available under clause 12.2.
In response to the submissions of the Respondent, the AMWU submitted that:
· The first sentence in clause 12.2(b) imports either the 15% or 30% shift loading from clause 12.2(a) and it is clear that the shift loading is not affected by the working of overtime;
· The loaded rate becomes the new base rate for shift workers;
· The reference ‘to all hours worked’ in clause 12.2(b) ensures that the overtime rate is applied on the loaded rate.
The AMWU submitted that the changes in wording across various agreements do not provide support for the construction of clause 12.2(b) advanced by the Respondent. Further it submitted that the various payslips submitted by the Respondent do not support the Respondent’s contentions.
The AMWU submitted that the contentions of the Respondent should be rejected as they reflect no more that the Respondent’s intentions and do not reflect any common intention of the parties when the Agreement was made. To the extent the Respondent relies on past practice to support its contention it is said that the failure of the Respondent to meet its obligations in relation to payslips cannot support an incorrect practice.
The Respondent submitted that the meaning of clause 12.2 and clause 13 have not changed over various iterations of the agreement since 2009. In 2009 the applicability of the shift loading to overtime hours worked was included in the overtime clause itself. The overtime clause in the 2009 agreement specified that overtime is paid on the base rate of pay found in clause 10.1. In the negotiations for the current Agreement the Respondent submitted that reference to the shift loading applying during overtime hours was removed from the overtime clause and put into the shift work clause.
The Respondent submitted that the purpose of clause 12.2(b) is to do no more than make clear that the shift loading to be applied to overtime hours worked is that loading which applies to the ordinary hours worked – that is, even if the overtime falls into a different shiftwork loading time, it is the loading that applied during the ordinary hours that determines the shift loading for overtime. So, for example, if the ordinary hours are worked between 2.00pm and 10.00pm the shift loading is 15%. If overtime is then worked immediately following the afternoon shift by an afternoon shift worker between, say, 10.00pm and 12.00am the shift loading on these hours of overtime worked remains 15% even though the hours when the work is performed fall into the 30% night shift penalty span. This also applies to an employee working night shift entitled to a 30% shift loading who may work overtime between 10.00pm and 12.00am before their shift who would receive the 30% shift penalty for the overtime hours worked.
The Respondent submitted that the determination of the rate payable for overtime is found in clause 13.1 which stipulates that overtime is paid at:
· 1.5 times the Employee’s base rate of pay as set in clause 10.1 for the first 3 hours
· 2 times the Employee’s base rate of pay in clause 10.1 for work in excess of 3 hours
· Sunday work is overtime and paid at a rate of 2 times the employee’s base rate of pay as set in clause 10.1
The Respondent said that clause 10.1 sets out the rates of pay to which the overtime penalty is to apply. This, it submitted, supports its contention as to how overtime is calculated – regardless of any other penalties applying.
The Respondent distinguished clause 9.3(c) relied on by the AMWU. The Respondent said that clause 9.3(c) relates to the payments made in relation to ‘flexible part-time employment’ and the loading under the clause is not an overtime payment but rather a ‘flexing payment’. In this respect the wording in clause 9.3(c) (that rates do not compound) cannot be contrasted to the wording in clause 12.2(b) as they relate to quite different payments. Further, the wording of clause 9.3(d) – which is about payment for overtime hours – makes clear that overtime is calculated on the base rate of pay and does not compound with the ‘flexing payment’.
PRINCIPLES OF INTERPRETATION
There is no dispute, and I accept that the principles of interpreting an agreement are set out in the decision of the Full Bench in AMWU v Berri[1] which states:
[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:
1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i)evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii)notorious facts of which knowledge is to be presumed; and
(iii)evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.
In AMWU v BOC Limited[2] the Full Bench relevantly observed:
[17] …The task of construing an industrial instrument begins with a consideration of the ordinary meaning of the words, read in context, and taking into account the evident purpose of the provisions or expressions being construed. Relevant context will include other provisions of the industrial instrument, read as a whole, and the disputed provision’s place and arrangement in the instrument. The statutory framework under which the industrial instrument is made, or in which it operates may also provide relevant context, as might an antecedent instrument or instruments from which a particular provision has been derived. Regard may be had to relevant context and surrounding circumstances to determine whether there is any ambiguity in a provision of an industrial instrument. The language of an industrial instrument is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. But context is not itself an end, and a consideration of the language contained in the text of the relevant parts of the instrument remains the starting point and the end point in the task of construction. A purposive approach to interpretation is appropriate, not a narrow or pedantic approach.[3]
WHAT DOES CLAUSE 12.2(b) PROVIDE?
Clause 12 of the Agreement is headed ‘Shifts and Rostered Days Off’.
Clause 12.2 is headed ‘Shift Loadings’. Clause 12.2(a) specifies the shift loadings payable for afternoon and night shift (the times of these shifts being defined in clause 12.1A). Clause 12.2(b) is subject to this dispute and deals with the application of shift loadings to overtime hours, clause 12.2(c) sets out the loadings payable when an employee works a temporary shift arrangement and clause 12.2(d) provides clarification of the operation of clause 12.2(c).
There is nothing in clause 12.2 in general or clause 12.2(b) in particular that deals with the payment for overtime when an employee is on shift work and in receipt of a shift loading. Rather, clause 12.2(b) is concerned with the shift loading payable for hours worked, in particular when the hours are overtime hours.
The sentence the AMWU relies on in clause 12.2(b) to support its contention is that ‘the applicable shift loading will apply to all hours work[ed]…including overtime hours’. This sentence does not, on a plain reading, specify that the overtime penalty is calculated on the loaded rate of pay (that is, the ordinary hours plus shift penalty). Rather, the sub-clause is concerned with the applicable shift loading to be paid for overtime hours worked, not the payment of overtime itself.
There is nothing in clause 12 generally or clause 12.2 specifically that supports the AMWU contention that clause 12.2(b) is a specific provision concerned with the payment of overtime for shiftworkers.
My conclusion is supported by a reading of clause 12.2(b) as a whole. The clause reads:
The shift loading that applies to an Employee's hours of work…is determined by reference to the ordinary hours…and is not affected by working overtime…For the avoidance of doubt, the applicable shift loading will apply to all hours the Employee works, including overtime hours.
The sentence commencing ‘for the avoidance of doubt…’ is relied on by the AMWU but it must be read in conjunction with the sentence that precedes it in clause 12.2(b) and as providing clarity to that first sentence. The words ‘for the avoidance of doubt’ create this necessary link. If the second sentence was not in relation to the first sentence, these words would have no work to do.
The first sentence in clause 12.2(b) is about the hours to which the relevant shift loading applies. It is not about the calculation of, or payment for, overtime. The second sentence, in providing clarity to the first sentence, can only be about the hours to which the relevant shift loading will apply.
I find no ambiguity or uncertainty in the clause.
Given this, the AMWU argument that clause 12.2(b) is a specific overtime provision for shiftworkers which cannot be derogated from by the application of the general overtime provisions at clause 13 does not withstand scrutiny.
Clause 13 deals with the overtime penalty payable for overtime hours worked while clause 12.2(b) deals with the applicable shift penalty.
Because clause 12.2(b) does not relate to the calculation of overtime, the distinction sought to be drawn from clause 9.3(c) and (d) is not relevant.
To determine what penalty is payable for overtime worked – regardless of when it is worked – clause 13 must be considered.
Clause 13.1 sets out the overtime rates and is clear that the rate is calculated on the employee’s ‘base rate of pay in clause 10.1’.
Clause 10.1 sets out the hourly rate of pay payable to employees (along with annual increases to that rate payable under the Agreement).
Given my finding above that clause 12.2 does not, contrary to the submissions of the AMWU, establish the penalty payable for working overtime, the calculation of the overtime penalty must be done in accordance with clause 13.1 and hence the rate specified in clause 10.1.
Clause 13.1 does not use language that might be considered ambiguous or uncertain such that there is any confusion as to the basis on which overtime is calculated. It is not permissible to read into clause 13.1 (or clause 12.2(b)) words that are not there to achieve some outcome that might be considered fair and just.
For completeness there is nothing elsewhere in the Agreement that suggests the base rate of pay on which overtime is calculated should include the shift loading paid pursuant to clause 12 of the Agreement (or any other loading). Base rate of pay is mentioned in a number of clauses including clause 9.3(c) and (d), clause 12.2(a) and (c), clause 13.3, clause 18.1. Clause 13.1 and clause 32.4 are the only clauses that make reference to the base rate of pay in clause 10.1. No other clause that references ‘base rate of pay’ suggests that the base rate is anything but that in clause 10.1.
I would further observe that clause 13.1, which sets out the penalty rates payable to overtime worked does not suggest that there is any other basis on which overtime is calculated except for the base rates found in clause 10.1.
For the reason given it is not necessary for me to consider the wording in previous agreements or the relevant Award.
CONCLUSION
I am satisfied that clause 12.2(b) does no more than clarify the shift penalty that is payable when overtime is worked. It does not operate to determine the calculation of, or rates applicable to, any overtime payment.
The calculation of overtime is therefore confined to the provisions of clause 13.1 which clearly specifies that overtime is paid on the base rate of pay specified in clause 10.1.
I make no findings in relation to what may or may not be on payslips issued to employees or if the calculation of overtime reflects my findings above. As to the current rates of pay under the Agreement and whether employees know their rate of pay (the Agreement provides for an increase in December each year of the greater of 3% or the annual wage review increase) that, it would seem, is easily rectified by publication of the rates given the annual wage increases have been above 3% in recent years. That the actual base rates are not spelled out in the Agreement does not add any support or weight to the AMWU’s claim.
In answer to question posed, the correct calculation of overtime payments for shiftworkers is based on the base rate of pay specified in clause 10.1. Clause 12.2 has no bearing on this matter except that the shift loading must also be paid on the overtime hours.
COMMISSIONER
Appearances:
R Wainwright for the AMWU.
D McLaughlin of Rigby Cooke Lawyers for the Respondent.
Hearing details:
2023.
Melbourne:
14 June.
[1] [2017] FWCFB 3005
[2] [2023] FWCFB 78
[3] Australian Workers’ Union v Orica Australia Pty Ltd [2022] FWCFB 90 at [18] and the authorities referred to therein; See also James Cook University v Ridd [2020] FCAFC 123 at [65] and the authorities referred to therein.
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