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

[2013] FWC 1079

[2013] FWC 1079

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
McCain Foods (Aust) Pty Ltd
(C2012/1083)

COMMISSIONER GREGORY MELBOURNE, 15 MAY 2013

Alleged dispute concerning classification structure.

Introduction

[1] This matter involves an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the Applicant) under s.739 of the Fair Work Act 2009 (the Act). The Respondent is McCain Foods (Aust) Pty Ltd (the Respondent). It concerns a dispute about the establishment of a Training Committee under the terms of the enterprise agreement that applies to the parties, and more specifically a dispute about the appropriate classification of employees working in the Cold Store at the Respondent’s production facility in Ballarat. The Respondent has, however, raised a jurisdictional objection to one part of the application and the order sought.

[2] The Commission previously issued directions for the filing of submissions and evidence prior to a scheduled hearing to deal with the dispute by way of arbitration. However, in light of the jurisdictional objection it was agreed the matter be dealt with “on the papers” and the hearing date vacated pending determination of the jurisdictional objection. If the jurisdictional objection is sustained the application will be dismissed. If it is rejected the matter will again be set down for hearing to determine the application on the merits. The matter was also the subject of a conciliation conference held at the plant in Ballarat, but was not able to be resolved. The Respondent participated in the conference, but reserved its rights in regard to the jurisdictional objection in the event it was unresolved and referred to arbitration.

The Issue to be Decided

[3] Section 595 of the Act prevents the Commission from dealing with a dispute unless it is expressly authorised to do so under or in accordance with another provision of the Act. The present application has been made under section 739. However, it is only enabled if a term in an instrument referred to in section 738 requires or allows the Commission to deal with the dispute. Section 738 states:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.” 1

[4] The parties in this matter are covered by the McCain Foods (Aust) Pty Ltd, Ballarat Production Enterprise Agreement 2011. It contains a dispute settlement procedure in Clause 7 which does provide for the involvement of FWA, as the Commission was then known. However, Clause 7.9 relevantly provides the Commission can only:

“7.9 ... resolve the matter in dispute ... by arbitration provided that the matter concerns the interpretation, application or implementation of:

7.9.1 a term or terms of this Collective Agreement, including the incorporated Award provisions, any other incorporated provisions and any other provisions or arrangements recognised in this Agreement; or

7.9.2 the National Employment Standards; or

7.9.3 the “General Protections” provided in the Fair Work Act 2009.”

[5] The AMWU seeks two orders as an outcome of its application. Firstly:

“.... the Company be required to participate in the relevant processes required under Clause 35 of the Agreement including, in particular, that the Company commences and participates in the establishment of a training committee and the implementation of classification assessment procedures as required by that Clause.” 2

[6] The AMWU also seeks an order that:

“ .... the Company be required to pay the current site multi-skilling allowance to all employees in the Cold Store until such time as the procedures under Clause 35 have been completed.” 3

[7] In regard to the first of these proposed orders the Respondent indicated in its submissions the establishment of the Training Committee requires the participation of both parties. It submits it is prepared to participate in its establishment and, given that commitment, it is not necessary now to make the order sought. It also submits the implementation of the classification assessment procedures is premature and that task should properly be left to the Training Committee, as provided for in the Agreement.

[8] In response to the second draft order the Respondent acknowledges a multi - skilling allowance is paid to some production employees. However, it is not paid in accordance with the enterprise agreement, but is instead a common law entitlement provided over and above the Agreement. For this reason it submits this is not a dispute that concerns “the interpretation, application or implementation of a term or terms of the Agreement.”

[9] Therefore, the issue to be determined is whether the Commission has the power, pursuant to Clause 35, to make an order that the Respondent be required to pay the current site multi-skilling allowance to employees in the Cold Store.

The Submissions and Evidence

[10] The Respondent submits section 739(3) of the Act limits the power of the Commission to deal with a dispute to the terms of an agreement. That section states:

“In dealing with a dispute, FWC must not exercise any powers limited by the term.”

[11] It notes, in turn, that the limitations contained in the wording in Clauses 7.9.1, 7.9.2 and 7.9.3 of the Dispute Resolution Clause in the Agreement significantly narrow the scope of what may be arbitrated.

[12] Further the Agreement does not contain any reference or entitlement to a multi-skilling allowance, nor is such an allowance or pay rate part of the NES or the general protections. Whilst it is paid to some production employees it is a common law entitlement provided in addition to any entitlements arising under the Agreement. It is not a term of the Agreement and therefore deals with subject matter beyond the scope of the Commission’s jurisdiction because it does not concern “the interpretation, application or implementation” 4 of a term under the Agreement.

[13] It rejects the submission of the Applicant that Clause 7.9 confers on the Commission a power of “implementation” of a term of the Agreement and that the Commission has powers beyond normal commercial or private arbitration allowing it to step outside the Agreement’s literal terms. It submits, instead, its powers of arbitration are both derived and limited by the terms of Clause 7, being the procedure agreed between the parties.

[14] It also submits the decisions in Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers’ Union of Australia 5 and Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia6, relied upon by the Applicant in its submissions, can both be distinguished from the circumstances applying in the present matter.

[15] The Applicant submits the jurisdiction to make the proposed order arises from Clause 7.9 and Clause 35 when read together. Clause 35 provides for the establishment of a Training Committee and for it to get involved in assessing employees against the Award classification structure, but to date this has not occurred. It submits, accordingly, that employees have been denied the opportunity for their skills and duties to be properly compensated and this is now an “acute situation in the Cold Store.” 7 It submits, in these circumstances, the Commission “can take carriage of the situation.”8

[16] It also submits Clause 7.9 expressly confers on the Commission the power of “implementation” of a term or terms of the Agreement, and these powers extend beyond normal commercial or private arbitration and allow the Tribunal to step outside of the literal terms of the Agreement. It relies on the decision in Re Ranger and Boral Resources in support of this submission. It submits the decision in Re Ranger provides support for the proposition that in exercising powers of arbitration the creation of legal rights and obligations is an outcome which may result. It submits this view is “fortified” by the decision in Boral Resources and when arbitrating under a power conferred by a dispute resolution clause the Tribunal is “.. confined by the Agreement orbit; but nonetheless, FWA can depart from a purely interpretative approach to the dispute resolution.” 9

[17] It cites the following passages from Boral Resources in support of that submission:

“[15] Section 738(b), on the plain meaning of its words, contemplates that an enterprise agreement may contain a term that provides a procedure for dealing with disputes that goes beyond the requirements of s.186(6). This is unambiguously suggested by the explication that commences with the word “including”. We think that this is a conclusive indication that the Parliament intended s.186(6) to operate only as a minimum requirement and not as a restriction on the inclusion of dispute resolution procedures that, although, within the ambit of “permitted matters” as specified in s.172, have an operation outside the categories specified in s.186(6)(i) and (ii).

[16] This construction is supported by a consideration of the objects of the FW Act, in particular, the object s.3(e) which refers to “enabling fairness and representation at work by ... providing accessible and effective procedures to resolve grievances and disputes ...”. It is a matter of common experience that disputes can arise between an employer and employees bound by an enterprise agreement that manifestly pertain to the employment relationship but are about matters that are not dealt with, or otherwise regulated in the enterprise agreement, typically because the circumstances giving rise to the dispute were not contemplated at the time the agreement was made. The construction advanced by Boral would leave such disputes without any mechanism by which they could be addressed by denying parties to a proposed agreement the option of including a term in their agreement that allows Fair Work Australia to resolve such disputes by whatever means therein agreed.” 10

Consideration

[18] The Respondent has already conceded the parties have not acted to establish a Training Committee within the appropriate timeframe required by Clause 35 of the Agreement. However, it has now committed to actively participate in its establishment and operation, therefore the first part of the draft order sought by the Applicant is no longer necessary. I agree with this submission. Clearly, the parties should have acted in compliance with what was contained in their Agreement and established a Training Committee within a period of six months after the Agreement was approved. It is regrettable this did not occur and there have no doubt been consequences, at least in terms of delay in the functions the Committee is established to carry out. However, given the stated commitment of both parties to now move to establish the Committee an order to this effect is, in my view, unnecessary.

[19] The Applicant has also proposed the making of a second order providing for employees in the Cold Store to receive an interim multi-skilling allowance as a consequence of the delay in establishment of the Training Committee. This proposal requires consideration in terms of the ability of the Tribunal to make the order sought.

[20] Under the provisions of sections 738 and 739 of the Act the powers of arbitration exercised by the Tribunal depend on the powers conferred on it by the agreement of the parties. Under the scheme of the Act there is no broad unfettered power of private arbitration that otherwise exists to resolve disputes between parties. Those arbitral powers instead depend on the agreement of the parties and any decision made by the Tribunal is not binding of its own force but derives from that agreement, which effectively authorises that exercise of power. The exercise of that arbitral power, and what it involves, has been considered in a number of decisions of this Tribunal and its predecessors. For example, in University of Western Sydney v Fletcher 11 a Full Bench of the then Australian Industrial Relations Commission stated:

“[22] In our view the Commission, in determining a dispute over the interpretation, application or operation of a provision of the Agreement, is required, in a reasoned decision, to pronounce the true meaning and effect of a provision of the Agreement, determine whether a provision has been applied in accordance with its true meaning and effect or determine the utility of, or the manner in which a provision of the Agreement operates.” 12

[21] It is also an exercise of power that is confined to what has been agreed by the parties and included in the dispute resolution clause in their Agreement. In the current Agreement this is expressed in the following terms:

“7.9 If conciliation fails to resolve the matter in dispute the parties may request that FWA resolve the matter by arbitration provided that matter concerns the interpretation, application or implementation of:

7.9.1 a term or terms of this Collective Agreement, including the incorporated Award provisions, any other incorporated provisions and any other provisions or arrangements recognised in this agreement; or

7.9.2 the National Employment Standards; or

7.9.3 the “general protections” provided in the Fair Work Act 2009.” 13

[22] The Applicant seeks to give an expansive view to the exercise of this power relying, firstly, on the decision in Re Ranger. However, I am not satisfied it provides assistance in this matter. As the Respondent indicated in its submissions the decision and statements of the High Court in Re Ranger in relation to the creation of legal rights and obligations were made in contemplation of reinstatement rights before these were contained in Federal legislation. As such, the decision did not involve consideration of the nature of the powers being exercised in a dispute resolution procedure contained in an enterprise agreement, but rather consideration of the more general arbitral powers possessed by the then Australian Industrial Relations Commission under the legislative scheme in place at that time.

[23] The Applicant also relies on the decision in Boral Resources. It was essentially concerned with the scope of what a dispute resolution procedure in an agreement can extend to include. The employer argued the scope was limited to that provided for in s.186(6) of the Act, which states:

“Requirement for a term about settling disputes

(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards...”

[24] Accordingly, a provision to allow for resolution of disputes about “matters pertaining to the relationship between the employer and employees covered by the proposed agreement” went beyond this and was not able to be included. The TWU argued in response s.186(6) specified minimum requirements only and did not prevent a broader operating disputes procedure to be included in an agreement providing, of course, its scope remained within the permitted matters provided for in s.172.

[25] The Full Bench in Boral Resources determined in favour of the TWU. It pointed to the word “including” in s.738 which states:

“(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6)...” 14

[26] It also made reference to the Explanatory Memorandum which states:

“2733. Modern awards and enterprise agreements must include a term providing a procedure for settling disputes about matters arising under the modern award or enterprise agreement (as the case may be) and in relation to the NES (these requirements are set out in clause 146 for modern awards and in clause 186 for enterprise agreements). A modern award or enterprise agreement may also provide a procedure for settling other disputes at a workplace. This Division will also apply to those matters.” 15

[27] However, the Full Bench in Boral Resources also made the following statement in its decision at [29]:

“We think it appropriate to note, as was conceded by Senior Counsel for the TWU, that the dispute resolution procedure arbitrated by the Commissioner would not allow for any arbitrated outcome of a dispute referred pursuant to that procedure that was inconsistent with the terms of the proposed enterprise agreement, including the ‘no extra claims’ clause that has apparently been agreed between the parties, because this would be contrary to the prohibition in s.739(5) of the FW Act.” 16

[28] I am not satisfied the decision in Boral Resources extends the powers of the Tribunal in the exercise of its dispute resolution functions as contended by the Applicant. It confines them to the scope of what the parties have agreed the dispute resolution clause in their agreement is to provide for. It also indicates any arbitrated outcome must not be inconsistent with the agreement, including any no extra claims clause, as this would be inconsistent with s.739(5), which states:

“(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.” 17

[29] As indicated already the wording of the Dispute Resolution Clause in the current Agreement confines the Tribunal’s powers under that Clause to the “...interpretation, application or implementation of a term or terms of this Collective Agreement, including any other incorporated Award provisions and any other provisions or arrangements recognised in this Agreement.” 18

[30] Against this background the Applicant seeks an interim multi-skilling allowance for Cold Store employees because the establishment of the Training Committee has been delayed and it is not yet performing the functions it was intended to carry out. It is appropriate to set out the terms of Clause 35 at this point.

“35. Classification Structure (new 2011)

The parties acknowledge that training consistent with business and employees needs is important to enable employees to undertake their work competently. The parties agree that it is in the interests of all parties to maintain consistency of training across the site.

In order to ensure that there is a classification system that recognises this principle and fosters the ability for employees to develop, subject to business needs, the parties agree that: –

• within 6 months of the certification of this Agreement the parties will establish a Training Committee in line with the following training clause to assess all employees, in line with the classifications structure of the 2010 Food, Beverages and Tobacco Award. Experts, as agreed to by all parties, may be used from time to time to assist the Training Committee.




Where the above time frames cannot be achieved or a dispute occurs, the party (or parties) may seek the assistance of Fair Work Australia in line with the dispute settlement procedure contained in this agreement.

Any new classification structure will only be introduced with the agreement of the parties. Prior to implementation, the parties must agree on the principles for employees to move up that classification structure. The clause will not be used to reduce employee’s wages either individually or collectively.

Training clause: –

A Training Committee consisting of employee representatives from different shifts and plants and management representatives, will be established at the site. The employee representatives will be elected from the DWGs. The Committee will determine the meeting schedule, however, in the initial stages fortnightly meetings may be required. This may revert to monthly meetings thereafter subject to the Committee constitution. Employee representatives on the Committee will be paid at the appropriate rate for time spent on Committee business including meetings. Appropriate rest breaks between the close of the meeting and the commencement of work shall be determined by the agreement. (e.g., 10 hour breaks).

The Training Committee shall advise management on:

• The skills and training priorities for the site and each work area consistent with business needs.



• Career paths.



• The method of selection of employees for training.



• An appeals process in relation to individual assessments.



• The site training plan.



• Skills shortages.



• Skills.



• Future skills and training needs to meet future business requirements.



• Productivity the improvements available from enhanced training.




The Training Committee will also ensure no false barriers are in place for training opportunities for production employees and that no employee shall be forced to train beyond legal and company minimum requirements in relation to product quality and safety.” 19

[31] What then is the intent of the Clause and what does it require of the parties? It is, firstly, a new clause introduced into an agreement between the parties for the first time, (as confirmed in the Clause headings.) It begins with acknowledgement about the importance of training and maintaining a consistent approach to training. In pursuit of this objective it requires the establishment of a Training Committee within six months of the Agreement being approved. In the event this time frame is not met it provides for the parties to seek the assistance of the Commission (presumably to assist with the Committee’s establishment.)

[32] Once established the Committee’s role is “to assess all employees, in line with the classification structure in the 2010 Food, Beverages and Tobacco Award.” The use of agreed external “experts” is provided for to assist in this process. It then confirms an agreed position between the parties that “any new classification structure will only be introduced with the agreement of the parties,” and with prior agreement required as to how employees move up that classification structure. It then continues to provide detail about how the Training Committee is to be structured and to operate. Finally, it provides a list of nine training and skills related areas the Training Committee is tasked with providing advice to management about.

[33] In summary, leaving aside the statements of intent and the acknowledgement of agreed positions the Clause essentially requires the following;

● the establishment of a Training Committee;

● the Committee to assess all employees in line with the award classification structure, and

● the Committee to provide advice to management on various training and skills related areas identified in the Clause.

[34] Accordingly, apart from the requirement for the Committee to be established the Clause does not prescribe outcomes or establish new entitlements, but instead sets up processes to be gone through to enable change, including requirements for agreement between the parties before that change can occur. Given that situation I am not satisfied any arbitrated proceedings involving the “interpretation, application or implementation” of those terms in the Agreement, as provided for in the dispute resolution process in Clause 7.9, could possibly result in the outcome proposed by the Applicant being the interim establishment of a multi-skilling allowance for Cold Store employees.

[35] The provision of such an allowance is not provided for anywhere else in the Agreement. Certainly, is paid to some employees at the plant, but exists as a common law arrangement over and above the terms of the existing Agreement. To suggest it now be applied to employees in the Cold Store through the exercise of the Commission’s arbitral power, consistent with the operation of Clause 7.9 and Clause 35, assumes an outcome that cannot be contemplated, in my view, within the meaning and effect of those Clauses.

[36] I am also satisfied the statement by the Full Bench in Boral Resources at [29] and set out at an earlier point in this decision is pertinent to the determination of this matter. It emphasises an arbitrated outcome of a dispute pursuant to the disputes procedure in an agreement should not result in an outcome inconsistent with the terms of that agreement. Similarly, for the reasons indicated I am not satisfied the creation of a multi-skilling allowance for Cold Store employees can be said to be consistent with the terms of the this Agreement.

[37] By way of contrast if the Respondent had refused to be part of the establishment of the Training Committee that situation could be the subject of an application pursuant to section 739. An order might be obtained as a consequence requiring it to participate in the establishment of the Training Committee within the given time frame. Such an outcome would clearly be consistent with the terms of the Agreement. Any continued refusal could see proceedings initiated to enforce the Tribunal’s previous order. However, for all the reasons indicated I am not satisfied an order in the terms now proposed can be said to be consistent with the terms of the existing Agreement. The Commission has no power to make such an order and the application is accordingly dismissed.

[38] Having come to this decision it is also assumed and understood that the parties have now established the Training Committee in accordance with Clause 35 and are now actively participating in the work that the Clause provides for the Committee to carry out.

COMMISSIONER

 1   Fair Work Act 2009 s.738.

 2 Outline of Submissions of applicant dated 11 December 2012, at [5].

 3 Ibid [6].

 4   McCain Foods (Aust) Pty Ltd, Ballarat Production Enterprise Agreement 2011, clause 7.9.

 5 163 CLR 656.

 6   [2010] FWAFB 8437.

 7 Outline of Submissions of applicant dated 11 December 2012, at [10].

 8   Ibid, [11].

 9   Ibid, [14].

 10   Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia[2010] FWAFB 8437, [15] – [16].

 11   [2009] AIRCFB 368.

 12   University of Western Sydney v Fletcher [2009] AIRCFB 368, [22].

 13   McCain Foods (Aust) Pty Ltd, Ballarat Production Enterprise Agreement 2011, clause 7.9.

 14   Fair Work Act 2009 s.738(b).

 15   Explanatory Memorandum, Fair Work Bill 2009 (Cth), [2733].

 16   Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia[2010] FWAFB 8437, [29].

 17   Fair Work Act 2009 s.739(5).

 18   McCain Foods (Aust) Pty Ltd, Ballarat Production Enterprise Agreement 2011, clause 7.9.

 19   McCain Foods (Aust) Pty Ltd, Ballarat Production Enterprise Agreement 2011, clause 35.

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